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12. It is probable that the change would require no fresh legislation, and would involve merely an alteration in the form of the item for audit now inserted in the estimates. On this point you will doubtless consult your law officer; and on receipt of your intimation that this has been done, further particulars will be sent to you as to the detailed arrangements to be made for carrying it experimentally into effect.
13. The cost of the supervision and other audit work to be performed by the Exchequer and Audit Department cannot be estimated until it is known in how many Colonies it may be possible to carry it out; but I should propose that the cost should be shared by the co-operating Colonies in proportion to their annual expenditures, and I have reason to believe that, thus divided, the burden upon each Colony would be inconsiderable, and likely to be exceeded by the savings which could shortly be made in the cost of the local staff.
I have the honour to be,
Sir,
Your most obedient humble Servant,
(2.)
Governor to Secretary of State.
KNUTSFORD.
No. 114.
MY LORD,
GOVERNMENT HOUSE,
HONGKONG, 30th March, 1889.
I have the honour to acknowledge the receipt of Your Lordship's Circular Despatch of the 18th September last, in which my attention is invited to the arrangements at present in force for the Audit of the Accounts of the Colony under my administration.
2. This subject has been occupying my attention for some time, but the diffi- culties with which it is beset, and perhaps also my want of the necessary technical knowledge of the subject, have prevented me from arriving at any very definite conclusion.
3. I am informed that, up to 1870, there was an Imperial Audit of Hongkong Accounts. For some time previously, the necessity of a change had been occupy- ing the attention of both the Imperial and the Local Authorities; and, after a full discussion of the question, principally directed to the details of the system which was to be adopted here, the Earl of KIMBERLEY intimated to the Governor the final determination of the Colonial Office to substitute a Local for an Imperial Audit.
4. Since that time the various Treasury Instructions which have been issued have formed the basis on which the local audit administration has been carried on. Various changes and improvements have been made, and, so far as I can ascertain there has occurred nothing which furnishes me with any strong ground for urging upon the Legislative Council the expediency of a change. I am not insensible to the very cogent arguments of the Comptroller and Auditor General in favour of an audit which is independent of the Local Executive, and, if it were made clear to me that this object could only be attained by the proposed method, I should have less difficulty in advocating its adoption. I am, however, informed that the Imperial Audit, as formerly conducted, was attended here with disadvantages similar to those which I have myself noticed in other Colonies. Queries regarding accounts were sent out after the lapse of periods varying from many months to as much as two years, when changes in offices made explanation and correction by no means easy; and much time and correspondence were expended, more frequently over very minute details than with regard to important matters of system and principle. The clerical labour involved, and the printing and stationery required, were often much greater than the results justified, inasmuch as the irregularities that were discovered could have been checked more readily and more advantageously on the spot.
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