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accounting, inasmuch as such charges for general purposes are wanting in the element of finality, and are likely to be less closely followed and supervised than payments made out of a specific annual grant. It is desirable also that all public purchases should be made out of a recognised annual vote, which definitely fixes a limit to the expenditure of the year, and to which all payments, as they occur, should at once be charged.
The abolition of the "Suspense Stores Account" therefore became an essential condition of the scheme, concurred in by the Secretary of State, which it was proposed should be adopted in Hong Kong.
4. Owing, as it was understood, to want of proper store accommodation and to consequent difficulties experienced in keeping the accounts of the Public Works Department, the new system of accounts, as approved, was not at once brought into operation, and it was not until the latter part of 1897, after Mr Nicolle, the Local Auditor, whilst in England on leave of absence had had an opportunity of discussing the matter in this Department, that any real effort was made to revise the accounts. In order to summarise the proposals already made and present the scheme in a concise form a memorandum was sent to Mr Nicolle in a letter from this Department, No 185, of the 29th September 1897, (copies of which are enclosed), the Suspense Account was abolished and the new system was introduced as from the 1st January 1898. It is to the working of this scheme that the criticisms now under consideration are directed.
8. The Comptroller and Auditor General has given careful consideration to the Governor's despatch, No 161, of the 27th