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has had an opportunity of personally consulting Mr: Phelips on the question of staff and the other arrangements that will necessarily arise.
3. In the meantime, I am to state, with regard to the proposal that the Local Auditor should cease to examine the accounts of the Naval Yard at Hong Kong and of the Colony
of Wei Hai Wei that the Comptroller and Auditor General is prepared to agree in the former case subject to a considera-
tion of the question of salary to which reference is made in the following paragraph of this letter. With reference, how- ever, to the local examination of the accounts of Wei Hai Wei it will be within the knowledge of the Secretary of State that this work was undertaken in 1903 at the express request of the Colonial Office and with the concurrence of the Trea- sury, and it does not appear to the Comptroller and Auditor General that any more satisfactory or economical arrangement can be devised. I am therefore to suggest for Lord Crewe's consideration that, subject to the convenience of the Govern- ment of Hong Kong, it may be continued as at present.
4. As regards the scale of salary (£720-810) which it is proposed should be paid to the Local Auditor subsequently to the introduction of the contemplated changes, I am to point out that Mr: Phelips's present emoluments are as fol- lows, viz:- Salary, £710 rising by annual increments of £20 to £800; allowance for audit of the Naval Yard Accounts, £100 and allowance for the audit of the accounts of Wei Hai Wei £50; making a total amount of £860, with a prospective in- crease to a maximum of £950. Should Mr: Phelips be relieved of the audit of the accounts of the Naval Yard and of the Colony of Wei Hai Wei he would thus under the proposed new scale, suffer a considerable diminution of his existing and prospective emoluments. The Comptroller and Auditor General considers that, inasmuch as when the present scale of salary of the post was fixed the fact that the Local Auditor was
receiving
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