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Inspection in the New Territories are stated to occupy about

three days quarterly. The cost of travelling expenses is

therefore negligible.

3. The staff of the local Audit Department

consists of an Auditor, two Assistants and a highly-paid

European Clerk and I still find it difficult to believe that

so large a superior staff is required for a Colony in which

the offices to be visited are so concentrated. I note that

British Guiana and Sierra Leone which are under the control

of the Colonial Audit Department each employ an Auditor and

only one Assistant, while Ceylon which audits its own accounts employs an Auditor and two Assistants, one of

whom devotes himself exclusively to Railway work.

If Ceylon with something like twice the

revenue of Hongkong, and seventy times its area requires for its audit of all accounts, other than those of the Rail- way, only an Auditor and one Assistent, the necessity for the employment in Hongkong of an Auditor, two Assistants and a highly-paid European Clerk seems to require some explanation. Part of such explanation can, as I suggested in my previous despatch, be found in the fact that the audit of the accounts of Weihaiwei and the Chine Postal Agencies absorb an appreciable part of the time of the Auditor. The Auditor gives the time so occupied as six weeks, including passages, in the case of Weihaiwei and three days monthly (1.e. 36 days in the year) in the case of the Post Agencies. On this basis it would appear that this Colony can at least claim to be repaid from Imperial Funds 25% of the salary of the Auditor, leaving out of account the question of the Colony's liability for the full pension of an officer, only three-fourths of those time is at its disposal.

I submit however that the evidence tends to show that if the Auditor were not occupied with these

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