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10.
As the records kept at the Magistracies and other departments did not provide an effective and adequate system whereby the disposal of the large quantities of miscellaneous goods confiscated on the order of the Courts could readily be traced, it was necessary for this Department to make certain proposals to Government for improving the procedure. As a result of these proposals action has been taken to establish proper registers, not only at the Magistracies, but also at the departments in which the details of the confiscated goods for final disposal are recorded.
11.
In the course of an audit inspection of the accounts at the Harbour Department, a considerable mmber of accounting discrepancies were observed, including over one hundred mis-allocations of revenue, in the departmental records. The matter was brought to the notice of the Harbour Master and the Accountant General and it was pointed out that the clerks responsible for these errors should be more closely supervised in future.
THE SUFFICIENCY OR OTHERWISE OF THE EXISTING CHECKS AGAINST IRREGULARITY AND FRAUD.
12. At the stage of re-construction reached in the Colony at the 31st March, 1947, it would be premature to say that the existing checks against fraud were adequate. In general, it may be said that most departments did their best to prevent the perpetration of fraud, to adhere to financial regulations, and to take reasonable precautions to safeguard public funds. It is considered, however, that the importance of departmental supervision and check by Heads of Departments and Senior Officers was not, and still is not, fully appreciated.
13. The Accountant General in Circular No.6/1946 drew the attention of Heads of Departments for the necessity of compliance with General Order No.70 (Colonial Regulation 301) regarding the furnishing of security by officers who handle public moneys. Considerable difficulty was, however, experienced in applying the Regulation since, owing to the relatively low salaries paid by Government, officers with financial responsibility were, in numbers of instances, quite unable to furnish cash or any other form of security. This question was one of the subjects dealt with by the recent Hong Kong Salaries Commission which recommended at paragraph 88 of their report that, with certain exceptions, the provision of security should be discontinued.
14. The Accountant General in a circular(No.3 of 1946) reminded Heads. of Departments of the importance of returning promptly all paid vouchers to the Treasury and of the necessity to render returns of unpaid vouchers held by them in accordance with Hong Kong General Order No.222. Failure to carry out these instructions facilitated the perpetration of a fraud in the Medical Department which resulted in a substantial loss to Government. (See Annexure V(A) to this report).
15. A request by this Department for the records showing the consump- tion of fuel by Kowloon-Canton Railway locomotives was opposed by the General Manager who stated that "consumption statistics were of no concern of the audit as they are in no position to assess the work an engine is called upon to perform". The matter was thereupon referred to Government and the General Manager later agreed to make the records available for audit inspection.
16. It was brought to the notice of the General Manager of the Kowloon-Canton Railway by this Department that the existing method of check on daily paid labour employed in the Railway workshops did not appear to provide sufficient safeguard against fraud and that the conditions appeared to justify the engagement of a trustworthy timekeeper.