REPORT TO THE DIRECTOR GENERAL OF COLONIAL AUDIT ON THE FINANCIAL OPERATIONS & ACCOUNTING METHODS OF THE SUPPLIES, TRADE AND INDUSTRIES DEPARTMENT HONG KONG,
A. GENERAL.
On the hand over of the administration of the Colony by the British Military Administration to Civil Government on 1st May, 1946, the Supplies, Trade & Industries Department was formed to continue the functions performed by a similar branch of the British Military Administration. Briefly, its activities could be classified as follows :-
(a) Price control, and
(b) the procurement and distribution of goods in short supply in the Colony, or goods procurable only through government channels.
The methods normally adopted under (b) were :-
2.
(i) on consignment, for private firms;
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(ii) by government purchase, for allocation to private firms or distributors; (iii) by government purchase for resale an individual ratio either
departmentally or by private fims acting as Government Agents for a commission on sales with an option to return unsold goods.
Apart from the purchase and distribution of such commodities as coal, flour, meat, rice, sugar, butter, which were on "world allocation") through the Ministries of Food and Supply in the United Kingdom, and the organisation of the Special Commissioner South East Asia, the department was mainly concemed with the completion of the procurement programmes of the British Military Administration. Subsequently, however, the department undertook the procurement of yarn for local industry and the financing of both import and export trade between the Colony and Japan on behalf of local merchants.
3.
In the Estimates for 1946/47, provision was made under Head 39 for the expenditure of the department on "Fersonal Emoluments" and "Other Charges". The bulk of the provision under the former subhead was for Temporary Staff of which no details were given, block votos being authorised for the various Sections under which the department's activities were organised. The expenditure on "Other Charges" was authorised as a one line vote without classification under subheads. In the Revenue Estimates for 1946/47, provision was made under Head 5(D) "Fees of Court or Office", subhead "Sales Supplics, Trade & Industry Department's Receipts, $1,283,300", but no revɑnuc in fact was credited to this subhead in 1946-47.
4.
Enquiry revealed, however, that the Accountant General had opened Suspense accounts to which expenditure on, and in connection with, the purchase of the various commodities and goods handled, and the services performed by, the department were debited and to which procecds of sales, otc. were credited. At the outset, seven separate Suspense accounts were opened, but by March, 1947, this number had increased to twelve. This Department was not informed of the authority for those arrangements and on investigation it was ascertained that the covering approval of the Secretary of State had not been obtained. The matter was taken up with Government and it was suggested by my predecessor that approval should be sought retrospectively to 1st May, 1946, for cach of the Suspense accounts then or subsequently oporated, that a limit should be set for each account and that the purpose for which each account was to be used should be clearly defined.
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