2
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instructions as to the closing entries which were necessary, to implement the decision reached at the Finam ial Conference last year, whereby this Government is not required to make any further cash payment on account of stores supplied by His Majesty's Government, but has been credited with further sums as a set-off against certain other liabilities for the settlement of which this Government has become responsible. As the result of further information and instructions given to the Accountants, a final Report was prepared and is that which is now enclosed with this despatch.
40 Although in the main the Accountants' Report sets out the basis on which certain assumptions have been made in completing the Accounts, there is also some reference to criticisms of the arrangements made for the financial control of the Department during the period covered by the Accounts.
These questions have been, I think, fully covered in considering the Director of Audit's Report in my despatch No. 48, and in your despatch No,226, in
5447which general covering approval for the departures
from normal practice was given. I am satisfied that the further inquiries which have been made have not brought to light any irregularities of a nature which merit further investigation, and that very largely the points which gave rise to criticism were a direct result of the very difficult conditions under which a most complicated large scale operation was carried out with unavoidably inadequate and inexperienced staff. Indeed if the circumstances set out in the Financial Secretary's memorandum enclosed with my Savingram No. 1042 of the 27th September, 1950, are 54/26/1450 borne in mind, I suggest
borne in mind, I suggest that a very difficult
22
operation was completed in such a way as to reflect credit on the officers responsible at the time. The position has more recently been very considerably improved and, thanks to assistance from the Accountants, the accounting arrangements are now in very good order and regular and up-to-date accounting statements are being produced, and are being audited by Messrs. Lowe, Bingham and Matthews.
5. I would remark with regard to the reference at pages twelve and thirteen in the Report to a guarantee of exchange to Scott and English Limited, that I think the explanation provided in Appendix A to the Report is an adequate one.
6. A further point to which the Accountants call particular attention, is that the Colony's Accounts hitherto have been somewhat misleading, mainly because the Statement of Assets and Liabilities has not included the balances recording commitments to and by this Government in respect of the trade with Japan, and has not clearly indicated the extent of Government's commitment of its funds in holding stocks of commodities. It is, of course, the unavoidable delay in the preparation of the Accounts now submitted to you which has prevented a clearer presentation of the position. The need for it had not been lost sight of, and I propose that, as suggested by the Director of Audit, in future an explanatory note should be