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of having to distinguish between expenditure from the C.D. & W. grant and from the grant promised in the 1948 Financial Settlement would be to arrange for its accounts to be subject to audit by the Director General of Colonial Audit so as to ensure that they were in a form acceptable in audit for United Kingdom purposes. In this case the University could submit one account covering capital expenditure ranking against (a) the grant under the Financial Settlement and (b) under approved C.D.W. Schemes and (c) the issues made from each source either through the Hong Kong Government or Airect. The Government of Hong Kong in order to comply with United Kingdom accounting requirements Would have to submit a statement showing the amounts recsaved from H.M.G. in respect of the grant under the Financial Settlement and issues therefrom made to the University. The University for its part would submit an annual Statement of Account in respect of C.D.W. Schemes in usual form together with the comprehensive supporting statement to cover receipts from both sources. All of these statements would need to be certified by the Director General of Colonial Audit.
5. I should be grateful if in consultation with the University authorities you would consider whether these arrangements would be acceptable and, if so, to arrange for the University to meet the conditions necessary for them to qualify as an administering authority for C.D. & W. schemes. As soon as these conditions have been fulfilled I shall be prepared to consider detailed 4.D. & W. aschemes in the usual form, quoting the University ae administering authority, up to the limit of £250,000.
6 In connection with the proposed grant of £250,000 by H.M.G. towards the creation of an Endowment Fund for the University which is mentioned at B(iii) (a) on page 9 of the Report of the Visitors, Grantham has suggested in discussion on the subject that I should seek your reactions to the proposal that the Government of Hong Kong should signify its willingness to contribute £250,000 to the Endowment Fund if a similar sum were offered by H.M.G.; I need hardly say that this evidence that the Hong Kong Government was prepared to do all in its power to assist the University would be a powerful argument in favour of like assistance being given by H.M.G.
7.
I will communicate with you shortly on the question of a public announcement being made in connection with the two sums of £250,000 which are to be devoted to capital expenditure. Meanwhile I should be grateful for your comments on the above proposals.
SECER.