60. The accounts of the loan have hitherto been kept entirely separate from the general accounts of the Colony. This question formed the subject of your Reference Sheet No. 2/1928.
From 31st December 1930 this practice ceases but in the process of closing the account two irregularities occurred.
61. The Annual Statement shows $88,132.18 as having been refunded by the Loan Account to the Treasury on 31st December 1930 but owing to the system commented on in paragraph 21 does not appear in the Treasury books until 2nd January 1931.
62. Further, a note on the statement shows that on 22nd December 1930 $59,366.52 on the Loan Fund balance was placed on Fixed Deposit for one year the idea being to use it eventually to increase the sinking fund beyond the statutory amount provided for in the Loan Ordinance (14 of 1927, Section 8). The Loan Fund being incorporated in the Treasury books on 31st December 1930 this Deposit should have been included in the main Treasury Assets. The Treasurer has made the necessary entry in the March 1931 accounts but for the period between the 1st January 1931 and the date of the entry this deposit does not in fact appear in the accounts of the Colony,
Minutes dealing with the point are enclosed (Enclosure T).
KOWLOON-CANTON RAILWAY.
BRITISH SECTION.
63. A copy of the Annual Report of the Railway is forwarded (Enclosure L). Detailed comparisons of the revenue expenditure with the Estimates and with previous years are contained therein and call for no further comment.
64. Continuous audit has been maintained during the year. Surprise surveys of Station cash etc., were made on twenty-seven occasions with satisfactory result.
65. In paragraph 93 of the report particulars of the outstanding claim against the Chinese Section are furnished and in paragraph 24 of this report reference is made to the $447,722 advanced for purchase of engines.
66. The final division sheets of Through and Joint Sectional Traffic receipts between the two administrations have been certified by this department for the year.
STORE ACCOUNTS.
67. In many respects the store accounting of the Colony and check of actual stock is not carried out in accordance with the general principles in force in other Colonies and the suggestion