CO537-2188 — Page 430

12. Enquiry in paragraph 36 as to

whether the audit of accounts should be carried out by the Colial Audit Department or by professional audit.

13.

Proposals in paragraphs 37 and 38 for the transfer or lease to Municipality of movable and immovable property required for effective conduct of Municipal affairs.

14. Question raised in paragraph 39 relating to engagement, dismissal, etc., of officers after transitional period.

15. Question raised in paragraph 40 of the secondment or transfer of officers of Hong Kong Civil Service.

16. Question raised in paragraph 41 whether the first Town Clerk should be a seconded Hong Kong officer.

17. Question raised in paragraph 42 whether Municipality should be subject to any form of external control.

18.

Recommendations in paragraphs 43 to 45 for changes in the Legislative Council.

19. Request in paragraph 46 for authority to put in hand forthwith all necessary detail preparations including the drafting of required legislation.

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Before the Treasury were consulted on the whole question, we told the Governor that we thought that commercial audit would be preferable The Treasury have since taken the opposite view and I think we should inform the Governor in the open reply to his despatch that we consider that the audit should be carried out by the C.A.D. and in a separate communication explain that after consulting with the Treasury we have changed our mind. (The Treasury evidently feel rather strongly about this point because Mr. Helsby has asked for an early opportunity of discussing it if we find any difficulty in agreeing to audit by the Colonial Audit Department.)

? say in the open reply that the Secretary of State will wish to be consulted further when details are available of the property to be transferred or leased. Add that in fixing these terms it will of course be necessary to take into account the financial position of the Colony and the question whether any replacements will be necessary for Central Government purposes.

? agree, in the open reply, that the Commission should be asked to advise on this question.

? agree, in open reply, that this might also be referred to the Commission, but make the Treasury point that it will be necessary to consider very carefully whether seconded officers ought to be retained on the Colonial Establish- ment once their duties have been permanently transferred to the Municipality.

Reserve this in the open reply for further consideration.

Agree Governor's recommendations, subject to comments on external financial control and general policy control in respect of education and social welfare under B.8 and B.10.

Agree in open despatch.

Give the desired authority in the open despatch but say that it is appreciated that this will involve a lot of work and that if the Governor came to the conclusion that additional staff was necessary

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