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10. The first chapter "Classification of Colonies" had for some years been practically obsolete. The second and third chapters, relating to the position and powers of the Governor and of Executive and Legislative Councils have remained unaltered, except in some unimportant details, since 1867. During that time the changes which have taken place in constitutional practice as regards the Colonies have been such as to necessitate complete redrafting of this part of the Regulations. The first part of Chapter VII relating to correspondence between Governors and His Majesty's Government contemplates methods which have to a great extent fallen into desuetude.

11. Of the regulations which have been to a great extent superseded, the most important division is that included in Chapters VIII to XI, relating to financial matters. The duty of auditing Colonial Accounts was discharged during the early part of the 19th century by two Boards, whose functions were transferred to the Audit Office, then a division of the Treasury, by Acts of Parliament of 1821 and 1832. The regulations in the edition of 1843 did not satisfy the House of Commons, before whom Colonial Accounts were then laid, and a Select Committee "appointed to examine into the accounts of Colonial Receipt and Expenditure laid on the Table of this House, and to Report their Opinion as to the mode in which it may be desirable to frame the same for the future, in order to introduce uniformity, regularity, correctness, and completeness," passed a series of resolutions, dated 17th July, 1845, on which were based Treasury Instructions regulating the future mode of keeping and rendering the Accounts of Colonial Receipt and Expenditure." These instructions were sent to the Colonies in 1847 in despatches desiring that the necessary steps might be taken for their adoption without delay and for the careful observance of the regulations and forms.

12. On the passage of the Exchequer and Audit Departments Act, 1866, it ceased to be the duty of the Comptroller and Auditor General to audit the accounts of Crown Colonies, except in cases where the revenue was supplemented from Imperial funds.

At first it was proposed to create an Audit Department at the Colonial Office, but it was ultimately arranged that Colonial Accounts should be audited by the local Governments. This change was carried into effect in 1869.

13. No alteration in the Colonial Regulations was made at the time, and several remain in a form that contemplates Treasury control, though some obsolete rules were cancelled by a Circular of 13th September, 1887. In 1889 defalcations in Bechuanaland drew attention to the unsatisfactory state of the regulations in force in some Colonies, and model instructions were compiled from "the rules in force in various Colonies, Colonial Regulations, Circular Despatches and other sources," which were sent to Colonies on 25th February, 1889, "as likely to be suggestive and useful on any occasion when new Regulations are issued."

14. In 1895 a suggestion was put forward that the Financial Instructions should be revised and embodied in the Colonial Regulations, but nothing was done at the time, and when the revision was undertaken in 1899 the proposal to incorporate them with the Regulations appears to have been lost sight of. After revision the Instructions were sent out in 1900 with a request that they "should, subject to any exceptions or modifications which might be shown to be necessary or advisable in particular Colonies, be adopted in all Colonies of which the finances are under the ultimate supervision of this Department," and attention was called to the advantages of uniformity.

15. On reaching the financial part of the Colonial Regulations, the Committee found that all those members who had served in Crown Colonies desired the incorporation of the Financial Instructions with the Regulations; and the Sub-Committee was directed accordingly. During the preliminary revision the Sub-Cominittee, of which Sir Edward Noel-Walker was chairman, had the advantage of the presence and advice of Mr. C. W. Trollope and Mr. A. E. Stephenson of the Audit Office, and, on one occasion, of Mr. W. Nicolle. Treasurer of Ceylon. The result of the Committee's work has been to combine the financial part of the Colonial Regulations and the Financial Instructions into a single chapter, and it is believed that the objections which had been raised by certain Colonial Governments have been met. The Committee therefore recommend that the new regulations embodying the Financial Instructions be accepted and applied to all Crown Colonies and Protectorates.

16. The amendments of existing practice recommended are as follows :--

1. The abolition of quarterly boards of survey. These are not considered to be of practical value, the surprise surveys affording the necessary protection.

Sec regula-

tion 331.

2. The institution of a Board to supervise tenders. See regulation 383. 3. The detailed statement of advances and deposits, which is required only for

audit purposes, need no longer be sent to the Secretary of State. tion No. 396.

See regula-

4. The provision that losses and profits on the sale of investments compared with the purchase price shall be accounted for in the case of investments on behalf of surplus balances See regulation 309.

While the Committee regard the usual system of entering the value of invest- nients in the accounts at cost price as the most convenient one, they consider that in the case of the sale of investments held on behalf of surplus balances, and not of any special fund, the resulting profit or less should at once be brought to account as revenue or charged to expenditure. When the securities are held on behalf of a special fund, the difference between the purchase and sale prices will, as heretofore, be left in (or borne by) the Fund until the Fund is closed.

5. The system of treating remittances to sub-accountants as imprests has been abandoned by general consent; and the method of accounting for imprests has been amended as shown in regulation 321.

17. The other changes recommended will most conveniently be taken in the order of the regulations at present in force.

18. Chapters 1. to III. These chapters classified the Colonies and stated the powers and duties of Governors and Councils. They have been combined in one chapter and brought into accordance with the present constitutions of the Colonies and Protectorates and the form of Royal Instructions now usual.

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19. Chapters IV. and V. relate to appointments, disinissal, salaries, and leave, and to the conditions upon which public officers are employed. The Committee have endeavoured to simplify the drafting of these regulations, and to embody so far as possible the numerous decisions which have been given as to their interpretation.

20. The regulation defining the distinction between offices which are, and which are not, of considerable rank, trust, and emolument, is of great practical importance in Colonial administration. It is to be found in the edition of 1843 in its present form, laying down three classes (1) not more than £100 a year (2) between £100 and £200 a year, (3) above £200 a year, and, although the lines of division seem quite arbitrary, it has worked since then without friction or injustice. The Committee, however, consider that the large increase in the number of Colonial appointments as the civil services of the Colonies and Protectorates become more highly organised, and the undoubted tendency on the part of successive Secretaries of State not to interfere with the Governor's selection in the case of offices near the lower limit of Class 3, justify their recommen- dation that the boundary between Classes 2 and 3 should now be fixed at £300; and they believe that this is substantially in accordance with existing practice in the case of many Colonies. (reg. 29.)

21. It is unnecessary to refer to the alterations recommended in the rules affecting suspension and dismissal, as they have already been adopted by the Secretary of State.

22. The usual form of leave certificate involves two (and in some cases three) signatures by the Governor and one by the Colonial Treasurer. This is, in the view of the Committee, an unnecessary waste of the Governor's time; and they recommend that the duty of certifying should be placed on the Colonial Secretary, who is responsible for the accuracy of the statements in the certificate. Further, some Colonies have added to their certificates, in the form of notes, the most important decisions with regard to officers on leave. These have been included in the new form of leave certificate drawn up by the Committee, which has been based on that in use by the Government of the Straits Settle- ments, but has been redrafted in such a way as to involve two signatures only, one by the Colonial Secretary and one by the Colonial Treasurer. (appendix 3.)

23. New regulations, based on existing practice, have been inserted dealing with the interviewing of officials (reg. 15), seniority (reg. 37), increments (regs. 80 and $1), special leave (reg. 90), and sick leave (reg. 99). The regulation (76) relating to the salary of acting appointinents is an extension of a rule at present in force in Mauritius and several West Indian Colonies, which permits an acting officer to draw all his own increments when he would otherwise gain no advantage from the arrangement. These increments represent an addition made to salary as an equivalent for experience gained in meritorious service, and should, in the Committee's opinion, always be drawn by an acting officer.

24. The Committee have carefully considered suggestions which have been placed before them for an alteration in the rule by which passages are only payable in the case of officers whose emoluments are not more than £500 per annum. It was proposed that offices should be arranged in four grades to receive full, two-thirds, one-third and no passage allowance respectively. Such an arrangement would undoubtedly make transfers