A (2) 4
SUSPENSE Account—$923,010.85.
19. Included in the balances leading to this net liability is the sum of $926,276.87 on account of Military Contribution. The position with regard to this liability was explained in paragraphs 45/6 and Enclosure "Q" of last year's report and is unaltered.
EXCHANGE ADJUSTMENT $332,099.29.
20. This figure should represent the difference between the dollar cost price of the Sterling Investments and Sterling Funds held on 31st December 1931 and their dollar value as standing in the books on that date.
In accounting for exchange fluctuations the procedure laid down by the Secretary of State in his despatch No. 431 of 26th November 1925 has, however, not been followed and this liability is consequently incorrect and affects the final balance of Assets and Liabilities.
21. The essential feature of the Secretary of State's despatch was that 'book' profits or losses due to conversions of sterling amounts, for purposes only of record in the accounts, should be kept entirely distinct from the profits or losses occurring on actual sterling transactions. The former were to be dealt with in this account "Exchange Adjustment" the balance of which should be carried forward each year to form a reserve to meet 'book' fluctuations; the latter in the "Exchange" account, which account is closed at the end of each year by transferring the balance to revenue or expenditure.
22. Departure from this system has resulted in:
(a) A charge being made against an expenditure vote in excess of what was actually required (Financial Message 191)
(b) A charge being made against an expenditure vote to cover 'book' losses, provision for which should have been reserved in the Exchange Adjustment Account (Financial Message 193)
(c) No provision being carried in the Exchange Adjustment Account for the fluctuations in the dollar value of the Joint Colonial Fund holdings at the end of the year (£159,000).
23. The examination of the final accounts brought the subject under considerable discussion and correspondence and finally it was submitted to Government that correcting adjustments should be passed, based on figures prepared in this department, before the closing of the accounts for June 1932. This course, a precedent for which occurred in 1926, has been approved by His Excellency the Officer Administering the Government.
24. To go further into detail here would unnecessarily complicate this report but copies of the queries, correspondence and rulings will be forwarded to you in due course under separate cover.
A (2) 4
SUSPENSE Account—$923.010.85.
19. Included in the balances leading to this net liability is the sum of $926,276.87 on account of Military Contribution. The position with regard to this liability was explained in paragraphs 45/6 and Enclosure "Q" of last year's report and is unaltered.
EXCHANGE ADJUSTMENT $332,099.29.
20. This figure should represent the difference between the dollar cost price of the Sterling Investments and Sterling Funds held on 31st December 1931 and their dollar value as standing in the books on that date.
In accounting for exchange fluctuations the procedure laid down by the Secretary of State in his despatch No. 431 of 26th November 1925 has, however, not been followed and this liability is consequently incorrect and affects the final balance of Assets and Liabilities.
21. The essential feature of the Secretary of State's despatch was that 'book' profits or losses due to conversions of sterling amounts, for purposes only of record in the accounts, should be kept entirely distinct from the profits or losses occurring on actual sterling transactions. The former were to be dealt with in this account "Exchange Adjustment" the balance of which should be carried forward each year to form a reserve to meet 'book' fluctuations; the latter in the "Exchange" account, which account is closed at the end of each year by transferring the balance to revenue or expenditure.
22. Departure from this system has resulted in:
(a) A charge being made against an expenditure vote in excess of what was actually required (Financial Message 191)
(b) A charge being made against an expenditure vote to cover 'book' losses, provision for which should have been reserved in the Exchange Adjustment Account (Financial Message 193)
(c) No provision being carried in the Exchange Adjustment Account for the fluctuations in the dollar value of the Joint Colonial Fund holdings at the end of the year (£159.000).
23. The examination of the final accounts brought the sub- ject under considerable discussion and correspondence and finally it was submitted to Government that correcting adjustments should be passed, based on figures prepared in this department, before the closing of the accounts for June 19832. This course. a precedent for which occurred in 1926, has been approved by His Excellency the Officer Administering the Government.
24. To go further into detail here would unnecessarily com- plicate this report but copies of the queries, correspondence and rulings will be forwarded to you in due course under separate
cover.
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