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29. The Head Shroff has been in the service of the Government for twenty-three years and furnishes security to the extent of $5,000.00. Mr. Messer expresses great confidence in him, and it is but rarely that the moneys in his hands are checked by the Accountant. Reliance is placed on his identification of payees and it is not the practice to have any witness to payments made by him.
30. At the close of each year. which is a time of great pressure of work, it is the established custom of the Treasury for many of the Paylists and cheques to be sent in to the Colonial Treasurer in order that he may sign the cheques before the vouchers have been scrutinized by the Examination Branch. The lists in such cases bear a note that they are to be returned to the Examination Branch, but it is clear that some Paylists with cheques signed by the Colonial Treasurer reach the Accountant's desk before they have been returned to the Examination Branch.
31. With regard to Paylists for the personal emoluments of the staffs of Govern- ment departments and those for the subsides due to Elementary Vernacular Schools, the procedure within the Treasury largely follows the same lines as those indicated above.
The Paylists are sent to the Examination Branch where in both cases the mathema- tical accuracy of the lists is checked, and in the case of personal emoluments the rates of pay are verified.
The cheques are prepared and signed and the book entries made as already indicated, but after the receipt of the lists and cheques by the Correspondence Branch they are sent direct to the departments concerned instead of being passed to the Head Shroff.
The departments concerned are responsible for the disbursements and for obtain- ing the signatures of the recipients.
After the completion of the payments on the lists they are returned to the Treasury and like all other expenditure vouchers are delivered to the Cash Book Clerk. This officer is responsible for seeing that all vouchers are duly receipted, but he does not appear to have received, until the autumn of 1927, any instructions as to the course to be adopted in the contingency of the signature of an individual payee being lacking, and of the voucher bearing, in lieu of such signature, a note indicating that the amount was required to be refunded.
32. Personal Emolument Vouchers are returned by the Cash Book Clerk to the Ex- amination Branch after completion by the signatories, but this is for the purpose of en- abling the Establishment Book to be posted; and the clerk responsible for this work has not received instructions to satisfy himself that the vouchers are duly receipted or to investigate in those cases in which the necessity for a refund was apparent.
33. We have mentioned that the cheque books are in the custody of the Cash Book Clerk, and it seems necessary that we should review the method of obtaining, dealing with and safeguarding these books.
Until the discovery that frauds had been perpetrated by means of Treasury cheques, it had been customary for cheques to be obtained from the Hong Kong and Shanghai Banking Corporation in books of six hundred cheques, which were supplied on requisi- tions prepared by the Cash Book Clerk and signed by the Colonial Treasurer. On re- ceipt of the books the cheques were counted by the Cash Book Clerk, and the books were then sent by him to the Victoria Gaol for the printing in of the Treasury serial numbers and the words "Colonial Treasurer" and "Cashier", and the cancellation of the word "Bearer" and the substitution of the word "Order".
When the printing was completed they were returned to the Treasury and handed over by the recipient to the Cash Book Clerk.
In transit to and from the Gaol they were in unsealed packages and on their return they were glanced at by the Cash Book Clerk, but were not again counted by him.
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