CO129-510-14 Report of committee of enquiry into discrepancies and losses in government departments in Hong Kong... 21-4-1928 - 24-10-1928 — Page 84

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We consider that instructions to cover such a contingency should have been given and that the scrutiny of completed vouchers by the Examination Branch should have been a normal part of the procedure of that Branch of the Treasury.

114. We consider that audit should have disclosed the failure to make the refunds. We are informed that the duty of checking the vouchers was undertaken at various times by some dozen clerks, some of whom have since left the Government service, and that such clerks had express instructions to note and report any unusual matter.

115. The fraudulent proceedings which caused the losses at Queen's College were of an ingenious and unusual nature, and might well have escaped discovery by a prudent business man; but the successful carrying out of these frauds was undoubtedly the result of the system adopted by the Headmaster, Mr. Crook, for the settlement of bills due to tradesmen.

This system does not appear to be authorized by the regulations, but it seems to be forced on the Heads of Schools if they are not to leave their schools in order to attend to the payment of bills.

The failure to require the production of vouchers when making out cheques and to call for and examine receipts, may be regarded as the omission of one immersed in scholastic affairs.

116. Owing to the omission to take stock in the Police Department Stores for four and a half years and to the absence of any handing over when Mr. Harrison relieved Mr. Riach in the appointment of Storekeeper, it is impossible for us to determine who, in the store itself, is to blame for the discrepancies disclosed in 1927.

117. Mr. Wolfe, the Captain Superintendent of Police, and Mr. Taylor, the Accountant, Police Department, appear to have regarded it as a condition precedent to stocktaking that the stock books should be up to date.

We consider that if Mr. Wolfe believed it impossible to comply with the regulation requiring the making of a complete inventory twice a year he should have reported this to the Colonial Secretary with a view to obtaining the additional clerical assistance neces- sary for bringing the books up to date. No such report appears to have been made until January, 1926. Besides, we see no difficulty in taking stock, even though the stock books have not been made up to date, and then, when this has been done, comparing the figures taken out at the stocktaking with those which appear in the completed stock books.

We consider that both Mr. Wolfe and Mr. Taylor should have taken steps to ensure that there was a stocktaking and a proper handing over on the appointment of Mr. Harri- son as Storekeeper in 1925.

118. Colonial Regulation 356 requires the Auditor to satisfy himself that "the in- structions of the Governor in all matters of finance and account are strictly observed and to bring to the notice of the Governor any failure in their observance".

We do not find that attention was called to the lack of proper stocktakings until the end of 1925 when the subject of all departmental stocktakings was raised.

We consider that the Auditor should have brought to the notice of the Governor at an earlier date the failure to make complete inventories of all police stores after the stock- taking in January, 1923.

119. During the period covered by the investigations of the Committee of Enquiry appointed to investigate matters in connection with the Registry of the Supreme Court the supervision of the accounts was delegated by the Registrar to the Deputy Registrar, Mr. 'C. A. D. Melbourne.

The accounts were unsatisfactory in their form and in the manner in which they were kept and moneys which should have been paid in were not paid in.

There was strictly speaking no accounting staff. Financial entries on the Court files were made by the shroff and book entries were made, as time allowed, by bailiffs and in- terpreters who lacked training in accountancy matters and on whose time there were many claims. The period was, moreover, one of particular strain as the strike and boycott caused much additional work in the Registry.

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