CO129-544-8 Adjustment of exchange account 1-6-1933 - 31-7-1933 — Page 14

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Sir,

COLONIAL AUDIT DEPARTMENT,

Queen Anne's Chambers,

Dean Farrar Street,

London. S.W.1.

8th March, 1933.

14

I have the honour to refer to your letter

of the 3rd of October last in which you submitted

Audit Query No. 65/E of 1932, which is returned

herewith, for my decision upon two points which were

explained at length in your letter in connection with

the accounting for remittances to the Crown Agents.

Your first point A, in paragraphs 4 and 5

2.

of your letter, was whether it was the duty of audit to

criticise the making of forward contracts by the

Colonial Government for the purpose of remittances to

England. There seems little doubt that the use of

forward contracts introduces the element of speculation

into Government accounting; and, as it is a well under-

stood though unwritten rule that Colonial Governments

should not speculate with public funds, I consider that

when you became aware through the reply to query 65/E

of 1932 that a forward contract had been entered into

you should have reported the circumstances to the

Colonial Government and enquired whether such contracts,

with their attendant risk of loss, were approved as

If

The Auditor,

part of the financial policy of the Government.

the reply indicated that the policy of forward contracts

was accepted, I consider that you should have requested

reference to the Secretary of State on the ground that

HONG KONG.

such