CO129-568-7 Report to Director of Colonial Audit- 1937- queries and correspondence 24-10-1938 - 13-7-1939 — Page 15

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not at the disposal of the Government in the same

way as are such cash deposits as, for example,

securities which are lodged by public officers for the performance of official duties and which are at Government's disposal. The money is simply deposited

with a bank and the Government does no more than hold

the deposit receipt or a safe custody receipt as

evidence that the deposit exists and as security that

it cannot be disposed of without Government consent. Government securities and mortgages are of course in

exactly the same position, that is, Government holds

the documents as evidence of the existence of the assets

but is not concerned with the income derived from them

•

and has no right to dispose of them.

2.

There appears, therefore, to be no valid

distinction between these various kinds of security,

and if the fixed deposits are to be included in the

balance sheet it would seem reasonable that the others

should be included also. The inclusion of investments

and mortgages would, however, be highly inconvenient

since their value naturally fluctuates year by year,

and it would be necessary, for the purpose of showing

them in the balance sheet, to make a more exact valuation

than is now necessary merely for the purpose of verifying

that the value is in excess of the fixed sum required

by the local insurance law. It can, I think, be argued

with considerable force that none of these assets are

funds in the custody of the Government any more than

are the securities deposited by the note-issuing banks

(which are referred to by the Auditor in paragraph 4 of

his report) and that therefore Colonial Regulation No.314

does not apply.

3.

I shall be glad of your directions, in the