CO129-605-1 Annual Accounts- 1946-7 9-9-1948 - 14-3-1949 — Page 33

REPORT TO THE DIRECTOR GENERAL OF COLONIAL AUDIT

ON THE AUDIT OF THE ACCOUNTS OF HONGKONG FOR THE FINANCIAL PERIOD ENDING 31ST MARCH, 1947

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INTRODUCTION

1. The Colony of Hong Kong was liberated from the Japanese on 30th August, 1945, and from that date to the 30th April, 1946, was governed by a British Military Administration which included in its personnel a small number of civil officials who had served in Hong Kong prior to its occupation by the enemy. Despite the fact that practically all Government records had been lost or destroyed, the restoration of law and order and the re-establishment of Government departments has been gradually accomplished.

2. The responsibility of the British Military Administration for the local accounts of the Colony ceased on 30th April, 1946, in accordance with arrangements made between the War Office, the Colonial Office and His Majesty's Treasury, as set out in War Office telegrams Nos. 01733 and 01734 of 19th February, 1946, addressed to Allied Land Forces, South East Asia, and repeated to Commander-in-Chief, Hong Kong, for Civil Affairs. The London Accounts Office which had been set up to handle the Colony's sterling assets and liabilities and the income and expenditure during the period of the ocopation of the Colony by the Japanese was also closed with effect from 30th April, 1946, that on the 1st May, 1946, the Accountant General assumed responsibility for all the accounts of the Colony.

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3. In addition to the incorporation into the accounts for the eleven months ended the 31st March, 1947, of the balances of the assets and liabilities of the Hong Kong Landon Accounts Office Balance Sheet at the 30th of April, 1946, (Appendix 5 to the Accountant General's Financial Report for 1946/47) and such local assets and liabilities of the British Military Administration as became the responsibility of the Civil Government under the terms of the hand-over agreement referred to in paragraph 2 of this report, certain local assets and liabilities which had apparently been in existence at the time of the fall of the Colony on the 25th December, 1941, have also been incorporated in the accounts for the above period.

4. The accounting procedure adopted to give effect to these arrange- ments was not entirely satisfactory and it was necessary to draw the attention of the Accountant General to the following points:-

(a) The balances of the Assets and Liabilities appearing in the

Hong Kong London Accounts Office Balance Sheet at the 30th of April, 1946, were incorporated in the accounts for May, 1946, as receipts and payments for that month and not as opening balances on 1st May, 1946. (See paragraphs 69 and 76 of this report).

(b) Certain balances were incorporated in the accounts at 1st May,

1946, without supporting Journal Vouchers. These appeared to be in respect of balances in the British Military Adminis- tration's accounts at the 30th of April, 1946, but included the balances on the Nickel Coinage Security Fund Investment Account and Fund Account which were included also in the London Accounts Office Balance Sheet at the 30th April, 1946. Moreover, the figures at which the Nickel Coinage Security Fund Investment Account and Fund Account were incorporated in the accounts for 1946/47 differed from the balances shown in the London Accounts Office Balance Sheet for this Asset and Liability. (See paragraphs 76 and 90 of this report).