CO129-607-3 Revenue Reward Fund 11-11-1948 - 12-12-1948 — Page 22

Page 10.

47. It has now been verifică that all excesses of Expenditure over the provision in the approved Estimates for the eleven months ended the 31st March, 1947, have been covered by Special Warrants, but in no case has the prior approval of His Majesty's Treasury been seen.

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48. Supplies, Trade & Industry Department. On the handover of the administration of the Colony by the British Military Administration to Civil Government on the 1st May, 1946, the Supplies, Trade & Industry Department was formed to continue the functions performed by a similar branch of the British Military Administration and was authorised by the Governor to be run as a commercial concern. The Director was given considerable latitude in the administration of the Department and the nomal regulations for financial control were, to all intent and purposes, dispensed with, although the authority of the Secretary of State and the Legislature do not appear to have been sought for the se ari'angements.

49. In this connection, no covering authority appears to have been obtained from the Secretary of State or the Legislature, where necessary, for the following matters affecting expenditure of public funds by this Department from 1st May, 1946, to the 31st March, 1947:-

(i) The discretionary authority allowed the Director for the

recruitment of, and salaries paid to, temporary staff.

(ii) Authority for the employment of a Rice Controller without

remuneration and certain other officers on a part time basis. (iii) Covering authority for the supply of services to be arranged

otherwise than by tender through the Tender Board.

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(iv) The authority of the Director to exchange flour and rice,

apparently obtained for distribution to the public, for other rice and for financial losses on such exchanges to be borne by public funds.

(v) The authority for Government to undertake the financing of

trade between Hong Kong and Japan through the medium of a "Two-Way" Account with the Supreme Commander for the Allied Powers in Japan, in accordance with the terms of the varying arrangements made over the period fran December, 1946, to date.

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(vi) The authority for the amount which may be owed to, or by, tho

Supreme Commander for the Allied Fowers in Japan through the "Two-Way" Account and for the appropriation of public funds involved in the accumulation of balances owing by the Supreme Commander for the Allied Powers in Japan.

A detailed report on the financial operations and accounting methods of the Supplies, Trade & Industry Department has been forwarded to the Director General of Colonial Audit, a copy of which was sent to the Colonial Secretary for his information. This report also deals with other points affecting the accounts for the years 1947/48 and 1948/49.

51.

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Kowloon-Canton Railway - Entertainment Expenses. In the course of the examination of the Expenditure accounts it came to notice that, out of the provision of $10,000 under Head 14 K.C.R., Subhead 12 "Incidentals", an amount of $3,870.25 was expended on the entertainment of the representatives of the Chinese Government Railway. The matter was brought to the notice of Government with the request that proper

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