ENG-1990 — Page 56

CONSTITUTION AND ADMINISTRATION

The audit of all the government's accounts is carried out by the Director of Audit and his staff. He also audits the accounts of the Urban Council, the Regional Council, the Vocational Training Council, the Housing Authority and more than 50 statutory and non-statutory funds and other public bodies, as well as reviewing the financial aspect of the operations of the multifarious government-subvented organisations in Hong Kong.

Government auditing practised in Hong Kong falls into two main categories, res- pectively termed 'regularity' audit and 'value-for-money' audit. The regularity audit, which is intended to provide an overall assurance of the general accuracy and propriety of the government's financial and accounting transactions, is carried out by means of selective test checks and reviews designed to indicate possible areas of weakness. The audit is designed to ensure as far as reasonably possible that the accounts are accurate and correct, although, with the considerable volume and variety of government revenue and ex- penditure, it cannot hope to disclose every accounting error or financial irregularity. Value-for-money audit is carried out according to guidelines tabled in the Legislative Council by the chairman of the Public Accounts Committee on November 19, 1986. The audit is intended to ascertain that prudence and economy have been exercised in the management of public funds and that good value has been obtained for expenditure which has been incurred. This involves going beyond the normal accounting records. In line with contemporary developments in both government and commercial auditing elsewhere, it is also becoming increasingly relevant to ascertain whether efficient and economical practices are being followed in pursuing prescribed goals and whether these goals are being achieved. The Director of Audit's report, after it has been submitted to the Governor as President of the Legislative Council and laid before the council, is considered by the Public Accounts Committee. Since 1988, in response to a recommendation made by the Public Accounts Committee, the director submits two reports a year. In 1990, the first report was tabled on April 25, covering the results of value-for-money audits completed, and the second report on November 11, covering the audit certification of the government's accounts for the preceding financial year as well as the results of value-for-money audits completed.

The director's reports on the accounts of other public bodies are submitted to the relevant authority in accordance with the legislation governing the operation of these bodies.

Foreign Relations

The Role of the British Government

Because of Hong Kong's status as a dependent territory, the Secretary of State for Foreign and Commonwealth Affairs is constitutionally responsible to the British Parliament for the actions of the Hong Kong Government and he has authority to give directions to the Governor of Hong Kong. In practice, however, such formal directions have not been issued in living memory, and Hong Kong conducts its affairs with a high degree of autonomy in all domestic matters.

The relationship between London and Hong Kong is also essentially one of co- operation. For example, one important task regularly undertaken by the Foreign and Commonwealth Office is to ensure that Hong Kong's interests and views (which are not always identical with those of the United Kingdom) are properly considered within the British Government machinery, particularly when new policies are being formulated by other Whitehall departments.

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