ENG-1994 — Page 59

CONSTITUTION AND ADMINISTRATION

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his powers, the Director is not subject to the direction or control of any other person or authority, and considerable discretion is given to him in the conduct of his inquiries. The Director functions independently of the administration and he is free to report publicly as he sees fit.

Aside from auditing the government's accounts, the Director of Audit also audits the accounts of the Urban Council, the Regional Council, the Vocational Training Council, the Hong Kong Housing Authority, the ex-government hospitals under the Hospital Authority, three trading funds and more than 50 statutory and non-statutory funds and other public bodies. He reviews, in addition, 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, termed 'regularity' audit and 'value-for-money' audit, respectively. The regularity audit, which is intended to provide an overall assurance of the general accuracy and propriety of the financial and accounting transactions of the government and other audited bodies, 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 properly presented or give a true and fair view of the state of affairs although, with the considerable volume and variety of government revenue and expenditure, it cannot be expected to disclose every accounting error or financial irregularity. Value-for-money audits are carried out according to guidelines tabled in the Legislative Council by the chairman of the Public Accounts Committee in 1986. The audit is intended to provide independent information, advice and assurance about the economy, efficiency and effec- tiveness with which any branch, department, agency, other public body, public office or audited organisation has discharged its functions. 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 President of the Legislative Council and laid before the council, is considered by the Public Accounts Committee. In 1994, the Director submitted two reports. The first report was tabled on April 27, covering the results of value-for-money audits completed, and the second report on November 16, 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.