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SCMP Reporter

I refer to the report headlined 'SAR Government accused of opaque account-keeping' (South China Morning Post Business, December 31).

It is necessary to prepare the government accounts on a cash basis, because this is the basis adopted for the Budget which, after approval by the Legislative Council, determines the amounts (and their scope) that can be spent by the Government each year. Both the administration and Legco need the cash-based accounts to confirm that actual income and expenditure are within the Budget.

Nevertheless, recognising the benefits accrual accounting would bring, the Financial Secretary announced in his Budget speech in March 2001, that in addition to the existing cash-based government accounts, accrual-based accounts would be published starting with the financial year 2002-03. This announcement was followed by a public consultation, details of which can be found on the Web sites of the Finance Bureau (www.info.gov.hk/fb) and of the Treasury (www.info.gov.hk/tsy).

SHUM MAN-TO

Director of Accounting Services



Administration needs cash-based accounts