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Provisional pension law.

Accounts and
Audit
Departments.

As has been said already, it is impossible, and would be tedious, to go. into the details of this laborious task; but one measure is perhaps of special interest, as illustrating the influence of temporary political considerations on financial regulations. The advent of the new Government encouraged the return of many officers of the late Sherifian Army. Several of them had not qualified for pension, but had cut themselves off from the Turkish Government under which their pensionable service had begun, and had thus some claim to special treatment from the 'Iraq Government.

To meet their case a provisional pension law was enacted early in 1921, which came into force with effect from 1st February, 1921.

It may be of interest to add, in connection with the subject of pensions, that the late Civil Administration and the present Iraq Government have alike honoured the obligations of the Turkish Government in the payment of pensions to ex-Turkish officials, though hitherto no contributions on this account have been credited to the local revenues.

The Accounts and Audit Departments.-As far as this Department is concerned, the above period falls naturally into three sections, marking three distinct stages in the evolution of the department.

First period, October 1920 to January 1921.-During this period the Department consisted of four distinct branches, viz., (i) Deputy Accountant General (Civil), who was the final accounting officer for all Civil Treasury Accounts and for all Departments whose accounts were maintained in the Civil Treasuries. At the same time, he was the Audit Officer for such expenditure.

(ii) Deputy Accountant General (P. & T.) who compiled the accounts of the Postal and Telegraph Departments, and audited them concurrently. (iii) Audit Officer (Irrigation and Public Works) who audited the accounts of the two Departments mentioned, after they had been prepared in the offices of the respective Directors.

(iv) Audit Officer for Port Accounts, with functions similar to the Audit Officer (Irrigation and Public Works Department).

As far as Audit went, the organization met all essential requirements, although many matters of detail were continually being reviewed and improved.

From the accounting point of view, the organization left much to be desired. The various branches were, in effect, independent accounting officers and there was no co-ordinating and supervising machinery to ensure that all technical accounting operations were carried out satisfactorily, even within each branch (such as transactions under "advance", "suspense" and "deposit" heads). As regards transactions affecting two of the branches, which may be classed as "exchange account transactions", the position was even more unsatisfactory, owing to the absence of any systematic machinery for the exchanging of such accounts between the respective accounting officers and for their prompt adjustment.

The weaknesses of the organization had long been recognised but it was not until 1921 that it was possible to form an Accountant General's Office to co-ordinate all the accounting operations of Government.

February 1921 to December 1921.-The Accountant General's office was formed in January 1921, Fuad Effendi al Sanniyah being appointed Accountant General with a British Secretary and an 'Iraqi Assistant Accountant General.

His duties were defined as follows in the 'Iraq Government Gazette for February 1921.

"An Accountant-General's Department has been formed to carry out the following functions:

Accounting.

(a) Organization and co-ordination of all accounting operations of Government; issue of instructions on accounting procedure and the general form of accounts; organization of a system of exchange accounts between different "Final Accounts Officers" in Iraq, and, if necessary, between Iraq and foreign Governments (India, United Kingdom, Egypt, etc). (b) Preparation of monthly consolidated statements of Receipts and Issues, and monthly statements of audited Revenue and Expenditure for administrative purposes.

Custody and movement of Funds.

(c) Resource operations, i.e., Shipment of Specie from India: sales of T.T's on India or United Kingdom; arrangements for the supply of funds. for military requirements; movement of Government Funds as necessitated by Government requirements.

(d) Arrangements for the custody of Government Funds: Currency Chests and Reserve Treasures.

Audit.

(e) Co-ordination of audit interpretations of Government's orders, Civil Service Regulations and financial legislations, and the formulation of general principles of audit.

(f) Recommendations as to the confirmation or otherwise of audit rulings of Audit Officers (Deputy Accountant-Generals, etc.), disputed by Departments, etc., for report to the Ministry of Finance, whose decision will be final.

(g) Presentation of audited appropriation accounts to the legislative body, with audit reports.

Until further notice, Departments, etc., will correspond on audit and accounts questions as at present, but Deputy Accountants-General and Audit Officers will communicate on audit and accounts matters with the Accountant-General instead of the Ministry of Finance."

Steps were at once taken for the issue of instructions calculated to ensure the systematic adjustment of inter-departmental transactions through "Exchange Accounts" between the various accounting branches and for the systematic clearance of the "advance", "deposit" and "suspense" heads within each branch.

"Accounts current' were also organized between 'Iraq on the one hand and His Britannic Majesty's Government, the Governments of India and Kurdistan (Sulaimani) on the other hand, for the adjustment of transactions affecting those Governments.

At the same time, arrangements were made to present to the Minister of Finance periodically a consolidated monthly statement of all Receipts and Issues of the Government of Iraq for administrative purposes.

Owing to the numerous and radical changes made in the general administrative organization of the Government of Iraq, such as the formation of Ministries, etc., it was not possible for the Minister of Finance to decide upon the general form which the Budget of 1921-22 should take until about August 1921. As a result the consolidated monthly statements for the earlier months of 1921-22 were much delayed, but most of the arrears of 1921-22 had been overtaken by the end of March 1922.

It was recognised, however, that an audited statement of accounts could not be prepared sufficiently promptly to meet all the requirements of the Ministry of Finance. To overcome this difficulty, steps were taken to provide for a monthly approximate statement of Receipts and Issues in Civil Treasuries alone (as distinct from Departments), as this would indicate, sufficiently accurately for the purpose of financial administration on broad lines, and within a fortnight of the end of each month, how the receipts and issues in Treasuries compared with, the figures of the sanctioned Budget.

The Hillah Treasury and Liwa Accounts were accordingly re-organised on lines calculated to enable an approximate classified statement to be submitted to Baghdad by the 7th of the subsequent month. The experiment was successful, and the procedure would have been extended in turn to all Liwas, but this extension was interrupted by the proposal, referred to belov, to adopt a general accounting procedure based closely on the former Turkish model.

It was possible, however, to send the Minister of Finance every month a "Review of the ways and means operations" of the preceding month, indicating on very broad lines how the 'Iraq Government's receipts and expenditure compared with one another, and comparing the totals of Iraq's drawings on His Britannic Majesty's Government (through India) with her disbursements, (to Military, Levies, High Commissioner, etc.), on account of His Britannic Majesty's Government.

Throughout this period, attention was given primarily to the accounting operations of the current financial year (1921-22). A very heavy volume of work had also to be undertaken in connection with the accounts of 1919-1920 and 1920-1921, which, as indicated above, were far from being complete. This work had not been completed satisfactorily by March 1922. and a considerable amount of work still requires to be done.

This legacy is the inevitable result of the unfortunate inability of this Administration to obtain from India, or spare from her available personnel, an officer and staff for a central Accountant General's Office. Strenuous endeavours were made to do this early in 1919; but the Government of India could not spare the officers asked for, and there was no alternative but to postpone the formation of an Accountant General's office until staff became available in January 1921.

Land Revenue.

Proposal for
creation of a State

Domains
Department.

'Amarah Muqata'ahs.

January 1922 to March 1922.-This period was characterized by the proposal to re-organize the accounts of the Government of Iraq on a model more suited to the employment of local personnel. After much discussion a general procedure was decided upon which follows fairly closely the former Turkish accounting organization, and the necessary Arabic forms and instructions are now being prepared.

Resource Operations.-During the course of the year 1921-22 it became evident that there was considerable misunderstanding in London as to the actual machinery by which funds were raised in 'Iraq to finance expenditure adjustable against the Middle East Vote. At the same time, it became obvious that the transition to accounting in Arabic, and the employment of the 'Iraqi accounting staff would be extremely difficult and much delayed as long as the Major Resource Operations were conducted by the Iraq Government, through its own treasuries.

Steps were therefore taken to transfer all the Major Resource Operations, and all the accounting for Middle Eastern Expenditure to His Excellency the High Commissioner's office, thus relieving the 'Iraq Government of responsibility for this work from the 1st April, 1922.

This measure is of first-class importance. It will enable the Accountant General's Office to concentrate on the requirements of the Iraq Government, and a far more significant change-it will compel the 'Iraq Government to realize more closely the limitation on its own ways and means, and will thus probably act as an effective incentive to economy.

4.-LAND REVENUE, CUSTOMS AND EXCISE ADMINISTRATION.

The administration of Land Revenue was under the Ministry of the Interior until October, 1921. It was much influenced in the early part of the year by political considerations. The disturbances of 1920 had dislocated agricultural industry and caused some genuine hardship among many who had remained loyal to the cause of law and order. Their grievances could not in justice be overlooked, and from one cause and another a considerable amount of revenue was remitted in the course of the summer.

Certain privileges also were granted or extended during the period under review, notably the immunity from enhancement of the fixed assessments on Muqata'ahs in 'Amarah which was extended to November 1922.

In the main, the Turkish law was applied, as during the provisional administration. The unsettled administrative arrangements led to a resumption of the system of farming taxes from which efforts to escape had been made during the previous year or two. Considerable difficulty was caused by the remarkable fall in prices of grain, which in some areas was as much as 100 per cent. Some diminution had been expected, but the factor which chiefly contributed to the fall, namely the rapid reduction in the size of the British garrison, had not been accurately gauged. Complaints on this score arose at first from the Hillah, Nasiriyah and Kirkuk Lawas; after careful consideration, it was found necessary to make a large reduction in the rice conversion rates in three qadhas of the Hillah Liwa, and to revert to the "Kharas" mode of assessment in the Suq-al-Shuyukh qadha of the Muntafiq Liwa. The Kirkuk case was different, since there was no question about the suitability of the rates at the time they were settled, and it was only on account of the practical difficulty of realizing the tax (some political factors also perhaps influencing the case) that a partial postponement of collection was allowed. It is probable that this will lead to similar concessions elsewhere, and it is important to find some safeguard against the detrimental effects on revenue exercised by fluctuation in prices.

Steps were taken towards the end of 1921 to form a State Domains department under the Ministry of Finance. It was found desirable, however, to postpone the creation of a separate office until more complete information had been collected in the Ministry with regard to the extent and value of immovable property belonging to the State. This enquiry is in progress. Meanwhile, attention was given to the possibility of raising funds to finance capital expenditure on Irrigation, etc., and the question of selling Government land was considered as a means to this end. Important economic points have emerged in connection with this subject, such as the possibility and desirability of creating a peasant-proprietor class, and it has been found useful to have a kind of informal committee composed of representatives of various departments for the consideration of these topics. This institution ought to prove of great value to the Ministry.

In October 1921, an officer was put on special duty to study the question of re-assessing the 'Amarah Muqata'ahs. His report which contains much of interest from political, economic and fiscal points of view, and in which the possibility of a considerable enhancement of revenue is forecasted, reached the Government just before the close of the financial year.

During the period October 1920 to April 1921, the revenue from Customs and excise was administered by the Ministry of Interior, while the Customs Excise. Department, consisting of a Chief Collector and two Collecters assisted by about a dozen other officers, was concerned only with Import and Export duties. In April 1921, excise revenue was brought under the Customs Department, the organization of which thereafter comprised a Director of Customs and Excise, two Collectors of Customs, two Deputy Collectors of Excise (working, as a temporary measure during the early stages of excise administration, directly under the Director and independently of the Collectors), and a number of assistants called Deputy Collectors.

The commodities on which excise duties were levied were Liquor, Opium, Tobacco and Salt, and the revenue derived from these sources (including also the proceeds of country-craft registration which was provisionally administered by the excise authorities) amounted in 1921-22 to 39.29 lakhs.

The following table (No. IV) gives the monthly value of the Import trade of Iraq (showing imports into Basrah and Baghdad separately) during the whole period under review:

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Specie imports during the above two periods amounts to.-

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Baghdad (Nos.)

12,71,950 84,983 1,184 32,24,463 1,830

For the financial year ending 31st March, 1922.

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Note. The total rupee value of specie imports during the period was

approximately 105 lakhs.

Table V gives the monthly value of exports during the same period..

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Note. The approximate value in rupees of exports of specie is 1,227 lakhs.

At the beginning of the year 1921-22, the ordinary ad valorem import duty was 11 per cent. In April of that year, the rate was raised to 15 per cent. on all articles previously liable to the 11 per cent. duty, with the exception of specified foodstuffs, machinery, building and engineering materials and certain other articles (vide Customs Notification No. 3 of 1921).

Further increases in duties were introduced by a law passed in September 1921. By this law, the following articles were removed from the lower ad valorem rate of 11 per cent. to a rate of 15 per cent., viz., tea, coffee, sugar, almonds and nuts, fruit and vegetables, provisions and groceries; the duty on imported cigarettes was raised from Rs. 2/8 per 1,000 to Rs. 5 per kilogramme, that on manufactured tobacco from 15 per cent. ad valorem to Rs. 5/- per kilogramme, that on cigars and snuff from 15 to 50 per cent. ad valorem, while "tumbeki" (or pipe-tobacco imported mainly from Persia)

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