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(23) The functions of the Auditor-General in respect of accounts of the States of North Borneo and Sarawak and State statutory bodies for the years up to and including 1968 should be delegated to the Directors of Audit in those States. The Reports on the State's accounts and those of the State statutory bodies should be presented to the Head of State concerned as well as to the Yang di-Pertuan Agong.
(24) Part VII of the Federal Constitution as modified to give effect to this Report should apply in North Borneo Sarawak not later than 1st January, 1965 except for Articles 105, 106 and 107 (Audit) and 111 (State borrowing) which should apply on Malaysia Day. The Committee considered that it is desirable that this Part should apply on 1st January, 1964, if this is practicable. The periods of time variously specified in this paragraph should begin from the date on which Part VII, as amended, came into operation in the Borneo States.
(25) Since Part VII of the Federal Constitution will not apply to the Borneo States on Malaysia Day, it is necessary to make transitional financial arrangements. The proposed arrangements are as follows:—
(a) until such time as Part VII of the Constitution is applied to the Borneo States, they should be responsible for all expenditure whether or not it relates to Federal or State services;
(b) all revenue accruing to or collected in the States which would accrue to the Federal Government under the terms of the Constitution as amended will continue to accrue to the Borneo States until Part VII of the Constitution applies;
(c) the Governments of the Borneo States should continue to accept liability for the payment of pensions and for all contributions to the Widows and Orphans Pensions and Provident Funds until Part VII of the Constitution applies;
(d) all assignments of revenue and statutory grants payable to the Borneo States in furtherance of this Report and under the Constitution should only be payable to the States when Part VII of the Constitution applies;
(e) all development projects in the Borneo States relating to what will be Federal services after Malaysia Day will remain liabilities of the States until Part VII of the Constitution applies;
(f) all equipment, stores and supplies ordered by the Governments of the Borneo States for what will be Federal services after Malaysia Day but for which the charges do not fall due for payment until after Malaysia Day shall be liabilities of the States until Part VII of the Constitution applies, but shall be the liabilities of the Federal Government of they fall due after that date;
(g) all assets and liabilities of the States which should properly become assets and liabilities of the Federal Government on Malaysia Day will remain assets and liabilities of the Governments of the Borneo States until Part VII of the Constitution applies;
(h) any expenditure which should, under the terms of the Constitution, be charged on the Federal Consolidated Fund on and after Malaysia Day shall not be so charged but shall, until Part VII of the Constitution applies, be charged on the revenues of the Borneo States and
(i) nothing in the foregoing should preclude the Federal Government from incurring additional expenditure on its own account in the Borneo States before Part VII of the Constitution applies.
25. Elections
(1) Article 114 should be amended to provide for the appointment of an additional member of the Election Commission. An assurance will be given that he will be appointed from the Borneo States.
(2) Initially members of the House of Representatives for a Borneo State will be elected by the Legislative Assembly of the State, and the Federal Constitution should so provide. The Federal Constitution should require the Head of State of each State, with the concurrence of the Yang di-Pertuan Agong, to provide by regulations for the procedure to be followed by the State Assembly in electing members of the House of Representatives; and the procedure may be such as to require or not to require that members of the House of Representatives are elected from among the
