BALANCE-SHEET TAGGED

New Zealand Herald, Volume LXXII, Issue 22166, 20 July 1935, Page 15

BALANCE-SHEET TAGGED

TAURANGA POWER BOARD EXPLANATION BY SECRETARY VICTORIAN LOAN INTEREST [by telegraph OWN correspondent] TAURANGA. Friday The Audit Office has certified the balance-sheet and accounts of the Tauranga Electric-Power Board for the year ended March 31, 1935, to be correct subject to the following comments: —"(1) Interest amounting to £2IBO 5s due on April 1, 1935, has been treated in the accounts as moneys due in respect of the year ended March 31, 1935; (2) although an amount of £I9OO in respect of sinking fund due on April 1, 1935, has beon debited to net revenue account and the cheque for payment thereof has been drawn on the power fund, the amount has not been included in the sinking fund reserve account in the balance-sheet."

The exception reads:—"The investment during the year on account of insurance reserve fund in debentures of the Auckland Harbour Board is without authority of law." The matter came before the monthly meeting of the power board, when the following letter on the subject from the deputy-Controller and Auditor-Gen-eral wan also read:—"lnvestments in Auckland Harbour Board debentures made subsequent to the passing of the Finance Act, 1920, are not authorised investments, and consequently the investments so made during the year ended March 31, 1935, are, as stated in the Audit Office certificate, without authority of law. Steps should therefore be taken by the board to comply with the law by realising these debentures without loss at the first available opportunity, and investing the proceeds in authorised securities."

Secretary's Explanation The secretary, Mr. J. R. Chambers, explained that the Tauranga Power Board had £2OOO invested in Auckland Harbour Board securities, which were earning 4J per cent. The board would have to sell these securities and reinvest at a much lower rate of interest. The board decided that the matter of effecting the change in the investment bo left in the hands of the chairman and secretary. The secretary also explained, in regard to the Audit Office's first comment, that tho interest on the conversion loan was due up to March 31, 1935, and payable on April 1. The total amount had been brought into the accounts for the year ended March 31, 1935, and he considered that was the correct procedure. The £I9OO referred to in the second comment was not a sinking fund, but was a definite _ repayment of loan, and had been credited to the loans repaid reserve. Interest Reduction Question The general manager of the National Mutual Life Assurance of Australasia, Limited, Melbourne, wrote stating that on presentation at the Baiik of New Zealand, Melbourne, of the Tauranga Board's debenture for £496 2s 7d on July 1, tho sum of £467 lis 2d only was paid by tho bank in respect of tho debenture. The letter concluded: —"Wo have accepted tho sum of £467 lis 2d on account of the amount of £496 2s 7cl duo to us without prejudice and under protest, and we demand payment of the sum of £2B lis 5d short paid without delay." The secretary said a test case was being brought to settle tho question of interest reductions on New Zealand local body loans domiciled in Victoria. The board deferred action.