PUBLIC ACCOUNTS.

Auckland Star, Volume LXVI, Issue 227, 25 September 1935, Page 16

PUBLIC ACCOUNTS.

AUDITOR-GENERAL. TREATMENT OF EXCHANGE. LOCAL BODIES PRAISED. (By Telegraph.—Parliamentary Reporter.) WELLINGTON", this day. Tho treatment of exchange in tho public accounts has been a question for regular criticism by the Controller and Auditor-General in his annual report to Parliament, and the matter is again dealt with this 3-ear. The method adopted to whicli exception is taken is to charge the cost to the ordinary revenue account, and to credit any premiums received from exchange to the same account irrespective of whether tho transaction related to this account. However, as is pointed out, the Minister of Finance has power to follow this practice, though it is also possible for the Minister to allocate the exchange to the appropriate accounts if desired.

An example of how the present system works is given in tho report. An expenditure of the Department of Scientific Bcscarch amounting to £414 was made in New Zoaland out of vote. It was remitted to London, where its value was £333. "As the amount recovered in London was equal to the valuo expended in New Zealand," said the report, "it is clear that tho net amount chargeable against tho vote was nil. Owing to failure to make proper allowance for the difference in exchange, however, tho vote, after being debited with £414, was credited with £333 only, and therefore showed a Viet debit of £81 in rfcspect to this transaction, and was clearly overcharged to this extent." The net cost of exchange for tho year, according to the AuditorGeneral, was £1,450,000, which was paid from the ordinary revenuo account, though in his opinion it should have been charged to tho various appropriate accounts. Another Angle Provided.

Another angle to the exchange position is provided in the statement of public debt as at March 31. It is shown as having declined by over 21 millions, a decrease effected principally by the application of tho proceeds of surplus sterling assets sold to the Reserve Bank. The annual savings in interest on the public debt through the operation of tho conversion legislation is £100,952, and tho total remaining debt is now just over £284,000,000. Attention is called to the fact that certain payments made in London by the High Commissioner are not submitted to audit, as is the case with other payments, therefore the AuditorGeneral informs Parliament that he accepts no responsibility for their correctness. He also brings to the notice of members tho fact that changes take place in the form of presenting public accounts, and such frequent alterations are undesirable, as they tend to reduce Parliamentary control through reducing the possibility of making adequate comparisons. The suggestion is made that no changes should be permitted unless authorised by the Public Accounts Committee.

After 15 years' experience of preparing Departmental accounts on commercial lines, the opinion is expressed that the rates of depreciation charged in the past have been in nearly all cases too high, "and that there is no doubt that many assets which have been written down to the extent of practically full original value still possess many years of useful life. The report adds: "For the year ended March 31, 1935, the depreciation will be calculated on the annually reducing value of the assets instead of tho original value as formerly, and new and reduced rates will be laid down for ensuing years. The Audit Office suggests that it would be more satisfactory to have a revaluation made of the various assets controlled by each Department, and to fix the rates to be charged annually on a basis to bo determined by a review of the records of each Department from the date of the inception of the system."

Local Bodies. The local bodies oi New Zealand gain a good word from the Auditor-General for the satisfactory position of their audits, the majority having last year shown a commendable desire to have their accounts audited with promptitude. A warning note is sounded in respect to the tendency of some local bodies to economise at the expense of their debenture-holders by refraining from meeting their sinking fund obligations each year, and 17 cases have come under notice. In specifying the list of misappropriations of local body funds last year, involving a total of £2435, the report states that in one important case the fraud was made easy by the practice of local body members signing blank, cheque forms and leaving them to be completed by ihc official concerned, but steps have been taken to have this practice discontinued imme-j diately.

Recent economic difficulties are reflected in the sums written off various Departmental accounts as being irrecoverable owing to debtors being unfinancial. The Lands Department's total is £21,156; while the losses on realisation of properties include £6569 by the Public Service Superannuation Board, £14,141 by the Public Trustee, and £2720 by the State Advances Office. The Treasu-y secured a writing off of £74,731 "miscellaneous investments, reserve fund, loss on realisation."