"UNFAIR TACTICS"

Evening Post, Volume CXX, Issue 125, 22 November 1935, Page 13

"UNFAIR TACTICS"

PUBLIC ACCOUNTS

MR. HISLOP'S CHARGE

MR. PARK ENTERS THE LISTS

Mr. A. D. Park, C.M.G., F.1.A.N.Z., F.R.A.N.Z., ex-Permanent Head of the Treasury, today Issued the following statement in reply to Mr. Hislop's statement appearing in "The Post" ; . yesterday with reference to the public ■ accounts:— 1 Mr. Hislop's further remarks on the public accounts of the Dominion, whilst casting grave reflection on the integrity of officers holding responsible • public positions, clearly revealed to those with an intimate knowledge of national finance the unfair tactics being adopted for political propaganda purposes. Mr. Hislop is quoted as saying: "I have had a long and extensive business ; experience, and balance-sheets and accounts are the same the world over." ; This is an extraordinary statement, and wholly illustrates the unfortunate fact that Mr. Hislop's knowledge of the \ public accounts of New Zealand have ~ been sadly neglected. In the first place there is a vast ■* difference between business finance with its relative accounts and national finance with its accounts. To even say that business accounts are the same the world over is a stretch of imagination, but to suggest that the public accounts of this Dominion are the same as something in some other part of the world displays a great deal of ignorance. MORE ADVANCED THAN ELSEWHERE. I have personally seen and discussed ; the public accounts of several other ' parts of the Empire with the respecT live Treasury heads, and I can say 'without fear of contradiction that none ■'• of them are the same. In fact I can go further say that the public accounts of New Zealand are more ad- . vanced in the direction of commercial •'' accountancy practice than those of al- ..' most any other part of the Empire. This process of advancement is in pro- ; gress, and much yet remains to be ■ done to fully co-ordinate and amalgamate the old statutory type of hybrid j cash accounts with the more scientific accountancy practices recognised in commercial circles. It is in the process ot this development, which the i i Chambers of Commerce strongly ad--1 vocated and the New Zealand Society of Accountants and other accountancy organisations fostered and assisted, ;. that differences of opinion on technical detail arose between Audit and Treasury. Treasury holds the statutory responsibility for the form in which the public accounts are presented, whilst Audit retains the unfettered right -of criticism in its reports to . Parliament. The significance of these , reports involved technical matters 1 which are not easily understandable by the. layman unskilled in accounts or national finance. The interpretation which Mr. Hislop places on them and attempts to make political capital, out of is unworthy of serious' reflection. To illustrate the unfair tactics adopted by Mr. Hislop let us take one example, from his statement in the "Evening Post" of the 21st instant, under the heading "Juggling with Accounts," and reading:—"'A and B are two sub-accounts within the Public ■ Account. A has £217 cash in hjand; B has £1,960,540 cash: the total of both is £1,960,757. B transferred to A £10,000, which obviously reduced B's balance by that sum, and increased A's balance correspondingly. In the accounts as published, however, B's balance still remains at £1,960,540, whilst A's is increased to £10,217, and the corresponding total of the two sub- ■\ accounts is shown as having been increased to £1,970,757, whereas in reality no increase took place in the' total.' This statement speaks for itself. If a public company manipulated its accounts in this manner, the promoters , would soon find themselves behind the bars." Now in setting out the illustration we have:— A's account, cash £217 B's account, cash £1,960,540 Total £1,960,757 The'next step is the transrer of £10,000 from B's account to A's account. To this, A's account is required to exercise its borrowing authority and issue a statutory security to B's account. It is now said that B's "balance" (note the word "balance" as distinct from' "cash") remains .at i> . £1,960,540, whilst A's is increased to £10,217, and the corresponding total of the two sub-accounts is shown as having been increased to £1,970,757, whereas in reality no increase took ■ ( place in the total. The public are not .. told that the term "balance" signifies ~ something different to "cash." After the transfer B's account is—Cash £1,950,540, and investments £10,000; whilst A's account is—cash £10,217. The total cash and investments is thus 1 £1,970,757. THE TERM "BALANCE." In the public accounts the term "bal- * ance" embraces "cash," "imprests outstanding," and "investments." The latter are turned into cash only as cash is required in order to protect the taxpayer' against unnecessary interest charges. Thus the use of the word '"cash" in one place and "balance" in ■ another is an illustration of the technicalities which are used to create confusion. Further the extract quoted from the Audit Report is torn from its context and used to convey an impression '■ which is wholly misleading. To offset these tactics I will also quote from the ' same page and the same subject of the Audit Report, viz.:— "I would like to make it clear that in making these comments the Audit Office in no way raises, nor has it ever raised, any objections to the actual transactions themselves which are quite legitimate and in accordance with law, and have been subjected to Audit investigation and duly passed as in order; it objects only to the method of 'recording'— (Note —the inverted commas are mine—these transactions in the published accounts which it considers is inaccurate and misleading to Parliament and the public." A BASELESS ASSERTION. The assertion by Mr. Hislop of manipulating and juggling the pubile accounts is a baseless one, and the connecting reference to being "behind the bars" is unworthy of a responsible public man. In conclusion I desire to add that my purpose in making this statement . arises from the fact that I am if member of professional bodies of accountants,^ the Dominion and that the public accounts in question wore issued over my signature as head of the , Treasury.