DEBITING OF EXCHANGE.

Manawatu Standard, Volume LV, Issue 256, 26 September 1935, Page 2

DEBITING OF EXCHANGE.

AUDITOR-GENERALIS COMMENT.

Tho manner in which exchange is treated in the public accounts is again criticised by the Controller and' Auditor-General, Colonel G. F. C. Campbell, in his. annual report to Parliament. Generally speaking, he says, tho method of treating exchange is to charge the cost to the ordinary revenue account of the Consolidated Fund and to credit any premiums received from exchange to the same account, irrespective of whether or not the transactions in respect of which the exchange arose are transactions of this account. The effect is to place a heavier burden than necessary on the Consolidated Fund and to relieve other accounts of their due proportion of the cost. It is possible for the Minister of Finance to. allocate the exchange to the appropriate accounts if so desired, the Auditor-General adds. As an example of effect on an appropriation account, Colonel Campbell quotes a case in which expenditure amounting to £414 18s 9d was made in New Zealand out of vote, “Scientific and Industrial Research,” the whole of such expenditure being recoverable in London. The equivalent of the £414 18s 9d was duly recovered in London, tho amount being £333 5s 8d sterling. As fhe amount recovered in London was equal in value to the amount expended in New Zealand it was clear that the net amount chargeable against the vote was nil. Owing to the failure to make proper allowance for the difference in exchange, however, the vote, after being debited with £414 18s 9d, was credited with £333 5s 8d only, and therefore showed a net debit of £Bl 13s Id in respect of this transaction, and was clearly overcharged to this extent. The above comments referred to the cash accounts only. As regards the departmental income and expenditure accounts and balance-sheets, the exchange charges were entirely omitted, and this rendered these accounts, which were required to be drawn up on a commercial basis, incapable of fulfilling their purpose. The net cost of exchange for the year amounted to £1,450,000 and was paid from and charged to ordinary revenue account. A very, substantial portion of this amount should, in the opinion of the Audit Office, have been charged to the various appropriate accounts.