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1950 NEW ZEALAND

Report of the Controller and Auditor-General on the PUBLIC ACCOUNTS of New Zealand for the Financial Year ended 31st March, 1950

By Authority: K. E. Owen, Government Printer, Wellington.—1950.

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TABLE OF CONTENTS

PAGE Allowances to Members of Boards and Committees .. .. .. 44 Apple and Pear Marketing Board .. 41 Appropriation Authority .. .. 26 Authorization and Control of Expenditure 22 Broadcasting Service .. .. 31 Charter of s.s. " Atlantis " .. 40 Coal-mines Acquisition .. .. .. 28 Compensation Claim Aorangi Block .. 27 Cook Islands Administration .. 43 Departmental Accounts .. .. 24 Deposits Account, " Miscellaneous " .. 23 Detailed Audit of Accounts Dispensed With 18 Disabled Servicemen's Re-establishment League (Ino.) .. .. .. 36 Discrepancies in the Statement of Accounts 3 Dominion Salt, Ltd. .. .. 39 East Coast Farmers' Fertilizer Co., Ltd. .. 39 Emergency Cool-storage and Meat Canning Plants .. .. .. .. 42 Form of Accounts .. .. .. 20 General Information .. .. 18 Hostels and Workers' Camps .. .. 34 Income Tax Arrears .. .. .. 26 Increase and Decrease of the Public Debt .. 20 Interest on Capital Liability .. 25 Irregularities in Connection with Public Moneys and Stores .. .. 6 Legation, Paris .. .. 24 Linen Flax Industry .. .. .. 37 Loans to Industries .. .. .. 36 Local Authorities' Accounts .. .. 43

PAGE Marketing Department .. .. .. 40 Money or Stores Written Off .. .. 45 Moutoa Estates .. .. 30 National Film Unit and National Publicity Studios .. .. .. .. 31 Occupation Force in Japan .. .. 36 Post Office Services for Other Departments 32 Post and Telegraph Department Profits .. 32 Proceedings Taken Against Defaulters and Others .. .. .. 17 Profits from Wool Disposal .. .. 42 Provisions of the Law Not Carried Out .. 4 Public Accounts, 1949-50 .. .. 18 Public Accounts and Statements .. .. 18 Remuneration of Overseas Officers .. 30 Repayment of Public Debt .. 21 Reports and Statements to Parliament .. 25 Salary Payments to Ministers .. .. 29 Services by Army Personnel .. 36 Sinking Funds of Local Authorities .. 44 South Pacific Trunk Air Routes .. 38 Staff Position .. .. .. .. 45 State Interests in Air Services .. .. 37 Stores: Defence Forces .. .. 35 Sums Allowed by the Audit Office as Paid Under Provisions of Section 73, Public Revenues Act, 1926 .. .. 12 Surcharges .. .. .. .. 17 Swamp Land Drainage .. .. .. 33 Transfers Between Votes .. 23 Visit of Australian Officials .. .. 44 Westport Harbour .. .. 33

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REPORT OF THE CONTROLLER AND AUDITOR-GENERAL I have the honour to submit my report for the year ended 31st March, 1950, in terms of subsections (2), (3), and (4) of section 89 of the Public Revenues Act, 1926, which are set out hereunder. (2) The Controller and Auditor-General shall in each year examine the Public Accounts received from the Treasury, and prepare and sign a report showing — (a) The particulars of any discrepancies between such accounts and the books of the Treasury : (b) Full particulars of every case in which the provisions of this or any other Act, or the regulations or any forms, have not been carried out or adopted, or have in any manner been varied or departed from: (c) Every case of failure to deliver or send in accounts or to collect or account for any moneys or stores : (d) All sums allowed or disallowed without vouchers, or with imperfect vouchers, or upon incorrect certificates : (e) Any proceeding that may have been taken by or against any person in pursuance of the provisions of this Act or the regulations : (/) All unsatisfied surcharges which have been made by the Controller and Auditor-General, and all surcharges disallowed by the Minister on appeal: (g) In what accounts the Controller and Auditor-General has, with the consent of the Minister, dispensed with a detailed audit: (h) Such other information as may be prescribed, or as the Controller and Auditor-General thinks desirable. : (3) The Controller and Auditor-General shall annex or append to the said report copies of all cases laid by him before the Attorney-General for his opinion, together with a copy of the opinion given in every such case. (4) The Controller and Auditor-General shall lay the said report before Parliament within fourteen days after the Public Accounts have been laid before Parliament. The Public Accounts received from the Treasury have been examined in terms of the first part of subsection (2) and have been printed as B-l [Pt. I], and the further provisions (a-k) of subsection (2) and the provisions of subsection (3) are satisfied as follows : (a) DISCREPANCIES IN THE STATEMENT OF ACCOUNTS There are no discrepancies between the accounts and the books of the Treasury, and no cases were laid before the Attorney-General.

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(6) CASES IN WHICH THE PROVISIONS OF THE LAW HAVE NOT BEEN CARRIED OUT The Audit Office is required to satisfy itself that all financial transactions of the State are supported, by proper authority, and, that they contravene no provisions of the law. Circumstances arise, however, which require or render desirable that public moneys shall be expended for purposes for which no specific authority exists, and for which the statutory provisions governing " unauthorized expenditure " or " emergency expenditure " are not available, or not available to a sufficient amount. There are cases also in which it is in the interest of public business that legislative restrictions shall not be applied. Several cases covered by the foregoing explanation arose during the year, and the Audit Office, following past practice, agreed to pass relative transactions on being informed by the Government that it would introduce validating or amending legislation, or otherwise provide the authority required. The necessary legislation or authority in the following cases was obtained during the year covered by this report: — (1) Section 20 of the Finance Act, 1949, preserved the position of a member of the General Assembly in respect of payment for his services as a member of the Royal Commission appointed to inquire into and report upon the sheep industry in New Zealand and as a member of the Government Service Tribunal. It did the same service for two Other members in respect of payments for the acquisition of certain land for the settlement of ex-servicemen. The Audit Office did not itself ask that validating legislation be obtained in respect of the payments made for land as mentioned in the preceding paragraph. This matter is further referred to on page 6 of this report. (2) Section 12 of the Finance Act, 1949, validated payment at the increased rate of £2OO of the annual allowance of £lOO payable to the Speaker of the House of Representatives in terms of section 11 of the Finance Act, 1927. (3) Part I of the Social Security Amendment Act, 1949, validated payment out of the Social Security Fund of monetary benefits at increased rates from Ist June, 1949 ; and the War Pensions Amendment Act, 1949, authorized increases in war and other pensions also from that date. Reference was made last year to cases in which validating legislation or other authority had not been provided at the date of the report. Legislation has since been provided as follows : (1) Section 2 of the Finance Act, 1949, validated unauthorized expenditure in excess of the limit fixed by section 7 of the Finance Act, 1947. (2) Section 21 of the Social Security Amendment Act, 1949, validated the payment of an allowance of £26 a year in addition to any age-benefit granted to a beneficiary who was a parent of a deceased member of His Majesty's Forces other than the New Zealand Forces or to a parent of a deceased member of the Mercantile Marine. Validating or other authority is awaited in respect of the following : (1) For payment of fifths to County Councils for expenditure by them in maintaining private logging roads which give access to State Forests. Note. —It was found that the term " road " used in the legislation providing for the payment of fifths did not include private logging roads as the New Zealand Forest Service states was intended.

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(2) For the purchase of 30,000 shares in the East Coast Farmers' Fertilizer Co., Ltd. Payment of £7,500, being ss. per share on application, has been made. (3) For the payment of a retiring allowance at the rate of £5OO per annum to a retired judge of the Supreme Court. (4) For certain contributors to whom Section 55 of the Superannuation Act, 1947, applies to have the right to elect to contribute to the Government Superannuation Fund on the allowances mentioned in that section and for financial adjustments arising from such election. (5) For the payment of social security benefits and war veterans' allowances at increased rates resulting from an increase in income exemptions. (6) For the payment at increased rates of war veterans' allowances and social security benefits other than family and superannuation benefits. (7) For the payment of the sum of £125 made in April, 1949, to T. Clifton Webb, Esq., Member of Parliament, to meet expenses incurred by him in connection with his visit to Canada as a delegate to the Commonwealth Parliamentary Association meeting. Excess Unauthorized.—Although the amount of the unauthorized authority available for the year ended 31st March, 1950, in terms of section 7 of the Finance Act, 1947 } was £2,895,108, the total issue against the account was £3,667,698, resulting in the statutory limit being exceeded by £772,590. The Government has advised that legislation will be introduced to validate the excess. Of the total issue, special items accounted for £662,066 and overdrawn votes for £3,005,632. The unauthorized statement submitted on pages 59-64 of the Public Accounts shows the composition of the total charge. National Development Loan, 1950. —In terms of sections 3 and 4 of the National Development Loans Act, 1941, the Minister of Finance is authorized to borrow for national development in the first three months of a financial year any balance remaining from the previous year's authority, together with an amount equal to one-fourth of the whole of the previous year's authority. At Ist April, 1950, the amount which could be borrowed under the foregoing authority was £13,221,225, and before the issue of the prospectus of the 1950 loan this sum had been reduced to £8,679,566. The Audit Office was therefore concerned to notice that the Minister of Finance was proceeding to borrow a further £20,000,000, or £11,320,434 in excess of the statutory authority available. This involved incorrectness of the statement in the loan prospectus that the loan was " authorized to be raised in accordance with the provisions of the New Zealand Loans Act, 1932 . . . " The Audit Office view was represented to the Treasury, which did not disagree with it. Section 44 of the Public Revenues Act, 1926, provides that any engagement for repayment of an unauthorized loan shall be " absolutely null and void," but section 6 of the New Zealand Loans Act, 1932, provides that "all moneys raised or purporting to be raised, and all securities issued or renewed, or purporting to be issued or renewed, under this Act shall, so far as concerns the lender or holder, be deemed to have been lawfully raised, issued, or renewed ..." and the SolicitorGeneral advises that the later enactment prevails. Treasury has informed this office that legislation will be introduced to deal further with borrowing in the early part of a financial year.

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Land Purchases From Members of Parliament. —Under section 23 (/) of the Electoral Act, 1927, the seat of a Member of Parliament shall become vacant if he becomes a contractor with the Government as defined in section 15 (3) of the same Act. Where, however, the contract is for the acquisition of land the member is not disqualified, but it is provided that a copy of the contract shall be tabled in Parliament within a time laid down. During 1949 two cases occurred where the Government purchased land in which Members of Parliament had an interest. The contracts were not tabled, the Director-General of the Lands and Survey Department being of opinion that this action should not be taken as the approach to buy the lands was made by the Department. The failure to table the contracts was met by provision in the Finance Act, 1949, section 20 (c) and (d), of which stated that the provisions as to disqualification of Members of the General Assembly should not apply in the two cases mentioned. The Audit Office does not in any way question the bona fides of the transactions, but is of opinion that the contracts should have been tabled as required by the relevant statutory provisions. (c) STATEMENT OF IRREGULARITIES IN CONNECTION WITH PUBLIC MONEYS AND STORES Misappropriations of public moneys by departmental officers included in this statement involve a sum of £2,094 16s. 6d. In addition, there are two cases of misappropriation involving £557 lis. sd. by non-permanent postmasters who undertake Post Office work in conjunction with their private businesses. These appear in that part of the statement detailing irregularities committed by persons other than departmental officers. The largest defalcation was committed by an officer of the Army Department, who drew a cheque for £765 10s. 3d. on his imprest account and converted the proceeds of it to his own use. He also operated an imprest account of the Department of Labour and Employment, and from this account he misappropriated the sum of £425. Restitution of £252 12s. lOd. was made by him, and £5OO was recovered under a fidelity guarantee insurance policy. As has been mentioned on previous occasions, the ordinary safeguards provided by internal checks are applied wherever possible to prevent irregularities, and the Audit Office in the course of its duties examines the accounting systems in operation and suggests improvements where necessary. The instances reported do not point to remediable weaknesses in the accounting procedure. Attention is drawn to the note under the heading " Social Security Department" on page 11 of this report. The relevant Treasury regulation has not been fully complied with in that it requires the return to include all cases where " any person illegally obtains possession of any public moneys," and this would apply to moneys improperly received as the result of any beneficiary's carelessness or negligence in advising the Department of altered circumstances. The return will be improved next year in that it will state the number of cases and the amount involved where the Department considers that there has been misappropriation, default, or malfeasance, even though the circumstances are not considered to justify Court action.

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File No. Nature of Irregularity. Amount Involved. Action Taken, and Result. Note.—In cases marked * police inquiries were either unsuccessful or are incomplete. CASES IN WHICH DEPARTMENTAL OFFICERS WERE INVOLVED Air Department £ s. d. A. 21/101/49 Theft of stationery supplies .. 28 1 8 Offender convicted and admitted to probation for twelve months. Restitution ordered. A. 21/101/49 Misappropriation of moneys .. 137 19 5 Offender convicted and admitted to probation for three years. Restitution ordered. A. 21/101/49 Fraudulent cashing of salary 27 19 6 Offender in each case was convioted cheques (two instances) and admitted to probation for two years. Restitution ordered. Army Department A. 21/9/49 Theft of surgical instruments Not stated Offender convicted and placed on probation for two years. Value of goods not returned recovered. A. 21/9/49 Misappropriation of moneys .. 765 10 3 Offender convicted and sentenced to eighteen months' imprisonment. £500 recovered under fidelity guarantee insurance policy. A. 21/9/49 Theft of binoculars (91 pairs) 2,278 18 6 Offender pleaded guilty and was remanded to the Supreme Court for sentenoe. Part goods recovered. Department of Health (Division of Mental Hygiene) A. 21/24/49 1 Theft of bedding material .. j Not stated | Offender convicted and fined £10. Material recovered. Department of Industries and Commerce A. 21/42/49 Moneys obtained by fraud 59 16 5 Offender convicted and admitted to probation for twelve months. Restitution made. Department of Justice and Prisons A. 24/17/167 Misappropriation of moneys .. 46 15 7 Offender admitted to probation for eighteen months. Restitution made. Department of Labour and Employment A. 21/9/49 Misappropriation of moneys .. 425 0 0 Offender convicted and sentenced to eighteen months' imprisonment. Restitution of £252 12s. lOd. made. A. 21/120/49 Misappropriation of moneys .. 41 0 0 Offender admitted to probation for two years. Restitution made. Ministry of Works A. 21/35/49 Misappropriation of moneys .. 127 7 5 Offender convicted and sentenced to A. 21/35/49 four months' imprisonment. Misappropriation of moneys .. 4 4 0 Offender convicted and fined £2 plus costs. Restitution ordered.

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File No. Nature of Irregularity. Amount Involved. Action Taken, and Result.. CASES IN WHICH DEPARTMENTAL OFFICERS WERE INVOLVED—continued Post and Telegraph Department A. 21/30/49 Misappropriation of moneys .. 3b s. a. 87 5 11 Offender convicted and sentenced to six months' imprisonment. Restitution made. A. 21/30/49 Misappropriation of moneys .. 108 11 7 Offender convicted and admitted to probation for three years, and ordered to pay Court costs. Restitution made. A. 21/30/49 Fraudulent withdrawal from 275 0 0 Offender convicted and sentenced to Post Office Savings-bank fifteen months' imprisonment. Account Restitution made. A. 21/30/49 Theft of clothing, tools, &c. .. Not stated Offender convicted and fined £30. A. 21/30/49 Misappropriation of moneys .. 95 0 0 Offender convicted and admitted to probation for three years. Restitution made. A. 21/30/49 Misappropriation of moneys .. 126 1 8 Offender convicted and sentenced to one year's imprisonment. Railways Department A. 21/36/49 Theft of petrol (28 gallons) .. 3 1 0 Three offenders. Two were admitted to probation for twelve months, and the other was discharged under Offenders Probation Act, 1920. Restitution made. A. 21/36/49 Misappropriation of ticket 0 1 1 Offender discharged under Offenders moneys Probation Act, 1920. A. 21/36/49 Theft of timber 6 2 0 Offender convicted and fined £17 10s. plus costs. A. 21/36/49 Theft of rails 5 17 0 Offender convicted and fined £10 plus costs. Restitution made. A. 21/36/49 Misappropriation of moneys .. 0 11 0 Offender fined £7 10s. plus costs. Restitution made. A. 21/36/49 Theft of petrol 0 7 3 Offender convicted and fined £7 10s. A. 21/36/49 Misappropriation of moneys .. 129 8 7 Offender convicted and sentenced to twelve months' imprisonment. CASES OTHER THAN THOSE IN WHICH DEPARTMENTAL OFFICERS WERE INVOLVED Agriculture Department A. 21/4/49 I Theft of wine (two cases) I Not stated | ! * Air Department A. 21/101/49 Theft of ammunition, arms, Not stated Each case was investigated by the clothing, equipment, and police or by Air Force authorities. stores (thirty-four instances) Inquiries in respect of thirteen of the cases are not yet complete. Court action is being taken in two other cases, and inquiries were unsuccessful in the remainder. A. 21/101/49 Fraudulent cashing of salary 14 10 11 * cheque

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File No. Nature of Irregularity. Amount Involved. Action Taken, and Result. CASES OTHER THAN THOSE IN WHICH DEPARTMENTAL OFFICERS WERE INVOLVED —contd. Army Department A. 21/9/49 A. 31/43 Theft of ammunition, arms, clothing, equipment, and stores (thirty-seven instances) x s. a. Not stated Each case was investigated by the police or by the military authorities. Inquiries in respect of nineteen of the cases are not yet complete. The goods were recovered in two cases, Court action is being taken in another, and police inquiries were unsuccessful in the remainder. Education Department A. 21/10/49 Theft of moneys 1 18 0 1 * Department of Health A. 33/3 Theft of cash, stamps, and stores 2 17 9 1 * Department of Health (Division of Mental Hygiene) A. 21/24/49 Theft of stores (four instances) 53 18 7 j 1 * Department of Industries and Commerce A. 21/42/49 1 A. 21/42/49 1 Theft of hose .. Theft of official postage-stamps J 2 5 0 | 21 3 10 [ * * Department of Labour and Employment A. 21/120/49 I Theft of stores (two instances) 1 15 11 0 | * Department of Lands and Survey A. 21/38/49 1 A. 31/12 ! Theft of stores (three instances) j 31 3 8 ■ * Department of Maori Affairs A. 21/27/49 | Theft of roll of sheep netting .. 1 Not stated [ * Ministry of Works A. 31/11/2 1 Theft of stores (two hundred and forty-eight instances) | 1,652 12 5 1 Reported to police —mostly petty items. Ministry of Works (Housing Division) A. 21/35/49 A. 31/59/2 Theft of money Theft of stores (thirty-two instances) 68 4 9 227 13 8 Offender convicted and admitted to probation for two years. Restitution made. Reported to police-—mostly petty items. National Provident Fund A. 21/26/49 Theft of registered letter containing remittances (two instances) 10 0 0 *

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File No. Nature of Irregularity. Amount Involved. Action Taken, and Result. CASES OTHER THAN THOSE IN WHICH DEPARTMENTAL OFFICERS WERE INVOLVED —contd. Navy Department £ s. d. A. 21/28/49 Theft of clothing, equipment, Not stated Each case was investigated by the A. 31/39 and stores (sixteen instances) police or by the naval authorities. Inquiries in respect of one case are not yet complete; otherwise police action was unsuccessful. In four of the cases the officers responsible for the safe custody of the goods were required to make good all or part of the loss. A. 21/28/49 Fraudulent cashing of allotment 2 2 0 * cheque. New Zealand Broadcasting Service A. 21/97/49 Theft of furnishings (two instances) 6 0 0 1 * New Zealand Forest Service A. 21/87/49 Theft of multiwall paper cementbags (45,400) 1,702 10 0 * A. 21/87/49 Theft of chaff-sacks (100) 13 6 8 * Post and Telegraph Department A. 21/30/49 Theft of cash and stamps (four instances) 26 16 10 Each case was investigated by the police. A conviction was obtained in one case; otherwise police action was unsuccessful. A. 21/30/49 Fraudulent withdrawal from Post 305 10 0 Each case was investigated by the Office Savings-bank Account (five instances) police. Convictions were obtained in two cases; otherwise police action was unsuccessful. A. 21/30 Theft of cash and equipment 57 0 6 Investigations were carried out in from public call offices and respect of each loss. stamp-vending machines A. 21/30/49 Theft of stores and equipment (fifty-nine instances) Not stated Each case was investigated by the police, so far without success, Inquiries in respect of eleven of the cases are not yet complete. A. 21/30/49 Theft of cash 348 1 8 * A. 21/30/49 Theft of cash 340 0 0 * A. 21/30/49 Theft of cash 221 17 8 Offender convicted and admitted to probation for three years. Restitution made. A. 21/30/49 Theft of cash 335 13 9 Offender convicted and sentenoed to two years' imprisonment. A. 21/30/49 Theft of remittance 170 0 0 * A. 21/30/49 Theft of registered letter containing departmental remittance (stamps) 20 0 0 * Railways Department A. 21/36/49 Theft of cash and tickets (eleven instances) 285 9 5 Each case was investigated by the police. Convictions were obtained in two cases and police inquiries were unsuccessful in the remainder. In three of the cases the officers responsible for the safe custody of the money were required to make good the loss.

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File No. Nature of Irregularity. Amount Involved. Action Taken, and Result. CASES OTHER THAN THOSE IN WHICH DEPARTMENTAL OFFICERS WERE INVOLVED—contd. Railways Department—continued e - A A. 21/36/49 Theft of pay envelope and conX> ». U.. 11 10 2 ♦Officer responsible for its safe tents custody required to make good the loss. A. 21/36/49 Theft of tin ingots 117 11 9 * A. 31/27/1 Theft of stores and equipment 432 15 0 * (various) Rehabilitation Department A. 21/116/49 Theft of bicycle, equipment, Not stated * timber, and tools (twenty instances) Department of Scientific and Industrial Research A. 21/98/49 Theft of equipment and stores Not stated I * (three instances) Social Security Department (Note. —Cases in which moneys were wrongly received but not in circumstances in which the Social Security Commission deemed criminal proceedings justifiable are not included in this return.) A. 21/2/49 War pension (economic and 65 0 0 Offender convicted and admitted to wife's) obtained by fraud probation for two years. Restitution ordered. A. 21/2/49 Age-benefit obtained by fraud 179 1 0 Offender convicted and fined £25 on (two charges) the first charge and admitted to probation for two years on the other charge. Restitution ordered. A. 21/2/49 War veteran's allowance ob287 17 7 Offender convicted and admitted to tained by fraud probation for three years. Restitution ordered. A. 21/2/49 Sickness-benefit obtained by 103 17 7 Offender convicted and admitted to fraud probation for three years. Restitution ordered. A. 21/2/49 Age-benefit obtained by fraud 107 5 0 Offender convicted. Restitution ordered. A. 21/2/49 War (economic and wife's) pen175 2 7 Offender convicted and admitted to sion obtained by fraud probation for three years. Restitution ordered. A. 21/2/49 Age-benefit obtained by fraud 117 0 0 Offender convicted and ordered to come up for sentence if called upon within twelve months. Restitution ordered. A. 21/2/49 War (economic) pension obtained 174 17 6 Offender convicted and admitted to by fraud (three charges) probation for one year on the first charge, and ordered to Come up for sentence if called upon within two months on the other charges. Restitution of £100 ordered. A. 21/2/49 Unemployment benefit obtained 259 7 4 Offender convicted and fined £5 plus by fraud costs. Recovery being made. A. 21/2/49 War (economic) pension obtained 35 10 10 Offender convicted and fined £20. by fraud A. 21/2/49 Widow's benefit obtained by 612 1 8 Offender convicted and fined £40 on fraud each of four charges. A. 21/2/49 Unemployment benefit obtained 13 10 0 Offender convicted, fined £10, and by fraud admitted to probation for one year. Restitution ordered.

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(d) SCHEDULE OF SUMS ALLOWED BY THE AUDIT OFFICE AS PAID, UNDER PROVISIONS OF SECTION 73, PUBLIC REVENUES ACT, 1928 Section 73, which requires the Audit Office to disallow any sum as paid where the voucher for the actual receipt or payment has not been produced, empowers the Minister, on satisfactory evidence being forthcoming that the requisite papers have been lost or destroyed or that it is not possible to obtain or replace them, to order that the relative sum be allowed. The powers of the Minister under section 73 have been delegated to the Secretary to the Treasury in terms of section 15 of the Finance Act, 1937, and he has recently stated in the following terms the scrutiny to which applications for orders are subjected before they are allowed " When applications are received by Treasury, they are examined by a special officer and the explanation given in the form is scrutinized. If this is considered ' unsatisfactory' taking into account the particular circumstances of the case, the

File No, Nature of Irregularity. Amount Involved. Action Taken, and Result. CASES OTHER THAN THOSE IN WHICH DEPARTMENTAL OFFICERS WERE INVOLVED—confcZ. Social Security Department—continued o „ J A. 21/2/49 Reciprocal age-benefit obtained JJ ». U. 64 12 10 Offender convicted and admitted to by fraud probation for one year. Restitution of £29 4s. 6d. ordered. A. 21/2/49 War pension uplifted by un51 3 4 Offender sentenced to twelve months' authorized person imprisonment. A. 21/2/49 Sickness and widow's benefits 131 14 0 Police prosecution pending. obtained by fraud A. 21/2/49 War (economic) pension obtained 68 5 0 Offender convicted and discharged by fraud (three charges) on two charges and ordered to come up for sentence if called upon within twelve months on the third charge. A. 21/2/49 War (economic and wife's) pen84 0 3 Offender convicted and admitted to sion obtained by fraud probation for one year. Restitution ordered. A. 21/2/49 War (economic) pension obtained 242 5 1 Offender convicted and fined £50 by fraud plus costs. A. 21/2/49 Sickness - benefit obtained by 28 16 0 Police prosecution pending. fraud A. 21/2/49 Sickness - benefit obtained by 17 2 0 Police prosecution pending. fraud State Hydro-electric Department A. 31/66/2 1 Theft of stores (seven instances) j 21 13 7 1 * A. 21/126/49 1 Department of Tourist and Health Resorts A. 21/128/49 Theft of rail tickets .. 8 4 2 Investigations unsuccessful. Value of tickets recovered. A. 21/128/49 Theft of moneys .. 102 0 0 * Amount recovered from Agents. Valuation Department A. 21/44/49 1 Theft of chain tape .. 1 Not stated [ *

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application is referred back to the Department for further evidence. There are not a very great number found unsatisfactory, but a regular percentage need the production of further evidence which is incorporated in the explanation. Each case is then dealt with by an officer to whom the Secretary to the Treasury has delegated powers (with approval of the Hon. the Minister of Finance). There are a small number of applications which are rejected, but Departments usually have presented sufficient evidence to satisfy Treasury."

The following payments have been passed by the Audit Office pursuant to orders, made under the delegated powers :

Department and Particulars. Reason. Amount. Total Amounti. Agriculture Compensation under the Stock Act, 1908 Goods and services Refund of college fees Salaries Travelling-expenses Travelling-expenses of officers travelling overseas Acquittances lost Acquittance lost Receipt unobtainable Vouchers and acquittances lost .. Receipts not obtained Receipts not obtained £ s. 10 5 7 6 2 5 251 0 6 6 61 15 d. 0 8 0 6 7 4 £ 338 s. 19 <1, 1 Air Freight charges Imprest payments, Fiji Overtime Pay and allowances Pay and allowances of officers overseas Salaries Travelling-expenses Travelling-expenses of officers travelling overseas Receipts unobtainable Vouchers lost Vouchers and acquittances lost .. Vouchers lost .. Vouchers lost 2 5 167 15 75 14 174 11 1,118 4 0 6 9 10 5 Vouchers and acquittances lost .. Receipts not obtained Receipts not obtained and vouchers lost 32 3 106 7 575 11 2 9 9 2,252 19 129 14 11 2 2 5 9 Army Compensation for loss of rifles Expenses of Polish children Medical fees Pay and allowances Repatriation expenses Salaries Acquittances lost Receipt unobtainable .. Acquittance lost .. ..A Acquittances lost Receipts unobtainable Receipt unobtainable .. 7 3 0 15 1 1 7 11 2 4 0 15 9 8 0 4 6 2 Customs Overtime Salaries Tx-a veiling-expenses Travelling-expenses of officers travelling overseas Voucher lost .. .. Voucher lost Receipts not obtained Receipts not obtained 1 9 7 10 7 14 112 9 0 4 1 4 Education Goods and services School requisites Travelling-expenses Travelling-expenses of officers travelling overseas Acquittance lost Acquittance lost Receipts not obtained Receipts not obtained 11 14 0 9 89 2 59 18 0 8 0 10 161 4 -6 External Affairs Air fares, Moscow Legation Miscellaneous payments, Washington Legation Travelling-expenses Travelling-expenses of officers travelling overseas Receipt unobtainable Receipts unobtainable Receipts not obtained Receipts not obtained 30 12 6 17 5 9 292 11 5 2 9 4 335 10 8

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(d) SCHEDULE OF SUMS ALLOWED BY THE AUDIT OFFICE AS PAID, UNDER PROVISIONS OF SECTION 73, PUBLIC REVENUES ACT, 1926—continued

, Department and Particulars. Reason. Amount. Total Amount. Health Goods and services Petty cash payments .. • : 'Salaries and wages Travelling-expenses Travelling-expenses of officers 4-TT/a l nr*rr nTraraoQ o ! Acquittances lost .. Receipts not obtained Vouchers and acquittances lost.. Receipts not obtained Receipts not obtained £ 212 1 940 58 123 a. d. 9 6 14 11 13 6 3 1 5 2 £ 1,336 S. ( 6 i. 2 vi cv v vxxxiic \j v ui ayrao (Mental Hygiene Medical fees Salaries .. Division) Acquittance lost Vouchers lost I 110 1 15 0 0 111 16 0 Industries and Commerce (includes Ministry of Supply) Goods and services . .j Petty .expenses, Bombay ; Petty expenses, Eastern Group Supply Petty expenses, Price Control Publications .. . Salaries .. .. .. Travelling-expenses • Acquittance lost Receipts unobtainable Receipts unobtainable 229 53 4 0 19 17 7 11 6 Receipts not obtained Receipts unobtainable Vouchers lost Receipts not obtained 13 . 1 45 39 14 2 12 15 2 5 8 10 388 1 Internal Affairs Bonus, deer control . .j Cable charges .. .; Expenses, War Graves, Noumea .. •Freight charges . .i Goods and services Pacific Science Congress j Travelling-expenses Travelling-expenses of officers travelling overseas Wages .. . Acquittance lost Voucher lost Receipts unobtainable Receipt unobtainable Acquittances lost Receipts unobtainable Receipts not obtained Receipts unobtainable Acquittance lost 0 26 10 0 33 16 16 589 19 10 5 18 10 4 2 9 3 14 1 11 4 0 0 0 1 9 6 n 19 17 g Island Territories Goods and services . J Overtime .. ., Refund of fares . . Salaries and wages . 4 'Travelling-expenses . Acquittance lost Vouchers lost Receipts unobtainable Vouchers lost Receipts not obtained 215 40 337 1,013 107 14 16 13 5 19 11 10 0 4 11 1,715 10 0 . i < • 1 Justice and Prisoij Goods and services . J Refund of fees .. .J -Salaries .. . J Travelling-expenses . is Acquittance lost Acquittance lost Vouchers lost Receipts not obtained 1 0 93 6 7 7 8 14 6 10 1 10 101 18 Q «L> Labour and Employment Salaries .. . i Travelling-expenses . ' Travelling-expenses of officers over- £ seas Vouchers lost Receipts not obtained Receipts not obtained .. 249 3 15 5 17 10 0 3 11 268 13 2

B—l [Fr. ll}

(d) SCHEDULE OF SUMS ALLOWED BY THE AUDIT OFFICE AS PAID, UNDER PROVISIONS OF SECTION 73, PUBLIC REVENUES ACT, 1926—continued

Department and Particulars. Reason. Amount. Total Amount. Land and Income Tax Refund of tax Travelling-expenses Lands and Survey Goods and services Salaries Toll charges Travelling-expenses Legislative Official stamps Maori Affairs Goods and services Overtime Salaries and wages Travelling-expenses Marine Goods and services Salaries and wages Travelling - expenses of officers travelling overseas Mines Coal subsidy Goods and services Ministry of Works Goods and services Goods and services Publications Salaries and wages Travelling-expenses Travelling - expenses of officers travelling overseas Ministry of Works (Housing Branch) Superannuation refunds Navy Deferred pay Goods and services Salaries New Zealand Broadcasting Service Travelling-expenses Travelling-expenses of officers travelling overseas New Zealand Forest Service Freight charges Goods and services .. Salaries .. .. Travelling-expenses Travelling-expenses of officers travelling overseas Acquittances lost Receipts not obtained Acquittances lost Vouchers lost Acquittance lost Receipts not obtained Voucher lost .. .. Acquittance lost Voucher lost .. .. Vouchers lost Receipts unobtainable Acquittances lost Vouchers lost Receipt not obtained Acquittances lost Acquittances lost Receipts not obtained Acquittances lost Receipt unobtainable Vouchers and acquittances lost .. Receipts not obtained Receipts not obtained Voucher lost Acquittance lost Vouchers and acquittances lost .. Vouchers and acquittances lost .. Receipts not obtained Receipts not obtained Acquittance lost Receipt not obtained Vouchers and acquittances lost .. Receipts not obtained Receipts not obtained £ s. d. 53 7 4 4 10 0 £ s. d. 57 17 4 254 16 4 5 0 0 1,454 17 4 673 5 1 492 0 8 1,799 5 6 39 16 2 806 6 9 310 10 1 127 1 2 155 17 1 29 9 2 16 0 68 14 1 5 0 0 1 12 0 29 11 9 1,398 13 7 25 0 0 39 13 3 617 17 10 15 14 0 467 6 0 24 14 8 105 13 3 25 9 9 15 4 1,310 3 10 329 3 11 27 19 5 39 16 2 213 4 5 526 15 8 66 6 8 35 17 7 274 12 6 1 0 0 4 13 2 36 16 4 38 19 11 45 11 9

[Pt. ll]

(d) SCHEDULE OF SUMS ALLOWED BY THE AUDIT OFFICE AS PAID, UNDER PROVISIONS OF SECTION 73, PUBLIC REVENUES ACT, 1926—continued

Department and Particulars. Reason. Amount. Total Amount. Police Gaming and Licensing Acts enforcei ment Salaries .. Travelling-expenses Receipts unobtainable Acquittance lost Receipts not obtained £ 88 62 1 s. 17 9 1 d. 4 3 11 £ 152 s. 8 d. 6 Post and Telegraph Goods and services Travelling-expenses of officers travelling overseas Acquittances lost Receipts not obtained 151 8 15 4 1 4 159 19 5 Prime Minister's; Toll charges Travelling-expenses Receipt not obtained Receipts not obtained 27 13 17 10 4 28 11 2 Railways Goods and services Travelling-expenses of officers travelling overseas Acquittances lost Receipts not obtained 91 195 1 5 18 11 287 0 4 Rehabilitation Educational assistance overseas bursars Goods and services Overtime Salaries Trade training subsidy ..: Travelling-expenses Travelling-expenses of officers travelling overseas Receipts not obtained 103 14 7 Acquittance lost Voucher lost Vouchers lost Acquittance lost Receipts not obtained .. Receipts not obtained 3 43 437 11 12 133 1 5 4 10 17 8 6 0 7 0 4 0 745 1 0 Scientific and Industrial Research Goods and services Imprest payments, Apia Publications Salaries Travelling-expenses Travelling-expenses of officers * travelling overseas Acquittance lost Vouchers lost Receipts unobtainable Vouchers lost Receipts not obtained Receipts not obtained 3 235 5 327 55 110 3 6 19 1 16 0 10 9 6 5 1 1 737 7 g Social Security General medical services Medical fees .. • • Overtime Pensions Salaries .. • • : Travelling-expenses Acquittances lost Acquittances lost Voucher lost Receipts unobtainable Voucher lost Receipts not obtained 158 3 54 98 142 10 8 13 7 7 12 13 6 6 2 11 3 0 468 0 o 4 State Hydro-electric Travelling-expenses . •• Receipts not obtained 0 12 6 12 6 Tourist and Health Resorts Freight charges Overtime and wages Acquittance lost Vouchers lost 4 70 1 2 11 6 74 4 5

B—l [Pt. ll]

(d) SCHEDULE OF SUMS ALLOWED BY THE AUDIT OFFICE AS PAID, UNDER PROVISIONS OF SECTION 73, PUBLIC REVENUES ACT, 1926—continued

(e) PROCEEDINGS TAKEN AGAINST DEFAULTERS AND OTHERS Particulars of cases in which proceedings have been taken in pursuance of section 69 (3) of the Public Revenues Act, 1926, are included in the statement under para, (c), page 7. The Audit Office is required by the above-mentioned section to take all such steps as it thinks fit to prosecute according to law all defaulters in respect of any public moneys or stores, but the section does not prevent prosecutions in such cases by persons other than the Audit Office. The statement includes, therefore, prosecutions which were instituted by Departments concerned as well as by the Audit Office. (/) SURCHARGES Section 69 (1) of the Public Revenues Act, 1926, provides that the Audit Office shall surcharge the person responsible wherever it appears to it that public moneys or stores have been lost through default, neglect, fraud, or error. In the past year it was found necessary to surcharge four officers, three of the surcharges being in respect of damage to departmental motor-vehicles and one in respect ■of damage to stores. Any person surcharged has the right under section 71 of the Act to appeal to the Minister of Finance, and the Minister may thereupon confirm or waive the surcharge as he thinks fit. All the surcharges were made the subject of appeal.

The appended table summarizes the position in connection with the surcharges issued: —

Department and Particulars. Reason. Amount. Total Amount. Transport Overtime Salaries Treasury Refund of amount paid in error .. Travelling-expenses Travelling-expenses of officers travelling overseas Voucher lost Acquittance lost Acquittance lost Receipts not obtained Receipts not obtained £ s. d. 28 17 6 13 13 0 £ s. d. 42 10 6 185 16 1 12 7 6 26 14 8 146 13 11 £16,77417 3

Department. Number of Surcharges. Total Amount of Surcharges Issued. Upon Appeal. Confirmed. Waived. Air (Civil Aviation) Scientific and Industrial Research Works Works (Housing Division) 1 1 1 1 £ s. d. 399 4 10 15 0 0 118 5 5 180 0 0 £ s. d. 10 0 0 10 0 0 2 0 0 20 0 0 £ s. d. 389 4 10 5 0 0 116 5 5 160 0 0 4 712 10 3 42 0 0 670 10 3

B—l [Ft. ll]

The surcharge for £285 which was unsatisfied at the date of the last report was reduced, on appeal, by the Minister of Finance to £26, and has been met. Of the surcharges issued during the year one remains unsatisfied, that issued against an officer of the Air Department (Civil Aviation Branch). (g) DETAILED AUDIT OF ACCOUNTS DISPENSED WITH Section 72 of the Public Revenues Act, 1926, authorizes the Controller and AuditorGeneral, with the consent of the Minister of Finance, to dispense with a detailed audit of any accounts in circumstances which render a detailed audit unnecessary. The Minister was not asked to give any new consent under this section during the year. (h) GENERAL INFORMATION The authority given to the Audit Office to give such other information as it thinks desirable has been taken to cover reference to items which are of interest in themselves, or which disclose a position calling for corrective action. Public Accounts and Statements It is mentioned on page 3 of this report that the public accounts received from the Treasury have been published as B-l [Pt. I] — That statement includes details of the Civil List Act, 1920, presented in terms of section 65 of the Constitution Act, 1852. The following additional statements complete parliamentary paper B-l [Pt. I]: — The Statement of the appropriation accounts required by section 86, Public Revenues Act, 1926 : The Statement of the Unauthorized Expenditure Account required by section 58, Public Revenues Act, 1926 : The Statement of Corporation Investments required by section 3, Finance Act, 1947. A Statement of the Public Debt of New Zealand and summary of the transactions thereof: A Statement of Advances by the Reserve Bank to the Government by way of overdraft: A Statement of Loans guaranteed by the Government. Public Accounts, 1949-50 The Public Accounts comprised in parliamentary return B-l [Pt. I] are compiled on a receipts and payments basis—that is, they include only cash transactions, and transfers in lieu thereof. They take no account of moneys owing to or by the various

B—l [FT. IT]

accounts at the date to which they are made up. In the case of trading accounts such as Electric Supply, State Coal-mines, Working Railways, &c., B-l [Pt. I] is supplemented by full statements prepared on accepted commercial principles. These are submitted to Parliament either in return B-l [Pt. IV] or with relative departmental reports. The account on which it has been customary to calculate the annual surplus, which custom has been continued in respect of the 1949-50 accounts, is the Ordinary Revenue Account, Consolidated Fund. This account records only cash and transfer items, but as the outstandings owing to and by it at the end of each year tend to approximate, such statement gives a fair picture of a year's transactions. A committee appointed to report on the form of Government Accounts in the United Kingdom recommended as recently as February last that the main Exchequer Accounts should continue on a cash basis. A condition to a proper operation of the system, however, would seem to be that receipts and payments are dealt with in a routine way and are neither advanced nor retarded. Optional payments not budgeted for should be delayed until they are included in a budgetary statement. In the opinion of the Audit Office there have been departures from these conditions both in the past and in the year now under review. On the 31st March last Treasury included in requisitions and bank orders presented for Audit countersignature public service salaries which did not fall due for payment until sth April. The following correspondence ensued : 6th April, 1950. The Secretary to the Treasury, Wellington. Payment of Salaries Since the introduction of the fortnightly payments of salary at Ist September, 1944, it has been the practice of Treasury to charge the expenditure in respect of a pay period which included days in two financial years in the year in which the last day of the pay period fell. Expenditure for salaries covering the period 24.3.1949-6.4.1949 was accordingly brought to charge during the financial year ended 31st March, 1950, but Treasury has submitted and the Audit Office has signed issue requisitions dated 31st March, 1950, which include pay for the salary period 23.3.1950-5.4.1950. This has resulted in an amount of £453,582 being brought to charge in the financial year ending 31st March, 1950, which in accordance with practice would not have been charged until the next financial year. This Office would be pleased to know on what grounds Treasury considered the charging of this expenditure in the accounts for the financial year ending 31st March, 1950 was justified. (Signed) : Controller and Auditor-General. 30th May, 1950. The Controller and Auditor-General, Wellington. Payment oe Salaries With reference to your memorandum A. 30/38 of the 6th ultimo regarding the payment of salaries which cover periods in two financial years, it is desired to point out that the practice of former years was based on the fact that the salary cheques for the first pay day in April were despatched from the Treasury in April. On this occasion, however, it was essential to despatch the great majority of the cheques on Friday, 31st March, so that they would be available for cashing on the pay day. As the cheques had to be despatched it was considered proper that the bank orders should be submitted for signature on the day the cheques left the Treasury.

B—l [Ft. ll]

Within the next few years it would be essential to bring 27 salary periods to charge in one year {1954 would be the latest) and after considering all relevant facts it was decided to make the change during 1949-50. It is proposed to charge 26 pay periods each financial year for at least the next ten years. Of the total amount included in the past year's accounts, the 5 days pay due in April represented an advance provision of £162,000. This will be a non-recurring expenditure until 1960 at the earliest. (Signed) Acting Secretary to the Treasury. There have been cases where cheques were despatched before bank orders were signed, and whilst it may be as stated by Treasury that only £162,000 related to the amount of salaries to be earned in 1950-51, the fall effect of the transaction was that the 1949-50 accounts were charged with an extra £453,000, of which £406,000 was against Consolidated Fund, Ordinary Revenue Account. An example of an optional payment in excess of the figure budgeted for is seen in the Defence Fund Account. The amount provided for in vote, " Navy," for transfer to this account was £200,000, but actually £300,000 was transferred. The extra £lOO,OOO could have awaited the advent of new budgetary provision. Form of Accounts Except that brief summaries of transactions have been inserted in Social Security Fund and War Expenses Account the form of the accounts and the information given in them show no departure from previous years. Increase and Decrease of the Public Debt The following statement shows increases and decreases of the public debt during the year:— £ s. d. Total debt as at 31st March, 1949 .. .. .. 641,176 ,'740 8 7 Increases during the year —- £ s. d. National Development Loans .. .. 34,399,460 0 0 Securities issued for renewal of loans falling due .. .. .. .. 1,798,116 0 0 36,197,576 0 0 677,374,316 8 7 Decreases during the year— Redemptions .. .. .. .. .. .. 7,302,974 16 3 Total debt as at 31st March, 1950 .. .. .. £670,071,341 12 4 The statement shows that the total public debt has increased during the year by £28,894,601 3s. 9d. of which £15,000,000 was short-term Treasury bills debt and the remainder long-term debt.

B—l [Pt. ll]

Repayment of Public Debt

The following table gives particulars of the amount of securities redeemed under the provisions of section 12 (b) of the New Zealand Loans Amendment Act, 1947, and the Repayment of the Public Debt Act, 1925 (now repealed), and also shows the total cost of redemption :

The balance of amortization contributions unspent at the beginning of the year was £764,023 16s. lOd. and during the year £4,723,040 19s. 9d. was transferred from the Consolidated Fund to Loans Redemption Account. These amounts were used to redeem securities of a nominal value of £5,487,064165. 7d. as shown above, which fell due for repayment in connection with the internal conversion loan of 15th June, 1949. These contributions are calculated on " the defined portion of the public debt," which, in terms of section 3 of the New Zealand Loans Amendment Act, 1947, includes the whole of the public debt except: — (а) Moneys borrowed on the security of Treasury bills issued under section 41 of the Public Revenues Act, 1926 (nil at 31st March, 1950) : (б) Moneys borrowed in respect of Electric Supply Account or State Advances Account, and transfers to either of these accounts from National Development Loans Account: (c) Funded debt owing to the United Kingdom. The following statement shows the amount of loans included in the defined portion of the public debt and those not included as at 31st March, 1950. The amounts set opposite the several accounts, other than Ordinary Revenue Accounts, War Expenses Account (1939), and Loans Redemption Account, represent also the amounts of capital liability due to the Consolidated Fund in terms of section 6 of the National Development Loans Act, 1941.

Nominal Value of Securities Redeemed. Bate of Interest, Total Cost of per Cent. Total to 31st March, 1949. Year 1949-50. Total to 31st March, 1950. Redemptions. £ s. d. £ s. d. £ s. d. £ s. d. Free of interest .. 780 0 0 780 0 0 780 0 0 li 459,417 10 0 459,417 10 0 459,417 10 0 1* 1,760,437 0 0 1,760,437 0 0 1,760,437 0 0 2* 2f 8,316,505 0 0 1,772,795 0 0 10,089,300 0 0 10,089,300 0 0 199,200 0 0 199,200 0 0 199,200 0 0 3 6,351,083 14 8 6,351,083 14 8 6,351,083 14 8 H 636,975 0 0 636,975 0 0 636,975 0 0 H 7,067,676 8 8 7,067,676 8 8 7,067,676 8 8 3f 288,111 7 4 288,111 7 4 288,111 7 4 4 11,995,160 10 6 3,714,269 16 7 15,709,430 7 1 15,697,742 16 2 H 2,104,760 0 0 2,104,760 0 0 2,089,382 5 0 5 5,573,735 0 0 5,573,735 0 0 5,573,181 5 0 5i 1,530,990 0 0 1,530,990 0 0 1,530,972 10 0 5§ 1,033,310 0 0 1,033,310 0 0 1,030,894 12 2 6 2,633,588 9 9 2,633,588 9 9 2,612,292 8 8 49,951,730 0 11 5,487,064 16 7 55,438,794 17 6 55,387,446 17 8

B—l [PT. ll]

Loans included in the defined portion of the Public Debt — Consolidated Fund : Ordinary Revenue Acoount— £ s. d. £ s. d. Greymouth Harbour Board .. .. .. 148,000 0 0 War Expenses (1914-18) .. .. .. 50,857,417 8 2 Reserve Bank Exchange Adjustment .. .. 20,000,000 0 0 Bank of New Zealand shares .. .. .. 7,934,365 0 0 British Commonwealth Pacific Airlines, Ltd. .. 541,935 9 8 British Petroleum Co. of New Zealand, Ltd. .. 1,275,000 0 0 Dominion Salt, Ltd. .. .. .. .. 50,000 0 0 Housing Account .. .. .. .. 50,850,952 2 5 Land Settlement Account .. .. .. 22,696,844 4 5 Linen Flax Corporation .. .. .. .. 300,000 0 0 New Zealand National Airways Corporation .. 1,500,000 0 0 Public Works Account— Public Works (including Railways and Post and Telegraph) .. .. .. .. 219,073,235 7 0 Housing Construction .. .. .. 6,479,768 3 6 State Coal-mines Account .. .. .. 5,331,614 13 0 War Expenses Account (1939) .. .. .. 201,525,604 7 1 588,564,736 15 3 Less loans represented by funded debt due to the United Kingdom Government .. .. 24,100,199 10 7 Decrease in Australian debt as a result of New Zealand exchange reverting to parity with sterling .. .. .. .. 150,774 0 0 24,250,973 10 7 564,313,763 4 8 Loans Redemption Account — Securities issued for renewal of loans falling due (not yet applied) .. .. .. 2,763,221 0 0 Amounts received in reduction of various liability accounts and not used for redemption of securities as at 31st March, 1950 .. .. 918,375 10 0 3,681,596 10 0 567,995,359 14 8 Loans not included in the defined portion of the Public DebtElectric Supply Account .. .. .. 43,974,085 6 3 State Advances Account .. .. .. 34,001,697 010 77,975,782 7 1 Funded debt due to the United Kingdom Government .. . . 24,100,199 10 7 Total liability represented by debt as at 31st March, 1950 .. .. .. .. .. .. .. £670,071,341 12 4 Authorization and Control of Expenditure The authorization of expenditure has been governed for many years by an arrangement under which Ministers surrendered their powers to Cabinet, which in turn delegated limited powers of authorization back to Ministers and to Permanent Heads of Departments. The present Government has decided to reduce the detailed work formerly carried out by Cabinet and Ministers. In the words of Treasury, the new arrangement is based upon " indirect control of expenditure through strict adherence to a budget instead of direct Government control in relative detail as heretofore," and the effect generally is to widen greatly the powers of authorization of Ministers and Permanent Heads. An example is the estimated cost for 1950-51 of printing the Journal of Agriculture, £130,500, which has been approved by the Minister, instead of, as formerly, by Cabinet.

B—l [Pt. ll]

The authorization limits for Ministers now vary according to the extent to which the expenditure approaches the routine or is something new, and the limits of authority for Permanent Heads, formerly £5O or £lOO, have been increased in most cases to £5OO and upwards. Although authorization powers have been widened, Treasury hopes to maintain a close control, and detailed instructions to that end have been issued. One feature of these is the requirement that a periodical return of expenditure showing in detail a comparison between actual and estimated expenditure is to be furnished by each Department to its Minister and to Treasury. It is too early yet to make any comment on the success or otherwise of the new arrangements from an Audit point of view, but their sponsors are confident that they will result in greater and not less control of Government outlay. Transfers Between Votes For many years it has been the practice of Departments to transfer from one vote to another the cost of inter-departmental supplies and services. For instance, if the Ministry of Works repaired equipment for the Marine Department the cost would first fall against the Ministry which would recoup it from vote " Marine," and credit it to its departmental receipts. In recent years Treasury considered that, as the preparation and recording of these transfers involved considerable work by many Departments and caused a double appropriation in that the Departments giving the service and the Departments making repayment had both to make provision therefor in their estimates, the transfers should be reduced in scope or discontinued except where trading Departments were affected. The estimates for the year 1949-50, for instance indicated that rents of buildings were to remain as a final charge against vote " Maintenance of Public Works and Services," instead of being recovered from votes of Departments occupying the rented premises. Where the estimates clearly disclose that costs will not be passed on to other Departments the Audit Office has not considered it necessary to raise any question, as Parliament is made aware of the position and can alter it, if it so desires. Treasury has now further instructed all non-trading Departments to discontinue all inter-departmental claims of a minor nature, but it has not defined the amount considered to be covered by its instruction. The Audit Office is of opinion that some general indication should be given in the estimates of the practice Treasury is adopting. It was further proposed that no transfers should be made in respect of supplies and services furnished by any branch of the Armed Forces to any other branch, but the Audit Office submitted that this could easily involve amounts which would obscure the true cost of the various branches Navy, Army, and Air. It was thereupon decided that the transfers for 1949-50 would be proceeded with. No decision will be made in respect of 1950-51 until information is available as to the amounts likely to be involved. Deposits Account, " Miscellaneous " The balance of Consolidated Fund, Deposits Account, Miscellaneous, one of the many individual accounts shown in Deposits Account on pages 32-35 of the Public Accounts, was £1,076,831 at Ist April, 1949.

B—l [Pt. ll]

An analysis of this balance revealed that many amounts which had been held for a considerable period could be disposed of either by payment of the deposit to the person or account entitled to receive it or to a lesser extent by transfer to revenue in accordance with the provisions of section 30 of the Public Revenues Act, 1926. On representations from the Audit Office, Treasury promised to scrutinize the amounts outstanding, and during the year the balance was reduced to £335,351 at 31st March, 1950. Of this sum, £llB,lOB belongs to Regimental Private Funds Trust Account, and £93,586 is held on behalf of the United Nations International Children's Emergency Fund. New Zealand Legation, Paris Early in 1949 formal approval was given to the establishment of a New Zealand Legation in Paris, and to the acquisition of suitable premises. The cost of acquiring these premises was approximately £35,000, and has been charged against vote " Public Buildings," for 1949-50. The cash payment for the purchase has been made from funds amounting to 80,000,000 French francs (approximately £80,000) which are being made available by the Government of France in currency which is non-convertible except as to 15,000,000 francs. This arrangement has been accepted as a full settlement of New Zealand's claim of £158,000 for advances, supplies, and equipment provided for the Government of French Oceania in wartime. A condition attached to the payment of the nonconvertible moneys is that they are to be used to meet expenses in Paris of establishing the New Zealand Legation, and towards educational and cultural purposes. Departmental Accounts Various Government Departments and bodies are required by their governing statutes or under section 57 of the Finance Act, 1932, to present their audited accounts to Parliament, and these are submitted either in their annual reports or in parliamentary paper B-l [Pt. IV]. In the calendar year 1950 all such accounts will be presented up to and including the financial year 1948-49 or later, with these possible exceptions : (a) The Public Service Superannuation Fund, for which the accounts for 1947-48 may not be completed in time for publication. This Fund was merged into the Government Superannuation Fund as from Ist April, 1948, and the accounts of the latter for 1948-49 will not be presented during 1950. This is unfortunate even though subsidies from the Consolidated Fund are based on actuarial considerations of which the financial position is only a part. (b) The Nauru and Ocean Islands Account. Statements of Account in connection with New Zealand's investment in the British Phosphate Commission have not been prepared since 1941, and it appears that they will not be brought up to date until discussions between the partner Governments at present proceeding are completed. (c) The New Zealand Reparations Estates, Samoa. The preparation and audit of the 1948-49 accounts have been delayed, and the balance-sheet may not be available in time for publication.

B—l [Pt. ll]

Interest on Capital Liability Interest on the public debt is payable in the first instance from the Consolidated Fund, Ordinary Revenue Account, and trading accounts with a capital liability to that Account in respect of loan-moneys used by them are chargeable with interest to it. The Minister of Finance has power to fix rates of interest payable and times of payment and may fix differing rates for different accounts or in respect of different parts of the same account. Rates which currently apply are : 3| per cent, per annum in respect of all accounts except Housing Account, which pays 1 per cent, on the first £5,000,000 and 1| per cent, on the balance. During the year the following accounts paid the full amount of interest due : Electric Supply, Housing Construction, Housing, Post Office, and Nauru and Ocean Islands. Part interest only was paid by the Land Settlement Account and the Maori Land Development and Housing Schemes. No interest was paid by the New Zealand National Airways Corporation. In terms of the Finance Act (No. 3), 1943, Section 3, where the Minister is satisfied that sufficient moneys are not likely to be available in any account for the payment of interest he may remit the whole or part of the liability. During the year this authority was exercised as follows : £ s. d. Linen Flax Corporation .. .. 9,613 19 5 State Coal-mines Account .. .. 176,683 5 9 Interest due by Working Railways Account amounting to £2,768,151 13s. 4d. was remitted in terms of section 36 (2) of the Government Railways Act, 1949. Dividends in lieu of interest were received from the Bank of New Zealand, but the undermentioned corporations made no payments : British Commonwealth Pacific Airlines, Ltd.; British Petroleum Company of New Zealand, Ltd.; Dominion Salt, Ltd. Full interest was received on the State Advances Corporation stock which offsets the capital liability of the State Advances Account. Reports and Statements to Parliament In the general information which the Audit Office gives in its annual reports items are sometimes included which could perhaps, if Departments were less diffident, be more properly included in reports they themselves submit to Parliament. There are some transactions which stand alone in the operations of a Department and about which Parliament should be given particular details. There is no specific requirement for the Departments concerned to supply this information, and its appearance in the report of the Audit Office may even be the reason in some cases why they have not done so. One example is the transactions relating to the Moutoa Estate, referred to elsewhere in this report. The accounts are not required to be published. The expenditure, in total, appears in the estimates, but the receipts are included with other figures in B-l [Pt. I], under the description " Departmental Receipts, Agriculture Department, General." The administration of the estate was transferred only recently to the Department of Agriculture.

B—l [FT. ll]

The voyage accounts of the " Pamir " provided a record which was of fairly general interest and which it might have been expected the controlling Department would itself submit. Examples of information which, following Audit representations, will now be published in departmental reports or in parliamentary paper B-l [Pt. IV] include — (1) Labour and Employment Department hostel accounts. (2) Bluff-Stewart Island Ferry Service accounts. (3) Rock Oyster Industry accounts. Accounts of the above are to be presented to Parliament. (4) Maori Land Development Schemes. Statements are to be submitted to Parliament showing the profits or losses on individual schemes. Reference has been made in earlier reports to the purchases by the State of shares in various companies. A statement of corporation investments is returned annually to Parliament in B-l [Pt. I], and accounts of some of the Corporations—e.g., the New Zealand National Airways Corporation —are required to be submitted to Parliament. In the following cases no such requirement exists -vt Share Investment. JName - 31st March, 1950. <• £ British Commonwealth Pacific Airlines, Ltd. .. .. 541,935 British Petroleum Co. of New Zealand, Ltd. .. .. 1,275,000 New Zealand Woolpack and Textiles, Ltd. .. .. 150,000 Tasman Empire Airways, Ltd. .. .. .. 375,000 Even though the New Zealand Government may not hold all the shares in any company it would seem to be desirable that when large amounts of capital are involved Parliament should be advised regularly of the results of operations. Income-tax Arrears The Audit Office has seen a statement of the total arrears of income-tax as at 31st March, 1950, and has been advised that, arising from shortage of staff, t&e position is not as satisfactory as the Land and Income Tax Department would like it to be. The Department does not now publish annual accounts nor make public the amount of outstandings. The United Kingdom Committee on Government accounts already referred to in this report recommended in respect of the corresponding Department coming within its review, the Inland Revenue, that it should publish an annual statement of revenue on a receivable-payable basis and of outstandings at the end of each financial year. Appropriation Authority Under the Public Revenues Act, 1926, the Audit Office has a duty to satisfy itself that expenditure has been provided for by proper appropriation, but what constitutes such appropriation may be a matter of opinion. A case in point concerned the publication of booklets relating to the activities of certain Departments. The principal provision for the cost of information and publicity was contained in the vote of the Prime Minister's

B—l [Pt. ll]

Department, but as regards these booklets or pamphlets the intention was that each Department should pay for its own publication. The printing cost of one booklet > " Housing in New Zealand," £1,334, was charged against a specific item vote, " Housing Construction." The cost of another, " The Maori To-day," £1,562, will be charged against a specific item in the estimates for the Maori Affairs Department for the year 1950-51. The provision in each of the foregoing cases was satisfactory. The State Hydro-electric Department, however, considered that the cost of a brochure detailing and illustrating its activities, amounting to £751, was covered by a general item for operating and administration costs on vote, " Electric Supply." The Audit Office was not wholly satisfied that this was so, but on being informed that the Treasury approved the charge it decided not to continue with its objections. Several further items of a similar nature such as films were noted relating to several different Departments, the costs being charged against merely a general item on the relative vote. It appears to the Audit Office to be desirable that provision for expenditure of this nature should be particularized in the estimates, at least to the extent of being shown therein under some such description as " publicity costs," and it trusts that this will be done in future. Another question of suitable appropriation arose in the circumstances stated hereunder. A southern County Council which maintains its roads under somewhat adverse topographical and climatic conditions has found itself in financial difficulties, and over the last five years has received State aid averaging £ll,OOO per annum. These grants have been charged to vote, " Maintenance of Public Works and Services," item " Restoration of Roadworks, Bridges, &c.," or item " Maintenance and Repairs to Roads." Neither of these items has always been suitable, as in one year part of the Council's deficit was caused by expenditure on controlling foreshore erosion and on carting domestic water during a dry spell. Moreover, the appropriation items appear to provide for assistance with specific works rather than for general assistance. If a Council is unable to operate on the same terms as other Councils and must seek special State assistance from year to year it would seem to be desirable that Parliament should be aware that it is providing money accordingly. This view has been represented to Treasury, but it has not signified that it is prepared to accept it. Compensation Claim, Aorangi Block Upwards of one hundred years ago a block of Maori land in Hawke's Bay, known as Aorangi, came under the control of the Crown and was disposed of to settlers. During the past eighty years the Maoris have maintained that the block was not included in Hawke's Bay lands purchased by the Crown, and that the Crown was therefore never the rightful owner. Several Committees and Commissions have investigated the claim of the Maoris, and in 1920 a Royal Commission found in favour of the Maoris, but made no recommendation as to compensation.

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Legislation was passed authorizing the Maori Land Court to ascertain the beneficial owners and report on reasonable compensation, and the Court reported in 1928, but no action ensued. Thereafter section 21, Maori Purposes Act, 1935, was passed authorizing the appointment of a Commission to determine the compensation, subsection (4) providing " The amounts recommended by the Commission . . . shall not become payable until each shall have been approved by the Minister of Finance and shall have been appropriated by Parliament for the purpose." Subsection (6) provided for any compensation payable to be paid to a Maori Land Board for distribution to the beneficiaries. No action was taken under the section. Towards the end of 1949 representatives of the Maoris and the Government agreed on £50,000 as compensation, consisting of—> £ Compensation in Maori Land Court's report of 1928 : 7,200 acres at 225. 6d. per acre .. .. .. 8,100 Simple interest at 5 per cent, for eighty-nine years (say) .. 36,000 Expenses to 1928 .. .. .. .. .. 2,500 Expenses to 1949 (say) .. .. .. .. 2,500 Total (say) .. .. .. .. £50,000 Cabinet approved settlement at £50,000, and an authority to charge that sum against Unauthorized Expenditure Account was submitted to the Audit Office, the money to be paid to the Maori Trustee, who was to distribute part to the " owners " of the land and to hold the balance in trust for their benefit. In view of the provisions of the above-mentioned Act of 1935, which required that the compensation be determined by a Commission, be appropriated by Parliament, and be paid to a Maori Land Board, the Audit Office was not prepared to pass payment and was fortified in this attitude by the concurrence of the Solicitor-General. The matter is under further consideration. Coal-mines Acquisition The State's investment in coal-mines was increased during the year, the largest purchases being the assets of Renown Collieries, Ltd., and Linton Coal Co., Ltd. In these cases the agreements involved the purchase of the companies' shares. The agreed price for the Renown Collieries shares was £186,000, and shareholders were given the option of accepting cash or New Zealand Government Stock. As at 31st March, 1950, £158,418 2s. had been paid in cash and £12,455 in the form of stock, leaving £15,126 18s. to be paid when share certificates are surrendered. All the shares in Linton Coal Co., Ltd., were purchased for £159,216 Bs. 3d. paid in cash.

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Two companies—Taupiri Coal Mines, Ltd. (purchased, in 1948-49), and Renown Collieries, Ltd.—are operated by directors appointed by the Government. Receipts and payments are controlled by Mines Department officers, the moneys being paid to or drawn from the companies' bank accounts, and not passing through the Public Account. The Audit Office has been informed that it is proposed to introduce legislation similar to the Westport Coal Company Act, 1948, to dissolve these two companies, as dissolution has hitherto been delayed through difficulty in arranging for payment of some few shares. The expenditure incurred in acquiring shares in coal-mining companies which retain their legal entity is shown in the " Statement of Corporation Investments " at page 65 of the Public Accounts B-l [Part I]. In purchasing the shares of Taupiri Coal Mines, Ltd., and Renown Collieries, Ltd., the Government acquired 53,333 fully-paid £1 shares in Waikato Carbonization, Ltd., giving it a two-thirds interest estimated to be worth some £130,000. Shares in Coal Products, Ltd., a company formed to handle slack coal in the Southland mines area, were acquired when the assets of Linton Coal Co., Ltd., and other companies were purchased. The company is still legally in existence, but is operated by the Mines Department. The Mines Department still holds company shares to a nominal value of £41,106 and debentures nominally worth £13,825 acquired with the assets of Westport Coal Co., Ltd. The Audit Office has been informed that these and similar investments are to be sold and the proceeds credited to State Coal Mines Account. Holdings of New Zealand Government stock will probably be cancelled, and the Account's loan liability correspondingly reduced. The disposal of shares held in Waikato Carbonization, Ltd., will depend upon Government policy. The shares of Coal Products, Ltd., have a nominal value only. Salary Payments to Ministers Under the Civil List Act, 1920, a fixed annual sum is permanently appropriated for the salaries of Ministers of the Crown. The amounts of salaries paid are set out in parliamentary statement B-l [Part I], and the 1949-50 statement shows that an overlap of salary occurred on 13th December, 1949, in that both incoming and outgoing Ministers received remuneration for that day. The attention of the Department of Internal Affairs was drawn to this matter before the duplication in payment occurred, but the view was expressed that as duties were carried out by both incoming and outgoing Ministers on the one day it would be unreasonable to deny payment to either. The position therefore is that the appropriation fixed by statute has been exceeded. The amount involved is under £5O, but reference is made to the point so that the explanation is available to any one scrutinizing the statement and noting the duplication of dates.

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Remuneration of Overseas Officers The fixation and, computation of the remuneration of New Zealand Government officers seconded temporarily overseas has over several years become a somewhat intricate process due to such factors as alterations in exchange rates, salary scales, taxation liabilities, and the introduction of rent and family allowances. Another factor is that salary deductions such as superannuation and social security charge are paid in New Zealand and only net remuneration paid overseas. The final result is that changes in remuneration are often involved and call for close and accurate liaison work between home and overseas offices. Several types of allowances, as indicated above, are paid in order to cope with different costs and standards of living, and salaries shown on the estimates are no indication of the total remuneration of officers. A matter that has been engaging the attention of officers of the Department of External Affairs and the Public Service Commission for some time is the reimbursement of hospital and medical expenses to such overseas officers as are liable for the payment of social security charge. The broad principle of the decision arrived at is that as from Ist November, 1949, the Government will accept as official charges two-thirds of the medical, hospital, and maternity charges incurred by these overseas officers. Moutoa Estates The administration of these flax-growing areas was taken over by the Department of Agriculture from the Industries and Commerce Department in March, 1949. Receipts and payments for the two years ended 31st March, 1950, according to Departmental records, were as follows : Year. Receipts. Payments. £ £ 1948-49 .. .. .. .. 8,602 43,101 1949-50 .. .. .. ..13,190 46,119 According to accounts as at 31st March, 1948, prepared by the Department of Industries and Commerce, the bulk of the expenditure on the estates to that date had been capitalized at £302,000, nearly all from loan-moneys. In the accounts which are to be prepared by the Department of Agriculture, but which are not required to be published, this capitalization will be reduced to £lOO,OOO as at Ist April, 1949, based on the estimated earning power of the estates, and this will assist the Department to balance the estate revenue and expenditure. This would not be possible if interest on capital were based on the higher figure. To further aid in this matter expenditure relating to flood prevention and damage will be charged to a special river protection and maintenance account. The Department's records show that economies have been effected in the employment of labour on the estates, and that an increase may be expected in the revenues derived from sheep-grazing. Revenue has been further increased by levying as from Ist April, 1949, a charge of 10s. per ton on green leaf supplied to New Zealand Woolpack and Textiles, Ltd., in addition to the royalty of a similar amount.

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National Film Unit and National Publicity Studios An Audit Inspector who recently examined, the above-mentioned Sections of the Prime Minister's Department for the year ended 31st March, 1950, has submitted the following statement: —• National Film National PublicityUnit. Studios. £ £ The gross payments for the year were .. .. 92,314 43,614 The amounts spent on the purchase of capital assets were .. .. .. 20,482 5,622 Therefore the net operating payments were 71,832 37,992 Receipts from sales were received from the following sources — N.F.U. N.P.S. £ £ Government Departments 13,458 8,625 Other sales .. .. 1,862 539 Overseas sales .. .. 134 6 " Weekly Review " .. 5,178 20,632 9,170 The balances, representing the net operating payments borne by the Department for the year were .. .. .. .. £51,200 £28,822 The Government Departments which made the payments shown above were Education, £6,100 ; Tourist, £4,392 ; Agriculture, £3,286 ; Transport, £2,024 ; and various others to the value of £6,281. Broadcasting Service Costs of the National Orchestra are charged against two appropriations mentioned hereunder: — (1) A permanent appropriation is contained in section 13 (1) of the Broadcasting Act, 1936, which reads as follows : There shall from time to time, without further appropriation than this section, be paid out of the Broadcasting Account the moneys following : (a) All moneys required to be expended for the purpose of providing programmes to be transmitted from broadcasting stations operated by the Minister or for the purpose of the exercise of the powers conferred on the Minister by this Act, not being salaries, allowances, or expenses payable to the Director, or to officers of the Public Service. The major expenses of the Orchestra, such as salaries, overtime, and travellingallowances, are treated as being covered by this provision, and as it contains a permanent appropriation such costs do not come under the same review by Parliament as they would if they were required to be charged against the annual vote.

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(2) The annual vote, " Broadcasting " bears certain administrative costs, such as rent and cleaning. These appear in the annual estimates with administrative expenses of the other branches of the Broadcasting Service. There is a Concert Section of the Service which controls the business side of concerts, whether or not the orchestra participates therein. Fees and other costs of artists and direct costs of concerts are charged against the permanent appropriation above mentioned, and the salaries of officials attached to the Section and other administrative costs are provided for on the annual vote, " Broadcasting." Members of the Orchestra and the concert artists are not engaged nor concerts promoted solely for broadcasting purposes. Section Bof the Statutes Amendment Act, 1947, empowers the Minister of Broadcasting " to organize and present concerts and entertainments for the general public, notwithstanding that the concerts or entertainments may not be broadcast," and in fact a few performances of the Orchestra and of certain artists were not broadcast. A tour of two concert artists proved costly to the Service, the expenses totalling £5,600 and the proceeds £1,200. A report in June, 1949, on the estimated income and expenditure of the whole Broadcasting Service indicated a probable loss in the accounts of the National Division for the year 1949-50, and suggestions were made to avoid such a result. One of them was that the ruling rates of depreciation of assets in the accounts be reduced. Investigation showed that the provision in the past had been generous, as the capital cost of much of the technical equipment, masts, &c., still in use had been fully covered. The engineers of the Service reported that the rates could safely be modified,' and Treasury and the Audit Office agreed. The consequent reduction for the year 1949-50 is estimated to amount to £21,000. Post and Telegraph Department Profits In the three financial years 1947-48, 1948-49, and 1949-50 the amounts received by Ordinary Revenue from Post Office earnings (including savings bank) were respectively £1,168,814, £1,109,967, and £997,928. At 31st March, 1949, the latest profits in respect of which payment had been made were part of the 1946-47 earnings of £1,397,928, to an amount of £400,000. At the same date one year later the balance of £997,928 had been paid over, but the whole of the earnings for 1947-48 were still in the possession of the Post Office. They had, however, shown a sharp decline from the previous year to £657,772, and in 1948-49 there was & further decrease to £304,754. Post Office Services for Other Departments When a falling off in Post and Telegraph Department earnings was mentioned in the press some months ago it was suggested that the Department made no charges for services rendered for other Departments and that its revenue could fairly be augmented by ma,lcing them in future. The suggestions that charges were not made were far from the facts, as a reference to the Department's accounts would have shown. The amounts collectable from other Government Departments were in 1946-47, £296,715, in 1947-48, £321,833, and in 1948-49, £407,425.

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There are, however, various minor services performed by the Post Office without charge, and it has advised this Office that " the whole ground of recoveries from other Departments is being reviewed to determine what charges should be made in the light of increased costs and altered circumstances." Swamp Land Drainage Over many years the State has expended very large sums on swamp land drainage and flood prevention, and it is still interested in draining further areas and in maintaining existing drains. In earlier years moneys were raised for these purposes under specific statutory authority and were credited to such separate accounts within the Public Account as the Waihou and Ohinemuri Rivers Improvement Account, the Swamp Land Drainage Account, the Hauraki Plains Settlement Account, and the Rangitaiki Land Drainage Account. These separate accounts were abolished some years ago, but balance-sheets in connection with the three last mentioned are still prepared and published in parliamentary paper B-l [Pt. IV]. The Minister of Lands is empowered to levy rates to cover part of or all of the capital and maintenance costs of the drainage works. In certain districts repayment of the full costs have proved to be beyond the capacity of the ratepayers, and substantial concessions were made by law, affecting both capital and maintenance rates. Further, although it is fairly clear that the Legislature intended the rates to cover all maintenance costs, subsidies have been provided from public moneys to meet part of them. For instance, a payment has been made in the last two years from vote, " Soil Conservation and Rivers Control," towards the Hauraki Plains maintenance costs, which costs in terms of section 12 of the Hauraki Plains Act, 1926, could, and possibly in law should, Mve been charged in the rates. Some time ago the Audit Office raised this matter, but did not press an objection on being informed that the rates must be considered to be at their maximum and that expenditure from which the ratepayers had been relieved would be specifically approved by Cabinet. Arrears of rates are not large compared with the annual charge except in the Waihi and Poukawa areas. In the former, outstanding rates at 31st March, 1950, total £1,990, about equal to five-sixths of a year's charge. Most of this refers to the rating period 1929-36 and is uncollect able. It will be written off. As regards Poukawa, the Audit Office inquired from the Lands and Survey Department whether any worth-while action could be taken to collect arrears totalling £6,504, approximating five years' rates, and the Department replied that a block of land on which most of the rates were owing was under the control of the Maori Trustee, with whom negotiations were proceeding. The rates appear to be well in excess of the value of the block. Westport Harbour The Westport Harbour Board was established by an Act of that name in 1884 and was endowed with the net revenue, including coal royalties, from certain lands of the Crown known as the Buller Coal Field Reserve and the Westport Colliery Reserve, and the net profits of a local railway. 2

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The Board became financially embarrassed and was abolished as from Ist April, 2921, by the Westport Harbour Act, 1920, the Government taking over all assets and liabilities. Thereafter the operations of the harbour itself were entrusted to the Marine Department. The revenues from the local railway were to be retained by the Railways Department. An Income and Expenditure Account and Balance-sheet relating to the harbour are prepared and published annually in parliamentary paper B-l [Pt. IV]. In 1947 the Audit Office drew Treasury's attention to the substantial operating losses in the accounts of the harbour, and suggested that remedial action be considered. Treasury replied that the bulk of the revenue was derived from handling coal, that an increase in harbour charges would affect the price of coal and the subsidy thereon, and that any action in the matter should await the findings of a committee of engineers set up to report on West Coast harbours. The Committee's report indicated the necessity for continued costly dredging and capital works, and it seems clear that the annual deficits will increase unless action is taken. Further, the acquisition of the Westport Coal, Co., Ltd., by the Crown terminated the harbour's revenue from coal royalties as it was ruled that the Crown could not pay royalty to itself. The New Zealand Forest Service claims also that the harbour loses the forest revenue from part of its endowments in terms of sections 66 and 67 of the Forests Act, 1949, which provide for the administration of certain timber-bearing land in the Buller Coal Field Reserve by the Forest Service. Further inquiries are being made by the Audit Office in this connection. Under these two Acts the harbour stands to lose possibly up to two-thirds of its former £15,000 endowment revenue. The operating loss for the year ended 31st March, 1949, in the latest annual accounts prepared at the tinle of writing this report, was £34,462, after taking into account £5,500 interest charges and £9,900 endowment revenue. Hostels and Workers' Camps A number of Government Departments provide accommodation for staff or for special sections of the community —e.g., immigrants, coal-miners, Government cadets, and industrial workers required to live away from their homes. The net cost of providing this accommodation is substantial, but little relative information has so far been made readily available. The Audit Office would be pleased to hear of an authoritative direction that all hostel accounts should be prepared in a form approved by Treasury and published in departmental reports. There is a need for uniform stores control and accounting procedure, and for the compilation of enough statistics to enable comparisons of costs to be made. In January, 1950, Treasury made a review of the operations of a group of hostels and camps, but it did not purport to be complete, and new hostels have since been opened. The review covered thirty-eight institutions which were operated by the Departments of Labour and Employment (22), Railways (7), Post and Telegraph (6), Health (2), and Maori Affairs (1). The figures obtained by Treasury were partly estimates

B—l [Ft. ll]

-and were not claimed to be exact, but they indicated that, after crediting all receipts, the cost of providing accommodation for 2,700 people exceeded £lOO,OOO per annum. To reach this result depreciation and interest on capital were included, but the costs ■of Departmental administration and accounting services were not. The Audit Office has been informed that in one Department an increase in charges has been decided on since Treasury's review. Charges made by the other Departments are still under consideration. Following a direction from Treasury, the Labour and Employment Department is preparing hostels and camp accounts for inclusion in parliamentary paper B-l [Pt. IV]. There has been delay in arriving at a proper valuation for some of the assets, but accounts up to 31st March, 1949, are now being audited in district offices. Those for the year •ended 31st March, 1950, are in course of preparation, and it is unlikely that they can be completed and audited in time to be published this year. Stores : Defence Forces Raticming.—Returns submitted by the Armed Services have been examined. A good standard has been maintained by Army but Air has left something to be desired. The latter Department has however given an assurance that steps are being taken to improve the unsatisfactory position. Army The majority of Army stores depots and camps have been inspected within the last year either by Audit or Army Department Inspectors. In most cases the control and accounting was found satisfactory, and any matters requiring attention were dealt with by the Department with reasonable despatch. The considerable increase in activities due to the Compulsory Military Training Scheme has thrown some of the stores accounting into arrears. Air Working parties are still engaged at stations in adjusting store ledger cards to •actual stocks. Normally a deficiency remaining after the setting off of surpluses against ■deficiencies under related heading is written off, but the number of items included in the working parties' reports showing either surplus or deficient is so great that Audit is of the opinion that the work involved in preparing applications to write off is not justified. This matter has been taken up with Treasury. The Mangaroa Stores Depot was closed during the year, and stocks were transferred to other depots. Here also many ledger cards showed discrepancies, and Treasury and Audit agreed that no useful purpose would be served by requiring the Department to take write-off action. Navy The position is not satisfactory, and there does not appear to be any prospect of its being made so within a reasonable period.

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General Owing to the staff position of the Audit Department it relies mainly on the work of departmental Inspectors so far as military stores are concerned. All reports furnished by these Inspectors come under its notice. Services by Army Personnel According to departmental records farmers still owe £3,187 for Army transport and labour supplied for harvesting and other farm work during the war period. Collections since Ist April, 1949, have amounted to £1,247, and £535 has been written off on grounds of hardship. The Audit Office has been informed that legal action is to be taken against unresponsive debtors. Occupation Force in Japan During the last financial year further claims amounting to £40,472 were preferred by the Australian authorities against the New Zealand Government for its share of expenditure charged to the British Commonwealth Occupation Force " Pool Account." In these claims, which adjusted charges for expenditure made but not previously debited to the Pool Account, credit has been given for the sum of £32,617 in respect of the cost of maintenance supplies forwarded direct to Japan by the New Zealand Government. An additional credit of £158,257 was allowed in respect of New Zealand's proportion of the gross proceeds from the sale of surplus yen held by the Force in Japan, resulting in a sum of £117,785 being received into War Expenses Account. Disabled Servicemen's Re-establishment League (Ine.) This incorporated society came into existence to provide for the needs of disabled veterans of the war of 1914-18, and it has acted as an agent of the Rehabilitation Board in respect of disabled men from the 1939-45 war. The accounts of the League are audited by a firm of public accountants on behalf of the Audit Office. Land, buildings, plant, and motor-vehicles valued at some £260,000 have been provided out of the Public Account either by way of monetary grant or rent free. Grants to meet administration expenses have also been made and interest-free loans to provide for working capital. Cabinet decided to convert such interest-free loans, which totalled £88,400, into " free grants," and the Audit Office inquired from Treasury whether the amounts should be included in the schedule of items written off the Public Account under the Appropriation Act. Treasury was of opinion that no useful purpose would be served by such inclusion, as the loans could have been turned into grants in Treasury's books by a transfer between the two relative items in the War Expenses Account, and there would then be no reason for writing them off charge. The Audit Office did not question the matter further, being content to refer to it here. Loans to Industries In terms of section 29 of the State Advances Corporation Act, 1936, the Corporation may, with the approval of the Minister of Finance, make loans for the development of any industry being carried on in New Zealand or for the establishment of any new

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industry. The same section requires that the Minister of Finance shall guarantee the Corporation against loss to it in respect of any of these loans. As shown on page 71 of the public accounts, the relative amount loaned at 31st March, 1950, was £841,657 2s. lOd. The principal borrower was Tasman Empire Airways, Ltd., to an amount of £505,000 and Milk Treatment Corporations accounted for a further £225,000. It may not be altogether clear that ventures such as the foregoing involving £730,000 were contemplated when the section became law, and as the guarantees in question can be met without further appropriation than is provided in the section a very heavy disbursement might be required to be made and would not need to be submitted to Parliament for its approval. Unless a hoped for improvement eventuates the contingent liability of half a million pounds in respect of Tasman Empire Airways Ltd., may become one which has to be met by the Government. Linen Flax Industry It was mentioned last year that the liquidation of the assets of the Linen Flax Section of the Industries and Commerce Department had been completed and that the Audit Office had certified a statement showing that the capital loss was £593,646 16s. Id., of which the United Kingdom Government's share was £523,436 3s. lid. Against this a sum of £2,504 16s. 7d. was due to that Government as its share of trading profit for the period ended the 31st December, 1947. Treasury recommended that in order to facilitate a final settlement a sum of £500,000 should be accepted in full discharge of the amount due to New Zealand. Cabinet approved, and a claim on the United Kingdom Government for this sum was made through the High Commissioner for New Zealand, London, early in August, 1949. The Audit Office has noticed that collections of inter-governmental claims tend to be casual even when considerable .amounts are involved. It might, for instance, have been expected that this claim for so useful a sum as £500,000 would have been closely, even though very tactfully, pressed. But it was not until November, 1949, that the High Commissioner, London, advised that he was unable to report any progress respecting the claim submitted three months before. In April, 1950, five months later, Treasury asked for further information, but no reply had been received in another two months, when Treasury again wrote saying that " since the matter is one of importance will you please advise the current position and estimate when finality can be expected." The accounts of the Linen Flax Corporation of New Zealand, which now controls the industry, have been audited to 31st December, 1949, and disclose a loss for the year ended on that date of £48,800. State Interests in Air Services Reference was made in last year's report to capital investments by the State in various air services and to amounts paid to offset operating losses incurred. During the year just ended further capital investments totalling £516,935 were made from National Development Loans Account, while operating losses amounting to £389,127 were paid from Unauthorized Expenditure Account and £152,787 from vote, " Civil Aviation and Meteorological Services." Some details of the various payments are set out hereunder. 3

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New Zealand National Airways Corporation. —Additional money provided during the year amounted to £275,000 bringing capital and advances to £1,500,000, which is the total authorized by sections 23 and 24 of the New Zealand National Airways Act, 1945. The net operating loss on internal air services for the year ended 31st March, 1949, was £243,318, and this sum, together with £lOO,OOO on account of an anticipated loss for the year ended 31st March, 1950, was paid to the Corporation from Unauthorized Expenditure Account. From that account the Corporation was also paid £45,809 to offset the loss made during the year ended 31st March, 1949, on the Pacific Regional Services, which it operates. British Commonwealth Pacific Airlines, Ltd. —During the year an amount of £241,935 (£300,000 Australian) was paid from National Development Loans Account to meet an authorized increase of capital, bringing the total paid up capital of the company to £2,000,000 (Australian), of which New Zealand has a 30-per-cent. share. In terms of an agreement, estimates of operating losses of the company are considered by a committee of representatives of the Governments owning shares, and as a result of this committee's recommendations the following amounts were paid: — on £ 48,387 .. .. .. Year ended 30th June, 1949. 36,000 .. .. .. Nine months ended 31st March, 1950. 38,400 .. .. .. Year ended 31st March, 1951. Tasman Empire Airways, Ltd.—ln terms of a recommendation of the representative committee previously referred to, an amount of £30,000 was paid to the above company, being New Zealand's share of the sum estimated to be required to offset operating losses for the year ended 31st March, 1950. This amount and those paid to British Commonwealth Pacific Airlines, Ltd., were charged to vote, " Civil Aviation and Meteorological Services." South Paeific Trunk Air Routes The South Pacific Air Transport Council, consisting of representatives of the Governments of the United Kingdom, Canada, Australia, New Zealand, and Fiji, is charged with the promotion of the development of Commonwealth civil air communications in the South Pacific and on the main trunk air routes traversing that area. At present the New Zealand Government is concerned with administering the civil airport at Nadi, Fiji, on behalf of the Council under an agreement whereby the net costs are met by the United Kingdom, Australia, and New Zealand. These are recorded by the Air Department in New Zealand and are audited by the Audit Office. The records for 1948-49 in Fiji maintained by the New Zealand Air and Works Departments were also examined by the Audit Office and the Ministry of Works. It was found that the stores accounting by the Air Department in New Zealand and in Fiji was in arrears. A considerable quantity of stores purchased from the United States

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Government wlien it handed over the control of Nadi at the end of 1946 has not yet been accounted for, and work, comprising maintenance of equipment, done in New Zealand on account of Nadi, possibly of considerable value, has not been costed and brought to charge. The costs so far assessed for 1948-49 and apportioned amongst the three partner Governments of the Council amounted to some £200,000, of which £60,000 remains due to New Zealand at date of this report. Dominion Salt, Ltd. Section 3 of the Finance Act (No. 2), 1948, empowers the Minister of Finance to acquire shares in a company formed for the producing, storing, and selling of salt, and in terms of this section the Government decided during the year to invest in a company already formed to produce salt by solar evaporation at Lake Grassmere in Marlborough. The company had expended a considerable sum in preparing the area for production, and, requiring additional funds, it asked the Government for assistance. To obtain further information concerning this project the Government invited an overseas world authority to advise on the possibilities. His report stated that, given proper planning of future development and efficient management, the area had excellent prospects. Satisfactory reports were also obtained from departmental officers regarding the result of capital expenditure already made. Consequent upon the Government's decision to provide additional capital, the existing company was reconstituted with a capital of £300,000, divided into 150,000 £1 ordinary shares to be held by the private interests represented in the company before re-constitution, and 150,000 £1 cumulative preference shares, carrying a dividend rate of 4 per cent, free of tax to be issued to the Government. The private interests have received 125,000 paid-up £1 ordinary shares and a cash payment, together equalling the expenditure incurred by them prior to the Government's entry into the business. This expenditure was certified by public accountants to be £137,335 2s. Bd. Calls on the Government amounting to £50,000 were paid during the year from National Development Loans Account in terms of an appropriation contained in the legislation already mentioned. East Ceast Farmers' Fertilizer Co., Ltd. On 25th January last the Government decided to subscribe for 30,000 £1 shares in the East Coast Farmers' Fertilizer Co., Ltd., and to promote empowering legislation as elsewhere mentioned in this report. The objects of the company are to erect within the Provincial District of Hawke's Bay a modern works for the .manufacture of fertilizers. The Government's capital contribution has been calculated on the basis of five £1 shares for each ton of superphosphate estimated to be used annually on the East Coast Crown lands. A payment of £7,500, representing ss. per share on application, was made to the company prior to the end of the financial year, and charged to the Unauthorized Expenditure Account.

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Charter of s.s. " Atlantis " In 1947 the New Zealand Government accepted an offer from the British Ministry of Transport of the use of " Atlantis " for a minimum of two voyages with immigrants to New Zealand. No formal charter was drawn up, but it was agreed in discussions and by correspondence that New Zealand would bear certain costs of converting the vessel from a wartime to a peacetime use, and the net cost of the voyages from the United Kingdom to New Zealand and return. No charge was to be made for interest and depreciation. The ship was converted for passenger use before the first voyage, and the passenger accommodation was increased before the second ; New Zealand's share of the total cost for these alterations being £(N.Z.)17,500. After the second voyage in 1948 the ship was subject to a major survey, and the passenger accommodation was increased from 616 to 900. In January, 1950, the Ministry submitted an account for £479,885 for these two items; an amount out of all relation to what the correspondence suggested might be the cost. The Ministry desired a settlement in the financial year 1949-50 for this work and for the balance due in connection with the voyage costs, and a payment of £500,000 was made in March, 1950, without prejudice to any adjustment that may be mutually agreed upon when the costs are reviewed. The ship carried immigrants, about half of whom paid £lO each towards the passage, and some other passengers who paid fares. The principal reason for chartering the ship, however, was for immigration purposes, and the cost per immigrant to the Public Account for the first five voyages, for operating expenses alone and after allowing for all cash collections from passengers, varied from £(N'.Z.)337 to £(N.Z.)159 per voyage. The larger figure refers to the first voyage, before the alteration of the exchange rate and before the substantial increase in passenger accommodation. Inclusion of survey and conversion costs would, of course, greatly increase these figures, but they cannot fairly be dealt with until it is known how many immigrants the ship eventually carries. Marketing Department The activities of the former Internal Marketing Division have been continued by the Marketing Department as reconstituted by the Marketing Amendment Act, 1948. The Department is concerned with tropical fruits, oranges, apples and pears (as agent for the Apple and Pear Marketing Board), lemons, tea, honey, eggs and egg products, tinplate, fertilizers, &c., and operates three food-processing factories. Milk Section. —The Department has also taken over the functions of the former Milk Marketing Division, the object of which was to improve the supply and distribution of milk in urban areas. It operates the National Milk Scheme, under which producers of milk for town supply receive a guaranteed price. Under this scheme if the total guaranteed or fixed costs and charges of producing, processing, and delivering the milk to consumers exceed the permitted selling prices the difference is met by a subsidy from vote, " Stabilization." Subsidy is claimed from the Department by local producer organizations and treating houses, which conduct the transactions with individual

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producers and distributors. The calculation of subsidy is by no means simple, and officers of the Marketing Department who have carried out inspections of the records of a number of individual distributors and producer organizations have effected fairly considerable recoveries of amounts overclaimed. The records of most of the operators concerned in the scheme, however, have not yet been examined. Payments from vote, " Stabilization " for milk subsidy amounted to £1,947,091, in the financial year ended 31st March, 1950. Several privately-owned milk treatment stations have been acquired by the Department in recent years, the intention being to carry out necessary improvements and then to dispose of each undertaking to a local organization. The costs of purchase and subsequent improvements have been borne by the Consolidated Fund —formerly from vote, " Agriculture," but lately out of vote, " Milk Marketing —which has in turn been credited with the proceeds of the sale of the assets. Four stations have been sold by the Crown—two to Milk Treatment Corporations set up for the purpose, one to a Borough Council, and the other to a registered company. At 31st August, 1949, the balance-sheet date of the Milk Section, five stations were managed by local Milk Corporations or Borough Councils on behalf of the Department, four were operated by the Department itself owing to the failure of efforts to induce local interests either to purchase or manage them, and in Christchurch a vendor company was running the business under a directorate appointed by the Crown pending sale to the Christchurch Milk Co., Ltd. The operations of these stations for the year ended 31st August, 1949, resulted in losses amounting to £19,088 before charging interest on capital and depreciation. These losses were off-set by a profit of £14,835 made by the Auckland Milk Treatment Corporation during a period of management on behalf of the Department, and by hire charges on assets leased to this Corporation, £5,459. To the net profit to the Department of £1,206 on all stations should be charged interest on capital, £20,980, and depreciation, £31,122, making a loss of £50,896 in the accounts for the year. The accounts of all stations, with the exception of those of the Christchurch company, are audited by the Audit Office. Two instances came under notice where, in the early operations, substantial credit was extended to purchasers of milk, and the Department has been unable to collect the amounts due. In one it was obliged to write off £6BO during the year under review, the debtor having filed in bankruptcy, and in the other it stands to lose something over £4OO. Apple and Pear Marketing Board The above-named Board has appointed the Marketing Department its agent to purchase fruit from growers and to arrange for storage and distribution. Periodically the proceeds of sales are paid to the Board, and the Department is reimbursed for its costs and expenses. Section 16 of the Apple and Pear Marketing Act, 1948, requires the Minister, after consultation with the Board, to declare the average price to be paid to growers for each current season, and for the 1949 season such price was fixed at 9s. 6d. per case, exclusive of packing and other allowances. The actual amount paid to growers

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averaged 9s. 5-99 d. per case. The accounts for the first year of the Board's existence, ending on 30th November, 1949, show that the amount paid to growers, together with the cost of marketing the fruit and the administration expenses of the Board, exceeded the amount realized from sales by some £37,000. In anticipation of a deficit the Board had earlier obtained the consent of the Minister of Finance, in terms of section 23 of the Act, to the granting by the Reserve Bank of an overdraft to an amount of £43,000. It has not yet been decided how or when this overdraft will be liquidated. In this connection it may be mentioned that section 23 (b) authorizes the Minister of Finance to guarantee repayment of the overdraft with the Reserve Bank, but no such guarantee has in fact been given. In terms of section 27 of the Act the accounts of the Board have been audited by the Audit Office. Profits From Wool Disposal In terms of clause 5 of Part 111 of the Disposals Plan set out in the schedule to the Wool Disposal Act, 1945, the ultimate balance of profit or loss arising from the transactions of the Joint Organization (known as the J. 0.) in New Zealand wool is to be shared equally between the Governments of the United Kingdom and New Zealand, A profit estimated at some £12,500,000 will accrue to New Zealand under the clause. In a Treasury memorandum of 15th May, 1950, addressed to the Minister of Finance it was stated that " all the profits resulting from the operations of the J.O. scheme were in 1948 committed by the then Government to be used in establishing a new marketing scheme or in any case for the benefit of the wool industry." This commitment was made in an exchange of letters dated 27th August, 1948, between the then Minister of Finance and the Chairman, New Zealand Wool Board, and was in effect confirmed by the present Minister on 15th June last. When a question arose as to the authority for the commitment or agreement the Audit Office was referred to section 5 of the Finance Act (No. 2), 1948. It appeared to the Audit Office that that section applied only to a surplus arising from the exercise of certain functions by the Marketing Department, and had no application to profits made by the J.O. The Crown Law Office agreed with this view, and legislation will be necessary to implement the agreement. This legislation, when introduced, will give Parliament an opportunity to be informed, if it so desires, of the grounds on which the agreement is based. Parliament will at the same time decide whether it will retain control of the profits by requiring their disposal to be subject to annual appropriation or whether it will divorce disposal from annual parliamentary review by providing a permanent appropriation. An advance payment of profits of £5,000,000 has been received from J.O. by the Marketing Account, which has meanwhile invested it in Government securities. Unless the agreement is confirmed by legislation, all profits, and interest earned on their investment, will be payable to the Ordinary Revenue Account of the Consolidated Fund. Emergency Cool-storage and Meat-canning Plants During the war, expenditure amounting to some £900,000 was made from War Expenses Account, Subdivision IV, Ancillary, to provide emergency storage space for meat and dairy-produce and to enable meat-canning companies to obtain additional plant and buildings. The terms under which freezing and canning companies were allowed

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to use the facilities thus created included provision for the ultimate realization of the assets, either by sale to the companies if they required them, or otherwise. Since War Expenses Account had been recouped to the extent of £673,332 from the Meat Industry Account and £220,000 from the Dairy Industry Account, the proceeds of realizations were to be paid into those accounts. In December, 1948, the New Zealand Meat-producers Board was authorized by the Minister of Marketing to undertake the realization of the assets, and a committee of the Board was set up for that purpose. So far, disposal has been completed in respect of only one of the companies concerned, but Audit is advised that negotiations are proceeding with other companies. In the case of the completed transaction, approximately the whole of the amount expended, about £34,000, has been recovered, and paid into the Meat Industry Account. There has so far been no recovery in respect of assets paid for out of the Dairy Industry Account. Cook Islands Administration The Cook Islands Treasury Regulations 1916, as amended on 11th May, 1931, made under the Cook Islands Act, 1915, impose on the Audit Office the duty of auditing the accounts of the Cook Islands Treasury annually, " save that if for any reason the Controller and Auditor-General may deem it necessary or advisable the audit of any one year's accounts may be postponed and the accounts be audited with the following year's accounts." The last visit to the Islands by an Audit Inspector was made towards the end of 1947, but a fair amount of auditing has since been done under an arrangement whereby expenditure vouchers are forwarded for examination in Samoa, where officers of the Audit Department are stationed. The next visit is now overdue, but the Audit Office has been advised that the final accounts and balance-sheets have not yet been prepared. During the past two or three years it became apparent that the accounting work was falling seriously into arrears owing to shortage of staff, and, as the Administration handles several hundreds of thousands of pounds annually, efforts have been made to improve the position. It is anticipated that the accounts will be audited within the next three months. Local Authorities' Accounts Four cases of misappropriations of funds by local-body officials, involving an aggregate of £1,354 Bs. 9d., were reported during the year, and in each case the matter was placed in the hands of the police for appropriate action. Full restitution was made in all cases. Numerous breaches of law relating to accounts were dealt with, and an adjustment thereof or a recovery of moneys was required in all cases. Mention was made in the last two reports of increases in the number of local authorities which had failed to live within their incomes or which had incurred bank overdrafts without authority or in excess of statutory limits. During the year 1949-50 there was a further slight increase in the number of such cases. Two cases of disqualification for membership of local authorities in terms of section 3, Local Authorities (Members' Contracts) Act, 1934, were dealt with.

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Reference was made in last year's report to a claim by New Plymouth City Council against the Crown in respect of alleged negligence by the Audit Office. Since the date of that report the Audit Office view of the matter was given to Parliament by the Minister in Charge of the Audit Department when its estimates were under consideration. On a claim of £16,895 a judgment for £8,164 was given against the Crown, but on application by the Solicitor-General for a review of the basis on which the amount was assessed it was reduced to £5,645. Audits of local authority and Government accounts throughout the Dominion are fairly well advanced, but there are very considerable arrears in a few districts. These are sufficient to cause the Audit Office much concern, not only because local authorities may thereby suffer avoidable loss, but also because it may give ground for a criticism of the Office to the effect that if it cannot fully carry out its statutory functions it should be required to delegate or abandon some of them. Sinking Funds of Local Authorities Owing to the progressive reduction of interest rates over the last eighteen years, local authorities are finding that the sinking-fund contributions being made in terms of the Orders in Council consenting to the raising of loans are not providing funds sufficient to repay the full amounts of the loans at maturity dates. The Audit Office is not empowered to require local authorities to increase sinkingfund contributions beyond the amounts prescribed by the Orders in Council consenting to the raising of the relative loans, but as opportunity offers it points out the effect of the reduced interest rates and suggests that consideration should be given to making increased contributions. Allowances to Members of Boards and Committees In May, 1949, a general increase in hotel tariffs was authorized, with the result that members of some fifty Boards and Committees, &c., whose rates of subsistence allowances were fixed by regulations were placed at a financial disadvantage pending the alteration of the several governing regulations to admit of higher scales. This proved to be an affair of some magnitude, expecially as other amendments were necessary in many cases. Regulations do not operate retrospectively unless, which is unusual, there is provision to that effect in the relative statutes, and in order that members should not be penalized financially Audit agreed to accept a Cabinet direction as an interim authority for the payment of higher rates. The regulations of many of the Boards and Committees have now been altered, but as the amendments do not operate retrospectively Treasury has agreed that validating legislation will be introduced to cover payments of increased subsistence allowances made prior to the effective dates of the amending regulations. Visit of Australian Officials The Audit Office was very pleased to have a visit during the year from Mr. A. C. Joyce, C.8.E., Auditor-General for the Commonwealth of Australia, and Mr. J. D. Chettle, Assistant Secretary and Chief Inspector, Audit Office, Canberra. These officials spent several days in Wellington informing themselves as to New Zealand

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Government Audit practice and procedure. They expressed appreciation of the material which had been prepared for their assistance, and also of some courtesies extended to them by the Prime Minister and the Government. They were to go to Ottawa and London to seek information at those capitals also before returning to Canberra. MONEY OR STORES WRITTEN OFF Section 3 (3), Public Revenues Act, 1926 The above section provides that no public moneys or stores may be finally written off and discharged from the relative Account without the authority of Parliament, and the Treasury Regulations require that before presentation of relative items to Parliament the concurrence of the Audit Office and the Treasury shall have been obtained. A statement of moneys and stores in respect of which Audit concurrence to writing off has been given in the financial year 1949-50 is included in the Appendix to this report. STAFF POSITION The staff position of the Audit Department cannot be said to have improved over the twelve months to 31st March, 1950. A number of changes took place, and although the final result showed a slight numerical increase, 190 as against 181, the replacements during the year lacked audit experience and did not compensate for the loss of trained personnel. There are sections of audit work to which only the scantiest attention can be given. J. P. Rutherford, Controller and Auditor-General. 2nd August, 1950.

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APPENDIX

STATEMENT OF SUMS IRRECOVERABLE BY THE CROWN, AND VALUES OF STORES, ETC., IN RESPECT OF WHICH AUDIT CONCURRENCE HAS BEEN GIVEN DURING 1949-50, FOR THE WRITING-OFF AND DISCHARGE FROM THE RELATIVE ACCOUNT

Department and Particulars. Reason for writing off. Value of Stores. Cash. Agriculture £ s. d. £ S. d. Value of stores Lost, broken, &c. 133 18 0 Value of stores Stolen 27 14 0 Value of stores Gratuitous issue 19 18 6 Value of live-stock Died and missing 2,835 4 0 Cash deficiency Irrecoverable 3 0 0 Miscellaneous Irrecoverable 3 19 9 Repairs to motor-vehicles and Nugatory expenditure 35 13 6 private property Air . Value of stores Lost, broken, &c. 2,249 12 4 Value of stores Deficient 3,172 9 8 Value of stores Stolen 330 12 9 Value of stores Destroyed by fire, Rongotai .. 2,364 15 0 Value of air frames Scrapped 5,969 0 0 Value of aircraft Crashed 5,304 15 2 Compensation for damage to Nugatory expenditure 4 16 4 clothing Freight charges Irrecoverable 100 2 6 Kit deficiencies Irrecoverable 11 5 8 Pay and allowances overpaid Irrecoverable 536 5 10 Repairs to motor-vehicles and Nugatory expenditure 414 17 8 private property Sale of supplies and equipment .. Irrecoverable .. 235 18 3 Air (Civil Aviation) Value of stores Lost, broken, &c. .. 66 12 0 Value of stores Stolen .. .. 186 19 9 1 Miscellaneous Irrecoverable .. 0 12 8 Repairs to motor-vehicles and Nugatory expenditure 16 11 8 private property Value of postage stamps destroyed Irrecoverable .. 2 0 0 Army 1 Value of stores Lost, broken, &c. 34,074 17 4 Value of stores Deficient 3,000 17 3 Value of stores Stolen 519 11 5 Value of stores Destroyed by fire . . 753 12 4 Compensation for loss of and Nugatory expenditure 2,767 13 8 restoration of damage to private property Harvesting labour Irrecoverable 521 13 5 Miscellaneous Irrecoverable 1 3 5 Repairs to motor-vehicles and Nugatory expenditure 996 3 6 private property Salaries overpaid Irrecoverable 8 1 1

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STATEMENT OF SUMS IRRECOVERABLE BY THE CROWN, AND VALUES OF STORES, ETC. —continued

Department and Particulars. Reason for writing off. Value of Stores. Cash. Education I £ s. d. £ s. d. Value of stores Lost, broken, &c. 298 5 8 Value of live-stock Died and missing 108 8 2 Compensation for loss of personal Nugatory expenditure 150 0 0 effects Miscellaneous Irrecoverable 6 13 6 Repairs to motor-vehicles damaged Nugatory expenditure 799 11 0 in accidents Salaries overpaid Irrecoverable 13 11 0 Sale of projector lamps Irrecoverable 139 4 0 Value of books not received Irrecoverable 296 0 0 External Affairs Value of stores Loss on sale 171 11 0 Health Value of stores Lost, broken, &c. 6,948 16 5 Exchange Irrecoverable 7 16 7 Maintenance fees Debtors unfinancial 27 15 0 Repairs to motor-vehicles and Nugatory expenditure 32 8 2 private propertyIrrecoverable Salaries overpaid 8 7 2 Health (Mental Hygiene Division ) Value of stores Lost, broken, &c. 7,350 16 2 Value of stores Stolen 50 14 2 Value of stores Destroyed by fire 64 0 0 Value of live-stock Died, &c. 1,163 12 0 Compensation for damage to Nugatory expenditure 9 18 6 property by patients Industries and Commerce (includes Ministry of Supply) Value of stores Lost, broken, &c. 1,964 7 7 Value of stores Stolen 2 5 0 Advances to tanning industry .. Company in liquidation 14,423* 7 4 Gas-meter testing fees Debtor untraceable 2 5 0 Repairs to motor-vehicles damaged Nugatory expenditure 5 7 3 in accidents Sale of goods Company in liquidation 1,013 0 8 Value of official stamps lost Irrecoverable 21 3 10 Value of tires short landed Irrecoverable 125 6 0 Internal Affairs Value of stores Lost, broken, &c. 620 3 9 Value of stores Stolen 48 17 7 Advances to stranded New ZeaIrrecoverable 706' 7 1 landers Compensation for loss of equipment Nugatory expenditure 16 11 6 Miscellaneous Irrecoverable 6 8 11 Repairs to motor-vehicles damaged Nugatory expenditure 179 10 1 in accidents Value of sheep worried by dogs Nugatory expenditure 247 17 6 owned by deer cullers Island Territories 1 Value of stores Lost, broken, &c. 7 16 2 Cash lost in transit Irrecoverable 3 0 0 Cost of fares Irrecoverable 24 5 11 Rent Debtor unfinancial 41 17 0 Salaries overpaid Irrecoverable .. .. i 28 11 2

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STATEMENT OF SUMS IRRECOVERABLE BY THE CROWN, AND VALUES OF STORES, ETC.—continued

Department and Particulars. Reason for writing off. Value of Stores. Cash. Justice and Prisons £ s. d. £ s. d. Value of stores Lost, broken, &c. 488 2 8 Value of stores Loss on sale 41 4 0 Value of live-stock Died, &c. 1,730 11 8 Value of stores Stolen 14 11 2 ■Compensation for damage to Nugatory expenditure 300 0 0 launch by escapees Fines and court costs Irrecoverable .. ,.. 471 9 10 Labour and Employment / Value of stores Lost, broken, &c. 955 17 11 Value of stores Stolen 10 11 10 Value of stores Destroyed by fire 262 10 4 Value of stores Loss on sale 316 0 10 .. Advances to workers, &c. Irrecoverable 24 15 9 Home Aid charges Debtors unfinancial 23 5 11 Hostel charges Irrecoverable 66 9 6 Miscellaneous Irrecoverable 5 18 2 Passage money Irrecoverable 442 18 5 Repairs to property damaged in Nugatory expenditure 3 8 6 accident | Land and Income Tax Compensation for damage to Nugatory expenditure 4 10 0 clothing Income-tax, &c. Debtors deceased, unfinancial, 20,247 9 11 and untraceable Repairs to motor-vehicle damaged Nugatory expenditure 15 10 0 in accident Lands and Survey i Value of stores Loss on sale 267 4 2 Value of stores .. Destroyed by fire 614 1 5 Value of stores .. Lost, broken, &c. 1,544 7 2 Value of stores Stolen 108 19 1 Value of live-stock Died, &c. 50,383 13 6 Compensation for damage to Nugatory expenditure 4 0 0 clothing Compensation for loss of live-stock Nugatory expenditure 35 0 0 Compensation for damage to Nugatory expenditure 393 8 7 property Land-drainage rates Compromise of amount due 2,918 9 10 Miscellaneous Irrecoverable 21 9 11 Rent Debtors unfinancial 473 19 1 Repairs to motor-vehicles damaged Nugatory expenditure 677 4 0 in accidents Royalties Company in liquidation 27 7 5 Survey liens Debtors unfinancial 1,813 4 3 Maori Affairs Value of stores Lost, broken, &c. 862 13 6 Value of stores Stolen 211 18 0 Value of stores Destroyed by fire 1 7 1 Value of live-stock Died, &c. 22,765 1 3 Advances on mortgage Loss on realization 1,789 17 9 Compensation for loss of stock .. Nugatory expenditure 2 3 6 Building construction claims Irrecoverable 376 5 11 Miscellaneous Irrecoverable 30 9 7 Remittances lost in transit Irrecoverable 73 6 8 Repairs to motor-vehicles damaged Nugatory expenditure 44 18 6 in accidents Unpaid interest Irrecoverable .. .. i 1 456 1 3

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STATEMENT OF SUMS IRRECOVERABLE BY THE CROWN, AND VALUES OF STORES, ETC. —continued

Department and Particulars. Reason for writing off. Value of Stores. Cash. Marine £ s. d. £ s. dValue of stores Lost, broken, &c. 318 2 4 Value of live-stock Died 27 0 0 Compensation for damage to and Nugatory expenditure 2i 14 8 loss of cargo Compensation for loss of equipNugatory expenditure 8 15 1 ment Repairs to motor-vehicles and Nugatory expenditure 35 15 2 private property Marketing Value of stores Lost, broken, &c. 208 0 1 Advance payments to apple growers Irrecoverable 5 13 10 in excess of realization value Sales of produce Debtors unfinancial 738 6 10 Theft of wages Irrecoverable 16 8 0 Mines Value of stores Lost, broken, &c. 6,661 3 7 Value of stores Stolen 0 14 4 Value of live-stock Died 108 15 2 Advances: Onekaka Iron and Company in liquidation 6,083 18 2 Steel Co. Compensation for loss of live-stock Nugatory expenditure 100 9 0 Levies under section 16, Mining Company in liquidation 76 5 1 Amendment Act, 1941 Rent Debtors deceased 13 15 0 Repairs to motor-vehicles and Nugatory expenditure 74 7 9 private property Sales of coal Irrecoverable .. 19 11 5 Ministry of Works Value of stores Lost, broken, &c. .. 12,047 11 5 Value of stores Stolen .. .. 1,627 12 3 Value of stores Destroyed by fire 7,131 7 3 Value of stores Loss on sale 168 12 6 Compensation for damage to Nugatory expenditure 2 0 0 clothing Compensation for loss of live-stock Nugatory expenditure 9 2 0 Cost of removal of cottage Irrecoverable .. .. 1 64 18 2 Miscellaneous Irrecoverable .. 14 8 9 Rent Debtors untraceable .. 1 71 18 5 Repairs to motor-vehicles and Nugatory expenditure .. j 857 14 4 private property | Storm damage, Westport: differIrrecoverable 1,188 3 9 ence between actual cost of repairs and amount charged Value of equipment on loan Irrecoverable 39 19 0 Water rates Irrecoverable 77 1 2 Ministry of Works (Housing Branch) Value of stores Lost, broken, &c. .. 1,392 15 5 Value of stores Stolen .. .. .. | 227 13 8 Value of stores Loss on sale 12 18 3 Half-cost of boundary fencing .. Irrecoverable 6 19 6 Salaries overpaid Irrecoverable 1 7 0

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STATEMENT OF SUMS IRRECOVERABLE BY THE CROWN, AND VALUES OF STORES, ETC. —continued

Department and. Particulars. Reason for writing off. Value of Stores. Cash. Navy £ s. d. £ s. d. Value of stores Lost, broken, &c. 4,947 6 6 Value of stores Deficient 1,547 12 11 Value of stores Stolen 47 19 5 Value of stores Loss on issue and sale 249 7 0 Miscellaneous Irrecoverable .. ... 12 8 9 Repairs to private property Nugatory expenditure 135 0 2 New Zealand Broadcasting Service Value of stores Lost, broken, &c. 5 9 10 Value of stores Stolen 34 18 0 Repairs to motor-vehicles damaged Nugatory expenditure 92 12 2 in accidents ■Salaries overpaid Debtor untraceable 11 10 7 New Zealand Forest Service Value of stores Gratuitous issue 64 19 11 Value of stores Lost, broken, &c. 770 17 0 Value of stores Stolen 24 12 3 Value of stores Destroyed by fire 761 3 1 Value of live-stock Died 23 10 6 Repairs to motor-vehicles damaged Nugatory expenditure 18 19 6 in accidents Salaries and wages overpaid Irrecoverable 4 2 7 Timber royalties Debtors unfinancial 23 1 7 Police Value of stores Lost 115 7 5 Repairs to motor-vehicles and Nugatory expenditure 214 - 8 1 private property Post and Telegraph Value of stores Lost, broken, &c. 1,603 7 6 Value of stores Stolen 243 4 7 Value of stores Destroyed by fire 1,387 0 8 Value of stores Obsolete 2,629 2 9 •Cash deficiencies Irrecoverable .. 620 1 8 Fraudulent withdrawals Irrecoverable 192 0 0 Loss through burglary and theft.. Irrecoverable 865 8 4 Miscellaneous .. Irrecoverable 15 11 2 Repairs to motor-vehicles and Nugatory expenditure 6,248 18 9 private property Salaries overpaid Irrecoverable 40 8 7 Toll accounts Irrecoverable 83 2 10 Prime Minister's Value of stores Lost, broken, &c. 56 1 7 Repairs to motor-vehicles damaged Nugatory expenditure 618 8 in accidents Public Trust Value of stores Lost, broken, &c. 17 10 5 Advances on mortgage Loss on realization .. 7,030 11 3 Public Service Commission Salary overpaid Debtor untraceable 1 0 1

B—l [PT. ll]

STATEMENT OF SUMS IRRECOVERABLE BY THE CROWN, AND VALUES OF STORES, ETC. —continued

Department and Particulars. Reason for writing off "Value of Stores. Cash. Railtvays £ s. d. £ s. d. Value of stores Lost, broken, &c. 2,754 5 4 Value of stores Stolen 446 5 5 Value of stores Destroyed by fire 681 2 1 Value of stores Loss on sale 2,095 19 6 Value of stores Obsolete 113 15 7 Value of train tickets stolen Irrecoverable 0 10 0 Rehabilitation Value of stores Lost, broken, &c. 486 1 11 Value of stores Stolen 176 2 5 Value of stores Destroyed by fire 0 13 3 Value of stores Loss on sale 7 4 0 Maori returned servicemen's loans Irrecoverable 731 9 5 Miscellaneous Irrecoverable 7 10 5 Reimbursement of State Advances Irrecoverable 16,219 2 6 Account: losses in respect of Servicemen's loans in excess of | two-thirds margin Repairs to motor-vehicles damaged Nugatory expenditure 65 8 2 in accidents Scientific and Industrial Research Value of stores Lost, broken, &c. 136 10 9 Value of stores Stolen 33 1 1 Compensation for damage to Nugatory expenditure 51 6 9 clothing Repairs to motor-vehicles damaged Nugatory expenditure 83 19 0 ■ in accidents Salary overpaid Debtor untraceable 3 5 9 Sale of publications Irrecoverable 0 8 0 Social Security Value of stores Lost, broken, &c. 7 10 10 Value of stores Stolen 0 11 10 Benefits, pensions, and allowances Debtors unfinancial and untrace2,66215 11 overpaid able Salary overpaid Irrecoverable • • 0 17 7 Warrant cashed by person unkown Irrecoverable •• 4 10 0 Stamp Duties Value of stores Lost, broken, &c. 4 15 Salaries overpaid Irrecoverable 16 4 11 State Advances (Housing Account) Rents Irrecoverable 481 5 7 State Hydro-electric Value of stores Lost, broken, &c. " 617 8 0 Value of stores Stolen 21 13 7 Value of stores Destroyed by fire 802 5 2 Value of stores Loss on sale 329 7 0 Claim for materials short supplied, SlT Part payment accepted 153 6 10 &jKJ. Miscellaneous Irrecoverable .. 8 10 1 Repairs to motor-vehicles and Nugatory expenditure 825 10 9 private property Sales of electric energy Irrecoverable 44 5 0

B—l [PT. ll]

STATEMENT OF SUMS IRRECOVERABLE BY THE CROWN, AND VALUES OF STORES, ETC. —continued

By Authority: R. E. Owen, Government Printer, Wellington.—l9so.

Price Is, 3c£.]

Department and Particulars. Reason for writing off. Value of Stores. Cash. Tourist and Health Resorts £ s. d. £ s. d. Value of stores Lost, broken, &c. 1,092 8 10 Value of stores Stolen 4 18 0 Value of stores Loss on sale 10 4 6 Value of stores Gratuitious issue 34 16 9 Value of live-stock Died 68 9 6 Cash deficiencies Irrecoverable 64 4 5 Compensation for loss of personal Nugatory expenditure 39 10 a effects Miscellaneous Irrecoverable 26 17 11 Repairs to motor-vehicles damaged Nugatory expenditure 12 15 0 in accidents Sales of electric energy Debtors unfinancial and untrace56 4 2 able Transport Value of stores Lost, broken, &c. 4 11 11 Goods service licence fees Irrecoverable 19 17 6 Salary overpaid Debtor left the service 2 13 7 Treasury Value of stores Lost, broken, &c. 233 1 7 Value of stores Stolen 147 10 0 Advances : earthquake relief .. Debtors unfinancial 99 ii 0 Advances: farmers' emergency Debtor deceased 582 4 5 relief Advances : land settlement assoDeficiency on winding up 4,659 13 3 ciations Advances to returned servicemen Irrecoverable 10,303 0 11 Miscellaneous Irrecoverable 4 12 2 Rural housing : sale of huts Loss on realization 2,341 6 8 Valuation Value of stores Stolen 3 14 1 Value of stores Lost, broken, &c. 1 15 0 Loss through burglary Irrecoverable 74 17 0 Salary overpaid Irrecoverable 10 13 8 War Expenses ( Agriculture-Services Vegetable Projects) Value of buildings Loss on sale 4,563 1 8 219,729 7 4 119,542 13 9 339,272 1 1

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Report of the Controller and Auditor-General on the PUBLIC ACCOUNTS of New Zealand for the Financial Year ended 31st March, 1950, Appendix to the Journals of the House of Representatives, 1950 Session I, B-01-part02

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Report of the Controller and Auditor-General on the PUBLIC ACCOUNTS of New Zealand for the Financial Year ended 31st March, 1950 Appendix to the Journals of the House of Representatives, 1950 Session I, B-01-part02

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Report of the Controller and Auditor-General on the PUBLIC ACCOUNTS of New Zealand for the Financial Year ended 31st March, 1950 Appendix to the Journals of the House of Representatives, 1950 Session I, B-01-part02

Using This Item

• the Clerk of the House of Representatives
• third parties (which may include government agencies, political parties, or people that have made submissions or others).

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Report of the Controller and Auditor-General on the PUBLIC ACCOUNTS of New Zealand for the Financial Year ended 31st March, 1950 Appendix to the Journals of the House of Representatives, 1950 Session I, B-01-part02

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Report of the Controller and Auditor-General on the PUBLIC ACCOUNTS of New Zealand for the Financial Year ended 31st March, 1950 Appendix to the Journals of the House of Representatives, 1950 Session I, B-01-part02

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