B.—No. 1b

4

REPORT OE THE AUDITOR ON THE FINANCIAL

The foregoing Abstract differs also from that of the preceding financial year in its containing no charge against tho Ordinary Eevenues on account of the Unauthorized Expenditure of former years. A supplementary vote was taken to cover that expenditure, and by a provision in " Tho Appropriation Act, 1866," it is directed that the expenditure in excess of the sums appropriated for tho years 1863-4 and 1865-6, amounting to £61,140 9s. 10d., is to be treated as expenditure authorized by " The Appropriation Act, 1865," and charged as such ; but as the account for the year 1865-6 is closed, this supplementary expenditure has necessarily been charged against the Provinces in their respective Surplus Eevenues Accounts, as follows : — £ s. d. Auckland ... ... ... .'.. ... 10,423 12 10 Taranaki ... ... ... ... ... 1,096 15 7 Wellington ... ... ... ... ... 5,249 13 11 Hawke's Bay ... ... ... ... ... 1,325 12 2 Nelson ... ... ... ... ... 3,555 10 9 Marlborough ... ... ... ... ... 818 13 7 Canterbury ... ... ... ... ... 15,713 5 0 Otago ... ... ... ... ... 21,118 6 5 Southland ... ... ... ... ... 1,838 19 7 £61,140 9 10 (See page 89, eighth column, of printed Statement.) As stated in the Eeport of the previous year, tho Surplus Eevenues have been increased by a fictitious sum. The Expenditure on account of the General Establishment in the Province of Marlborough, exceeded the Ordinary Eevenues collected in that Province by the sum of £2,852 14s. 7d. The Province of Marlborough is accordingly charged in account with this excess, and the Surplus Eevenues distributed to the other Provinces are incj*eased by a corresponding sum. (Printed Statement, page 63.) The over issue of Surplus Eevenues to the Provinces, which in the last year's Statement was shown to be £36,537 14s. 7d., is found on the 30th June, 1867, to have increased to £325,776 12s. Id. (Printed Statement, page 89, 10th column.) " The Surplus Eevenues Act, 1867," releases the Provinces from all charges on this account prior to 30th Juno, 1867, and closes the whole of the Provincial Surplus Eevenue Accounts on that day, by providing, as an ultimate settlement, that certain fixed sums, amounting altogether to £31,053 10s. 7d., shall be paid by tho Provinces of Hawke's Bay, Otago, and Southland, and that other fixed sums, amounting to £31,053 10s. 7d., shall be paid to the Provinces of Auckland, Wellington, Nelson, and Canterbury. This adjustment was based on a Statement laid before the House of Eepresentatives (Appendix to Journals, 1867, B. 13.), which assumes that the total Surplus Eevenues distributable under " The Surplus Eevenues Act, 1858," for the period included between Ist July, 1858, and the 30th June, 1867, amounted in the gross to £1,597,842 lis. 9d., and that the sum distributed on account of the same period was £1,781,531 Is. 3d. It is found, however, on examination of the Accounts, that tho sum distributable is overstated by £50,634 18s. 7d., and, besides this, that a deduction of £6.1,140 9s. lOd. has to bo made for Supplementary Expenditure required by " The Appropriation Act, 1867-8," to be paid out of the Eevenues of 1865-6, thus making the total sum distributable £1,486,067 3s. 4d. It is also found that the sums over-issued to Provinces amount to £306,887 2s. 4d., instead of £183,688 9s. 6d., as stated in " The Appropriation Act, 1867-8." In the Annual Statement of the Treasury, the over-issue is stated to be £325,776 12s. Id. ; but in this sum tho Treasury has included certain moneys owing by Provinces for Interest and Sinking Eund on the Half-Million Loan, amounting altogether to £18,889 9s. 9d. These transactions are now struck out, as they do not properly belong to the Surplus Eevenues Account. They are as follows i— £ s. d. Auckland ... ... ... ... ... 14,482 16 9 Taranaki ... ... ... ... ... 2,598 7 3 Wellington ... ... ... ... ... 1,722 1 3 They should bo transferred to a separate Account as outstanding liabilities of the Provinces. The issues of Surplus Eevenues in excess appear to be as follows : — £ s. d. Auckland ... ... ... ... ... 39,445 8 7 Taranaki ... ... ... ... ... 6,132 6 5 Wellington ... .... ... 21,281 14 4 Hawke's Bay ... ... ... ... ... 7,993 9 6 Nelson ... ... ... ... ... 12,533 11 3 Marlborough ... ... ... ... ... 13,745 9 0 Canterbury ... ... ... ... ... 65,976 15 0 Otago ... ... ... ... ... 120,296 3 4 Southland ... ... . ... ... ... 19,482 411 £306,887 2 4 Adding, therefore, this total sum (£306,887 2s. 4d.) to the aggregate Surplus Eevenues (£1,486,067 3s. 4d.), the total sum distributed to Provinces would be £1,792,954 ss. Bd. instead of £1,781,531 Is. 3d., as stated in tho Parliamentary Paper. If, now, this amended sum of £1,792,954 ss. Bd. were redistributed among the Provinces, the difference between the results which would then be obtained and those on which " The Surplus Eevenues Adjustment Act, 1867," was based, would be important. But a fallacy has crept into the method by which the adjustment of 1567 was calculated. The Province of Marlborough, instead of being a sharer in the sum proposed to bo divided, w"as mulct of an additional sum for the benefit of the other Provinces. The

Unauthorized Expenditure.