B.—No. 2a,

First Report. The Auditor would observe that tho Adjustment Account should introduce no new matter, and should deal only with entries in previous years' accounts. If this view had been followed, the Treasury would not have included, as it has done in the present Statement, the sum of £367 17s. 3d., shown at page 4 as ' ; Revenues received during the year 1866-7, but only now brought to account." This receipt properly belonged to the Consolidated Fund Account, Part 11. The Auditor would not have considered this of sufficient importance to bring under the notice of the Legislature, with a view to the account being amended, had not the highly objectionable course been taken by the Treasury of bringing again to revenue a large sum of money which had been finally discharged from the Finance Accounts of the year 1866-7. This will be seen at page 2, where the Colonial Treasurer, to meet outstanding liabilities, transfers again to revenue the sum of £88,460 4s. Id., being moneys which he had finally parted with, and which he had shown in the Finance Accounts of the year 1866-7 as paid out of the revenues of that year on account of Interest and Sinking Fund on various New Zealand Loans. These moneys are thus made to do double service in the Bevenue Accounts ; —first, of paying Interest and Sinking Fund in the year 1866-7, and afterwards, in the year .1867-8, of meeting a corresponding portion of the supplementary and other expenses of the Colonial Government. Of course the Treasury has adjusted its balances by corresponding transfers from temporary or book accounts, and at the same time it retains in suspense accounts corresponding sums standing to the credit of the Colony, so as to enable it to show again in future accounts the same Interest and Sinking Fund as final charges against the revenues. For it must be understood that under this objectionable manipulation of the Bevenue Accounts, the Interest and Sinking Fund represented by the sum of £88,460 4s. Id. will appear again in the Bevenue Accounts as final charges against the Consolidated Fund of subsequent years. For instance, in Bart 11., page 41, of the Finance Accounts under examination, the Colonial Treasurer has charged against the Consolidated Fund the sum of £4,500, being interest for the half-year ending 30th June, 1867, on the ISCew Zealand Loan of £150,000 (1860), although the same interest for the like period is borne as a final charge on the revenues of the previous year (1866-7). Thus the same liability appears twice against the revenues of the Colony, and it will be so with the remainder of the sum of £88,460 4s. Id. The Auditor is of opinion that the provisions of the 49th clause of the Bublic Bevenues Act, under which these transfers were made, are not retrospective. That the Colonial Treasurer having, for a period prior to the passing of the Public Bevenues Act, dealt finally with this sum of £88,460 4s. Id., by charging it against the revenues of 1866-7, was debarred from recouping the moneys and using them in' account for other purposes. The Auditor is further of opinion that, even admitting the 49th clause of the Public Bevenues Act to be retrospective in its operation, the course taken by the. Treasury is objectionable, as in that case the moneys ought to have been treated as surplus revenues of the year 1866-7 payable to Provinces. The Auditor submits that the Adjustment Account is wholly unnecessary, and that all the transfers could have been more readily shown in the Finance Account, Part 11. If, however, the Adjustment Account be retained, it is necessary to amend it by'striking out from the revenue side the sum of £88,460 4s. Id., and placing it again among the suspense and other book accounts. Charles Knight, 18th August, 1869. Auditor.

THE AUDITOR'S REPORTS ON THE COLONIAL TREASURER'S FINANCE ACCOUNTS OE THE YEAR 1867-8.