B.—No. U

REPORT OF THE AUDITOR-GENERAL ON THE PUBLIC ACCOUNTS, 1869-70.

Sir, — Audit Office, Wellington, 15th September, 1871. I have the houor to forward herewith my Report on the Public Accounts of the Colony for the financial year 1869-70, in order that it may be laid before the General Assembly, in. torms of " The Public Revenues Act, 1867." I have, &c, Charles Knight, The Hon. the Colonial Treasurer. Auditor-General. _♦ In compliance with the provisions of the 60th section of "The Public Revenues Act, 1867," I have the honor to transmit, for the purpose of being laid before the General Assembly, my Report on the Colonial Treasurer's Abstract of Receipts and Expenditure for the year 1869-70. Warrants. The warrant given by His Excellency the Governor on the 25th June, 1870 (the only one affecting expenditure of the year 1869-70 that has reached the Audit Office), amounts to £1,318,505 13s. 7d. The expenditure charged in the accounts for the year is .£1,593,182 18s., exclusive of the unauthorized expenditure provided for by the Appropriation Act of 1870, amounting to .£74,634 13s. 3d., and shown in the accounts of the year under consideration, but not carried into the total. The very large amount of unauthorized expenditure in each year, the great discrepancy between the extent of the Governor's warrant and the amount of the expenditure, and the fact that the warrant was not issued until after all the payments of tho year were made, render it incumbent on the Auditor-General to call the attention of the Legislature to the very imperfect check that the law seems to impose on the issue of public moneys. It is scarcely necessary to «dd that the whole of the expenditure without the Governor's warrant was illegal, and a direct encroachment on the prerogatives of the Crown. By an unalterable provision of the Constitution Act, no part of Her Majesty's revenue within New Zealand shall be issued except in pursuance of warrants under the hand of the Governor directed to the Public Treasurer thereof. It may be a serious question whether the Governor is not absolutely required by the Constitution Act, and as the legal custodian of the public purse, to prevent the unauthorized issue of the Queen's revenues. Whenever this power shall be exercised, no issue from the Consolidated Fund in excess of the votes of the Legislature could be made without the concurrence of Her Majesty's representative. The scheme of the existing control and audit in New Zealand is, that there shall be three officers concerned in the receipt and issue of the public revenues, viz., — The Comptroller, The Colonial Treasurer, The Auditor-General. This seems to be taken from the late Exchequer system in England. The weak feature iu it is, that it separates the control and audit. And it is noticeable that the Imperial Government had long been impressed with the inconvenience and weakness arising out of this separation in Great Britain; and at the time the New Zealand Legislature was passing the Public Revenues Act, intelligence reached the Colony that the Imperial Legislature had at length abolished the office of Comptroller, and placed the control of the public revenues and the audit of public accounts under one officer, the Auditor-General. If the experience iu England and the practice in Victoria may be taken for guidance, it. ■would seeem that the New Zealand Legislature took a retrograde step in adopting for its model the Exchequer system of control, without introducing into the scheme the vital alteration which had so frequently been insisted on by the late Comptroller of the Exchequer, Lord Monteaglc, whose objections to the Exchequer plan were taken on the ground that although it controlled the issues it gave the Comptroller no means of knowing how the Treasury spent the money. In England the Queen is virtually the custodian of the Public Exchequer, as no moneys can be issued out of it, except in pursuance of Her Majesty's warrant. In Victoria the Governor is the custodian, and the issues from the " Public Account " are made on his warrant only. It is in New Zealand alone, of all the Colonies of Great Britain, that the direct control of the public purse has been taken from the Governor and given to a subordinate officer; and