A.—4.

16

I also enclose copy of a letter I have sent to His Honor the Superintendent, bringing to his notice the fact of the Provincial Treasurer having, on the 13th February, withdrawn £10,000 from the " Provincial Account," and placed it to a new account called by him " Provincial Account No. 2," quoting warrant No. 15, already referred to, as his authority. It appears to me that the Provincial Treasurer has rendered himself liable to the penalty of £500 under section 10 of " The Provincial Audit Act, 1866 ;" and I have to request that you will take the necessary steps to enable me to have the opinion and assistance in this matter, and in any other matter that may occur, of the Attorney-General. I have, &c., H. S. McKellar, The Secretary to the Treasury, Wellington. Provincial Auditor.

Enclosure 1 in No. 38. The Provincial Auditor to the Provincial Treasurer, Wellington. Sir, — Provincial Audit Office, Wellington, 2nd March, 1874. In answer to your letter of the 27th ultimo, informing me that warrants were awaiting my certificate, I have the honor to state that, finding the balance to credit of the " Provincial Account" is insufficient to meet amounts of previously certified warrants now remaining unexercised, I am unable at present to certify any warrants. I have, &c, H. S. McKellar, The Provincial Treasurer, Wellington. Provincial Auditor.

Enclosure 2 in No. 38. Copy of a Letter to the Superintendent, Wellington, referred to in Mr. McKellar's Letter of 10th March, 1874. Your Honor, — Provincial Audit Office, Wellington, 9th March, 1874. In accordance with article 3 of the Schedule to " The Provintial Audit Act, 1866," I beg to bring under your consideration the following circumstance: — On examination of the pass-book of the Bank of New Zealand for the " Provincial Account," I find that on the 13th February the sum of £10,000 was withdrawn from that account, on cheque No. 395. This was signed by the Provincial Treasurer, and paid by him into an account at the Bank of New Zealand called " Provincial Account No. 2." On reference to the counterfoil, I find there stated that it was drawn under warrant No. 15, on account of " The Bridges, Roads, and other Works Appropriation Act, 1874." A similar entry appears in the cash-book. Since that date many cheques have been drawn on the new account, without any entry thereof in the cash-book. I submit that there is no authority in warrant 15, even if that warrant is legal, for such a proceeding on the part of the Provincial Treasurer; and I have deemed it my duty to bring the matter under your notice. I have, &c, H. S. McKellar, His Honor the Superintendent, Wellington. Provincial Auditor.

No. 39. v The Secretary to the Treasury to the Provincial Auditor, Wellington. Sir,— Treasury, Wellington, 13th March, 1874. I have the honor, by direction of the Hon. the Colonial Treasurer, to acknowledge the receipt of your letter of the 10th instant, reporting that you had refused to sign certain warrants presented to you for that purpose, amounting to £4,382 Bs. 3d., and that you had received an order of the Supreme Court, to show cause by Counsel, on the 17th instant, why a mandamus should not be issued to compel you to certify. In reply I am to inform you that the AttorneyGeneral will be instructed to give you the assistance you require to meet the Rule Nisi. With reference to that part of your letter which relates to the transfer by the Provincial Treasurer of £10,000 from the Provincial Account to a new account called by him " Provincial Account No. 2," whereby it appears to you that he has rendered himself liable to the penalty of £500, under section 10 of " The Provincial Audit Act, 1866," I am to inform you that the Attorney-General will also be instructed to assist you in suing the Provincial Treasurer for the penalty referred to.