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I must ask you to read my last report in connection with this one, and may remind you that I left with you a correct statement of dog-tax due. In the belief that a better state of affairs has now' been brought about, I do not wish to advert to the past, but hope that this may be the last of a long series of adverse reports, any one of which, you will pardon my saying, would in any other county in my district have caused the proper remedy ito be instantly applied. I have, &c, H. Livingston, The Lake County Chairman, Queenstown. Provincial District Auditor.

Sir, — Dunedin, 30th December, 1886. I have the honour to forward to you the enclosed abstract, with audit certificate attached. As you are aware, the document was retained pending inquiry into a very suspicious transaction. I have now to report to you on the subject. In your accounts for half-year ending 30th September, 1885, on page 165 of the cash-book, voucher 127, there appears as paid to a Dunedin firm the sum of £5 165., and on page 169, voucher 227, the sum of £12 ss. These two sums, you will observe, amount to £18 Is. In tho half-year ending 30th September last there occurs a payment to the same firm of £18 Is. The cheques for the first two sums were cashed on the 25th July, 1885, and 12th August, 1885, respectively, and receipted vouchers were presented to me when auditing your books. These vouchers have now disappeared, and the firm referred to inform me that the amounts were never paid to them, and that the only voucher signed by them since a date not later than 1884 was tho voucher for £18 Is., the only sum then owing to them by the Council, a cheque for which they received on 11th June, 1886. This cheque has also been cashed. I find it impossible to resist the conviction that the signatures to tho missing vouchers were not genuine, and I leave the matter in your hands for investigation. The search for these vouchers led me to the discovery that a large number of vouchers for several financial periods have been abstracted—by whom I cannot of course say. It is very remarkable and a just ground of complaint by me personally that the Council in the circumstances of the last twelve months should have permitted such perfect facilities to exist for tampering with the records of the office. I have, &c, H. Livingston, The Chairman, Lake County Council. Provincial District Auditor.

11. Bib,— Dunedin, 31st May, 1883. During the course of my approaching audit of your accounts I shall require the following documents: (1) Detailed statement of rates for the year 1880-81 unpaid on 31st March, 1883; (2) ditto for the year 1881-82; (3) ditto for the year 1882-83 : the total of each statement to agree with the amounts shown as a balance in the ledger "County Account." I have the honour to request that you will give instructions to have these statements prepared at the earliest opportunity. I have, &c, H. Livingston, The Chairman, Lake County Council, Queenstown. Provincial District Auditor.

(Memorandum.) Gore, 6th August, 1883. I beckket. to say that, through an oversight on my part, the memorandum left with you requires a postscript. In going over the accounts I found a day-labour voucher a-wanting—" Warbriok," for, I think, £13. Mr. Boult promised to find it; but, owing to time at the end being taken up with last period's errors, I omitted to ask him for it again. That must be taken as an exception to the certificate, unless you can examine the voucher and see that it is correct. It occurs in the first three months, and is marked by me thus in the cash-book: "NoVr." (i.e., "No Voucher"). All Warbrick's vouchers should be produced and compared with cash-book. I have, &c, H. Livingston, The Treasurer, Lake County Council. Auditor.

CORRESPONDENCE AS TO TRAVELLING EXPENSES. Deab Sic, — Lake County Council, Qucenstown, Bth July, 1886. Your report, dated the Ist July, 1886, attached to the balance-sheet was considered by this Council at its last meeting, and I am instructed to apply to you for more explicit detail as to your exception No. 1 in the report —viz., " A portion of the travelling-expenses of members does not come within the definition of tho Act, ' Actual travelling expenses of members coming from a distance,'" I extract from tho minute-book a copy of the resolution under which this Council agrees to payment of its members attending meetings of the Council. The resolution is dated the 23rd November, 1881, and reads thus : " That travelling-allowances be granted to members, such allowance to be at the rate of 2s. per mile, one way, each attendance at meetings, except to members resident within a radius of ten miles from the county office, to whom a sum of £1 be voted for each attendance." Arc the Council to understand that they have no discretionary power whatever in defining members' expenses ? If you will kindljcgive me your views on this matter you will greatly oblige. I have, &c, H. Livingston, Esq., Provincial District Auditor, C. C. Boyes (pro J. B.). Dunedin.