I.—7a.

57

Audit, Pbe-audit, and Post-audit. Whether the Audit Office passes a voucher or not, the responsibility of the administration ought to remain the same. The expenditure of the administration must naturally be confided, and cannot but be confided, to the care of its officers. These officers being employed directly in the service of the administration, must be assumed to consider it their principal duty to study, with a view of promoting, the best interests of that service, and to be incapable of knowingly authorising any payments which in their judgment the Audit Office, with all the information, should be unable to pass. Under the system of post-audit, the system of auditing after payment, the administration is under the necessity of justifying its payments at the audit, and this obligation must operate effectively to keep the administration alive to its responsibility by the fear of having, as the consequence of failure to justify the payments, to make good the amount of them. Under the system of pre-audit, the system of auditing accounts for payment before the payments are made, the administration has not, of course, the great motive for prudence which is but the natural effect of having to justify the payments after they are made; and if, consequently, the responsibility of the administration should not operate so effectively to secure to the public service a justifiable expenditure, that security which the responsibility of the administration should give for a justifiable expenditure would be either weakened or lost. The justification might then be left to depend almost, if not entirely, on the failure of the Audit Office to detect irregularity. The passing by the Audit Office of the vouchers for expenditure before the,payments are made is in practice apt to beget an assumption that this passing beforehand is the main justification in any event, and the tendency of such an assumption must be to weaken or destroy whatever security the responsibility of the administration ought to afford. A department of administration has the special knowledge necessary to and the best means of judging whether every particular item of the expenditure of the department can be justified. The Audit Office, on the other hand, has but a general knowledge, and cannot be expected to detect all cases of irregularity. Where, then, the audit follows the payments, the administration is uncertain what payments the auditor may question, and naturally does not make any payments which in its judgment the auditor ought not to pass. The judgment and discretion of the administration are thus exercised to secure, independently of the Audit Office, just and regular expenditure. Where, however, the audit of expenditure precedes the payment, and the auditor passes what practically are but proposals to pay, the administration may be content to make all the payments that the auditor may pass—that is to say, may be less careful of being able to justify the payments on any other ground than that the auditor has not objected to them. The powerful motive of self-defence is wanting. But, in any case, the responsibility of the administration remains, and its officers must have the care of the expenditure, not less because they are assumed to be incapable of proposing to make or of approving of any unjustifiable payments, than because the Audit Office is a check against irregularity. J. K. Wabbubton.

EXHIBIT 0. Payments made by the Post Office on behalf of other Departments. All boarding-out orders issued by the Education Department. All payments of the Justice Department for bailiffs' mileage-fees. Interest on debentures issued under the Naval and Military Settlers' and Volunteers' Land Act, and the Native Land Purchase Act. All gas accounts throughout the colony, payment being required promptly to obtain discount. All amounts of 10s. and under, except for Railway Department. Any claim which the department concerned may require to be promptly paid in any part of the colony—with the approval of the Treasury. Interest on New Zealand Consols throughout the colony. All payments at the Chatham Islands for every department. All Imperial pension-warrants which the Treasury may desire paid, through the Post Office. Payment to Maoris for the Native Land Purchase Department, without limit to amount, for which money separately imprested. The expenses of general and by-elections in about half the electorates of the colony, to enable prompt payment of casual employes and contingent expenses. The wages of labourers on co-operative works, especially when distant from settled country, on behalf of both the Public Works and Lands and Survey Departments. Payments for the Mines Department in compensation for water-race rights, &c. Any large payment for any department which may desire the Post Office to act as its agent— if specially authorised by the Treasury. Payments under special arrangement not covered by imprest moneys. Payments throughout the colony on behalf of the Public Trust and Advances to Settlers Departments, including advances on mortgages, all expenses (outside Wellington), and all payments on account of the distribution and administration of estates. 26th September, 1898. W. Gkay.

EXHIBIT P. Sib, — General Post Office, Wellington, 24th September, 1898. As requested by the Committee, I have the honour to enclose copy of memoranda under the terms of which the Post Office made payments out of moneys imprested by the Treasury prior to the passing of " The Public Eevenues Act, 1891." The Chairman, Public Accounts Committee, I have, &c, Parliament Buildings, Wellington. W. Gkay, Secretary. 9—l. 7a.