B.—l [Pt. ll].

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Audit of Goveenment Stores and Property. This very important branch of Audit work has not in the past received that attention which its importance requires. Although a Government Stores Auditor has been appointed, it is found that without the help of some Assistant Inspectors a complete audit cannot be carried out. In very few Government Departments is the system of control over stores efficient. Stores are the equivalent of cash, but many public officers do not seem to have recognized this fact, nor have they been called upon to observe the same care and attention with regard to the accounting for public stores and property as has been enforced in regard to accounting for public moneys. The Public Revenues Act very properly makes no distinction between a defalcation in stores and a defalcation in public moneys —both are equally punishable. Owing to the failure to recognize this principle I fear that very considerable losses have occurred in the past —losses which have remained undetected owing to inefficient control. The promulgation of multitudinous regulations and instructions, with subsequent amendments, is calculated to cause confusion and does not necessarily bring about efficiency. The only method by which efficiency can be attained is by establishing a sound system and by ensuring observance of that system by regular inspections by an Audit officer. The present form in which, the Public Accounts are presented to the House makes it impossible to include in those accounts any reference to value of stores and property of the Government. It is hoped that the decision of the Government that departmental balance-sheets shall be prepared annually will to some extent provide a remedy for this defect. The practice of piecemeal purchasing, and purchasing " for immediate use," has been prevalent in the Service, with all its attendant evils. A Stores Purchase Board has been constituted by the Government which will regulate the system of purchasing by Departments and should materially assist in eliminating many of the existing evils. The system of writing-off stores which have been lost or stolen has been perfunctorily carried out in most Departments. It is essential that all Government stores and property required to be written off should be so written off under a uniform system, and duly reported to Parliament. Improvements have been effected in some Departments in this respect.. In the Defence Department, for instance, a sound costing system has been instituted. The Audit Department aims at introducing a system in connection with all Departments, which will enable departmental costs to be compared with trade costs of a similar nature, and will make it possible for Parliament to judge of the efficient and economical working of the departmental establishments or otherwise. Such a system also, from an administrative point of view, is advisable so as to enable executive officers to control the expenditure which is incurred under their supervision. The following departmental systems have been partially inspected: Agriculture, Defence, Education, Marine, Mental Hospitals, Mines, Police, Prisons, Public Works, and Public Health. The investigations have proved the existence of many defects. Stores have been purchased and never brought on charge ; stores have been written off without sufficient inquiry and without the authority of Parliament; there has been insufficient check on. deliveries, which, opens the door to short deliveries and other frauds ; insufficiency of check and ease with which articles can be written off open the door to theft; there has also been an absence of a proper costing system and stocktaking, rendering it impossible to ascertain if peculation is going on. Audit investigations have also proved that there have in some cases been free issues of Government goods to Government officers, or issues at reduced cost. Officers of the Public Service are not entitled to derive, either directly or indirectly, any such advantages from their status in the Service. Loans and Public Debt, etc. The total amount of loans outstanding at 31st March, 1922, was £219,054,385, including Public Debt Account, £206,434,435, and State Advances Debt Account, £12,619,950. Of the total securities outstanding representing the public debt, £11,288,180 consists of interdepartmental liabilities only, and the relative securities arc shown under " Debenture Sales Account " and " Inscribed Stock Sales Account " in the general balance-sheet relating to the public debt. Public debt loans amounting to £731,325 were paid off during the year as follows : — £ s. d. Out of Ordinary Revenue Account .. .. .. 730,011 0 7 Out of sinking fund set free .. .. .. 1,288 19 5 Out of moneys raised in 1920-21 .. .. .. 25 0 0 £731,325 0 0 Loans amounting to £157,870 were raised during the year for redemption of loans falling due in 1922-23. This amount therefore appears twice on the debt at 31st March, 1922. In addition to the transactions already stated, public-debt Loans amounting to £4,289,125 have been renewed during the year by the issue to the holders of £4,270,975 debentures and £18,150 inscribed stock. Loans amounting to £2,826,095 were paid off out of moneys raised by the issue of an equal amount of debentures and inscribed stock. Securities to the amount of £22,816,325 were issued in conversion or replacement of securities of an equal value. Included in the amount of £22,816,325 is an amount of £22,000,000, debentures issued in place of an equal amount of memorandum security, representing advances made by the Imperial Government to this Dominion during the period of the war. The amount now represented by memorandum security is £208,931.