B.—l [Pt. llj.

opinion, and it was held that in the case of certain of such accounts a Warrant under the hand of the Governor-General was necessary before moneys could lawfully be issued therefrom. The Treasury was accordingly advised of the position, and has arranged that in future a Warrant shall be obtained in all cases where necessary. Hutt Valley Housing Scheme. Hutt Valley Lands Settlement Act, 1925.—1n carrying into effect the Hutt Valley housing scheme inaugurated under the provisions of the Hutt Valley Lands Settlement Act, 1925, the Railway Department, under authority of section 10 of that Act, erected houses which entailed an expenditure of £78,764 up to the end of February, 1928, out of Working Railways Account. An agreement had been made between the Railway Department and the State Advances Department to the effect that interest at the rate of 5-j per cent, would be paid to the Working Railways Account by the State Advances Office from the date possession was taken by the purchaser until the capital sum was paid to the Working Railways Account. The interest charges to 31st March, 1928, amounted to approximately £2,000. As there was no statutory authority for the payment of interest charges out of the State Advances Account, the Audit Office, in order that the amount could be made available for the use of the Railway Department, passed the payment on the Government giving an undertaking to introduce validating legislation during this session of Parliament. Loans to the Western Samoan Administration. Finance Act, 1926. —Under section 4 of the Finance Act, 1926, as amended and extended by section 8 of the Finance Act, 1927 (No. 2), authority is given to advance moneys by way of loan to the Samoan Administration, it was understood by the Audit Office that such moneys were to be advanced only for the purpose of making capital expenditure on public works in Samoa, and the Orders in Council authorizing the loans, pursuant to section 33 of the Samoa Act, 1921, specifically limited the application of the loan-moneys to such purpose. The Department of External Affairs obtained an opinion from the Crown Law Office regarding the position of such loans, and it was held that the Acts quoted above did not have the effect of limiting the expenditure to the purpose stated, but that notwithstanding this fact the Orders in Council which did limit the expenditure of the loan-moneys to this purpose were not necessarily invalid, as by section 31 of the Samoa Act, 1921, power is given to fix additional limitations by regulation. It appeared clear that the policy of the Government, as indicated by the terms of the Orders in Council, was to lend money only for the purpose of providing public works in Samoa, and, as it was understood that in all probability a portion at least of the moneys advanced had been or would be applied to other purposes. Audit was unable to pass applications for further advances, except on the assurance that any legislation found necessary to validate the payment would be introduced during this session. Main Highways Account. Interest and other Charges on Main Highways Loans. —Section 15 (1) (d) of the Main Highways Act, 1922, provides that interest, sinking fund, and other charges on loans may lawfully be paid from the Revenue Fund of the Main Highways Account, provided the appropriation of Parliament has first been obtained. Amounts of £28,929 lis. lOd. and £250 were paid in the year 1927-28 under this section without the necessary appropriation. The attention of the Treasury has been called to the omission, and as an undertaking has been given to obtain such appropriation in future, and as there is no objection to the charge as a matter of account, Audit has allowed the charge to stand, although it has not been appropriated as required by law. Main Highways Revenue. —Section 24 of the Finance Act, 1927 (No. 2), requires that practically the whole of the receipts of the Main Highways Revenue Fund (other than moneys paid by local authorities in respect of the maintenance and repair of main highways) shall be ppid, in the first place, into the Consolidated Fund, and transferred therefrom to the Main Highways Revenue Fund. It was found that this provision was not being carried out, and in explanation the Treasury stated that the provision was intended only to apply to receipts of the nature of taxation, and suggested that under the circumstances the Audit Office should in the meantime agree to regard the section as referring only to that class of receipts on the understanding that amending legislation, to be made retrospective, would be brought forward this session. The Audit Office agreed not to insist on the strict observance of the law, on this understanding. Payments made from the New Zealand Public Account without Authority of Law. Public Revenues Act, 1926. —During the year 1926-27 and also in 1927-28 it was found that in some cases payments had been made on behalf of services outside the Public Account from the Foreign Imprest Account in London when there was no parliamentary appropriation authorizing such payments to be made from the Public Account. The matter was brought under the notice of the Secretary to the Treasury, who referred the question to the Crown Law Office for an opinion, and it was held that these payments from the Public Account were without authority of law. The Treasury has suggested that the law be amended to enable such payments to be made ; but it appears to the Audit Office that, as a matter of principle, the moneys of the Public Account should not be used to make payments either on behalf of private individuals or outside bodies, or on behalf of accounts which Parliament has seen fit to separate from the Public Account by special enactment, unless the moneys have been first paid into the Public Account by those on whose behalf payment is

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