B.—l [Pt. ll].

Other local authorities are experiencing difficulty in meeting their obligations to pay interest and sinking fund on loans, one at least of which has placed its financial position before its bond-holders with the object of obtaining some measure of relief from the burden of loan charges. I desire to stress again the necessity for local authorities to carefully review their estimates from time to time during the year, with the object of endeavouring to keep expenditure within the bounds of the available income. Domain Boards and Cemetery Trustees. Although the accounts of Domain Boards and Cemetery Trustees, which total 723 and 329 respectively, are individually small, considerable difficulty is experienced by the Audit Office in obtaining the books and accounts for audit in some cases, and it is evident that in these cases little interest is taken in the financial affairs of their respective Boards or Trusts by the members, upon whom the responsibility of submitting the accounts to the Audit Office is placed by statute. Repeated requests made in writing and personally to the Secretaries or Chairmen of these defaulting bodies have in many cases failed to obtain any satisfactory result, and as the homes of these gentlemen are generally situated some distance from the ordinary routes travelled by the Audit Inspectors, the Audit Office has solicited the co-operation of the permanent heads of the respective Departments concerned —i.e., the Lands and Survey Department in the case of domains, and the Health Department in the case of cemeteries —in endeavouring to obtain the books from the Secretaries or Chairmen for audit. Despite these efforts, however, there are still some Domain Boards' and Cemetery Trustees accounts which have not been submitted for audit as required by the law. It is no part of the duty of the Audit Office to prepare these accounts nor has it any say in the appointment of the Secretaries, which are matters for the Boards themselves. The position has been represented to the Right Hon. the Prime Minister, and I am pleased to state that he has agreed to the introduction of legislation giving Audit greater powers with regard to the audit of these accounts. Disqualifications. Fifteen members of local authorities forfeited their seats during the past year on account of their being concerned or interested in contracts with the local authority of which they were members to an extent in excess of the statutory contractual limits, or on account of their holding an office or place of profit under or in the gift of such local authority. In all instances the members concerned appear to have acted in ignorance of the law. In the present state of the law a person employed by a local authority of which he is a member, on works carried out by it under an unemployment scheme, is automatically disqualified from acting as a member of that local authority, and it would appear desirable in the particular circumstances that such person should by statute be granted exemption from disqualification. There is, however, nothing to prevent him from obtaining work under an unemployment scheme administered by an adjoining local authority of which he is not a member. At the present time the various statutes which govern the qualification for members of local bodies provide each for its own condition of disqualification and, in consequence, a person may be disqualified for acts in respect of one local body of which he is a member, while no disqualification would ensue for a similar act in respect of another class of local body. This diversity in the statutory provisions governing disqualification has been on many occasions the cause of members being unwittingly disqualified, and the cause also of the Audit Office rulings in the matter being misunderstood. I desire, therefore, to again call attention to the necessity for enacting some uniform provision regarding disqualification which will be applicable to members of every class of local authority. Defalcations. The defalcations on the part of local authority officials which were reported by Audit Inspectors during the past year totalled eighteen in number, and show an increase of eight as compared with the number reported the previous year. Criminal Court action was taken in respect of these defalcations in each instance. The largest sum misappropriated by any one official in the cases referred to was approximately £1,180, and in two other cases the total sums involved amounted to approximately £1,140 and £1,115 respectively. Local Government Law. The Audit Office was called upon to take action in respect of numerous breaches of the law relating to the accounts of local authorities as detailed below (Schedule A). Where a satisfactory explanation concerning the breaches of law has not been made by the local authority an adjustment in the accounts or a recovery of the moneys has been required by the Audit Office. Where, however, special circumstances existed the adjustment has been waived on an undertaking being given that legislation would be sought for the purpose of validating the irregularity. A list of the special cases where this conditional waiver was granted is set out in Schedule B.

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