B.—l [Pt. ll].

List of Departments the Property and Stores of which have been Audited during the Year — continued.

Audit of the Accounts of Local Authorities. The position of the audit of the accounts of local authorities at the 31st March, 1933, was not quite so good as at the, end of the previous financial year, the arrears of work at the 31st March, 1933, showing a slight increase over the arrears at 31st March, 1932. A considerable amount of extra work arising from the Unemployment and National Expenditure Adjustment Acts has been required to be undertaken by the Audit Inspecting Staff, and the progress reported in my last report has received a check in consequence. The number of officers on the Audit Inspecting Staff at the 31st March, 1933, was the same as at the 31st March, 1932, but the total of fees recorded during the past year in respect of the work carried out by the Inspecting Staff shows an increase when compared with that of the previous year of £440. As the fees are charged at a uniform rate for the time occupied on the audits it will be seen that any increase in the arrears of work is not due to any falling-off of energy on the part of the Audit Inspecting Staff, but rather to the additional work thrown on the staff. Local Authorities' Finance. During the year there were thirty-two cases where the statutory provisions governing borrowing on overdraft were contravened by local authorities. Some local authorities, through no lack of effort on their part to maintain their expenditure within the bounds of their income, are, owing to their inability to collect outstanding rates, finding it extremely difficult in the present financial stress to keep within the statutory limit of overdraft, and in several instances where the overdraft has been exceeded the local authorities concerned have shown a reluctance to take the necessary steps to recover the outstanding rates. Section 3 of the Local Bodies' Finance Act, 1921-22, restricts the borrowing on overdraft or temporary loan by a local authority during anv year to an amount not exceeding three-fourths of the total revenue of the preceding year, provided, however, that at the end of any year the amount so borrowed does not exceed a sum greater than that portion of the revenue of that year which remains unpaid and outstanding at that date. A local authority may therefore have committed a breach of section 3 at the end of any financial year, in that the amount owing at that date on overdraft, and/or temporary loan, exceeded the outstanding revenue of that year, but such local authority may nevertheless have complied with the statute on the following day, the first day of a new financial year, as on that day the borrowing limit is three-fourths of the total revenue of the preceding year. The present economic position has disclosed the inadequacy of the provisions of section 3 as a safeguard against excessive borrowing, as the fact that a local authority's accounts disclose that the bank overdraft, and/or temporary loans, do not exceed the revenue outstanding, is not an indication that the lender's position is secure, for the reason that it may not be possible for the local authority to collect any substantial portion of the outstanding revenue. It is apparent that at the present time the limits of borrowing fixed by section 3 are excessive in cases where arrears of rates form the greater part of the outstanding revenue, as such arrears will no doubt include a large proportion of uncollectable rates.

XXVI

Department and Offlce. Number. Date. Remarks. Naval Defence Department — Naval Base, Auckland .. .. .. .. 16/8/32 Stores. R.N.V.R., Auckland .. .. .. .. 31/8/32 Cash and stores. R.N.V.R., Dunedin .. .. .. .. 30/4/32 Stores. R.N.V.R., Wellington .. .. .. .. 30/6/32 Cash and stores. Ships' cash accounts .. .. .. 44 Various Cash. Ships' miscellaneous accounts .. .. 29 Various Stores. Police Department — District Office, Auckland .. .. .. 30/5/32 Cash and stores. Police Station, Opotiki . . .. .. .. 25/3/33 Stores. Prisons Department — Prisons .. .. .. .. 12 Various Cash and stores. Public Works Department — District offices and sub-offices .. .. 26 Various Cash and stores. Road stores and roadworks .. .. 44 Various Stores. Lake Coleridge .. .. .. .. 31/7/32 Stores. Mangahao .. .. .. .. .. 5/7/32 Cash and stores. Waikaremoana .. .. .. .. 5/7/32 Cash and stores. Waitaki .. .. .. .. .. 31/3/33 Cash and stores. Workshops, Wellington .. .. .. .. 31/7/32 Stores. State Forest Service — District Office, Auckland .. .. .. 31/10/32 Cash and stores. District Office, Christchurch .. .. .. 31/10/32 Cash and stores. Plantation, Hanmer Springs .. .. .. 10/1/33 Cash and stores. District Office, Hokitika .. .. .. 22/4/32 Cash and stores. District Office, Invercargill .. .. .. 28/11/32 Cash and stores. Plantation, Maramarua .. .. .. .. 30/12/32 Cash and stores. District Office, Palmerston North .. .. 28/9/32 Cash and stores. Plantation, Riverhead .. .. .. .. 30/12/32 Cash and stores. Plantation, Tairua .. .. .. .. 6/12/32 Cash and stores.