B.—l [PT. lIJ.

PUBLIC ACCOUNTS ' FOR THE FINANCIAL YEAR ENDED 31st MARCH, 1934.

REPORT OF THE CONTROLLER AND AUDJTOR-GENERAL.

I have the honour to submit my report for the year ended 31st March, 1934, in terms of subsections (2), (3), and (4) of section 89 of the Public Revenues Act, 1926. Paragraphs (a) to (h) of subsection (2) set out the several matters which the Controller and Auditor-General is required to include in his report to Parliament, and, in accordance with that statutory requirement, where such matters have come under the notice of or have been dealt with by the Audit Office during the year the details thereof have been included in this report under their appropriate headings. The full Statement of the Receipts and Payments of the Public Account is contained in two parliamentary papers —namely, 8.-l [Pt. I], which shows, under main headings, the receipts and payments of the funds and accounts comprising the Public Account, and also shows details of the expenditure under the annual appropriations, Civil List, and the Unauthorized Expenditure Account, and 8.-l [Pt. ll], which shows certain of the receipts and payments in greater detail than they are shown in 8.-l [Pt. I], and as the last-mentioned paper for 1933-34 has already been laid before Parliament, it is only necessary for me to present Part II in accordance with the usual practice. Instances of Non-compliance with Law. The Controller and Auditor-General is required by the Public Revenues Act to call attention to any cases where the provisions of the law have been varied or departed from, and I accordingly submit the following instances: — 1. Section 6 of the New Zealand Debt Conversion Act, 1932-33, provided that the holder of securities convertible under the Act should not be entitled to demand payment of interest on such securities, or to receive new securities, until he had surrendered the existing securities. In one case an insurance company had securities deposited abroad, and was unable to uplift them for conversion until it had replaced them with new securities. In these circumstances the Audit Office agreed to the issue of new securities in conversion before the production of the converted securities on the company giving adequate indemnity to cover the Government against possible loss. The converted securities were afterwards duly surrendered to the Treasury. 2. Under the provisions of the Banks Indemnity (Exchange) Act, 1932-33, the proceeds of exchange purchased thereunder were available only for the purposes set out in the Act, and were not available to cover the general expenditure of the Government. During the year it became desirable to use these moneys to meet general payments due by the Government in London, and a regulation was made by Order in Council dated 28th August, 1933, under section 9 of the Act, authorizing the Minister of Finance to expend such moneys on any of the services of the Government for which due authority existed. This regulation provided the necessary authority for the expenditure of these moneys for such purposes on and after the date of the Order in Council, but expenditure of this nature had already been made, and, strictly speaking, such