B.—l [PT. ll],

I do not propose now to enter into details concerning the subjects then submitted by Audit, but I may mention that in the course of discussion important differences were found to exist between the procedure and functions of the Public Accounts Committee of the House of Commons and the procedure and functions of the corresponding Committee of the New Zealand House of Representatives. As these questions very closely affect the very important principle of the control of public expenditure by Parliament through its Committee, and also through the Controller and Auditor-General, who is an officer of Parliament, and as they also affect the constitutional position of the Controller and Auditor-General, vis-a-vis the Public Accounts Committee and Parliament, I feel it desirable that the attention of Parliament should be called to the action taken by the Controller and AuditorGeneral in the hope that consideration may be given to the anomalies which appear to exist and which would seem to require early adjustment. Non-compliance with Law. In my report for last year, 8.-l [Pt. ll], page iv, paragraphs 3, 4, and 5, attention was drawn to certain matters in which the provisions of the law had not been complied with. As these irregularities were then dealt with in detail, Ido not propose to reiterate the objections referred to. No action has been taken, however, to remedy the position either by altering the present system so as to comply with the law or by amending the law so as to bring it into line with existing practice. Reference was also made in my last report, page xii, to the fact that payments made in London by the High Commissioner under the authority of section 20, Finance Act, 1928, are not being submitted for audit as is the ease with other payments. This practice still obtains and Audit can therefore accept no responsibility for the correctness of these payments. Changes in the Form of the Public Accounts. In my report for last year, 8.-l [Pt. ll], page xi, I drew attention to important changes in the form of the Public Accounts for the year 1933-34, and it is noted that still further changes have been made in the form of these Accounts for the year 1934-35. As pointed out last year it is the rule in the United Kingdom that no important alteration should be made in the form of the Public Accounts or Estimates unless such alteration has been approved by Parliament through the Public Accounts Committee. Frequent alterations in the form of the Public Accounts a,re undesirable, as they tend to reduce parliamentary control, and it is indicated by the highest authorities that the presentation of the accounts in a similar form year by year to enable proper comparisons to be made is of such importance that, even though an alteration may in itself be thought desirable, it should be made only after the gravest consideration and after the consent of the Public Accounts Committee has been obtained. I therefore again bring this matter under notice in the hope that steps may be taken by Parliament to require that no important alterations in the form of the Public Accounts or Estimates shall be made until such have been submitted to and approved by the Public Accounts Committee. Repayment of the Public Debt. The following table gives particulars of the amount of securities redeemed during the year under the provisions of the Repayment of the Public Debt Act, 1925, and also of the total amount so redeemed to 31st March, 1935 :—

IV

Nominal Value of Securities. Rate of Total Cost of Annual Saving Interest. Total to 31st March, v 1Q „. I Total to 31st March, Redemptions. of Interest.* 1934. Year 1934 ~ 35 ' I 1935. Per Cent. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. 3| 900 0 0 55,560 0 0 56,460 0 0 56,460 0 0 3f .. 0 12 0 0 12 0 0 12 0 4 2,290,863 0 0 .. 2,290,863 0 0 2,279,175 9 1 11,454 6 3 41 2,070,940 0 0 .. 2,070,940 0 0 2.055,562 5 0 20,709 8 0 5 2,596,400 0 0 1,567,000 0 0 4,163,400 0 0 4,162,846 5 0 62,451 0 0 51 1,353,090 0 0 500 0 0 1,353,590 0 0 1,353,572 10 0 23,687 16 6 5f 953,780 0 0 100 0 0 953,880 0 0 951,464 12 2 19,077 12 0 6 942,900 0 0 .. 942,900 0 0 921,603 18 11 23,572 10 0 10,208,873 0 0 1,623,160 12 0 11,832,033 12 0 11,780,685 12 2 160,952 12 9 * Difference between the rate of interest which the securities bore and the rate (3J per cent.) payable, by the Consolidated Fund to the Public Debt Repayment Account on the amount of securities redeemed under the Act.