B.—l TPt. 111.

In several of my previous reports I referred to the unsatisfactory state of the law governing the disqualification of members of local authorities, and I am pleased to note that the anomalies then existing in the law have now been removed by the passing during last session of Parliament of the Local Authorities (Members' Contracts) Act, 1934. The new Act provides for uniformity in the conditions which constitute disqualification of the members of the various types of local authorities. It becomes more obvious each year that some clearly expressed statutory rule should be laid down regarding what constitutes the reasonable additional costs of holding an Electric-power Board or Harbour Board election when such election is conducted simultaneously with the election of a Borough or County Council. Many disputes have arisen in the past between local authorities as to the interpretation to-be placed" on the words "reasonable additional costs," and the disputes have been determined by the Audit Office. In order to remove the cause of the disputes a clear definition of what constitutes " reasonable additional costs " is advisable. Although many local authorities have established stores systems by which an efficient control is maintained over the receipt and issue of stores, I again desire to draw attention to the fact that there are" yet a considerable number who fail to realize the many advantages to be obtained by keeping an accurate stores accounting system. Many of these local authorities contend that the amount and nature of their stores transactions do not warrant the expense of establishing and maintaining a stores system. It is not suggested that such local authorities should be required to establish elaborate systems of stores control. The wishes of the Audit Office would in such cases be met so long as the stores records kept by the local authorities afforded an adequate check over the receipt and issue of the stores. At present there is no statutory obligation 011 local bodies to keep accurate stores accounts, and, as stated in previous reports, it is desirable in the interests of the ratepayers that the keeping of stores records by the responsible officials of local authorities should be made compulsory by statute. The services of the Audit Inspectors are available to local authorities desirous of introducing systems of stores control into their accounts, and a number of local bodies have already sought their advice in this matter. Several of the County Councils within the Taranaki Provincial District have for a number of years past omitted to collect the heavy-traffic license fees in respect of all farmers' private motor-lorries used in carting milk to factories and in respect of which such fees are payable under the regulations. The Audit Office has no statutory power to compel these Councils to collect the«license fees in question, and attention is therefore drawn to the matter. The Audit Office was during the year called upon to deal with numerous breaches of the law relating to the accounts of local authorities, as detailed below (Schedule A). In each case where the Audit Office had power to take action an adjustment of accounts or a recovery of the moneys was required, excepting where a satisfactory explanation was made or where special circumstances were such that an adjustment or recovery was waived conditionally on legislation being obtained to validate the irregularities. A list of special cases where this conditional waiver was granted is set out in Schedule B. Schedule A. Depreciation in trading accounts, absence or inadequacy of charge for . . . . 9 Disqualification of local-body members on account of breaches of law . . . . 8 Expenditure without legal authority .. .. .. . . . . .. 24 Expenditure made by education authorities out of endowment income without approval of Minister .. .. .. .. .. . . . . . . 11 Failure to provide for expenditure for year out of revenue .. .. . . 26 Failure to make claims within prescribed time for refunds of tax under Motor-spirits Taxation Act, 1927 .. .. .. . . . . . . .. 6 Fidelity securities for staff (absence of) .. .. .. . . 4 Finance Act, 1931 (No. 2), section 45 (2), and Finance Act, 1932, section 39 (3) — Rebates on rates not allowed in terms of .. .. .. .. 3 Approval of Minister not obtained for disposal of balance of subsidy received .. 1 Harbours Act, 1923, section 68 —Credit given for period in excess of that provided . . 4 Heavy traffic license fees not collected in respect of farmers' motor-lorries . . . . 5 Investments contrary to law .. .. .. .. . . . . 7 Loans raised without compliance with section 3 (1), Local Authorities' Loans (Rates of Interest) Act, 1931 .. .. .. .. .. .. 1 Local Bodies' Loans Act, 1926 (offences under) — (a) Loans raised in excess of or without legal authority . . . . 2 (b) Loan-moneys illegally expended .. .. . . . . . . . . 9 (c) Loan-moneys not placed in separate bank account . . . . . . ..11 (d) Sinking funds not established and instalments in arrear .. .. ..17 (e) Interest paid in excess of authorized rate .. .. . , . . 1 (f) Miscellaneous ~ ~ , , ~ ~ , , , . 7

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