B.—l [Pt. ll].

Audit of War Expenses. In the War Expenses Account the net amount of loan-moneys raised during the year was £14,504,491, the proceeds of war taxes totalled £15,745,247, and miscellaneous receipts amounted to £487,709. From 3rd September, 1939, the date of the outbreak of war, up to the 31st March, 1941, the receipts credited to the account include donations totalling £100,(582, and ranging from the "widow's mite" of 4d. to £20,000, and voluntary interest-free loans from £l to £1,000,000, totalling £2,592,050. Expenditure in connection with the three fighting services brought to charge during the year amounted to £2,108,898 for the Navy, £17,249,620 for the Army, and £7,487,795 for the Air Force. An amount of £278,592 was accounted for under the head of Civil. The account opened with a credit balance of £953,379 and closed at 31st March with a credit of £4,428,548. Answers to inquiries made by the Audit Office indicate, however, that at the close of the year the claims not then received from the Imperial Government for equipping and maintaining our forces overseas prior to that date are likely, when they come to hand, to be much in excess of this balance. During the year the work of the Audit Office in connection with war expenses increased progressively with the Dominion's expanding war activities. In addition to the officers engaged in Head Office on the audit of vouchers supporting war expenditure, two are continuously employed in auditing the pay, allowances, and allotments of Navy personnel, and five others, who receive assistance from time to time, a,re engaged permanently at Base Records office in checking the pay, allowances, and allotments of members of the Second New Zealand Expeditionary Force. Two officers are also employed continuously at Army Headquarters on audit work connected with soldiers' pay. Three Audit Examiners are engaged permanently at Air Force Headquarters on the work of auditing pay, &c., of the personnel of that Force. To carry out the work of checking the accounts relating to home-defence units and Territorials undergoing intensive training, one member of the staff is stationed at Auckland, two at Waiouru Military Camp, two at Wellington, and two at Burnham Military Camp. There are also eight members of the staff attached to the New Zealand Expeditionary Force overseas, seven of whom are employed in auditing the records of soldiers' pay and purchases of equipment and supplies in the Middle East, and one is employed on similar duties with the " B " Special Force. The difficulties which arise in connection with accounting for the pay of an army when it takes the field, and suffers losses of men by death and capture, and also loss of records, can readily be imagined, and the presence of an audit staff at the place where the accounting records are adjusted must assist Audit to obtain the maximum satisfaction which circumstances allow. In addition to the officers already mentioned who, as indicated, are mainly engaged iti auditing the pay, allowances, and allotments of the armed services, Stores Audit Inspectors periodically visit naval bases, military camps, area offices, unit headquarters, and air force stations for the purpose of checking the purchase, receipt, and issue of military stores and equipment. Army Stores. —The term " stores " as used against this reference does not include foodstuffs. These are dealt with against the reference " Army rations." The expansion of the Territorial Force, added to the mobilization of the overseas force, has very greatly increased the volume of work entailed in the receipt and issue of equipment and stores. To impose a thorough check on this work would entail the establishment of special audit sections at ordnance depots and mobilization camps, and provision for interim audits at area offices. Trained officers are not available for these purposes, and work has had to be restricted mainly to an investigation of the general state of the accounts at the various depots and camps.

ii—B. 1 [Pt. ll].

IX