B.—l [PT. ll].

and in another case proceedings were not taken in view of a medical report as to the state of health of the official concerned. The aggregate sum of all the misappropriations was £820 ss. Id., and the largest sum involved in the case of the defalcations of any one official amounted to £260 2s. Bd. In my previous report attention was drawn to the absence of authority to pay wages of employees, other than "casual" wages, out of Imprest Accounts, and to the difficulties being experienced by most local authorities in obtaining signatures of members to cheques drawn for payment of regular wages on the dates required by the awards in force. It is understood that the Department of Interna] Affairs is considering the promotion of legislation to include all wages instead of " casual" wages in the definition of expenditure which may be made from Imprest Accounts, and it would greatly assist the administration of local authorities if such amending legislation were enacted. Certain land which had been vested in a local authority as an endowment for the improvement and benefit of the district, was taken by the Crown under the Public Works Act, 1928, for the purpose of erecting a post-office. The compensation in respect of the land and the improvements thereon was agreed at £9,000, and was paid to the local authority concerned. The Audit Office raised the question whether, in view of the fact that the land had been vested in the local authority as an endowment, there were any restrictions on the use by the local authority of the compensation moneys. The question was recently disposed of by way of originating summons when the Supreme Court decided that the land was held by the local authority in trust for a particular purpose within the meaning of section 156 (2) of the Municipal Corporations Act, 1933, and that, therefore, the moneys fell within the provisions of section 92 of the Public Works Act, 1928, and should have been paid to the Public Trustee pending direction of the Supreme Court as to their disposal. The Court further held that until such time as that direction was obtained it was the duty of the local authority to preserve the capital sum of £9,000 and to invest it, if that was reasonably possible, so as to provide income for the general purposes of the local authority. During the year a local authority paid to two of its employees amounts covering, in each case, the same period in respect of— (a) The monetary equivalent of leave on retirement: (//) Retiring-allowance from its own pensions fund : (c) Salary in respect of re-engagement from the date of the commencement of the leave on retirement. The Audit Office represented to the local authority that payments (a) and (b) could not properly be made, as in the circumstances of re-engagement there had in fact been no retirement of the employees. These representations were accepted by the local authority, which obtained refunds amounting to £1,215 from the employees. Schedule A (p. xv) sets out the breaches of law relating to local authorities which the Audit Office dealt with during the year by suitable reference in its certificates to accounts, and also, where necessary, by obtaining an adjustment of the accounts or a recovery of moneys unlawfully expended. Matters which, although not breaches of law on the part of local authorities, the Audit Office felt called upon to refer to in its certificates are set out in Schedule B (p. xv). In certain cases, which are set out in Schedule C (p. xvi), an adjustment of the accounts or a recovery of moneys was asked for, but upon assurances being given by the local authorities that application would be made for the introduction of validating legislation, the Audit Office agreed to withhold action on them. The necessary legislation has already been provided in respect of the Mount Roskill Road Board, the Newmarket Borough Council, and the Patea Borough Council.

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