EXCHANGE ANOMALIES

Evening Star, Issue 22143, 25 September 1935, Page 6

EXCHANGE ANOMALIES

GOST CHARGED TO ORDINARY REVENUE AUDITOR-GENERAL RENEWS CRITICISM TOO MUCH DEPRECIATION ALLOWED ON ASSETS [From Ouu Parliamentary Reporter.] WELLINGTON, September 24. The treatment of exchange in the Public Accounts has been a question for regular criticism by the Controller and Auditor-General in his annual report to Parliament, and tlie matter is again dealt with this year. The method adopted to which exception is taken is to charge the cost to the ordinary revenue account, and to credit any premiums received from exchange to the same account, irrespective of whether tlie transaction related to this account. However, as is pointed out, the Minister of Finance has the power to follow this practice, though it is also possible for the Minister to allocate exchange to the appropriate accounts, if desired. An example of how the present system works is given in the report. An expenditure by the Department of Scientific Research amounting to £414 was made in New Zealand out of the vote. It was remitted to London, where its value was £333. “As the amount recovered in London was equal to the value expended in New Zealand, it is clear that the net amount chargeable against the vote was nil. Owing to failure to make proper allowance for the difference in exchange, however, the vote, after being debited with £414, was credited with £333 only, and therefore showed a net debit of £Bl in respect of this transaction, and was clearly overcharged to this extent.” The net cost of exchange for the year, according to the Auditor-General, was £1,450,000, which was paid froni ordinary revenue account, though, in his opinion, it should have been charged to the various appropriate accounts. Another angle to the exchange position is provided in the statement of the Public Debt as it March 31. It is shown as having declined by over 21 millions, a decrease effected principally by the application of the proceeds of the surplus sterling assets sold to tlie Reserve Bank. The annual saving in interest on the Public Debt through the operation of the conversion legislation is £160,952, and the total remaining debt is now just over £284,000,000. Attention is called to the fact that certain payments made in London by the High Commissioner are not submitted to audit, as is the case with other payments. Therefore the AuditorGeneral informs Parliament that he accepts no responsibility for their correctness. He also brings to the notice of members the fact that changes take place in the form of presenting the puhlic accounts, and that such Iroquenfc alterations are undesirable, as they tend to reduce parliamentary control through reducing the possibility of making adequate comparisons. The suggestion is made that no changes should be permitted unless authorised by the Public Accounts Committee. After 15 years’ experience in preparing the departmental accounts on commercial lines, the opinion is expressed that _the rates of depreciation, charged in tHe past have been in nearly all cases too high, and that there is no doubt that many assets which have been written down to the extent practically of their full original value, still possess many years of useful life. The report adds; “For the yemended March 31, 1935, depreciation will ho calculated on the annually reduced value of the assets, instead of the original value, as formerly, and now reduced rates will he laid down for ensuing years. The Audit Office suggests that it would be more satisfactory to have a revaluation made of tho various assets controlled by each department to fix the rates to be charged annually on a basis to be determined by a review of the records of each department from the date of inception of the system.” Tho local bodies of New Zealand gain a good word from the Auditor-General for the satisfactory position of thoir audits, tho majority having last year shown a commendable desire to have their accounts audited with promptitude. A warning note is sounded in respect to tho tendency of some local bodies to economise at the expense of their debenture Holders by refraining from meeting their sinking fund obligations each year. Seventeen cases have come under notice.

In specifying the list of misappropriations of local body funds last year, involving a total of £2,4.35, the report states that in one important case fraud was made easy by tho practice of the local body members signing blank cheque forms and leaving them to be completed by the official concerned, but steps have been taken to Have this practice discontinued immediately. Recent economic difficulties are reflected in the sums written off the various departmental accounts as being irrecoverable owing to tho debtors being unfinancia!. The Lands Department’s total is £21,156, while the losses on the realisation of properties include £6,669 by the Public Service Superannuation Board, £14,141 by the Public Trustee, £2,720 by the State Advances Office. The 'treasury secured the writing off of £74,731 —“ miscellaneous investments, reserve fund, loss on realisation.”