REPORTS OF THE PROVINCIAL AUDITOR.

New Zealand Times, Volume XXX, Issue 4419, 19 May 1875, Page 3

REPORTS OF THE PROVINCIAL AUDITOR.

Provincial Auditors’ Further Report eor Quarter ended 30th September, 1874. FURTHER REPORT For his Excellency the Governor of New Zealand, upon the accounts of the Provincial Treasurer, Wellington, for the quarter ended 30 th September, 1874, relative to a loan of £IOO,OOO, raised by the Superintendent of Wellington, upon mortgage of the harbor reserves, &c. In continuation of previous audit observations relative to a proposed operation by the Provincial Treasurer for the issue of moneys from the loan fund branch of the provincial account, the Provincial Auditor has now the honor to submit for his Excellency’s information full particulars of the loan referred to, and of the causes which prevented audit certificates being granted for the issue of any part of the funds in question. Certain lands appeared to have been granted to the province under the authority of the Public Reserves Act, 1854, and of Crown grants dated 18th October, 1855, and 20th June, 1862, respectively. These lands, or part of them, were mortgaged by the province to the Bank of New South Wales for a sum of £25,000 sterling; but an Act of the Colonial Legislature, intituled the Consolidated Loan Application Act, 1860, enabled the Crown to* repay to the above-named Bank the amount advanced by it on security of the lauds. The colony repaid the amount to the Bank, and the mortgage was accordingly handed over to the Crown, it being expressly provided that the province should no longer borrow moneys upon the harbor reserves. This provision remained in -force ancPlhe Crown held the lands until after the passing of the Wellington Harbor Reserves Mortgage Release Act, 1873, which Act enabled the Superintendent, upon repayment to the colony of the sum of £25,000, and upon provision being made for repayment to the Crown of a further sum of £31,000, and interest, &c., refereed to in the last quoted Act, to obtain a release of the lands and to' borrow moneys upon them. The Superintendent paid the twenty-five thousand pounds to the colony, and provision was made by means of an arrangement entered into with the Municipal Corporation of Wellington, for repayment to the Crown of the thirty-one thousand pounds sterling and interest, &c. The Crown accordingly released the lands from mortgage (except those included in the f' Ist and 3rd schedules to The Reclaimed Land r Act, 1871.) It was observed, however, that the £25,000 . paid to the Crown in consideration of the release of the mortgage, was part of a loan of £IOO,OOO sterling raised by the Superintendent from the Wellington Trust Loan and Investment Society, on security of the harbor reserves. It (the £25,000) was borrowed on the 13th October, 1873, but the inortgage to the company was not enacted until the Bth September, 1874. It will therefore be observed that the £25,000 was obtained from the Trust and Loan Company in advance of the intended mortgage, and before the Superintendent had the authority of law to borrow moneys on the harbor reserves. Before declining to certify the Superintendent’s warrants for the issue of any part of the loan, the auditor referred this point among others for the opinion of the Attorney-General, who advised as follows : “ I am of opinion that the £25,000 paid by the Superintendent to the colony was borrowed without authority of law, for though the Superintendent obtained the money from' the Trust and Loan Company, in order to pay the colony, yet as until after the £25,000 was paid to the colony, the Superintendent hod not authority of law to borrow on mortgage of the land, or otherwise,” it will thus be observed that the loan was not lawfully borrowed, and that it could not therefore he legally issued. • It , may also be stated that the Provincial Auditor entirely failed to trace any appropriation by the Provincial Legislature for the issue of the loan in question. The Provincial Treasurer contended that appropriation of the moneys was to be found in a Provincial Ordinance intituled an Act to Explain and Amend the Harbor Reserves Act, Session 111., No. 14, and that the authority appearing in that Act to borrow moneys on mortgage for the purpose of reclamation, was of itself sufficient appropriation to warrant the issue of the moneys, borrowed, because sums so borrowed, the Provincial ’ Treasurer contended, could only be applied to the purposes for which they were raised, viz., reclamation of the harbor reserves. The Provincial Auditor could not understand, however, how this reasoning could be reconciled with the fact that £25,000, or one fourth part of the whole loan, hud olreudy been applied to other purposes than those of reclamaturn, as previously shown. The question of appropriation was, therefore, referred for opinion of the Attorney-General, who advised

as under : **l am of opinion that -without an appropriation the moneys cannot be issued for the purposes of the contact to reclaim. There is no appropriation that X can find, certainly there is none in the Xlarbor Reserves Acts. ** I am also of opinion that the authority to contract for reclamation alone is not an appropriation either of loan or ordinary revenue to the payment of the contract price. * In order to save the province the cost of a lawsuit, which the Provincial Treasurer stated it was his intention to institute in the endeavor to compel the Auditor to certify warrants for th£ issue of the loan, the Attorney-General was willing to try the whole question at issue between the Audit and Treasury Departments, in the .shape of a friendly action before the Court of Appeal, which was then in session. A proposal .was accordingly made to the Provincial, treasurer, that the case should be so tried before the Judges of the Supreme Court; but. the. Provincial Treasurer declined the offer, ahd ‘ uuder, : all the circumstances of the case,' the ' Provincial Auditor was unable to certify warrants for the issue of moneys from WitS regard to a claim by the Governors of the Wellington College for a sum of £BOO, the .valueof certain. Savings .Bank, debentures held by them, .the Auditor was unable to certify the warrant presented to him, for the following'reasons The Act under-which the securities were stated to have,been issued, expressly provides that “the deiientures shall not be'transferable "—the transfer of the securities to the Wellin«ton College therefore appeared to be illegal. 0 The Wellington Debts Act, 1871, requires that tliesfe debentures “ shall not be converted into money, but shall be handed over to the Colonial Treasurer.” A somewhat similar provision appears in the Post-office Savings Bank Amendment Act, 1869. Keeping in view the provisions contained in the Acts above quoted, and the facts that the debentures were created after the Schedule to the' “Wellington Debts Act, 1871,” was framed (which schedule was supposed to include all the debts of the province at the time of the passing of the Act) and the value of the securities did not appear in any of the accounts of the Provincial Treasurer as a debt due by the province, and there was no appropriation by the Provincial Legislature to warrant the issue of moneys to meet old liabilities of which the Provincial Council appeared to have had no knowledge, it was deemed expedient to refer these questions for the opinion of the law adviser to the Crown, to whom they were accordingly submitted. The AttorneyGeneral considered it very doubtful whether the debentures can be legally held by any person. It may here bo stated that that the College accounts, required by law to bo furnished to the Provincial Auditor for examination and audit, have not been received in the Audit Office, ....... E. Macalisteh, Provincial Auditor. W. W. Taylor, Esq., Speaker of the Provincial Council, Wellington. Provincial Auditor’s Bepobt foe Quarter ended 31st December, 1874. Provincial Audit Office, Wellington, 28th April, 187 C. Si ß) _X have the honor to forward to you herewith the following documents relative to

the accounts of the Provincial Treasurer of this province for the quarter ended 31st December, 1874 : 1. Duplicate of observations furnished for the information of his Excellency the Governor in accordance with the requirements of, law. 2. Printed form of “Report of the Provincial Auditor.” 3. Abstracts of Accounts. 4. Statement of Receipts and Disbursements of the Loan Fund Branch of the Provincial Account.—l have, &c., R. Macalister, Provincial Auditor. W. W. Taylor, Esq., _ Speaker of the Provincial Council, Wellington. Report for His Excellency the Governor of New Zealand. . The Provincial Auditor has the honor, in accordance with the requirements of the Provincial Audit Acts, to forward herewith, for the information of his Excellency, the following observations upon the accounts of the Provincial Treasurer, Wellington, for the quarter ended 31st December, 1874. In absence of any appropriation by the Provincial Legislature of sums “deposited” at interest with the Provincial Treasury/ by natives (or more properly Loans) received by the Provincial Treasury without the authority of law, such sums remain in the Bank unproductive to the Provincial Government with interest accruing upon them at the expense of the province. If it is intended that loans of this description should be received for the future, it is considered that express legislation will be necessary to enable the Provincial Treasury to receive and utilise them. In the mean time moneys so received (£2945) have been transferred, at the request of the Provincial Auditor, from revenue to the loan fund branch of the provincial account.

With regard to trust moneys deposited by contractors and others as security for the due completion of works, and held by the Provincial Government pending the fulfilment of obligations, it may be stated that these funds (£2039 4s. 3d.) have been transferred from revenue to a deposit account at the Bank, instead of being as heretofore used as ordinary provincial revenues. The law does not provide for the disposal of trust funds held by the Provincial Government—these moneys are not subject to appropriation by the Provincial Council—they are not, therefore, issued under ware-ant, but are refunded to depositors by the Provincial Treasurer with the concurrence of the Superintendent, and with the knowledge of the Provincial Auditor. .Robert Macalister, Provincial Auditor. 27th April, 1875. MEMORANDUM. Provincial Audit Office, Wellington, sth May, 1875. The attention of the chairman of the committee appointed to audit the accounts of this province for the financial year ended 31st March last, is invited to the following observations upon the mode which has hitherto obtained of conducting the provincial account at the Bank of New Zealand. The practice which obtains in the Bank of paying cheques drawn by the Provincial Treasurer, without first ascertaining that the amounts of those cheques have been duly entered in warrant, is, perhaps, the most important question affecting the provincial account.. It is scarcely necessary to point out that, in absence of any provision by law for the prevention of so objectionable a system, there is in reality no practical check upon the Pro-, vincial Treasurer, or upon .other officers of the Provincial Treasury, who may be authorised by bis Honor the Superintendent to sign cheques, and all the revenues at credit of the provincial account could thus be withdrawn, issued, or paid away without the knowledge of either the Superintendent or the Provincial Auditor. In absence of any provision to meet the requirements of the case by Provincial Audit Acts of the Colonial Legislature, it is submitted for the consideration of the Audit Committee, whether it is desirable that this matter should be brought before the Provincial Council, with the .view of obtaining local legislation for the better protection and control of provincial revenues. R. Macalister, Provincial Auditor. E. Pearce, Esq., Chairman Provincial Audit Committee, Wellington.