XIII

E.—l

As in previous years a portion of the votes"for scholarships, for district'high schools, and for manual and technical instruction, as well as most of the building vote for the year, was not received by the Boards until after the 31st December, 1902. The amounts payable thereunder to the several Boards are, however, included in the assets of the Boards shown in Table O. Tables 0 and P show the financial position, as regards the General and Building Accounts respectively, on the 31st December, 1902; for the purpose of comparison the deficits and balances on 31st December, 1901, are also given. In order to make clear the statement of assets and liabilities in the General Account the following explanation, given in the last two annual reports, is reproduced here:— In Table 0 there are included among both the assets and the liabilities the payments made to Education Boards in the December quarter by the School Commissioners out of the proceeds from educational reserves, which, if counted among the cash assets, should also be set down on the other side as amounts due to the Government. The origin of the present position in regard to these amounts cannot be clearly understood without going back to the date from which the accounts of the Education Boards may be said to start. After the passing of " The Education Act, 1877," all the accounts of the Boards were adjusted as up to the 30th June, 1878. For the September quarter of that year the full amount of the capitation grant was paid to the Boards, the amounts received by the Boards from the School Commissioners during that quarter not being deducted. In every subsequent quarter there has been deducted from the capitation grant to each Board the amount received from the Commissioners in the preceding quarter. Generally speaking, then, a Board will, at the end of any quarter, have received a sum from the School Commissioners which has not yet, in accordance with the statute, been deducted from the capitation grant, and is therefore a liability to the Government. Strictly, if the Boards include such sums in their money assets, they should show corresponding liabilities. The practice in the past seems, however, to have varied with different Boards. Some Boards have uniformly shown such amounts among their liabilities ; some other Boards appear to have overlooked them, or, at all events, to have regularly excluded them from the list of their liabilities. The amounts shown among the liabilities in the column headed " Due to Government " are all of this character. In cases where the amounts derived from primary reserves on account of the December quarter dii not appear in the cash balances no corresponding liabilities would arise. At the close of the year 1902 seven out of the thirteen Boards had deficits on their General Aocount, amounting altogether to £6,211; at the end of 1901 nine Boards had deficits, amounting in all to ,£9,571 ; the total deficits have therefore been decreased by £3,360. Six Boards had balances on 31st December, 1902, amounting in the aggregate to £6,840, as against four Boards whose accounts were in credit in December, 1901, with a total balance of £5,923, the increase in the credit balances being thus £917. The total amount of improvement during the year was therefore £4,277. The Boards that improved their position on the General Account during the year were nine in number: Wellington, which reduced its deficit from £4,549 to £2,762, shows the greatest improvement, while Auckland, which increased its balance from £2,203 to £3,092, comes next. The position of the North Canterbury Board was almost stationary during the year; that of Grey and South Canterbury changed slightly for the worse; and Hawke's Bay's balance was diminished from £2,855 to £1,678 —£1,000 of the difference, however, being caused by a transfer of that amount from the General Account to the Building Fund. On the Building Account ten out of the thirteen Boards were in credit on the 31st December, 1902 ; of these, five Boards showed balances that in a greater or less degree were smaller than those shown twelve months previously, while three (Hawke's Bay, North Canterbury, and South Canterbury) had increased their balances, and the other two —namely, Marlborough and Grey—had changed small deficits into substantial balances. Of the three Boards that exhibited, deficits on their building account Wellington calls for the most remark, as it increased its net liability from £604 to £7,651 ; in the case of Otago, a deficiency of £456 takes the place of a credit balance of £1,491; on the other hand, Auckland reduced its deficit from £3,587 to £1,012. To sum up, the total deficits of the three last-named Boards on the Building Account at the close of 1902 amount to £9,119, as against £4,526 in December, 1901. The total balances of the Boards that were in credit on the same account were, on the 31st December of last year, £18,671, as against £19,248 at the corresponding date in the previous year. The net balance of all the Boards on