8.—13.

4

A balance-sheet showing the whole receipts and expenditure of such accounts would simply be as follows :—

Cash in hand and in bank, £40,376 10s. sd. Such a balance-sheet, followed by statements similar to those certified by the Audit Office for the year ended the 31st March, 1904, would fulfil all the requirements of section 50. If the liabilities and assets of the colony are shown, they should be shown, not in the balance-sheet required of the Superintendent by section 50, but in a separate statement. J. K. Waebueton, Controller and Auditor-General.

The following remarks may be added in reply to the strictures made by the Audit Office on the balance-sheet submitted for audit:— Section 50 referred to provides that " The Superintendent shall, within sixty days after the close of each financial year as aforesaid, prepare and lay before Parliament, if sitting, and if not, within fourteen days after the commencement of the next session, a balance-sheet showing " certain particulars specified in subsections (1) to (5). I contend that the balance-sheet submitted fully complies with these requirements in the most approved form, and is in accordance with the correct practice of accountancy, Now the question arises, What is a baiance-sheet ? What is a balance-sheet for ? What is it intended to set forth to those to whom it is to be presented? It is evident from the comments made by the Audit Office that they have no true conception of what a balance-sheet is, or what it is intended to set forth. The only idea which the Audit Office has of a balance-sheet is that it is a mass of figures brought together so as to form a complete balance of figures, and there it ends. It is quite immaterial that there is no information for any one, except the bare fact that there has been a balance arrived at. Every accountant and auditor knows that this is merely preliminary to the preparation of a balance-sheet in which it has no more place than the whole mass of figures comprising all the transactions for the year, and which the auditor certifies to be correct. It is what is known to all accountants, if not to the Audit Office, as the trial balance. The final point reached by the Audit Office in its conception of a balance-sheet is where an accountant's work proper begins in the preparation of a balance-sheet. All authorities agree that a balance-sheet must set out in a concrete form clearly the results of all the transactions —viz., the true financial position, and the results of the operations for the year. The balance-sheet demanded and insisted upon by the Audit Office affords no information whatever as to the true financial position of this office, nor any information as to the results of the operations for the year, nor any indication of what the profits are, cost of management, or profits on interest, and a balance-sheet prepared on the lines required by the Audit Office would be incorrect and misleading. The balance-sheet submitted sets forth clearly, in a concrete form, all the liabilities and all theassets, and is a complete as well as a true and faithful balance-sheet, setting forth the financial position of the office. It also shows the profits made on interest, the cost of management, and thenet profits, which are the results of the year's operations. The last balance-sheet presented by Mr. Warburton as Superintendent (in the form now demanded) was incorrect and misleading in many items, and such as no auditor would be justified in certifying to as correct. It was not a true statement of the financial position nor of the results, and could not be in the form insisted upon. For the past three years, owing to the attitude of the Audit Office, the true and faithful balance-sheet of this office, from which alone any information as to the operations of the office has been gleaned by the Press and others, has been presented to Parliament without an audit certificate, which is a most undesirable state of things. The Controller and Auditor-General further states that £30,000 was written off loan-flotation charges unlawfully. The question of writing off these was submitted to the Solicitor-General, whose opinion was as follows : "As regards the loan-flotation charges, the question seems to me to be a matter more of book-keeping than of law. They are, I think, chargeable to the Management Account, under subsection (1), (a), of section 48, and must be written off or otherwise provided for out of profits, as it cannot be suggested that the Consolidated Fund is to meet them.— Fbbd. Fitchbtt, Solicitor-General.". There can be no doubt, therefore, that the writing-off was lawfully made and essential for the accuracy of the accounts and balance-sheet, notwithstanding the opinion of the Audit Office. P. Heybs, F.S.A.A., Eng., Superintendent. 3rd July, 1905,

Approximate Oostof Paper. —Preparation, not given; printing (1,675 copies), £4 Is,

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Price 3d.]

Balances, 31st March, 1904. Transactions during Year. Balances, 31st March, 1905. Accounts. Dr. Cr. Dr. Or. Dr. Cr. £ s. d. £ 8. d. £ s. d. £ s. d. £ s. d. £ a. d. Advances to Settlers Office Management Investment .. Bills receivable Suspense 14,978 4 11 11,344 13 11 j 574,485 5 1 139,032 4 5 394,532 6 4 549,086 19 7 139,032 4 5 421,081 2 7 50 0 0 14,321 18 1 40,376 10 5 37,893 10 2 740 11 7 3,223 11 10 41,117 2 0 41,117 2 0 790 11 7 4,424 2 7 15,522 8 10 15,768 16 6 15,768 16 6 1,123,572 4 8 1,123,572 4 8