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EEPOET.

The Public Accounts Committee, to whom was referred Paper 8.-22, being the correspondence relative to the payment of interest on debentures under " The Aid to Public Works and Land Settlement Act, 1903," has the honour to report as follows :— That it has carefully considered the said paper, and has examined in connection therewith Mr. J. K. Warburton, Controller and Auditor-General, and Mr. Jas. B. Heywood, Secretary to the Treasury. That section 3 of" The Aid to Public Works and Land Settlement Act, 1903," empowers the Colonial Treasurer to issue short-dated debentures without coupons, and under the provisions of that section the Colonial Treasurer issued debentures of denominations not exceeding £100 without coupons. As evidence of the payment of interest to the holders of these debentures, the Treasury supplied to Postmasters and bank officials a form of statement under which they were to certify to the amounts paid, and that they had, when making such payments,' indorsed on the debentures a statement of the payment of such interest. This form of interest-certificate the Controller and Auditor-General objected to as not in accordance with " The Public Eevenues Act 1891," not being supported by any receipt from the debenture-holder. That the Controller and Auditor-General stated to your Committee that where there were no coupons he would accept an interest-certificate in the form submitted if the fact of the payment of interest and indorsement on the debentures were further attested by the certificate of another independent officer instead of by a receipted voucher in the name of the alleged holder of the debenture, but that the Audit Department preferred in all cases to have coupons attached to the debentures. That it is of opinion that the system of coupons attached to debentures and the surrenders of such coupons on payment of interest affords the most complete system of checking payments, but that where coupons have not been issued the interest-certificate as submitted with the addition of the attesting certificate from an independent officer affords a better check for audit than a mere receipt for payment where the holder's name is unknown. Bobeet MoNab, Chairman. 6th October, 1905.