B.—l [Pt. IT].

Local Authorities (Members' Contracts) Act, 1934, would remove many anomalies that had previously existed in regard, to the disqualification of local-authority members. Although, however, the position that had previously existed was greatly improved by the passing of the Act, many difficulties are still experienced by localauthority members, who, generally, do not possess expert knowledge of the law, in interpreting some of its provisions, and, indeed, a great number of the disqualifications which have come under the notice of the Audit Office since the coming into force of the Act appear to be attributable to this cause. In the circumstances it is considered by the Audit Office that legislation, which it is understood has already been under consideration, setting out more fully and clearly the position regarding the disqualification of local-authority members is most desirable. The Audit Office was called upon during the year to deal with five cases involving misappropriation of moneys or other property by local-body officials or cash shortages in local-body offices. In each of these cases the matter was placed in the hands of the police for appropriate action. The aggregate sum of all the misappropriations and shortages during the year was £503 11s. 9d. The largest misappropriation by any one official was £215, and another case involved an amount of £206 19s. 10d. There came under the notice of the Audit Office during the year numerous breaches of law in respect of the accounts of local authorities. Those cases in which the Audit Office finally included in its certificate to the accounts a qualification in respect of any such breaches of law are set out below (Schedule A). Attention was also drawn by the Audit Office in its certificates during the year to certain matters relating to the accounts of local authorities but which were not breaches of law (Schedule B). In each case where it was incumbent on the Audit Office to take action a recovery of moneys or an adjustment of accounts, as the case may be, was obtained, except in cases where, in view of special circumstances, an assurance satisfactory to the Audit Office was obtained that legislation validating the irregularity would be introduced, in which cases the adjustment or recovery was waived conditionally on such legislation being passed. A list of cases where a waiver conditional upon legislation was granted is set out below (Schedule C). Schedule A. Accounts not prepared in form required by statute .. .. .. .. .. 3 Agreements entered into without lawful authority .. . . .. .. .. 2 Contracts of insurance taken out with mutual insurance companies .. .. .. 1 Contracts varied without authority of law. . . . .. .. .. .. .. 3 Depreciation in trading accounts, absence or inadequacy of charge for .. .. 6 Disqualification of local-body members on account of breaches of law.. .. .. ..10 Expenditure without legal authority .. .. . . .. .. .. 13 Expenditure made by education authorities out of endowment income without approval of Minister 2 Expenditure made by education authorities on break-up expenses, &c, without or in excess of approval of Minister .. .. . . .. .. .. .. .. 6 Failure to provide for expenditure for year out of revenue .. .. .. . . 18 Failure to claim subsidy under section 20, Finance Act, 1935 .. .. . . .. 1 Fidelity securities for staff, absence of .. .. .. .. .. ... 2 Finance Act, 1934, section 20, moneys not dealt with in accordance with .. . . . . 25 Harbours Act, 1923, section 68 : Credit given without security for period in excess of that provided 4 Heavy-traffic license fees not collected in respect of farmers' motor-lorries .. .. 4 Heavy-traffic license fees : Regulations not complied with . . .. .. .. .. 2 Hospitals and Charitable Institutions Act, 1926, section 75 (3) : Approval of Minister not obtained to capital expenditure .. .. .. . . .. . . .. .. 1 Interest on temporary loans paid in excess of authorized rate .. .. .. 3 Investments contrary to law .. .. .. . . . . .. .. 11 Local Authorities Interest Reduction and Loans Conversion Act, 1932-33 : Non-compliance with terms of conversion order .. .. .. .. .. . . . . 1

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