D.—No. 1

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PAPERS RELATIVE TO THE

the 30th September, explanatory of the Auditors' Eeport, and by other collateral evidence. These loans are distinctly denied by His Honor to have been obtained from the public funds. Your Committee confine themselves to a simple narration of what they have acertained on this point; they will offer no suggestions on what appears to them a grave and serious breach of public trust, but leave it to the Council to deal with this matter as it shall think fit. Tour Committee beg to express their satisfaction with the mode in which the Government accounts are kept by the accountant, Mr. Street, with this exception, that in accordance with the recommendation of the Accountant's Eeport of July, 1859, and the recommendation of the Auditors, your Committee would strongly urge that in future all Bank transactions should pass through the Accountant's books. This would to some extent form a check on the improper use of the public funds. Your Committee would also recommend that there should be regular Grovernment pay-days, that no Grovernment moneys over £2 sterling should be paid except by the Treasurer's cheque in favour of the party entitled to receive the money, and that all Government moneys received should be paid daily into the Bank account if they amount to £10 or upwards. They would further express their conviction that, as an additional check, the Superintendent's warrants should, before payment by the Treasurer, be countersigned by a duly authorized member of the Executive, and that the Treasurer's cheques should be countersigned and entered by the Accountant before payment by the banker. Your Committee would further recommend such alterations in the Audit Ordinance as would better define the Auditors' powers and duties ; and also that the relative duties of the Superintendent and of his Executive in reference to financial matters should be more clearly defined, either by resolution of the Council, or, if necessary, by a new Executive Ordinance. In conclusion, your Committee would only add that this Eeport was adopted by the Committee unanimously. Thomas B. Gillies, Dunedin, 18th December, 1860. Chairman.

MINUTES OP EVIDENCE. "Wednesday, Decembek 12, 18G0. At a Meeting of the Committee on Public Accounts, &c. Present —Messrs. Walker, Tarlton, Dick, Gillies, and the Speaker; Mr. Grillies in the chair. W. H. Eetnolds, Esq., examined. By the Chairman]- —Were you one of the Auditors appointed by the Council in April last to audit the Public Accounts ? Yes. When did you commence your duties ? I cannot remember the exact time, but it was some considerable time after appointment. Would you explain to the Committee the reason of the delay between your appointment and the commencement of your duties ? The Superintendent's absence, and the vagueness of the instructions given by him to Mr. Morris, rendered it uncertain whether the audit was to be confined to the public accounts, or to embrace also those of the Eoad and Education Boards. Mr. Eeynolds would wish to state that the Treasurer gave every facility for the examination of the accounts ; indeed he requested us to audit in June, but we declined on the above grounds. Did you, as well as Mr. Morris, apply to the Superintendent for instructions ? I do not remember. Do you remember when the Superintendent left, and how long ho was absent ? I think he left in May or June, and believe him to have been absent five or six weeks; of this, however, I am not certain. Did any communication pass between the Auditors and the Superintendent between the commencement of the audit and the date of the first report ? No written and official communication that I remember. Will you inform us what are the circumstances, so far as you know them, which caused the remarks in Auditors' Eeport on Voucher 437 (immigration per " Gala ") ? This payment was under the Emigration contract between the Government and Messrs. James Macandrew and Co. ; that firm gave the Government written instructions to pay all moneys due under the contract to J. Gladstone and Co., or order. Gladstone and Co. subsequently formally instructed the Provincial Government to pay such moneys due in Otago to James Macandrew and A. W. Morris, jointly ; thereafter to James Macandrew and W. H. Eeynolds, jointly. These instructions were recognized and acted on in every case except the " Gala." Have you been requested by Mr. Macandrew to sign his receipt for the " Gala's " money ? Yes, and also by the Provincial Treasurer and Accountant. Why did you decline ? The money had been already paid to Mr. Macandrew without my authority, and the evidence of its having been properly applied was refused. Have you, since the date of the Auditors' Eeport, signed this receipt or received evidence of the proper application of this money ? I have not. By Mr. Walker.'] —Have you seen any written communication from Messrs. Gladstone and Co. to the Provincial Government, instructing the Provincial Government to pay the moneys due to them in Otago, under the Emigration Contract, only to the order of Mr. James Macandrew and Mr. W. H. Eeynolds, jointly? I have seen such a document, but not when we were auditing the accounts. By the Chairman.]— -With reference to Voucher No. 738 (Clutha Coal Field, £1000), will you state what you know of it ? I know nothing of it, except that the warrant and voucher are vague and unsatisfactory in terms ; and on application to the Treasurer for information, he could give us none, stating that the transaction to which it referred, was managed by the Superintendent personally. Did you, either as Auditor or otherwise, seek information from the Superintendent on this point ? I spoke to him privately on the subject. 9