A.—4

38

Accounting Officer that the statement is correct. The Treasurer's cash-sheets are checked in the Audit Office with the " attested accounts" of the Collecting Officers, which are sent to the Auditor-General direct, and also with the Banksheets, which the Bank is also required to send to the Audit Office daily. The latter audit is carried on concurrently with the transactions, being usually not more than four or five days in arrear; whilst the comparison with the " attested accounts " is necessarily delayed by the more lengthened period at which the latter are received. By the second and third sections of the Audit Act these "attested accounts" are required to be sent to the Audit within ten days, in Sydney after the end of each month, and out of Sydney after the end of each quarter. Although the Auditor-General is required to surcharge an Accountant with, errors in his account, or insufficient collections, he has no power to enforce his surcharge : he can do no more than report it to the Treasurer to be put in force. The Treasurer, however, is himself, in his character of Receiver of Inland Revenue, liable to be surcharged. In such a case the power of the Audit and the duty imposed on it is a dead letter. Nor has he any power of compelling officers to reply to his queries, and the result is that, as a matter of fact, months and even years elapse without notice being taken, in some instances, of the Audit queries or demands for further information. Moreover, as there appears to be a rule in force that the Treasury will not enforce any surcharge until the reply of the officer concerned to the querry has been received, it would seem that any surcharge may be evaded by neglecting to notice it. Again, it is not admitted that the Auditor-General has the power of going into any office and inspecting the accounts. In practice the officers of the Audit Office do sometimes make such local inspections. The accounts of the Customs, for instance, are thus in part periodically inspected; but the right to inspect the accounts in the Stamp Office was upon one occasion denied, and the claim for exemption was upheld by the Treasury. The Inspectors of Local Accounts are, in New South Wales, officers of the Treasury, not, as elsewhere, of the Audit Office. It is generally admitted that no perfect audit of revenue accounts can be effected apart from a local inspection of the books and papers in an office; and that the returns made to the Audit by Collectors are not sufficient to enable a complete audit to be made. Whilst, therefore, the Act requires the Auditor-General to surcharge Collectors with moneys they have neglected to collect, the machinery is wanting which would enable him to carry out the law. That the inspection of local accounts should be conducted by the Treasury instead of the Audit, is a system adopted nowhere but in New South Wales, and the anomaly is the more remarkable in that colony because the Treasurer is himself, as Collector of Inland Revenue, the officer who may be surcharged. The Audit Office in this, as in all the colonies except New Zealand, is considered to have no control over the Ways and Means, and therefore no power to prevent the Government from obtaining moneys either in excess of, or from other sources than, those provided by Parliament. There is, in short, nothing corresponding to the control exercised by the Exchequer in England. The Audit Office is therefore relieved from the duty of keeping any accounts with the object of showing that the limits of Ways and Means authorized by law are not exceeded, or that other moneys are being obtained by the Government than those placed at its disposal by Parliament. The principal accounts kept in the Audit Office are the Appropriation Ledgers, occupying five large folios, in which each vote severally is credited with the amount appropriated, and debited with the expenditure. Each account is balanced monthly; the issuing balance, however, is not carried out, but is obtained by inspection when required. Pending the passing of the Appropriation Act each vote is credited with onetwelfth part of the vote for the previous year upon the passing of each Supply