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148. Mr. Montgomery.] You could prevent this, could you not, by asking for the money in plenty of time?—lf we did not wait until balance at a minimum, but applied periodically—say, at the middle of each month —we probably could manage it. 149. Why not do it ?—There is no reason why we should not. 150. Do you not think that the Auditor should report any practice in reference to these particular accounts that is contrary to law?— Yes. 151. This is contrary to law, is it not ?—Yes. 152. And therefore you think it quite right to report it?— Yes. 153. He has only reported it to the House by laying it on the table ?—lt is not a report to the House. 154. Mr. Fraser.] It is not a special report ? —No. 155. Mr. Montgomery.] You do not suggest there is anything wrong in putting a tag on to these accounts ? —The only thing I have to say is that if the Auditor-General thought it his duty to do so he should have done it before. 156. Or might have warned you?— Yes; he had several opportunities. In the June quarter last year the imprest was exceeded, and also in other quarters. lam not taking exception to the Controller calling attention to the overpayment, but consider that he did not do this at the right time. 157. Mr. McNab.] Could you supply the Committee with a copy of that regulation or instruction you referred to which was issued before 1891 ? —Yes. [See Exhibit P.] 158. Mr. Tanner.] Under what Act was it made ?—The Act of 1878, I think. 159. Of course, it would be gazetted ?—I am not clear that it was gazetted. 160. Are not all regulations under Acts gazetted ? —lf it were an arrangement between the Audit, the Treasury, and ourselves it probably would not be gazetted. 161. Mr. Fraser.} What check does this system of imprest afford? You said just now that you could avoid the possibility of evasion of the law by asking for what you want at the middle of each month ?—So far as the payments are concerned, there is no greater check under imprest than there is without. 162. Your opinion is that it affords no check?— That is my opinion. The imprest moneys are paid in and lie at Wellington. The payments are made by Postmasters out of their collections, and when the accounts reach Wellington they are audited in the usual way. There is a final audit, of course, and that lies with the Auditor-General. No payments are made unless they are contracts, or approved either by the Minister or a permanent head. 163. Well, you admit there is a breach of the law, but you do not consider the present system affords any check at all ?—Yes, there was a technical breach of the law. The complete system of pre-audit has broken down, because the greater part of the expenditure is made out of imprest, which is not pre-audited; but paying out of imprest affords no additional check.

Thuksday, 22nd Septembeb, 1898.—(Hon. W. J. M. Larnach, Chairman.) James B. Heywood examined. 1. Hen. the Chairman.} You are Secretary to the Treasury, are you not?— Yes. 2. Do you hold any other official positions?— Yes; lam Paymaster-General, Eeceiver-General, and Registrar of Consols. 3. There is a note, or tag, placed by the Auditor-General on the balance-sheet of the New Zealand Post Office accounts; Ido not know if you have seen it ?—Yes, I have seen it. 4. Can you give some explanation as to your view of the matter ?—I do not exactly know what lam asked to speak about. Am Ito express an opinion on the tag? 5. I think the Committee desires to have your opinion in connection with the Auditor-General's memorandum in reference to any accounts that come under your control ?—These accounts are not under my control at all. The Treasury is only connected with them in the matter of finding funds for the Post Office, out of which these payments for services of their own and other departments are made. 6. Bight Hon. B. J. Seddon.] There are two points that we want elucidating. One is as to whether the present practice has been going on for some years, or whether it is an immediate change made by the Postal Department in paying out funds prior to receiving the imprest ?—Well, of course, I shall not be able to speak on that matter with an absolute knowledge of my own. I have nothing to do, and the Treasury has nothing to do, with the book-keeping of the Post Office; but I can only say that, so far as I am aware, this system has been going on ever since it was inaugurated by the Post Office in 1888. 7. Hon. the Chairman.'] Without any imprest ? —No; the imprests are made by the Treasury to the Post Office, but some payments are made by the Post Office prior to getting the money. 8. Bight Hon. B. J. Seddon.] Anticipating the imprest, in other words ? —Yes. I have no doubt the Secretary to the Post Office has explained the system on which they make these payments. I shall be glad to give the Committee a second-hand idea of the matter, if they have not already got the first one. 9. There is another point as to instructions having been issued by the Treasury prior to the Act of 1891—between 1888 and 1891—as to these payments specially provided for in the Act. There was an instruction that they were not to do this ?—Prior to 1891 the Post Office could only by law make payments out of any imprest moneys that might have been given to them ; but in 1891 the Act specially provided for their being able to make payments by Act, as it were. Prior to that they were only in the general condition of an imprestee, but since 1891 they have been enabled by Act to pay moneys out on behalf of the different departments.