B.—l [PT. IV], SUP. to 1937.

STATE ADVANCES OFFlCE—continued. ADVANCES TO SETTLERS BRANCH—continued. Interest Account for the Yeae .ended 31st March, 1937. Dr. £ s. d. £ s. d. C'r. £ s. d. £ s. d. Interest on loans .. .. 761,521 16 10 Interest on mortgages .. .. .. 82 18 3 Less overdue and accrued at Interest on State Advances Cor31st March, 1936 .. .. 176,685 14 1 poration stock .. .. 576,228 0 7 584,836 2 9 Less accrued but not due at Interest accrued but not due at 31st March, 1937 .. 175,844 11 10 31st March, 1936 .. .. 91,666 18 2 484,561 2 5 Accrued but not due at 31st March, 1937 .. .. 90,220 6 10 574,781 9 3 Interest on temporary Treasury investment .. .. 4,875 0 0 Less accrued but not due at 31st March, 1936 .. .. 1,849 6 3 3,025 13 9 Balance : Gross loss transferred to Profit and Loss Account .. .. 182,790 13 4 £760,680 14 7 £760,680 14 7 Management Expenses Account for the Year ended 31st March, 1937. Dr. £ s. d. Cr. £ s. d. Audit fee .. .. .. .. .. 100 0 0 Release fees .. .. .. . . .. 0 15 0 Commission . . .. .. .. . . 122 9 10 Sundry fees .. .. .. .. .. 3 10 6 General expenses .. .. .. .. 4171 Refund insurance premium .. .. .. 0 2 9 Post Office services .. .. .. .. 114 15 0 General .. .. .. .. .. 3 3 8 Printing and stationery .. .. .. 11 18 1 Administration expenses recouped from— Salaries .. .. .. .. .. 102 13 0 Repatriation Branch .. .. .. 595 0 11 Solicitors'costs and Court costs .. .. 50 11 6 Other branches .. .. .. .. 615 0 0 Treasury for management charges .. .. 1,400 0 0 Balance transferred to Profit and Loss Account . . 689 11 8 £1,907 4 6 £1,907 4 6 Geo. G. Rose, Superintendent. Departmental Note. —In terms of the State Advances Corporation Act, 1934-35, all mortgages and certain local-body, investments formerly shown as assets of various branches of the State Advances Office were transferred to the State Advances Corporation of New Zealand, and, in consideration therefor, stock for a certain proportion was issued to the Minister of Finance and the balance shown as a contingent liability of the Corporation. The stock has been allocated to the various branches, having regard to the purpose of the several accounts and the nature of the liabilities. These assets, which have replaced the mortgages previously held, are not legally vested in the Superintendent, but they have been included in the State Advances Office balance-sheets in order to show the financial results of the year's operations. Interest on this stock, together with the proportion of profits payable to the Crown under the State Advances Corporation Act, 1934-35, is paid to the Public Account, where these moneys have been applied in payment of the interest due on the loan capital held by the various branches of the State Advances Office. These amounts have therefore been reflected in the accounts as presented above. The position will be regularized when the provisions of Part lof the Finance Act, 1937, come into force on the 31st March, 1938. By that Act the State Advances Account is abolished, the moneys in that account being transferred to the Public Account and all property vested in the Superintendent declared to be property of the Crown. I hereby 'Certify that the Balance-sheet and accompanying accounts have been duly examined and compared with the books and documents submitted for audit, and correctly state the position as disclosed thereby, subject to the departmental notes enfaced thereon and to the following exceptions : (1) The amount of exchange paid in respect of the interest which has been paid in London on the loans of this account has not been charged to the account, but has been borne by the Consolidated Fund ; (2) the State Advances Corporation stock should not appear in the Balance-sheet as an investment of the Superintendent. It is vested in the Minister of Finance, to whom the stock was issued in exchange for mortgage securities transferred to the Corporation in terms of the State Advances Corporation Act, 1934-35 ; (3) contingent liability of the State Advances Corporation should not appear among the assets of the Superintendent, as it is not the property of the Superintendent. In terms of the legislation, so long as this liability exists the surplus profits of the Corporation are payable to the Public Account and not to the State Advances Account; (4) the Profit and Loss Account is overstated to the extent of the interest on the Corporation stock and of the profits of the Corporation which have been paid to the Public Account in accordance with the statute. —J. H. Fowler, Controller and Auditor-General.

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