me. From various remarks which I have read and heard passed at different times, I infer that the audit required by some parties is not an independent audit but an inquisition, not to ascertain whether the books reflect fairly and properly the position of the Scheme, but to seek for faults, not only in the books and records but in all or any matters that it deems advisable for its own purpose to attempt to make use of. As a matter of fact, I have gathered from remarks which I have read in various papers that the audit desired is as much for political as for other purposes. In connection with the auditor, it has always been my object to assist him to every extent, and to obtain from him any help that he was able to give me; and I will take up this position with any outside auditor, if he may be appointed, just as I have taken it with the Auditor General. Personally, I do not see what can be gained by the appointment of an outside auditor, for the Auditor General's audit is continuous, and I do not think that anyone would claim for one minute that he is biased or other than independent, neither do I think it could be claimed that he is incapable of properly auditing the books, and I again affirm the audit is continuous and not periodical. I would also like to say that any new auditors would have to work for some months before they could obtain an insight sufficient to properly criticise the Scheme and to properly grasp the books and the principles governing them that they were checking. In connection with that, I would like to read an extract that has just come to hand from the progress report of the Royal Commission that is now sitting in South Australia on their Wheat Scheme. One of their findings in this report—

The Victorian and Western Australian Acts directed the Minister to cause books of accounts to be kept showing the purposes for which money was received and paid. The accounts were subject to audit by the Auditor General, and a copy of the accounts was to be furnished to the Governor-in-Council and presented to Parliament. The Commission suggested that some such arrangement be adopted in South Australia.

Another point made by Mr. Hammond was that after his experience of the work being conducted departmentally he was of opinion that it would have been better if an outside house had carried on the accounts work. As his basis for this statement he went on to say that Government men were hard to move and were not as efficient, also they could not be dismissed with out no end of trouble and Parliamentary inquiries. Only three Government men have held senior positions in the Accounts Branch, two of these, myself and Mr. Grogan, Mr. Hammond intimated possessed some ability, while in connection with Mr. Berkeley I do not think Mr. Hammond has had sufficient knowledge of that officer to draw a correct inference regarding his ability. As inspector of agencies I have had access for some very considerable time to the books of 14 or 15 private firms operating as agents under the Scheme and I am of opinion that the standard of work shown, except in three or four cases, was not up to the standard of the accounts work of the Scheme. Also in connection with this statement of Mr. Hammond's I would say the bulk of the Accounts Branch is made up of members who are outside men, several of them have had considerable experience in the grain trade. Personally I do not think it would be advisable to run an Accounts Branch through an outside firm that was not under the control of the General Manager controlling the Scheme. The accounts branch cannot stand wholly and entirely apart from the rest of the Scheme. It is practically the clearing house for all matters connected with the Scheme and it must have frequent access to all the records and must also be in close touch with the General Manager to obtain prompt decisions regarding different items, such as various arrangements under which money is to be paid away. Also moneys are being handled in huge sums, probably larger sums than in any private house in this State, and it does not seem to me feasible that anyone should suggest that the administration and payment of these huge sums should be left entirely in the hands of persons entirely unconnected with the Scheme which was providing these funds. One does not hear of large business concerns placing their accounts with an outside and independent house, and I do not think one is likely to. To my mind the idea is impracticable. In connection with the office accommodation, which was claimed to be expensive, I would state that it was claimed to be expensive, I would state that it was claimed to be expensive, I would state that it was necessary, in my opinion, to have the whole of the Scheme under one roof. For a portion of the time the certificates branch of the Scheme was at the Department of Agriculture, and the balance of the Scheme in the A.M.P. buildings. During this time there was a certain lack of cohesion between the certificates and the balance of the Scheme, owing to the distance that the two staffs were apart, and it was found necessary that for proper working the whole of the staff should be under one roof. The certificates now in circulation number 60,000, and as there is a fair amount of correspondence in connection with them it must be recognised that they must of course have access to all the other portions of the Scheme. In connection with the returns submitted to the Committee I was not aware until Mr. Hammond made his reference to them that any dissatisfaction had been expressed with regard to them. Though I did read in one of the newspapers after Mr. Hammond left the Committee a statement to the effect that he had found a discrepancy of 800,000 bushels therein on one occasion. I have examined the statements for some time back and I cannot place an over-statement of that amount though I can for a considerably lesser amount. I would point out that while the error in the statement may have been in existence it would not have the effect that Mr. Hammond believes it would. These statements are drawn up from information contained within the books and from returns and figures forwarded by the various agents. They are not in themselves any portion of the Accounts system and do not play any part in the working of the Accounts Branch. I will deal with this supposed error and the effect again after I have explained the working of the Pool in connection with the different Schemes, for it will then be seem by you, even though this error did take place, and it may have done, the effect would not be to interfere with the policy in any way whatever, and I want you to clearly understand that these returns are only an abstract sent to the Committee and they are not a portion of the Accounts system. No complaint of any member of the Committee, however, in connection with these returns, and I am under the impression that members had always been satisfied with the same. I would state that the way in which an error like this could occur would be if the mills had rendered to the Scheme weekly statements to the effect that they had been milling 1916-17 wheat when actually they had been milling 1915-16 wheat. For example, a mill might receive 400,000 bushels of 1915-16 wheat for milling. It would be deemed advisable for the quality of the resultant flour to mill it, early in 1917, wheat of 1916-17 with which to obtain perhaps a better quality. of flour. These wheat would be milled concurrently. The miller would show in his returns in error perhaps a larger quantity of 1915-16 wheat milled than he had actually milled, but as soon as the Scheme knew exactly milled, but as soon as the Scheme knew exactly what 1915-16 wheat had been delivered to him, the Scheme would be in a position to correct any over statement in connection with the 1915-16 milling returns.

1886. By Hon. J. F. ALLEN: Did you ever find such an error as that or are you merely stating a suppositions case?—It has actually occurred in several cases. Mills have been careless in rendering returns, and so long as they show to the Scheme that they have milled a certain quantity of wheat, in many cases they do not care whether it was 1915-16 wheat delivered by the agents to the mill, and they would say that that amount was 1915-16 wheat and everything else was 1916-17 wheat. Eventually then the error would only be a transient one: it would disappear. Mr. Hammond mentioned about £12,500 in suspense which afterwards grew to £17,000. This was not really a suspense item in the accounts books, though it appears as such in the returns. he amounts were payments to mills for Imperial flour which they had shipped on our account