Wheat (1) - Part 1

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1887. By the CHAIRMAN: Can you give me the date when the Audit Department first started making an audit of your accounts?—The 14th February, 1917.

1888. Then Mr. Hammond was really right when he stated that an audit had not been made up to the time he left?—No. Mr. Hammond left in September of 1917, he states in his evidence.

1889. He said no complete audit had been made during the time he was a member of the Board?—An audit of six months had been made while he was a member of the Board.

1890. But the audit had not been completed?—A continuous audit is never completed.

1891. As far as the balance sheet for each year was concerned, there was a complete audit, was there not?—No. There was an audit verifying that statement, but that audit is no more complete than is a continuous audit.

1892. Does not each year stand on its own?—Not in a continuous audit. In continuous auditing, the audit carries on from month to month, verifying any statements which may be prepared in the course of the audit. But a periodical audit verifies statements which are prepared. I claim that the audit now being given the books is a continuous audit, which examines all transactions, verifying in the course of its work any statements which may be prepared during the time the continuous audit is in progress.

1893. But Mr. Hammond, I think, was alluding principally to the 1915-16 harvest and was under the impression that as far as that harvest was concerned, it ought to have been finalised?—It is impossible to finalise those books yet, because we have not yet got all the final out-turns of vessels from London so far as cash proceeds are concerned.

1894. I think it was Mr. Hammond's intention to convey to the Commission that so far as the 1915-16 harvest was concerned there was nothing whatever, or shall I say very little, done as regards the audit and that no audit was complete?—The notes of evidence which I had the opportunity of perusing stated that no audit of any kind had been made.

1895. Had been competed?—Had been made.

1896. But when you realise that Mr. Hammond had been a member of the Board from 1916-17 to 1917, over twelve months, is it not natural that he might miss the auditor, if the auditor had been there for a few weeks only?—The auditor was there for six months, from February to September; and there was not only one auditor, but he had an assistant, and also a machinist checking totals.

1897. As far as the Audit Department are concerned, have they not too much work already, so that they are unable to conduct the audit in a proper manner?—Not in connection with the Wheat Scheme. I have interviewed the Auditor General in connection with our audit, and he states that his audit is a continuous one and will remain a continuous one.

1898. We know it is continuous now, but a considerable time elapsed before the Audit Department took on any of this work at all?—But there was no Act authorising an audit until December, 1916, and within two months from that date the Auditor General commenced the work.

1899. But was the fact of there being no Act an excuse for no audit being made?—As a matter of fact the Auditor General showed me a minute to, I believe, the colonial Treasurer in connection with auditing the Wheat Scheme books shortly after the Wheat Scheme was installed; but apparently, according to the correspondence, the decision come to was that it was not then know whether the Wheat Scheme was a Government body or a semi-Government body, and so no action was taken.

1900. From your own knowledge, can you tell us whether the Board, which was then claimed to be acting as an executive body, made any demand that an audit should be instituted?—To my own knowledge there was no such demand made; but there may have been such a demand without my knowledge.

1901. So far as you are aware, the Board did not make any such demand?—That is so.

1902. Therefore, if the Board did not make any demand for an audit, they were virtually responsible, since they were working as an executive body?—As I say, I am unaware whether they made the demand.

1903.I say, if the Board did not make such a demand, they are virtually to blame for the fact of an audit not taking place?—An audit did take place, covering the whole of the workings of the Scheme from its inception, though the audit was a little late in starting.

1904. It did not take place until early in 1917?—That is so.

1905. And the Scheme started in December, 1915?—The Act authorising the audit was passed in December, 1916.

1906. You would not claim that if there was a Act passed there should not be an audit, would you?—No, there certainly should be an audit.

1907. There is no Act, for instance, under which the sawmills are working but there is an audit?—Yes, but the sawmills are covered by the Trading Concerns Act, and they are a Government institution.

1908. There was no Trading Concerns Act for three years after the sawmills started. Was not this a Government institution as well?—Semi-Government.

1909. So really there was no excuse for waiting about 18 months before starting an audit of the accounts, seeing that there was so much money involved?—It depends on the party who made the excuse.

1910. Do you think there should have been one?—An audit should have been started before it was, but the audit was made to cover all the transactions from the commencement of the Pool, so that as it turns out no harm was perpetrated by the late commencement.

1911. I am not insinuating that there was any harm, but there might have been?—It is always well to have things properly audited.

1912. By Hon. J. F. ALLEN: It was not part of your duty to see that an audit was carried out?—No.

1913. By the CHAIRMAN: In regard to the statement you referred to by Mr. Hammond, that there was no middle before Mr. Grogan took over, was not Mr. Hammond dealing principally with regard to one statement made to the Board?—If Mr. Hammond was limiting his remarks to one statement only, it seems to me it is not correct to infer that the accounts were in any way in a muddle.

1914. He went on to point out that, owing to the change which had been made the statement that was present to the Board, which you term is an abstract?—That is all it is.

1915. Was wrong to the extent of 800,000 bushels, that both accounts 1915-16 and 1916-17 was the reason given for it?—I think I showed—and I am not aware that an error was made—that it would have had on effect on the apportionment of the moneys, as Mr. Hammond infers.

1916. He said he felt it might have done so?—It did not do so.

1917. So far as Mr. Hammond was concerned, the abstract is placed before the mas members of the Board, though you said it had nothing to do with the accounts branch, but it was done to give them information as to how the Pool stood financially and the quantity of wheat required?—Yes.

1918. Therefore, it was necessary that the abstract should be correct?—Yes, it should be.

1919. Otherwise, it would be misleading as to the working of the Pool?—I may point out that an error like that is obvious.

1920. I remember one time when I got some information as a Minister where there was profit of £40,000 showing, but I did not get on the platform and state that, as I might have done?—In many instances in a Government department the return is asked for and has to be prepared in a few minutes or hours, whereas in a private concern the statement would be given to the accountant to make up wit ha few days to check it. The weekly statement at that time was completed in about 36 hours, the officers frequently working until ten or eleven o'clock at night to get them ready for the Committee.

1921. Seeing you get weekly returns from the banks, would that not be sufficient for the Board when it met?—The banks had nothing to do with the quantities.

1922. Was there anything on the certificates?—No.

1923. The quantity they were paying for was not shown?—They pay on the certificates of the agents; there is a complete check on all payments.

1924. They gave you the number of certificates paid on?—They gave us an actual certificate. It is recalled from circulation on the first payment.