partners. This measure appears to have contributed largely to the diminution in the divisible profits of the undertaking, as a result of which no provision was made that year for further working capital and development. While the reduced prices apply equally to all shipments made to the three participating countries, namely Australia, New Zealand, and Great Britain, buyers in the United Kingdom have not, as a matter of fact, derived any benefit from the reduction, inasmuch as, owing to the high cost of freights and to economic conditions prevailing in the European market, the buyers in this country have been able to obtain all the supplies of phosphate that they required at a lower price from other sources.

Interest at 6 per cent. on the capital outlay has been received and paid into the Exchequer, together with Sinking Fund repayments (on a 50 years basis). The outstanding capital indebtedness to the United Kingdom at 30 June, 1923, was £1,466,966 Os. 5d.

The accounts have been audited by and bear the certificates of Messrs. Kent, Brierley, and Sully, Public Accountants, of Melbourne, Australia.

DISPOSAL AND LIQUIDATION COMMISSION.

ACCOUNTS INCLUDED FOR THE YEAR 1923-24.

21. With the sanction of the Treasury the trading and realization accounts of the Disposal and Liquidation Commission included in this volume incorporate transactions to the end of 1923-24. As a result these are final accounts and any outstanding items are to be transferred to the schedule of ordinary liquidation assets and liabilities for collection or payment.

BORING FOR OIL.

22. The final account now presented is designed to show the results of realization and the total loss on the scheme. The loss of £672,976 10s. 11d. includes charges amounting to £104,914 14s. for interest on advances to the Managers and on expenses borne by Votes for other Departments.

As stated in paragraph 20 of my last Report boring operations were brought to a close and the work of dismantling begun in 1921-22. The accounts of the Managers show that the costs of salvage including dismantling of oil storage tanks were £19.552 8s. 7d.

The realization receipts include the sale of the two productive wells at £1,500 and £1,575 respectively. In the former case, the purchaser, who is the owner of the land, gave up his claim to ownership of the oil found, of the value of £13,695, and indemnified the Government against any claim by a neighbouring colliery company in respect of the coal pillar left to protect the borehole.

BOARD OF EDUCATION.

SUPPLY OF CASTS.

23. The net loss on the year's trading, £217 19s. 2d, increases the total net loss since the transfer of the business to the Department to £1,339 3s. 1d., but as explained in paragraph 22 of my Report last year no direct loss has resulted to the State, as the surplus of assets over liabilities on the taking over of the business in August, 1921, amounted to £4,005 18s. 6d.

The business was.transferred from Goswell Road to the Victoria and Albert Museum, South Kensington, in June, 1922, and the lease of the former premises, which was valued as an asset of £2,000 in last year's Account, was sold for a net sum of £1,865.

In view of the surrender to the Treasury of this sum of £1,865, the Board of Education decided not to charge interest in the present Account either upon the Reserves standing against the business on 1 April, 1922, or on Exchequer Advances beyond 31 October, 1922.

This procedure did not appear to me to be strictly in conformity with the instructions issued upon the subject by the Treasury, and I understand that the matter is still under consideration of the Board of Education and the Treasury.

DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH.

NATIONAL PHYSICAL LABORATORY.

24. These accounts are designed to exhibit the annual running cost of each Department of the Laboratory, distributed according to classes of work undertaken.

No trading accounts were rendered for any period before the year 1922-23, and for the purposes of this account the value of the equipment at 1 April, 1922, was taken as £100,000. The excess of the remaining assets over liabilities at 1 April, 1922, was assessed at £16,527.

With Treasury approval the book value of the equipment is to be maintained at the figure of £100,000. No charge will be made for depreciation, but the annual expenditure on maintenance and replacements will be charged against revenue.

Land, Buildings, and Furniture do not appear in the Balance Sheet as capital assets, but the account includes a charge for their use, representing, in the case of Lands and Buildings, a rental valuation framed by the Inland Revenue Valuation Department, and, in the case of Furniture, 5 per cent. of the book value at 1 April, 1922.

The total of indirect charges has been distributed over the various heads in proportion to the direct expenditure.

STATIONERY OFFICE.

FOREIGN OFFICE PRESS.

25. The accounts show that a net profit of £5,379 5s. 4d. was obtained from work valued at £30,532 10s. 3d. This includes approximately £23,000 for printing priced out at the rates specified in the contract which had been held by the late owners of the Press since 1909, subject to adjustments for variations in wages as for private contractors. The Press was taken over in November, 1918, and the contract then running would normally have lapsed at 31 August, 1921; the rates specified therein have, however, been continued as the basis of credits for printing executed by the Press.

HARROW PRINTING WORKS.

26. The accounts for 1922-23 disclose a net profit of £49,434 0s. 1d. as compared with a loss of £21,093 0s. 7d. during the preceding year. This very satisfactory improvement appears to be due directly to reductions in staff effected, without loss of output, under the new management of the works installed at the beginning of 1922. The average weekly wage bill during 1921, £4,040, was reduced to approximately £3,200 by 31 March, 1922, and to £2,500 by 31 March, 1923. Further. the new system of allocating work, referred to in paragraph 32 of my last Report, has resulted in augmenting the work at remunerative prices allotted to this factory while permitting the more economical running of the plant.

27. The charges for interest on capital advances and on advances for working expenses are subject to the same qualification as was mentioned in paragraph 33 of my last Report. I have recently conferred with the Treasury as to the correct method to be adopted in future accounts and the result of these deliberations will be embodied in the accounts for 1923-24.

28. The charges for fire insurance premiums shown in the Profit and Loss Account are assessed on the values of plant and machinery the rental assessments charged are regarded as inclusive of the fire risks to the buildings. The fire risks are accepted by the State in accordance with the general policy in regard to public buildings, and charges are raised in the accounts merely to facilitate comparison with similar commercial accounts.

In response to my suggestion the Stationery Office have agreed to raise charges in the accounts as from 1 April, 1923, representing premiums to cover the risks from fire to stocks, including paper supplied free by the Stationery Office for printing, and to work in progress.

WAR OFFICE PRESS.

29. This Press, previously maintained and run by a firm of printers under contract with the Stationery Office, was taken

over by that Department, with the sanction of the Treasury, as from 1 April, 1922. The work (confidential printing) executed at the Press has been credited at rates allowed to the Harrow Factory for other confidential printing, but an allowance has been added, with Treasury approval, for accommodation charges, amounting in 1922-23 to £539, to meet the probable excess cost entailed in the maintenance of this small isolated establishment. Under the previous contract free accommodation was provided. Interest on capital advances and depreciation have been calculated upon a six months' basis, the plant, &c., having been acquired at intervals during the year.

PUBLICATIONS SALES OFFICES.

30. Trading Accounts for the year 1922-23 and Balance sheets of the Sales Offices in London and the provinces have been prepared, at the direction of the Treasury, but were not available in their final form for my examination until May, 1924. I am informed that the delay in their submission was largely attributable to the fact that the system of book-keeping in use in the various Sales Offices during the period in question was not one devised with a view to the compilation of such accounts, and was not readily convertible.

As a result of my examination I have raised numerous questions with the Stationery Office, some seriously affecting the gross profit shown by the account of the London wholesale and retail offices, and consideration of these will materially delay the submission of accounts to which my certificate could be appended. I have consequently thought it desirable that the accounts should be omitted from the present volume in the absence of replies to my queries, and I propose that they should be presented with those for 1923-24, which I understand will be available for my examination by the statutory date.

ROYAL COMMISSION ON SUGAR SUPPLY.

31. The net loss on Sugar Supply operations shown in the cumulative account from 14 August, 1914, to 31 March, 1923, is £27,448,242, as compared with £26,711,492 recorded in the account to 31 March, 1922.

This difference is due mainly to the fact that the charge for interest has been increased by an amount of £831,994, which represents interest on Exchequer Advances for the period from 1 April, 1921 (shortly after the date of removal of restrictions. upon import, sale, and distribution of sugar) to 30 September, 1921 (the date on which disposal of stocks was practically com pleted).

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WHEAT COMMISSON.

PROVISIONAL NATURE OF ACCOUNTS.

32. In my Report last year I stated that the Wheat Commission Trading Accounts to 31 March, 1922, were framed in part on estimated figures. The ledgers and store records have now been corrected and brought up to date, and from them an aggregate Trading Account to 31 March, 1923, has been prepared, covering the transactions of the Commission from the commencement of operations and including the final disposal of stocks. This account, which has been examined by my officers, is much more reliable than those of previous years.

The account is not, however, a final one, inasmuch as the pooling adjustments between the Allied Governments of the cost of the cereals purchased by the Wheat Executive have not yet been determined. The records of this Executive in the Commission's books are of great magnitude, and are still under special investigation by the Board of Trade and examination by my Department. The discrepancies discovered in these records will affect the net loss and various other items in the Commission's Trading Account and Balance Sheet, and, in the circumstances, I am not in a position to append to this account my usual certificate of correctness.

Malcolm G. Ramsay,

Comptroller and Auditor General.

EXCHEQUER AND AUDIT DEPARTMENT.

20 June, 1924.