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balanced, those for 1890 and 1891 were not balanced. He was responsible for seeing that the books for 1890 were balanced. He called the attention several times of the Treasurer and Acting Treasurer to this fact but he cannot give any dates. He did not do so in writing but only in conversation. He could not audit the books properly until this book was added up. As far as the Treasurer furnished him with books and vouchers he checked the accounts. He did not discover the defalcation sooner because the book was not added up or balanced, and however minute his examination was, the system followed by ALVES would screen him until the book was balanced, or until he -the Local Auditor-by chance lighted upon one of the cases in which the counterfoil of the receipt did not agree with the Rent Roll.
24. Mr. F. H. MAY, who was Acting Treasurer from 31st March till the 7th October, says that Mr. NICOLLE on two occasions spoke to him about the Rent Roll not being balanced. The first time was not long after he took charge and again as far as he can remember in August. He spoke to ALVES, who was very busy and who was working at it. ALVES showed Mr. MAY the book and he (Mr. MAY) regarded it as a clerical arrear which would be soon wiped off. In August he urged ALVES to get on with it as quickly as possible. That was the Rent Roll for 1891. Mr. NICOLLE'S words were to the effect "I wish you would hurry up ALVES about the Rent Roll, he has not closed his book yet."
25. Mr. WODEHOUSE, in his evidence, states that he relied upon the auditor as the only practicable check. If money was taken to ALVES the only check would be the audit. He constantly examined the Rent Roll and he considered that to enable the auditor to properly check the accounts it was necessary that the Rent Roll should have been written up and balanced. He was of opinion that there was no real check except the balancing and continuous auditing, and he admitted after some questions that if the books had been balanced within a month of the expiry of the year the deficit would have been ascertained at once.
26. Having considered the evidence which has been given on this point, we beg to report as follows:-
The order of Mr. LISTER dated the 14th December, 1883, authorizing Mr. ALVES to sign the receipts, placed the whole control of the receipt of rent in his hands, without any control over him in respect of monies which he might have received personally, and should any fraud be committed in the course of the year, the only means of de- tection lay in the balancing of the Rent Roll at the end of the year. That seeing that the Land Office furnished an account of all monies which ought to have been received, and that the Audit or Treasury Ledger showed what had been paid into the Treasury for the year on account of Crown Rents, the fraud would have been discovered at once, if the columns in the Rent Roll for sums received had been added up soon after the end of the year, for it is proved that ALVES kept these correctly.
27. Both Mr. WODEHOUSE and Mr. MITCHELL-INNES say they now see and ack- nowledge that balancing the books was the only check, but they did not at the time realize the importance, and they looked to the Audit Office to detect any fraud, but they did not furnish the Audit with the necessary books. They both knew of the power which had been placed in ALVES' hands by his signing the receipts.
They were responsible for the proper keeping of the books and accounts; it was therefore their duty to see that no arrears of rent were being allowed to accumulate, yet they did not insist on ALVES adding up and balancing this book.
They should not have accepted his excuse that he had too much work, but should have enquired what the other work was, and have relieved him of it if necessary, and insisted on the book being balanced within a reasonable time after the end of the year.
28. The fact that there was an Audit did not relieve them of the responsibility "that all revenue be properly received, that proper rules are observed and proper pre-