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5. Though speaking on the subject with much diffidence, I may say that one consideration which weighs with me is the disadvantage which attends any post- audit. Previously to 1884, the system of pre-audit prevailed here, under which no money was paid until accounts had been passed. At that time, Sir WM. MARSH being Auditor, considerations were pressed upon the Government, principally in connection with the Public Works Department, which resulted in a return to the system of post-audit, but I am not satisfied that the change has been beneficial. Indeed, before Your Lordship's Despatch had reached me, I had under my consi- deration the necessity of reverting to the pre-audit principle. No doubt, under the present system, the Head of a Department is responsible for overcharges, and, in most cases, these are so trifling that no difficulty in adjustment can arise, but in such Departments as the Surveyor General's and the Supreme Court, where very large sums of money are dealt with, it is obvious that overcharges and inaccuracies might prove very serious. And if this is so on the spot, the consequences would be much more serious if many months elapsed before the accounts could be finally adjusted.

6. I annex to this despatch a report on the subject by Mr. STEWART, Colonial Secretary and Auditor General, who is of opinion that on the whole, the local system, especially if changed to a pre-audit, would be more serviceable and more economical than an Imperial Audit.

7. Whether his views are correct or not I am scarcely in a position to form a judgment. For I have no means of estimating either the actual cost of the pro- posed change, or the probability of its being free from the objections which attended a similar system in the past. And I am moreover without information on another most important point, viz., as to the extent to which the evident à priori objections to the present system have in its practical working proved to be valid.

8. In order therefore that I may obtain more light on these points, I should be very glad if Your Lordship could see your way to adopt the following proposal:- That a trained Auditor should be sent out here, with instructions that, after making a full examination into the Colonial Accounts and the present system of auditing them, he should report to me as to the expediency or otherwise of the proposed change, as suggested by the actual facts which have come under his observation.

9. The expense of such a visit would, of course, be borne by the Colony, and the money would I think be well spent even if it produced merely satisfaction in the minds of all concerned as to the absence of any excessive evil in the actual working of a system which is, no doubt, theoretically so imperfect.

10. Such a visit, moreover, would serve to clear up another point as to which I am at present in doubt, viz., whether it would not be possible to obtain all the advantages of an Imperial Audit, without its disadvantages, by the pericdical visits of a similar officer who would be responsible only to Your Lordship or to the Im- perial Audit Department, and be entirely independent of the Local Executive (except perhaps as regards the duty of furnishing it with copies of his reports). A system similar to that suggested is in force in connection with several of the Local Banking Institutions, and I do not see at the moment any strong reason why it should not be adopted by the Government. As compared with audit in England it would certainly save much time, and I should think much money also, especially if the services of one officer were shared by several Colonies.

I have the honour to be,

The Right Honourable

My Lord,

Your Lordship's most obedient,

Lord KNUTSFORD, G.C.M.G.,

&C..

&c.

S.c.

humble Servant,

G. WILLIAM DES VEUX.