First complete system of audit. Functions of the Audit. application, upon an improved principle, to all parliamentary grants for public services. The first complete audit appropriation account of the miscellaneous civil service grants was that of the grants for the financial year 1868-9, which marks the commencement of a new era in our financial history. These accounts were laid before the House of Commons in 1870, and submitted to the examination of the Committee of Public Accounts in that year. In the appropriation account each grant is specially reported upon, audited, and certified by the comptroller and auditorgeneral; the actual expenditure on behalf of the same is compared with the amount granted, any saving or excess is formally stated, and explanations given of the causes of variations, with copies of correspondence, when necessary, with the departments concerned." It should be remembered that the Board of Audit was Board of merely a board of verification, not of control. Its functions, when in existence, were summed up by its secretary in the following terms: The whole of our experience as appropriation auditors tends to satisfy us that we ought to have no further communication with the executive departments than may be necessary for the purpose of obtaining information. Whatever tends to associate us, either directly or indirectly, with the pecuniary transactions of the government, cannot but tend to damage the credit of the reports in which we are required to submit those transactions to the judgment of Parliament. We conceive, therefore, that we should never be required to advise, to control, or to remonstrate.' i Another scheme The scheme which Mr. Macaulay himself suggested suggested. for the due application of the appropriation audit to all the parliamentary grants was based upon the principle above contended for, that every parliamentary vote should be placed by the Treasury under the immediate h Com. Pap. 1868-9, v. 35, pp. 1144-1148. Also the Annual Appropriation Accts. i Rep. Come. Pub. Accts. p. 131, Com. Pap. 1865, v. 10. superintendence and control of some one responsible officer or department known to the House of Commons, and held responsible for the proper application thereof; that regular appropriation accounts' should be annually prepared by each department for submission to the House of Commons, which accounts should be rendered to the Board of Audit to be examined and reported upon; that the board should report to the House every case in which it may appear to them that a vote has been exceeded, or a sum charged against a vote which is not supported by proof of payment, or wherein a payment charged did not take place within the period of the account, or cannot be charged against a particular vote consistently with the requirements of Parliament. At length, in 1866, by the Act already noticed- Clauses in abolishing the Board of Audit, and substituting a comp- the Act of troller and auditor-general for the comptroller-general this subof the exchequer and the commissioners of audit- ject. provision was made for the accomplishment of this important reform. The clauses of this Act which relate to the audit of accounts were drafted by Mr. Macaulay, and they embody and carry out the principles of account suggested by him in the scheme above-mentioned, and which had already been in practical operation as regards the expenditure of those departments to which the appropriation audit had been previously applied. The Act further provides for the extension of the appropriation audit to the whole of the grants for civil services, including every item that is voted in Committee of Supply.* After the introduction of the Exchequer and Audit Departments Bill, it was referred to the Committee on Full details of this scheme are given by Mr. Macaulay, in a series of proposed regulations, with explanatory notes. Rep. Com®. Pub. Accts. App. pp. 131-139, Com. Pap. 1865, v. 10. * Act 29 & 30 Vict. c. 39, secs. 22-32. Corresp. &c. on Exchequer Opinion of Public Accounts, by whom it was subjected to a thorough mittee of scrutiny, and was reported to the House, with some the Com amendments, but with a decided approval of its general purport. In evidence before this committee, the chairman of the Board of Audit, and Mr. Macaulay, the secretary, agreed in the opinion that the Bill embraced the leading principles in regard to audit for which the Audit Office had been long contending; namely-1. That the department which is entrusted with the administration of a vote shall be responsible for the preparation of the appropriation account thereof; that is to say, an account showing how the trust which has devolved upon the department has been discharged. 2. That the department which shall be entrusted with the administration of each vote shall be appointed by the Treasury. 3. That the auditors shall be responsible to Parliament only. It is further provided by the 23rd clause of the said Act, that the Treasury shall prepare a plan of account-books and accounts adapted to the requirements of each branch of the public service, and which shall exhibit in a convenient form the whole of the receipts and payments, &c., on behalf of the same, with a view to the appropriation audit thereof. By a Treasury minute, dated June 22, 1866, a departmental committee was appointed to devise the plan of these books and accounts; and also to consider of a new classification of the civil service estimates, in order to facilitate discussion upon them in the House of Commons; and to bring them into agreement with the form of accounts to be afterwards prepared, under the appropriation audit.m Appropriation accounts of all the sums granted by 1 Rep. Come. Pub. Accts. (Exch. and Audit Bill), Evid. 181-192, 309313, Com. Pap. 1866, v. 7. For a discussion of certain points of difficulty in the application of these principles, see Ib. 195–211. m For a copy of this minute, see Com. Pap. 1866, v. 39, p. 143, &c. ; and see Com. Pap. 1867, v. 39, p. 337, &c. For further particulars as to the proposed re-classification of the estimates see ante, vol. 1, p. 750. Parliament for the civil services and the revenue departments, for the year ending March 31, 1869, were laid before the House of Commons in 1870." pated ad It is undoubtedly of the first importance that the Antici appropriation audit should be extended to every branch vantages of the public expenditure, inasmuch as the financial therefrom. accounts which are annually presented to Parliament do not as yet exhibit the precise relation between the grants and the expenditure for each particular service; and Parliament has no means of comparing the expenditure actually incurred with any vote to which the appropriation audit has not been applied. Under the new system of taking the votes for those issues only which will come in course of payment during the year, the appropriation audit is more especially valuable. Without it, the departments having no direct interest in looking after their unexpended balances, such balances, instead of being surrendered to the Exchequer, could easily be applied, by direction of the Treasury, to some service not authorised by Parliament; and it being no one's business to call attention to the irregularity, it might escape notice." Manner of conduct tion audit. The appropriation audit is conducted exclusively by the Exchequer and Audit department, acting in concert ing the with an officer from the accountant's branch of the de- appropriapartment whose accounts are under examination. Every account is examined on behalf of the House of Commons, in accordance with the rules prescribed by the Exchequer and Audit Act of 1866.P The object of this audit, and its precise difference from a mere administrative audit, have been thus thereby Results explained. The appropriation audit is intended to obtained. ascertain what payments are properly chargeable to a particular parliamentary vote. It accordingly determines-1. Whether the expenditure incurred is verified by regular vouchers. 2. Whether it has been sanctioned by the proper departmental authority. 3. Whether it has been distinctly authorised by Parliament. The administrative audit is confined to the two first enquiries, but the appropriation audit determines all three. Accordingly, whenever any particular accounts are directed by the Treasury to be subjected to the appropriation audit, the mere administrative audit to which such accounts may have been previously subjected is necessarily merged in the larger enquiry." When the accounts for the past financial year to Reported which the appropriation audit is applied have been duly House of examined, the comptroller and auditor-general is reCommons. quired to embody the result of such examination in to the reports for the information of the House of Commons. His report is sent, first of all, to the Treasury, in order that that department may interpose its authority to rectify any irregularity pointed out therein; and also that the Treasury, in transmitting the report to the House of Commons, may accompany it with any observations they may think fit to make upon it, having previously furnished the comptroller-general with a copy of their observations in the shape of a Treasury minute. It is the duty of the comptroller and auditorgeneral to direct the attention of Parliament, in his reports, to every departure from the provisions of the Appropriation Act. These reports should make men |