The Auditor-General has requested that I review Opinion No. 2 of 1950 in so far as it relates to the scope of the surcharging powers conferred on the Auditor-General by virtue of section 42(2) of the Audit Act 1901–1947.¹

(2)  The question to be considered is whether a person whose neglect caused damage to a Commonwealth motor vehicle entrusted to his custody could, under the provisions of section 42 of the Act as it read before being amended by the Audit Act 1948, have been surcharged with the amount of the damage.

(3)  In Opinion No. 2 of 1950 I expressed the view that it was clear, before the Audit Act 1948, that the Auditor-General’s power to surcharge officers was limited to cases involving conduct relating to the care and custody of cash or the performance of accounting duties.

(4)  The Auditor-General considers that this view involves such a serious limitation of his powers to surcharge before the passing of the Audit Act 1948 as to require review and amplification.

(5)  In a memorandum to me, dated 17th March, 1950, the Auditor-General writes:

I would now like to submit to you for consideration in connection with your review of the matter some facts which appear to me to be pertinent to the case.

Section 42 of the Act, prior to the 1948 amendment, was preceded by section 41 which relates to the audit of returns, cash sheet statements, accountable receipts accounts and receipts sent to the Auditor-General.

The view is apparently held by you that the provisions of Section 42 relate to the audit which is carried out under Section 41. Presumably your view is that section 41 relates to the audit of cash accounts and has no relation to stores accounts. If such be the case I suggest that this is open to question.

The audit to be carried out by the Auditor-General under Section 41 would appear to me to be wide enough to cover the audit of stores accounts in addition to cash accounts notwithstanding the fact that Section 45 specifically relates to the audit of the accounts of any person charged with the custody or control of stores belonging to the Commonwealth.

All stores accounts originate from the cash accounts of the Treasurer. One important responsibility which rests upon Audit is to see that when payments are made from the Consolidated Revenue Fund for the purchase of stores etc such stores are duly accounted for.

I would suggest that it is not unreasonable to assume that if the Auditor-General in carrying out his duty under Section 41 discovered that stores which had been purchased from the Consolidated Revenue Fund had in fact disappeared it would be competent for him to surcharge the person responsible under powers conferred upon the Auditor-General by Section 42(2). It would, I think, be difficult to contend that while the Auditor-General could query a loss of cash disclosed by the audit carried out under Section 41 and if necessary issue a surcharge in regard thereto, such action could not be taken in regard to expenditure on the purchase of stores not properly accounted for which comes under his notice in connection with the same audit.

Incidentally, it has never been thought that the provision of Section 42(1) relating to audit queries and observations were confined to cases relating to the care and custody of cash or the performance of accounting duties. It will be appreciated that any such interpretation would have seriously hampered the Auditor-General in carrying out his duties under the Act.

(6)  As the Audit Act 1948 has amended the Act so as to empower the Auditor-General to surcharge in cases of a deficiency or loss of or of damage to public stores or property caused or necessitated through the fraud, mistake, default, neglect or error of any person, any questions as to the scope of the Audit Act 1901–1947 in relation to stores are now of rather academic interest, but, in deference to the Auditor-General, I propose to review and amplify the views expressed in Opinion No. 2 of 1950.

(7)