We have kept a regular journal of all our acts, and full records of every account, and our clerks have stated all claims fairly and intelligibly, so that at all times accurate statements may be made out of every transaction which has been under the cognizance of the board.

The law requires that we should make out a general account against the Confederate States, to be presented in proper form, sustained by vouchers, at the end of every quarter of a year. It also requires that payment should be demanded according to the convention between the commonwealth and the Confederate States, which was adopted on the 25th of April 1861. We have found it impracticable to comply with this requisition, because large amounts expended by this board were upon requisitions for specified sums of money to meet purchases not yet made, and for which legal vouchers could not be procured. These requisitions were chiefly made by commissaries and quartermasters, who divided the funds among their assistants, and who could render no returns until settlements were made with those assistants. No examination could be made by the board until the accounts had been supervised by the heads of departments, and returned with the vouchers to sustain each item. Again, when these reports were made, they were subjected to the scrutiny of the examining clerk of the board, who made his report thereon, noting errors and exceptions, which required the action of the board, and had often to be returned to the heads of departments for explanation and correction.

In some cases no settlement has been yet made, because the officers by whom the expenditures were incurred were taken prisoners of war, and could not render their accounts without their books and vouchers. In other instances books and vouchers have been taken by the enemy and destroyed, and the reports have been delayed by subsequent attempts to supply their places. Some of the quartermasters and other officers have been turned over to the confederate service, or been since conscripted, and have not had the power or time to make out accounts, and the heads of departments therefore have not settled finally their accounts. A large number, however, of complicated transactions have been examined, and many final settlements have been made. But still the general account is not in a condition to be rendered in such form as would insure its payment.

The convention referred to between the state and the Confederate States contains the provision that “whatever expenditure of money, if any, said commonwealth of Virginia shall make before the union under the provisional government, as above contemplated, shall be consummated, shall be met and provided for by said Confederate States.” Under this agreement, whenever the settlement has been alluded to between this board and the treasury department of the Confederate States, we have always been informed that such claims cannot be paid until an appropriation therefor has been made by congress. For the large amount of expenditures by the state made since the union with the Confederate States, there has been no understanding, and no law has been passed acknowledging the claim, or making appropriation to meet any such expenditures.

It will be necessary that some provision should be made by law for the appointment of some agent to make out this general account and to see that it is properly sustained by vouchers, to ask for a suitable appropriation by congress, to collect the money due, and to pay it into the treasury of the state.

We present the following statement of the amount of claims and requisitions allowed by the auditing board and ordered to be paid out of the treasury, from the date of the organization of the board to the 30th day of November 1864, inclusive: 1. On account of the quartermaster's department: Amount of claims and requisitions allowed, 1,850,795 072. On account of the commissary department: Amount of claims and requisitions allowed, 877,009 743. On account of the ordnance department: Amount of claims and requisitions allowed, 728,618 984. On account of the navy: Amount of claims and requisitions allowed, 308,851 585. On account of the recruiting service: Amount of claims and requisitions allowed, 5,681 256. On account of inspector general's department: Amount of claim allowed, 65 007. On account of engineer department: Amount of claims and requisitions allowed, 136,187 458. On account of the medical department: Amount of claims and requisitions allowed, 17,322 719. On account of the paymaster's department: Amount of claims and requisitions allowed, 2,359,859 5810. On account of miscellaneous expenditure: Amount of claims and requisitions allowed under this head, 95,185 1611. On account of telegraph lines: Amount of claims allowed, 13,548 5912. On account of Major General Floyd's army: Amount of claims and requisitions allowed, 1,761,475 90[Total,] 8,154,601 01

From the 30th of November 1864, to the date of this report, the following additional claims have been allowed by the board: On account of the ordnance department, 2,745 15On account of the navy, 124 80On account of the paymaster's department, 420 00[Total,] $8,157,890 96

Thus the large sum of eight millions one hundred and fifty-seven thousand eight hundred and ninety dollars and ninety-six cents has been allowed out of the treasury of the state, upon the orders of this board alone; and as the whole amount thereof, so far as yet expended, has been devoted to the defence as well of the Confederate States as of the state of Virginia, and as the constitution of the Confederate States makes it the duty of the confederate government “to protect each state against invasion,” it is but right and proper that this expenditure should be refunded by congress.

This statement is sustained by general vouchers throughout; but, for reasons heretofore stated, the particular vouchers for all the items of expenditure actually made, out of the amount allowed by the board upon the requisition of the heads of departments, cannot be produced, final settlements of the accounts of disbursing officers in those departments having, in many cases, not yet been made. The unexpended balances of the requisitions allowed by the board bear, however, a very small proportion to the whole amount so allowed.

The business confided to the board has now been reduced within a narrow compass, and will consist hereafter, mainly, if not entirely, in superintending the settlement of accounts referred to the board by heads of departments. In this view of the case, we are ready and desirous to resign our office as an auditing board, should it be the pleasure of the general assembly to relieve us of further duty in regard to the business of that office; and in such event, we desire the general assembly to consider this as a tender of our resignation. At the same time, it is proper to add, that we are not unwilling to continue to do what the general assembly may think proper to be done by us in winding up this business.

Should we be relieved, as we have stated, the services of our clerk may be at once dispensed with. Should we continue to act as a board, his services would be essential.

We cannot retire without expressing the hope that the war, which has been righteously undertaken for the maintenance of southern rights, may be successfully brought to a speedy termination, by the unqualified recognition of the independence of the Southern Confederacy, and the restoration to Virginia of all her territory “to the uttermost limits of her ancient boundaries,” maintaining fully her jurisdiction and sovereignty.