AUDITING OF TRUST ACCOUNTS

Press, Volume LVII, Issue 17295, 5 November 1921, Page 9

AUDITING OF TRUST ACCOUNTS

IHBOLOSOBES BY AUCKLAND BANKRUPTCY. (PEESS ASSOCIATION TELEGRAM.) AUCKLAND, November 4. The Official Assignee in the bankrupt estate of Hammond and Cracknell, solicitors, stated that Hammond's private liabilities were £IB4B, with practically no assets. The investigating accountant reported general neglect of tho bookkeeping side of the business. The position disclosed to dote was:—Trust moneys received on behalf of clients, and not represented by eecuritief. £46,171; ordinary trade creditors, £239;.oredit balance in trust account. £116; book debts, £12,870. There were some instances in which claims might arise where properties had been sold and loans had not been paid off. A great many of the9o loans were made in the time of a former partnership on unregistered mortgages, and in some cases properties had been sold without provision for repayment to lenders. In nil cases tho firm continued to pay interest to mortgngees. About £40,000 was not accounted for. The accountant investigating tho affairs of the firm said that had a correct balance of the books been insisted upon, irresnlnritieß would have been disclosed years ago. The Official Assigneo said that W present system was grossly at fault in that the continuation of the services of nn auditor was absolutely in the hands of the firm whose books ho was auditing. An auditor of trust accounts should be in such a position as to feel that whether his report was favourable or not, his position wonld be secure. In reply to a creditor, ho said bankrupt's books could not have been audited. The meeting carried a motion! "That the creditors are stronqly of opinion 'that the state of affairs disclosed by this bankruptcy calls For more stringent, regulations for the auditiag of trust accounts."