DUTIES OF AN AUDITOR.

Press, Volume LXVII, Issue 20302, 30 July 1931, Page 13

DUTIES OF AN AUDITOR.

TO TDK EDITOR OV TUB I'RES3

Sir, —It has always appeared strange !o me that 'while an auditor will not necept tho certificate of a cashier as to the contents of the till or cash box. but rightly insists on counting it himself, he accepts the certificate of a general manager, or of departmental managers, with respect to the thousands of pounds sterling of merchandise which in a number of cases represents the greater part of the company's or firm's capital. -My contention is that if an auditor cannot give his own certificate (which is >a reasonable attitude, seeing that he is not a merchandise expert) he should insiirt 07t an independent valuation. The New Zealand Accountants' Institute has proved a valuable organisation, being most punctilious in its deliberations on the ethics of accountancy, and I consider it would be time well and profitably spent if it were to deliberate at length on the subject matter of this letter, and give its members a lead. To continue to evade the issue, !\V stating that its members cannot assume any responsibility with respect to a .major ass£t of a balance-sheet, is not to maintain the high traditions of i!ie Institute.

Tim auditors arc appointed by the shareholders to act us scientific watchdogs of accounts, and it should bo their bounden duty to insist on independent valuers being appointed.

To accept the certilieates of, say, directors, manager?!, or assistants is not in the best Interest of the investors. It would no doubt assist materially ii" bauliintj insf itiitions granting overdrafts would co-operate in .securing this much needed reform. To my own knowledge two companies have found their affairs in difficulties through i-tooks of merchandise having been over-valued, and it was quite obvious that had independent valuers been tippointed and a proper writing-down of old and out-of-dato stock been adopted, the trouble would have been averted. Human nature is alike the world over, self-preservation being tho iirst law of life; and therefore it is not fair or expedient to involve an interested director, manager, or employee in the certification of his own stock. The adoption of some independent system of aluatxon is long overdue, and would act as a precautionary measure against inflation of values.—Yours, etc., SHAREHOLDER. July 29th, 1931.