SUIT AGAINST AUDITORS

Press, Volume XCVII, Issue 28540, 20 March 1958, Page 7

SUIT AGAINST AUDITORS

Evidence For Defence

(New Zealand Press Association) WELLINGTON, March 19.

Auditors were regarded as watch dogs, and if they did not act in that capacity auditing would become a fiasco, said Mr R. A. Young in the Supreme Court today, making submissions on behalf of the Nelson Guarantee Corporation in its claim for £1763 Ils 5d against a Nelson firm of auditors for alleged failure to detect defalcations within a reasonable time. The defendants are Charles Bertram Hodgson, Herbert George West, and Patrick Biss Griffin.

For the defendants Mr W. E. Leicester submitted that the plaintiff had failed to establish that the defendants’ conduct had fallen short of the standards of their profession so as to amount to negligence. It had to be determined what action would have been taken by reasonably prudent auditors in similar circumstances. There had been a difference of opinion in the testimony of three prominent auditors as to what steps should have been taken.

Evidence for Defence lan Thomas Cook, an auditor, a defence witness, said today that he considered the primary duty of the defendants, acting in their capacity as accountants, was to bring the plaintiff company’s books up to date for 1953. They had completed the writing up of the accounts, but apparently were unable to complete the audit by June, 1954. Griffin and Hodgson, two members of the auditing firm, had many clients to look after, and could not devote all their time to that particular assignment. David Alexander Ford Crombie, a public accountant, said that the Companies Act did not stipulate how auditors should carry out duties. He did not consider that a continuous audit was necessary for the plaintiff company He himself would have placed seme reliance on adequate supervision by the manager of the plaintiff company. If he felt the office work was unsatisfactory he would comment on it to the management.

Griffin’s Evidence Griffin, a member of the auditing firm, said in evidence that his firm had complained several times to the plaintiff company verbally about the non-availability of the books. He knew there was a provision in Section 141 of the Companies’ Act for auditors to report to an annual general meeting as to whether they had obtained all the information and explanations they required. The delays were not reported because of the special circumstances. He agreed that auditors protected shareholders’ funds, and that the officers and servants of a company such as the plaintiff would be subject to their scrutiny. However, he believed that the plaintiff company and its directors were responsible for the nondetection of the defelcations within a reasonable time.

Mr Leicester: Would it be fair to say yiat the books of the company were in a disgraceful state?—At that period—l9s2 to 1953—yes. The hearing, before Mr Justice McCarthy, will continue tomorrow. Golf AVONDALE LADIES’ CLUB.— Mid-week bogey match—Silver division: Mrs M. Henderson, 2 down. Mrs A. H. Bissett, 5 down; Miss E. Moore, 6 down: Mrs J. Claydon, 6 down; Mrs H W. Wilkins, 7 down Bronze division: Mrs S. Maples, all square; Mrs R. W Palmer. 1 down; Mrs P. Smith, 2 down; Mrs D. Bennett. 3 down; Mrs O. Hurpin, 4 down.

CHRISTCHURCH LADIES’ CLUB. —Bogey—Silver division: Miss W Morgan (8), 2 down; Mrs A. I. Charles (11). 3 down; Miss A. Grannell (8), 3 down; Miss A. Murray (7), 4 down; Miss M. Donaldson (14). 5 down. Bronze division: Mrs R. R Bell (23), 1 down; Mrs T. Armstrong (15), 1 down; Mrs W. E. Simes (14). 2 down; Mrs L. R. Dunster (23), 2 down; Miss B. Coop (17), 2 down: Mrs L. J. Roy (14), 2 down. Mrs Bell won on the count-back. Kingscote Cup—First round (played on handicap): Mrs Jones and Mrs Fernie beat Mrs Dunster and Mrs Willis, 1 up; Mrs Innes Jones Mrs Hunter beat Mrs O’Shea and Mrs Wellbrock, 2 up; Mrs Vaughan and Mrs Austad won by default from Mrs P. T. Davey and Mrs Boon; Mrs Hyde and Mrs Mitchell beat Mrs Leithead and Miss Findlay. 5-3; Mrs M. W Simes and Mrs Kerr beat Miss Irvine and Mrs James. 3-2; Mrs Watt and Miss E. White Parsons beat Mrs J. Andrewes and Miss Sowden, 6-5 Mrs Armstrong and Mrs Page beat Mrs Beadel and Mrs Robertson. 6-5; Mrs Simpson and Mrs Rickman beat Miss Stout and Mrs Green. 5-3; Miss Morgan and Miss Rutherford beat Mrs Dawson and Mrs Mac Gibbon 4-3; Miss Fleming and Miss Nutl beat Mrs Adamson and Mrs Morris 4-2; Mrs Glackin and Mrs Roy beat Mrs Brittan and Mrs Burt. 5-4. RAWHITI LADIES' CLUB.—Stableford: Mrs M. Green, 36 points; Mrs J. Hay, 32; Mrs N Leake, 30; Mrs P Holson, 28.

WAITIKIRI LADIES' CLUB— Stableford—Senior: Mrs J. Forbes, 32 points; Mrs H. Dymond, 31; Miss L. Hillis. 28; Mrs W. G Walker. 27 Junior: Mrs J Lake, 36; Mrs B. Wilkins, 35; Mrs K Stone, 33; Mrs J Johnston, 31.

WAIMAIRI LADIES’ CLUB— Opening day match, bisque bogey— A grade: Mrs D. Clegg (17). 3 up; Mrs J. McDonald (17), all square. B grade: Mrs Neville (23) 3 up; Mrs R. Challis (23), 3 up; Mrs F. Savvich (27), 2 up. Mrs Neville won on the count-back from Mrs Challis.