Defects Of N.Z. Company Accounts

Press, Volume CI, Issue 29932, 20 September 1962, Page 17

Defects Of N.Z. Company Accounts

Only about 20 per cent of New Zealand public companies reveal their turnover m their annual accounts, according to a recent survey. Writing in the “Accountants’ Journal,” Mr R. W. Hopkins, lecturer in Accountancy at the University of Canterbury, reports on a study of 133 companies’ accounts, comparing the information shown in each firm’s report for the years 1954. 1958 and 1960.

Mr Hopkins found that 19 compan’es (14 per cent, of the sample) supplied their turnover figures in their 1958 reports. The figure increased to 27 (20 per cent.) in 1960. ■’Of these companies, only a few—and those mainly public utilities (e.g.. gas companies) —presented the information as an integral part of the accounts. Obviously, the majority of companies are not prepared to present anything approaching a more informative revenue account

which would be the natural consequence of including turnover figures,” Mr Hopkins says. “Meagre Details" Any development in* this direction would be a “vast improvement over the meagre details now supplied in compliance with statute.” Expenses such as directors’ fees, depreciation. interest and audit fees were important in their own right, but as a group they did not constitute a figure of real significance. “Even at this restricted level of presentation, over 50 of the profit and loss accounts examined for ■ the year 1958 gave every indication of not complying with the Companies Act. particularly as regards disclosure of auditors’ fees and interest on company debentures or fixed loans.” Mr Hopkins found that 69 companies (33 per cent.) of a sample of 211 reports in 1958 showed their taxation provision, in the profit and loss account, with other expenses. The Companies Act. 1955. states that the item should be shown separately in the profit and loss account. Jargon Decried The use of the balance sheet captions “assets” and “liabilities” was declared “inappropriate and unnecessary” more than 15 years ago. in the recommendations of the New Zealand Society of Accountants of 1946. “Retention of such expressions to this present day therefore clearly indicates a lack of appreciation of the need to abandon such unnecessary jargon.” Another "deficiency of financial reporting” in New Zealand found by Mr Hopkins was in the presentation of the auditor’s report. The value of this report to all concerned with company activities is evident, but in no case is it more so than with the institutional investor. . . . Yet how often is it possible to view auditors’ reports printed in the finest of type and squeezed into a ■space at the bottom of the page no more than one inch in depth?”

Business Personal Mr R. S. Brittain, formerly chief manager for New Zealand of the Bank of N.S.W, has been appointed to the board of Ross and Glendining, Ltd. Mr L. J. Bell, a senior sales representaivte in Christchurch for Burroughs. Ltd., has been appointed manager of the company’s newly-opened branch in Invercargill.