Auditors tag report

Press, 10 November 1981, Page 37

Auditors tag report

Colonial Motor Company, Ltd, Wellington-based vehicle distributor and engineer, and its auditor cannot agree about certain stock inflation appropriations. In the annual report the auditors have qualified their report, in respect of the company’s appropriation of $550,00.0 to the reserve for the inflation of stock. In their report (for the year to May 31) the CMC directors say that in previous years transfers have been made to specific reserves and long-term provisions be-

fore the profit for the year was calculated. ■ They say they are aware that certain deductions do not comply with standard accounting practices laid down by the accountants’ society. Nevertheless they say that in the absence of any simple universally acceptable method of accounting for changing money values at the present time, they believe that the reserves and provisions (for inflation of stock, etc.) are a proper and reasonable charge for inclu-_

sion in the accounts before arriving at a profit figure. The reserves and provisions referred to are:— $550,000 to the reserve for stock inflation, $90,000 to provision for seismic alterations, and $lOO,OOO to provision for building reinstatement. As already, reported, the net profit for the year edged up from $2,553,875 to $2,561,054 after an increase in sales from SIS2M to SI66M.