DELAY IN AUDITS.

Manawatu Standard, Volume LII, Issue 255, 27 September 1932, Page 5

DELAY IN AUDITS.

LOCAL BODY ACCOUNTS. REPLY TO COUNTIES ASSOCIATION. WELLINGTON, Sept. 27. Some of the reasons leading to delay in the audit of local body accounts are given in the reply of the Deputy Controller and Auditor-General to a remit adopted by the Counties Association. The remit expressed the grave concern of the Maniototo County Council at the increasing number of defalcations by officials of local bodies. Owing to the apparent failure of the Audit Department’s officers to detect the various misappropriations in their early stages, and the subsequent loss to local bodies through being only able to recover the amount misappropriated within twelve months of notifying the insurance company, the matter was brought to the notice of the AuditorGeneral with a view to obtaining a greater measure of security than was afforded under present fidelity policies. In his reply the Deputy Controller and Auditor-General stated that in many instances the accounts of local bodies were not ready for complete audit until some considerable time, in some cases a whole year, after the period of twelve months has expired. In order for a fidelity policy to be effective, the cover should he extended to defalcations discovered within a period of two years or at least of 18 months from the time of their commission.

“The Audit Office notes that the remit quoted in your letter was received from the Maniototo County Council . . . the letter proceeded. “Any failure in that particular instance on the part of the Audit Office to detect the misappropriations in their early stages was primarily due to the fact that on several occasions on which the audit inspector visited the county office for the purpose of auditing the council’s accounts the books were found to be in such an incomplete state that it was impossible for him to carry out a complete audits The chairman of the county was advised on two occasions of the unsatisfactory manner in which he books were kept, but it was subsequently ascertained that he failed to inform the council of the clerk’s negligence in the matter of keeping the accounts up to date. The audit inspector’s experience in connection wit, the Maniototo County Council’s accounts is, unfortunately, nob an isolated case.

“An audit inspector fixes certain dates for particular audits and if a local body does not have its accounts ready for audit at the date specified it is necessary for the inspector to proceed with the audit of other accounts.

. . . It may, therefore, be that when the audit is eventually undertaken it covers a period greatly in excess of twelve months. “The delays in the auditing of local authorities’ accounts are not, however, invariably due to the procrastination ... or incompetency of the local authorities’ officials, as in the past delays have in certain instances been caused through the inadequacy of the audit staff. The audit office is quite alive to the necessity of maintaining an adequate staff to keep the work of audit up to date, and if local bodies would on their part exercise reasonable supervision over their officers so as to ensure that their accounts are properly keot and promptly prepared for audit, the increasing of the period of cover under fidelity policies by at least six months should afford sufficient protection against loss through defalcations.”