FUTURE PROFITS

Nelson Evening Mail, Volume LXIV, 6 August 1931, Page 5

FUTURE PROFITS

ACCOUNTANTS’ REPORTS

NEED FOR EXERCISING CARE A question of gieM interest to accountants pud investors, and one which is hedged with great difficulties was considered at the last meeting ql the executive of the New Zealand Society of Accountants. The attention of the executive was called to the prospectus of a certain company, in which extracts from reports oi' accountants were utilised to support the contention of the promoters that the project would provide large profits to prospective shareholders . The full reports of the accountants wore not printed, but short extracts gave the impression that these authorities \yere definitely of the opinion that the proposed company should earn very large profits. While members of the executive consilcred that a consultation with an accountant ‘s a wise preliminary to the formation of a public company, conseiderable care lias to be exercised in making reports, especially to avoid predictions as to future profits, as investors may bo misled, particularly if only a partial use is made of the expressions of opinion from the public accountant.

It was resolved to communicate with the public accountants. concerned, .advising that the executive strongly deprecates the statements made, for the reason that it is an established rule that a public accountant, in submitting a report covering the affairs of a company must report on facts only, and not on future estimates. In connection with the measures which had been previously approved for the relief of members of the society who have suffered losses in the Hawkes Bay earthquake, it was reported that expenditure to date totalled £llOO.