THE CITY COUNCIL BOOKKEEPING.

New Zealand Herald, Volume XIV, Issue 4747, 2 February 1877, Page 2

THE CITY COUNCIL BOOKKEEPING.

AND BETWEEN WKIGaT ANDfsiR. BRODIEj,} ~ : f£x, the meeting of the City" Counoil; yesterday, J;he report of the committee,.who were appomteditp consider the report of. Mr. fright. aSd the reply of the City.Treasnrer, Mr;- was brought npi and the reports of Messrs. Wright and Brodie laid on the table* The consideration of" the report hasjjeen, postponed until .Wednesday 'nexiT" The following are the principal portions of'the reports :—

' ; MB. WItIGHT S UEPORT. . --*—•• Auckland,"January 13, lS77r P A Philips,-Esq., Town Clerk. ■gj,! in conformity with the desire of .vonr'committee, convened to me in your letter of the 14th ult., I have now the honour to furnish you with "a. full and exhaustive'report upon the present state of the books, and the manner in winch they have Been kept sihee Mr. Brodie's appointmenfcas City : Treasurer; and further, to • report seriatim upon the correctness or otherwise of the statements made by Mr. J. F. King. I deem if quite beyond my province to deal, 'with the cash accounts of your Corporation, : as the duty of vouching for their correctness 'rests entirely with your auditors, who have already certified in'the most distinct manner as to the of- those- accounts ; and .such certificate, from year to year, must place beyond all doubt the accu. racy of the v cash,.records." '....:. Vhe eiinple' ; eiitfy .- of .cash' transactions cannot 'afford information as to the assets or liabilities'of the . City- Corporation, ~nor..,pf> the' large and variecTproportie? heid in the.ratepayers ;-acd tirm-mightr find 'itself hopelessly; , insolvent, notwithstanding the .correctness of its cash-book, so might the affairs of a public-body drift into the utmost confusion.with property unan'd liabilities unknown or unascertainable (even" though its- cash entries were correct); if the necessary accounts had not.froui.,timo, to time been opened in IBe ledger, 'through 'the journal, showing the many:- trauaactioris ' : - which would not of necessity, .pass,thrqugh r the. cash-book. .. i As regards tfie present: state , .of the books and the manner in which they have-been kept since- the appointment' '"of Mr. Brodie, 1 I find: .1.,- That, they,,have never been balanced, since Mr. Brodie's • appointment,- nor have they : been kept in such a manner as to render a balancesheet, possible, ]how, or. at-,any otlier' time. 2/. The books have not been kept by : doiible 1 entry'or. by. single entry. I cannot find any attempt at method c? system in' themanner'inwhich they a been kept, and I find that although th;,ro are some raccounts correct, >a yeryrlarge number sre' utterly wrong,',and; show untrue, statements: of the accounts under their various headings.! . . . 3.-The books, seem ta s 'iave been' kept by more than one person, evendown; to as late AjSaM as' 1876, for I'find several; entries in both ledger and journal in different' handwritings.. . ; ; 4. Dates haVe been' systematically : disregarded, ! and it-, is-.'aj frequent occurrence to find; entries for'any || given year or month- preceding othsr entries i dated one year or month before the ;;event of j such given year. . / . 57 : 1 find that accounts in the ledger showing" transactions extending from-1872 downglio August, 1875, are still open, the amouhts of- balances not haviug been;.brought., flown drV .accounted for, nor do ' they in'any way-correspond with the printed statements of accounts published annually.. . .... 6. Respecting the year ending 31st'October, 1876, I have to say, '.that during' the whole of the year the books were' grossly incorrect; and I take this opportunity to repeat' the assertion;-I deemed it' necessary to make in my'former report of loth August, 1576, : "-that some of the largest and most important ' items' "were absolutely not shown at all in the Corporation books; learing.Bums-auiounting to many thousands of pounds idtallyiuh- ; accounted for." 'As it has been'attempted to throw some doubt upori "the above quoted I now desire .to re-iterate anS 'confirm tho strict accuracy of every word : l '.then wrote, and to state that the accounts iwere in that, condition: up to -31st jOctober, I , ' 1876;'' but at • that ."daW 'many new accounts, wero opened, with,a view to covering and rectifying the.errors and omissions which ,had beeu perpetuated the preceding years, representing a sum of about £200,000. . ,Tho books at the present tirue'are uadoubtedly much more complete thr.ii they were on 30th October, 1876 ; but it must not be, inferred from this that they are now by'any means correct/ . . . The financial.archives of our city are of more importance., to, us/than the Tower records, and it is a duty which this city owes to ; its creditors and to posterity, that the chronicles of its " : monetary affairs should be above the suspicion:.o£ inaccuracy. . ...,. The blunders in _ these.'.books'..'hava' been' so numerous, • persistent, and 'ridiculous, that •"£- 4o; not, consider it possible rto render the : ledger or journal presentable without tsoaimeacing theni again at origin.' . . . When - the ' books!"differ from the' annual accounts, '■ both/..'cannot be correct; but., as. we- have the ■ auditors' ' names to the accounts, it follows that when: the books disagfe'e'the laltetinust ; be wrong, s .. . .... .A,.reference t>' ledger* paper 81, will show-Uiat the-debits were-made to appear" -as credits and. vice versa, downrto an late as ,28th , October, IS7G.; and yet/notwithstanding the inability at that dateT:o..distingnißh the difference-between a receipt anda~pay-' ment, I fia'd that only'three days, later,-viz:,-? on 31st October, IS76J the most intricate'and' correct r'journal''-entrie3 have been made to put-matters-Btraightr The pages" ot'journal _entiie,« T I : -refer; to- are.; jndjibitably r the rwork' of some thoroughly skilled 1 - and J efficient accountant'; ' '•' bbt how such; entries are;-cpmpatible ;with the profound ignorance of the vgry : elements of book r 'keejjing, ',exhibited,, three days previously, is i a matter that might be conjectured/ but I do -not' feel 'called upon to -ex;plain£^^_^ntrie9>havo,been ; -niade jn-journal-apparently"without*th"e effect or object of such entries : bein^ : understood. . 9.; The journal has not been kept since 31st October,"lß76, -nor have the entries made .then lip close "the-books to that datevyet jbeen posted into the ledger. . . . lp. ' Salaries /account,'!:folio"! ISO; I • find - that,, according to the books, only £73 15s was" ■paid for salaries duriog the'period'from 15th November, 1573,. to 31st October, 1575, a of riearly.;two years. Whether the Council's officers gave their services gratuitously during that period, ■ I -am not 1 awnro, but it would appear so from' the books. There ie'still a debit o£ £131 5s outstanding Prime, ..which-shoulol-b"e collected or written, off; and I regret to find that this distinguished councillor, after haying devoted himself with such disinterested zeal 'and pre-eminent ability to,' the affairs'of the city, should now ; be brought' in a debtor to this extent for the privilege of filling- the .office of Mayor for one short year. It is, indeed, a sad reflection, that honour and greatness cannot be attained in Auckland without, being charged for at so much per week; and if future mayors are to be treated in this way, they miiy, perhaps, be led to believe that the game is hardly ' worth' the candle. 11. . : . In August, 1576, there was no account in existence for the large transaction with Messrs. Mbrrin, although they had up to that time received ■ upwards of JE40,000 on contract account. . . . 12. The Ridings's account, page 87, ledger, extending from'lß74 to 2Sth September, 1576 shows a debit of £125 still outstanding 15. Stone-breaking machine, &c., folio 213 • On the loth November, 1872, the stonebreaking machine appeared as an asset value £350. From that date, however, until 31st October, 1876; this machine has had no existence in the books, -wheu it once more makes its appearance at Journal, folio 92, upon the authority of the annual statement of the previous year. ... IS. On 31st October, 1875, the annual printed accounts show that £100,000 has been received for Waterworks Loan, but at that time there was nothing in the books whatever to show that any such loan had been negotiated or snch sums received and no record of the transaction was made in the books until 31st October, IS7C, after a lapse of one year. ... icording to the books, the City Council possessed no assets and had no liabilities until the 31st October, 1876, when these and other amounts have .been taken from the annual accounts prepared or audited by the auditor, and placed in the books 20. I may add that, as the Council declined to pay me my just charge for my former report, made at their request, they had no right to correct

their-b'oo"ke-in,the manner I then sneeeiLj - « but/' as has been accepted t acted upon, I mrat certainly look % fee.4-Miv Wright"then refers, at nn-L"* I able! length, to letter 5?J* ? that the annual accounts have not shown *J* 'i ■•trae; balances in*-the city books, that ti accounts iave been, compiled from otk sonrbes than the'b'ooks, that thecitvho y '-■ wereTnot any system .- large sumshad been omitted from ' making them completely wrocg, 'iS | concludes "thns : —ln conclusion j j,j ve^ e S say that I have endeavoured t> pat jA" 'I clearest language, any books j trust this report with, all .the information theyvt^igPv| anr.'&c, "■ •(Signed) Henry" WEicS^ : -1 MB..BRODIE'S KETI.Y."Siisf """ "" r Anckland,.22nd After an introductory Brodie remarks :—ln the first plaoa.r^tnk : I mifc that the resolution passid 1 Council on the 28th Decornbsr las u ? ;books has not been carried out. Theresol* • tipa as"reported in all the.local papers aal : .also read in the rough minutes was to ftl effect •' that Mr. Wright and another be an! pointed to make a joint report." I submit that if this had-been, acted npon ao such report as the ono.lj am..about to tenW to wouid ever have been sent in, for simple reason that no respectable aecauntijj would iave signed-his name, to snch a sided, false, and malicions production, Mr. : Wright was'originally, appointed to re. port on..the books, 1 think it was patents the Finance .Committee' that' he ( was B ,"j likely to prove, an'impartiat-jadge, and, fo ; that rcasoD, Mr. Fraser tg '■ 'act witit ',him. .Mrl V. Fraser decline \ to do . so, why I 13 , f the sufferer. It ? point out first theunfairnessi generally of ti. i report, and;- afterwards 4b"comment on sots ' r .pJ- th'« : mo're~Berions charges made against mj -' work. The whole tenor of. Mr.' Wright's report .bears-upon-this issue:' " ; Were ft. assertions < contained >in Mr. King's letter pf--30th> .October --last''-'correct or other. wi'se?" Hβ" says ~he has been fo ;sirfed/to ¥epbri W this*- Now, as tit. Wright Eas-told''many people that he is ths author of—that- letter, his bias to prove ths assertiona.j.therein."tor -be correct mnst U mariifest. An -JjpnouJ-ahhj-vinan would bav e shrnuk. frpm ccnst'itutirig r himself, judge aid 'jarylri his own' case':' As Mr. Wright is mj avowed enemy, hia report I mmt eay, just uutruthfalnes, that I expected. ,: '"'"' '-'-'■ ■' : : (2.) Mr. Wright has riot dared to attack tb.e,i!cgrrecsne33 Vof t&WsSinual statements /of aecouutsuas certified bySthe auditors, and he very wiIUy r p_ttts it: " That it yond his.prpyincertQ.deaiyith&tbreScash accounts or the Corporation, as the duty oE vouching for their corretitness rests entirely with,.the -auditors,"- begrto remind the Council that the auditors' annual certificate does not alone refer to t the cash 'correctness o£ each yearly statement4of- assets' and liabilities. Mr. Wright says :, "Notwithstanding the correctness of th*e affairs of a publio''body i 'mignS drift into the utmost con-fusion'-with property^uaaccquuted. for and liabilities unknown or unascertainable." Be does not say_that the cfty/s'lprbpercyja.iniaccounted lie, eoi-words this paragraph''that jieopje J uniCc(iuS|nted -with the facts i wouldva.upposo; that, such is the caae. I have anfiualiy' produced and.-laid before the auditors arstatcment o£ receipts and «. penditure, as requiredbjJiHe' 16Sth section of the Municipal Aci, 18&7, accompanied aanuajly by,ia statement of assets aad liabilities, and : Mr;-Wright must be a mere novice in;;public vi accoauts it he ventures "to assert'that this'iioes not iuclnde the whole ,■<*£- !-..■»•'? s. i n - ■•

—Mr. -Brodie -then gives from th6l auditors?Tepprt'j'affirEtiiijg the :.correet- . nesa- ? of ■> the /Cor'pbrafioa'a'* accounts, and : shows/that when -lie took - charge. o£ the- ■ books- be kept then.in 'the'same way they had been kept previously, and then adds :— : "Smcel'howeverj'.the Finance Commit ;tee reported .in' Septembeflast,. that the books should in future be kept by double jentry, I took immediate steps to put the work at the year ending 31st October, 1876, into a proper ficfrmr of double entry, and to do< this itf was necessary- to enter in the journal, and post therefrom ta the ledger jthe statement of tyjseta'an&liabilitieson 31st October, 1875.---Mr. "Wright says he did not fet out a trial'bajmice. .He knoira, or should aye known, •! tha.fr. when'he took up the bppks,,somfe of jhe,postings. of journal entries wei-e not completed, and that therefor* a trial balance .waq impossible until'this \?js done; .1 unhesitatingly, assert that a trial balance can be taken out, but not .by a. pet-son-who does not wish- to-do it. I did not. journalise the assets and-liabilities iu former years,- • I t-eoosidered the printed statements o? ar-co-iais signed by the auditors; passed ai the , annual meeting of tie Couacil and certified by..the Mayorywere the true acaaal accounts />f tbecity, and in tho. words of the'Act,/'.' {inal.in.regaM to ail persona whomsoever!" r 'Mt.~ Wright lays great stress, on the journal, and journal entries.'; Perhaps" lie will be surorised to learn that a very popular , Nvprk'bn bookkeeping (Inglis, in " Chambers's Educational Course") teaches double .entry on a system ,whiohdispense>'with'.the',journal altogether. . -;^-;-< ''i have" looked"in vaiii for any authority which ■ admits of the possibility of dispensing -with ithe ; cash-book, though Mr. Wright ,lias , said,, "in the traasactions ,of, ._the.,City Corporation a caah.book is qnite :;a ~1 snperfinoris'"record." I think th'e ,; Council jwill\agfee with me 'that no plan-coufcljte devised so admirably adapted 1 to" cover ~tne defalcation of an embezzling bookkeeper,, as'lthat .of. doing away with the cash-booki llt 'simply comes to this—some; rgreat ' i authorities say the journal can be dispensed with. Mr. !. Wright, on ~the/otnerT havd, - insists on its importance.-* - -' No ' authorities say •that the cash-book-''can' be dispensed with, but Mr. Wrigßt'says"" It is a superfluous .record !"-Cii:;>;vf ;■ Any oae would think on reading Mr. r: WrJghfß report that I had books. He -takes care to suppress the fact that the very page .he -speaks of; (92) '.ja headad " Journal, 1870," and the entry Itself,'which commenced at;page 90, not ,92, is headedthns.- « ! 1575, JSov. 1, sundries to assets, £2L<2,052 3s Sd, per printed statement to October 31." There is no attempt to mislead or mystify. Hone was it is aU straightforward and honest , The same sort of answer will apply wto, aU his other instances. Most of the. examrfes quoted mtboa charge (sth).are..answered by my general remarks abova on the mode- of keeping the,accounts. , I : wiU- merely further observe that all ; *hese accounts," except wro, have., been properly and accounted foe in the annual statement:' ."-. Hr. Wright reiteratesEsassertipn of loth May, 1876 ( 'that some of.the -largest-and most important items are absolutely not shown at all, &c.,) -with great emphasis, and cofl« eludes his first paragraph by admitting that the " thousands of.pounds unaccounted for," "perpetuated throughout the preceding years,? , ,-were rectified by a few journal entries .made,- I' distinctly state; in compliance with-the committee's report Not-withstanding-;aU-Mr.-'Wrinht says, I assert that the accounts' for 1576 in the books are in a correct state of double entry. He harps upon the date, and I reply they can. bei as; easily, pat in donble Qntry as were; •■ the ■ accounts of last fear. The examples he gives are wilful misrepresentations. -*' The -assets account he mentions is dated ■1875, November 1, on which date it amounted to. £232,052 3s S4 lince altered by journal'entries consequent )n adjustment of arrears of rate, as shown u the printed statement of 31st October, -576. - /Xhe_ assets at the latter date had not seen printed from the journal entry at the ;ime he was examining the books, but the lecessary journal'entry had been made, and his he knew, but of course suppressed v act - TO - • • r think I need not reply V

Hγ. Wright's remarks in.Mr. J. P. &2? s etter. My answer, as he says, -" cm ■* gathered from the foregoing remarks; , ' but I vish to call; attention to his remarks reaping the' waterworks booKs, Tvhic&he opene-i Ehey have never been touched since ho 1«K them, because I had every particular 0 ' iiccouo.t'required in my own set of The auditors knew of his books, but neve , even asked to see them. In conclusion, 1 think I have said sufficient to show that "/ work has been criticised by my avoir** enemy, who cavils where there is no occasion, and will not see evidence of a desire on my part to comply with your wishes, by one who stoops to misrepresentatiou a n< * direct falsehood to do me an injury, J' e » dares not to say that a single annual statement is wrong.—l am, &c, {Signed) P. Brimhk, Treasurer.