AUDIT OF PUBLIC COMPANIES, &c.

New Zealand Herald, Volume XXV, Issue 9184, 13 October 1888, Page 3

AUDIT OF PUBLIC COMPANIES, &c.

TO TBB KDITOR. Sir,—On one or two occasions during the last fifteen years I have in your columns called attention to tho perfunctory manner in which the audit of accounts in our publics companies has been carried out, and the farce of expecting that ordinary business men could either bring the capability to the task, or that it was possible we could expect those interested in the maintenanceof a glowing account of a company's affairs to be able to give a candid report, mora particularly if they were clients (often under obligations for advance? or assistance). I would again point to the system now existing in certain States of America. By act of local legislature competent professional auditors are appointed at fixed intervals, by the Government, and they hava the power at any time—l think it is upon ten or fourteen days' notice—to at once proceed to tho audit of any banking or other similar corporation, and are bound to publish all particulars for ihe information of the bondholders and the public. If we had a similar Act here, what a deal of misery might have been saved ! There is another subject I have before addressed you upon, which will not be out of place ab the present time. That is, the verylarga. amount of money tied up by certain institutions in large and costly buildings, a tenth part of which would suffice for the business wants. When you visit several of the small towns in the South, one is astonished to see the expensive class of buildings erected not warranted by the trade. Branches established where agencies would suffice. Large expensive buildings erected, on costly sites (purchased instead, of leased). It would appear as if it were absolutely necessary to make great display to inspire confidence. The result is, that large establishments need a large number of officials, and hence we have the somewhat just comp'aints of one of the shareholders at a late banking meeting, that these officials are too big for their billets. It is too often forgot that the moneys spent in this direction yield little or no profit, or' very exceptionally so, and that ifc is not the money of the directors which is beinjr expended, but of tho unfortunate shareholders who are rarely, if ever, consulted on the matter. They have to stand by and see unnecessary extravagance in this direction. May our present troubles teach us a lesson, and rather let tho solidity of the business inspire confidence than dividends out of re» serve funds or grand costly buildings thsh are not needed. But of more importance still, let us have a true, competent, and efficient audit enforced by Act of Parliament.—l am, etc., Finem Respice.