ACCOUNTANTS' DUTY.

New Zealand Herald, Volume LXIX, Issue 21117, 26 February 1932, Page 11

ACCOUNTANTS' DUTY.

PROSPECTUS CERTIFICATES. NEED FOR SPECIAL CARE. THE MISLEADING OF INVESTORS. [BY TELEGRAPH. —OWN CORRESPONDENT.] WELLINGTON, Thursday. Advice to members of the profession to be particularly careful when giving a certificate for publication in a prospectus or for advertising purposes was given bv Mr. J. M. Elliffe, of Auckland, in his presidential address to the annual meeting of the New Zealand Society of Accountants last evening. Mr Elliffe said during the year several cases had been reported to the committee of the council in which accountants had given reports which had subsequently been inserted in prospectuses or used in advertisements. Several of those reports contained statements which might be misleading to possible investors. It had been necessary for the committee to communicate with the members concerned asking for an explanation.

"I would draw the attention of members to a brochure on "Professional Ethics," which was issued by the council in 1927," Mr. Elliffe said.. "Clause 11 of the brochure deals with the preparation of certificates by accountants and points out that carelessness in this matter would be a cause for discipline by the council. I would like to amplify this clause by saying that a public accountant should in no case, give any certificate or statement, unless he has satisfied himself by careful examination that the contents are accurate in every respect." Mr. Elliffe said investors attached considerable importance to any certificate signed by a public accountant and mem bers should make no estimate of future profits or any statement which might pos sibly mislead a prospective investor. It had been stressed that frequently company promoters, in compiling a prospectus or advertisement, had inserted extracts from reports by public accountants. An extract stated without its context, which might qualify the statement very considerably, frequently conveyed a quite erroneous impression. It was recommended, Mr. Elliffe added, that when giving a report for prospectus purposes, members should make the stipulation that the report, if published, should be printed in full and no extracts used separately except with specific approval.