The Pahiatua Herald. with which is incorporated THE PAHIATUA STAR. Published Monday., Wednesdays, and Fridays. MONDAY, JUNE 18, 1894.

Pahiatua Herald, Volume II, Issue 163, 18 June 1894, Page 2

The Pahiatua Herald. with which is incorporated THE PAHIATUA STAR. Published Monday., Wednesdays, and Fridays. MONDAY, JUNE 18, 1894.

Tut examination of the direotors ami other official* of the New Zealand Loan and Mercantile Agency Company Limited, farnilhei abundant proof for the absolute necemty of further reforms in company management and control. The facts elicited from Mr C. J. Moore and Mr W. 11. Peat, members of the Institute of Chartered Accountants and Auditors of the Loan and Mercantile Company bring into prominence the capable manner in whioh auditors scamp their work and foist upon too confiding shareholders documents purporting to be “ a full and fair statement of accounts,” but which are in reality a mass of falsehood scientifically clothed. The report of the examination of Messrs Moore and Peat must exasperate those shareholders of the Until and Mercantile Company who have carefully read the same. During tho course of the examination SJr Justice Vaughan Williams was tempted to ask Mr Moore tho following pertinent ijues tion : “Do you think auditors arc of any use at all, or would you do away with them altogether ?” What could he the efficiency of the audit, for which a copy only of the lodger balances are furnished, and are taken for granted by the auditor? Mr Moure, in addition to his position as auditor of the Doan Company, held the post of managor of the New Zca land Land Company. There wasaconsanguineous relationship between (lie two companies, and it must have beon patent to all concerned that it was j morally impossible for Mr Mnovo to discharge his duties honorably under , tho circumstances. For instance. New Zealand bund Company shares

amounting to upwards of £300,000 appeared in the Loan Company balance sheet under tho guileless heading of “ wool and produce advances." An auditor occupies a very responsible position. He is paid by the shareholders to see that their money is being properly cared for and utilised in a safe and profitable manner. He oannot without a flagrant dereliction of his duties take anything for granted. Since tho bursting of the banking babble in Australia steps have been taken to form an Institute of Accountants in this colony, and the corporation has been registered, but this fact does not afford shareholders of joint stock companies any additional security against villainous auditing. Messrs Moore and Peat are or were members of the Institute of Chartered Accountants of England, and their auditing has been proved to be more than worthless. If it were madeillegal for an auditor to be a sharebroker or manager of a company we believe better and more conscientious work would be the result. It is manifestly injurious for a shareholder to be dabbling in tho shares of the company whose balance-sheet he audits. It may so happen that a misleading balance-sheet would be to his pecuniary advantage, and an unscrupulous auditor would not hesitate to take advantage of his position. A good deal of blame lies with the shareholders also. It should be a cardinal feature of all joint stock companies that no auditor shall hold office for two years in succession; this wholesome rule obtains with someoompanies, one of which we believe to he the Australian Mutual Provident Society than which there is not a sounder institution in the Australasian colonies. Auditors appointed by the government and going on circuit would undoubtedly be the most practical way of solving the difficulty, but there is the possibility of the nominees of the State not possessing the confidence of the shareholders, and the effect would be to depreciate the value of shares of companies whose balance-sheets were audited by government auditors in whom there was no conlidence. The question of auditing calls for immediate attention. Honest and conscientious work is needed, and we look to Parliament to help in effecting this reform and protecting innocent shareholders, who in most instances are widows and men in the sere and yellow leaf, from tho machinations of artful accountants.