CONTINUOUS AUDIT PLAN

Poverty Bay Herald, Volume LXIV, Issue 19375, 13 July 1937, Page 14

CONTINUOUS AUDIT PLAN

STOCK EXCHANGE BOOKS (jh;i-:nsi.a.\i> decision (Elec. Tel. Copyright—United Press Assn.) BRISBANE, July 12. The committee of the Brisbane Stock Exchange has decided to introduce a rule providing for. a continuous audit of the books of all members. This decision is a sequel to the announcement made by Mr. Alan Abercrombie, president of the Brisbane Stock Exchange for the past two years, that he was unable to meet his financial commitments on July G.

MELBOURNE LESSON POSITION IN DOMINION XIOIOD OF FIDELITY FI X’D The failure in Melbourne recently of a large sharebroking firm which was a member of the Melbourne Stock Exchange gave a severe blow to the prestige of the Exchange, but from this ill wind there appears to be every possibility that a substantial amount of good will accrue. The heavy losses incurred have brought the Exchange under the fierce light of public criticism, with a demand for the introduetion of safeguards to protect the public against losses in the event of default by a member. The committee of the Exchange, which has been criticised for its inaction in the past, apparently does not intend to lay itself open to a repetition of the accusation, and has already held protracted meetings at which‘the question of safeguards has been considered. No public statement has been made, but it is understood that in the discussions special emphasis has been laid upon the necessity for conducting a compulsory periodical audit of members' books, and establishing a substantial guarantee fund to cover any losses which may occur in spite of the audit provision. The basis of Stock Exchange business is confidence, and over many years the institution has built up a reputation and to-day is regarded in much the same light as a bank. The Sydney Stock Exchange recently incorporated a rule establishing a large fidelity fund, but neither the Melbourne Exchange, nor any of the New Zealand Exchanges, yet offers its clients anv protection against possible failures on the part of members. The New Zealand Exchanges, which are linked under the New Zealand Stock Exchange Association, have had the matter under consideration, but an effective scheme is complicated bv the fact that all the Exchanges have country members. However, it is correct to state that the principle has been adopted by the New Zealand Exchanges. It is in the drafting of the rule that difficulty is being experienced. Happenings in Melbourne should be an effective spur to the association to hasten its plans while the initiative remains in its own hands.