QUESTION OF BOOKS.

Timaru Herald, Volume CXXV, Issue 18538, 8 April 1930, Page 4

QUESTION OF BOOKS.

BUSINESSMEN’S OBLIGATIONS. ACTION BY OFFICIAL ASSIGNEE. The question as to what books are required by business men in the course of their occupations was discussed at a sitting of the Magistrate’s Court in Geraldine yesterday morning, before Mr C. R- Orr-Walker, S.M. The discussion arose through an action in which the Official Assignee in Bankruptcy at Timaru (Mr W. Harte), proceeded against James Stevenson on a charge that, within three years of the commencement of his bankruptcy, he did fail to keep such books of account as are usual and proper in the business carried on by him, and to sufficiently set forth his business transactions and disclose his financial position. The charge was laid under Section 138, subsection (d), of the Bankruptcy Act, 1908. Mr W. D. Campbell appeared on behalf of the Official-Assignee, and defendant was represented by Mr J. Emslie, who intimated that his client pleaded guilty and elected to be dealt with summarily. Mr Campbell said that defendant had been in business as a grocer in Geraldine for 18 months, and had been adjudged bankrupt on January 29 last. Bankrupt’s books had been handed to the Assignee, who had had the assistance of a fully-qualified accountant in trying to arrive at the true position of the business. This, however, had proved an impossible task. It was estimated that, during his term of business, the turnover had been about £IBOO, and the estimated cost of the goods obtained about £ISOO. At a meeting of creditors, dissatisfaction had been expressed at the nature of the defendant’s books. The case, Mr Campbell said, had been brought to impress on people in business the class of books they should keep. The minimum num- | ber of books was not great, and these would save the Assignee, and others, a great deal of trouble. The deficiency | in the business, Mr Campbell said, was about £7OO, and the actual loss about J £SOO, so that the business really cost about £BOO, when the figures previous- ' ly mentioned were taken into consid- ' eration. There was no check to show what money the defendant had taken J out for himself. John Leggott, public accountant, ' Timaru, said that records for any small business should provide details j of cash received, cash paid, goods bought, and goods sold. He considered a receipt book was necessary, to j show receipts for payments of custom- \ ers’ accounts, also a cheque book, a cash book to show details of all receipts, whether for accounts or cash . sales, and details of all payments, * whether by cash or cheque, for purchase of goods, or assets, payments of business expenses and personal drawings. Docket or invoice books, saloi Journal or day book, and a ledger, to record customers’ accounts, were necessary, while at the end of each year a book, or sheets containing list of was required. Mr Leggott detailed the duties of each book he : had spoken of, and said they represented a minimum of requirements. ‘ Business men should have in the least an elementary knowledge of the correct compiling of such books as contained a record of their business transactions. These books would not disclose a person’s financial position, but this could easily be arrived at by an accountant. Defendant’s books, Mr Leggott added, were very unsatisfactory, and the position was not clearly shown, nor could it be arrived at. Mr Emslie admitted the facts as stated, and said that defendant had been in the grocery business for about 20 years. Defendant did not, apparently, understand bookkeeping. He had failed there, although he thought he had been doing alright. If defendant had carried on a strictly cash business his position might have been altogether different. Unfortunately he had launched out without a system, and when his saleable stock was at an end he was hampered for cash. His creditors had passed a resolution in favour of defendant being prosecuted, so that the Assignee's hands had really been tied. Mr Emslie said the defendant had had a good deal of illness in his family, and he had been well and sufficiently punished for any injury he had done to anyone, and the

warehouses had been the chief sufferers. Mr Emslie suggested a term of probation, adding that the bringing of the case would probably have a salutary effect on others. The Magistrate said it was obvious that defendant’s books were not the proper ones, and obvious also that defendant did not know his real position until his bankruptcy. So far as he (the Magistrate) knew, there was no obligation on the part of a solvent person to keep books. The risk was not so great, but if the risk was run, and if the attempt failed, a person would have to answer the charge. The public must be protected against men with no knowledge of bookkeeping. Apparently the defendant had a rough-and-ready knowledge. The Magistrate said he could not see any advantage from a term of imprisonment, although such a course had been followed in other courts. He would inflict the penalty of a conviction, and would order probation, which would be a lesson to defendant, and to others. The time must come however, the Magistrate added, to imprison people for such offences, and it behoved all small traders to seek the advice of an accountant. Otherwise the consequences would be serious. Defendant was convicted and released on probation for two years, special conditions being (1) that he shall not enter into any trading business where books are usually kept while he is undischarged; (2j that he pay the Assignee expenses amounting to £9/9/-, these to be paid within six months, by such instalments as may be approved by the Probation Officer.