INVESTORS CAN EASILY BE MISLED.

Star (Christchurch), Volume XLIV, Issue 183, 4 August 1931, Page 5

INVESTORS CAN EASILY BE MISLED.

ACCOUNTANTS WARNED TO EXERCISE CAUTION. (Special to the “Star.”) WELLINGTON, August 4. A question of great interest to accountants and investors, and one which is hedged with great difficulties was considered at the last meeting of the executive of the New Zealand Society of Accountants. The attention of the executive was called to the prospectus of a certain company, in which extracts from reports of accountants were utilised to support the contention of the promoters that the project would provide large profits to prospective shareholders. The full reports of the accountants were not printed, but short extracts gave the impression that these | authorities were definitely of the opinion that the proposed company should earn very large profits. While members of the executive considered that a consultation with an accountant is a wise preliminary to the formation of a public company, considerable care has to lie exercised in making reports, especially to avoid predictions as to future profits, as investors may be misled, particularly if only a partial use is made of the expressions of opinion from the public accountant. It was resolved to communicate with the public accountants concerned, advising that the executive strongly deprecates the statements made, for the reason that it is an established rule that a public accountant, in submitting a report covering the affairs of a company must report on facts only, and not on future estimates. In connection with the measures which had been previously approved tor the relief of members of the society who have suffered losses in the Hawke’s Bay earthquake, it was reported that expenditure to date totalled £llOO.