CLAIM FOR AUDIT FEES.

Waikato Times, Volume 97, Issue 15999, 30 May 1924, Page 10

CLAIM FOR AUDIT FEES.

KIORRINSVILLE COMPANY SUED. SOME STRANGE EVIDENCE. A claim for audit fees and a coun-ter-'claim for the refund of money alleged to be wrongly paid to the auditors was responsible for the forthcoming of evidence concerning the inside workings of a Morrinsville 'cooperative company, certain allegations being made agrajnst one of th c responsible officials. The case was one in which English and Luxford (Mr E. 11. Northeroft), auditors, of Hamilton, claimed from the Morrinsville Co-operative Motor and MTieelwright Co (Mr E. McGregor) £32 7s as the balance of audit fees owing for work done during the years 1021-23. A counterclaim was lodged for the recovery of £4 9 Gs 2d for money which was allegedly -wrongly paid to plaintiffs. The case, winch was a lengthy one, was heard before Mr J. H. Salmon, S.M. The defence, which was heard first, made allegations of negligence on bebalT of plaintiffs 'in the audit of the books. The share capital account, it was claimed, bad mot been checked in a proper manner, and the auditors, it was alleged, knew fcha;t the balance did not show the true position of the company. The former secretary of the company "had employed plaintiffs to do clerical work which was part of the duffies of the secretary, who had paid for this out of the- company's funds. The directors had signed blank ebecrues for thc secretary to use during the time which elapsed between meetings. The chairman of directors, under cross-examination, staid he considered (.hat the secretary was to blame for the directors not knowing the company's true position.

The present secretary stated that the company had issued a writ against the former secretary for moneys alleged to have been wrongfully paid. The writ was for approximately £3f>o, and was compromised for about £250. Mr Northcroft. for the plaintiff, submitted there was no negligence that would entitle the defence to complain that his clients were not entitled to their money. The auditors had merely to take reasonable care and must not be regarded as insurers. The company, after settling its claim to the former secretary, could not now claim from English and Luxford. The magistrate maintained that if the defendant company compromised with Iheir secretary they could not now claim from plaintiffs. The affairs of the company disclosed an extraordinary position. They found the directors trusting their secretary implicitly, even to thc extent of signing blank cheaues. It was clear that the directors had lieon misled and expected the auditors to drop on these matters. It was impossible on the evidence to find the auditors guilty of negligence. Judgment was given for the plaintiffs on the claim and counter-claim with costs amounting to £9 12s.