COMPANY REPORTS.

Auckland Star, Volume LXXI, Issue 217, 12 September 1940, Page 21

COMPANY REPORTS.

COMPARATIVE STATEMENTS. ■ Many well-known accountants of British countries and the United States of America are in favour of procedure to make the positions of' companies readily understandable in annual presentations of figures. For example, a report of a committee of the American Institute of Accountants mentions that the increasing use of comparative statements in the annual reports of companies is a step in the right direction. The practice enhances the significance of the reports, the report continues, and .brings out more clearly the nature and trends of current changes affecting the enterprise. The use of statements in comparative form serves to increase the reader's grasp of the fact that the statements for a series of periods are far more significant than those for a single period—that the statements for one year are but one instalment of what is essentially a continuous history. It is therefore recommended that the use of comparative statements should be extended. In any one year it is ordinarily desirable that the balancesheet, the income statement and the surplus statement (the two latter being separate or combined) be given for the preceding as well as for the current year. Footnotes, explanations and accountants' qualifications already made on the statements for the preceding year should be given, or at least referred to, in the comparative statements.

-. If, because of xeclassifications or for other reasons, changes have occurred in the basis for presenting corresponding items fof tlJfe two periods, information should tie furnished which will explain the, change. This is in conformity with' the well-recognised rule that any change •in practice -which would affect comparability should be disclosed. The question of responsibility to be assumed by the accountant in his report requires consideration. In general it is desirable that he should accept the responsibility of satisfying himself that the figures for the preceding year fairly present the position and results, and are properly comparable with those of the current year, or that any exceptions to their comparability are clearly brought out. In the common case in which the accountant will have examined, the accounts of both years no difficulty in assuming this responsibility should arise.