AUDITING OF ACCOUNTS

Dominion, Volume 12, Issue 142, 11 March 1919, Page 8

AUDITING OF ACCOUNTS

DEFICIENCY IN COMPANIES ACT. A deficiency in the sections governing the auditing of accounts under the Companies Act has been brought to the notice of tho Wellington Central Chamber of Conunerce by a Dunedin aocountant, and at yesterday's meeting of the chamber Mr. L. A. Edwards, ■ of tho Legislation Committee, submitted a report on the matter. Tho sections concerned were Nos. 133 to 136. and' Mr. Edwards stated that a careful reading of the sections disclosed tho fact tliat an unprincipled accountant could givo a certificate on a balancesheet complying with tho aforementioned sections without conducting an audit of the books. Thero was no doubt that when the sections were originally framed tho intention was that the books should bo audited, but as the sections were constructed an audit of tho books was not mandatory. Section 135 stated that every auditor of.a company shall have a right of access to tho books and accounts, etc. Sub-section 3 stated: "In every such report the auditor shall stato that tho balance-sheet lias been drawn up so as to exbibit' a true and correct view of the slate of the company's affairs as shown by the books," but it was not necessary for .the auditors to certify that they had audited the books. The present wording of tho sections, therefore, had given rise to two instances, brought under tho notico of the committee, where company managers had approached auditors with the request that their certificates could be given in accordance with the Companies Act: (a) "That it would not bo necessary to spend too much time going through tho books; (b) to give a certificate that would comply with the Companies Act and not do work in excess of ,£2 2s. worth." Many auditors' certificates did not elate that they had audited the books. Tiio committee recommended that the above sections of the Companies Act be amended so that it bo made compulsory that the bonks bo audited and that tho auditors' certificate and report declare that the books have been audited by them.