South Canterbury Times, WEDNESDAY, MAY 26, 1880.

South Canterbury Times, Issue 2243, 26 May 1880, Page 2

South Canterbury Times, WEDNESDAY, MAY 26, 1880.

Now that the annual farce of electing auditors for the various municipalities in the colon}' is in full swing, the time is opportune for calling attention to the serious sides of this popular delusion. It is undeniable that the system of audit pursued by public corporations in New Zealand is unsatisfactory in the extreme. The .important functions that auditors are called upon to perform are completely lost sight of in the process of selection and appointment. A fee Is voted which is usually quite insufficient, and this paltry bait is held out to any member of the unemployed that chooses to nibble. The average ratepayer whose knowledge of book-keeping and accounts is often somewhat circumscribed, is called upon to exercise his choice. Should the candidate he incompetent there is no help for him—somebody must bo appointed. As a burgess, in this matter his hands are tied. He may have no faith in any of the applicants, but be is pi'cvcntcd from looking around him, as he would do, if his personal concerns were at stake. An auditor cannot be selected in the same way as a physician, or a solicitor. The successful applicant requires no certificate of competence. Ho undergoes no examination —ho Is subjected to no test as to eligibility. He may be but an indifferent accountant or bookkeeper, and his acquaintance wdth the rudiments of ' arithmetic may be slender indeed, hut he has only to offer himself —he requires hut to nibble the lean municipal bait—and the ratepayers as in duty bound, will pull him to the front.

In order that some idea may be formed of the broadness of this municipal farce it is only necessary to consider for a moment the qualifications that are demanded of a genuine auditor. An auditor to be efficient must possess the qualities of a specialist. He must have large practical experience as an accountant, besides theoretical skill. His duties require the vigilance of an expert, united with an extra amount of courage and determination. Ho need not be exactly a detective, hut it is necessary to the proper fulfilment of his duties that he should be a skilful examiner. In examining trust accounts his duty is to see that everything is straightforward and legitimate. His investigations should be mere than superficial. Something else besides the mere adding together of figures, or the working out of moderately intricate calculations have to be pe’formed, if his duties arc properly carried out. He has to sec that the items charged under the head of expenditure are fa 1 '" and reasonable, that they are strictly legal, and that they come within the scope of the body concerned.

How many out of tlx? list candidates, who at tin's moment arc? offering their services to the ratepayers of New Zealand as auditors, are, cither qualified or willing to perform these functions properl}'? Is it not preposterous to assume that the paltry allowances voted for the work will "bring skilful and efficient candidates into the field ? Or assuming that sufficiently qualified accountants were forthcoming, is it reasonable to suppose that they could afford, for the scant remu Deration voted, to give the time and trouble to the performance of the work, which is so desirable ? Wc think not. Wc have no hesitation in designating this annual election of auditors a farce. It is a pity that it should be so, seeing that a vigilant system of audit is the chief safeguard on which ratepayers and burgesses must depend ; the best guarantee they can have, that their money is well expended. But efficient audits must be the exception, not the rule, so long as auditors are appointed by the present free, easy, and haphazard process. In directing attention to this audit question our desire is to impress on the legislature the necessity of having competent and efficient officers appointed for the purpose of auditing the accounts of public bodies. Not only municipal corporations, but public bodies generally such as Harbor Boards, Education Boards, and the various public societies in which trust funds are deposited should have, the assistance of a periodical overhauling. Defalcations have of late been on the increase. Our columns have been well embellished with incidents illustrative of the effects of a loose morality and undue facilities for fraud. Although Canterbury has enjoyed a pleasing exemption from the frauds that are creating a sensation in the colony, wo have had plenty of examples from the North and South of the consequences of lax supervision. We need only allude to instances of embezzlement combined with incendiarism, and the numerous cases of defalca-

tions in .Dunedin, that have lately been reported. The only preventive for such a state of things is the adoption of precautionary measures. Means must be taken to render fraud so difficult as to be next to impossible. This can best be accomplished by the appointment of public auditors, specially trained for their duties, and who will be independent of the bodies for whom the audits arc performed. That this is desirable is rendered evident by the ruptures and collisions that have lately taken place, between certain public bodies in Southland and Auckland and the auditors of their accounts, because the latter objected to the system initiated of members recouping themselves for personal expenses. It would be better for public corporations themselves if a thorough system of audit such as we suggest were enforced. The result, in many instances, would be to restore public confidence to institutions that are now regarded as lacking stability. In some of the Australian colonies, if not in the whole of them, public auditors arc appointed by the Government for the purpose of Overhauling the accounts of subsidised institutions. In Scotland, not so long since, the public auditor could make an inspection of any bank when he thought proper, and demand ocular proof of the bullion in band. If similar stops were taken in New Zealand, the result would be general!}' beneficial, for it would tend to make public bodies careful of their expenditure, and it would effectually stamp out a class of defalcations that have lately been largely on the increase.