BANKRUPT SOLICITORS.

Taranaki Daily News, 5 November 1921, Page 5

BANKRUPT SOLICITORS.

SERIOUS POSITION REVEALED. CASE OF GENERAL NEGLECT. By Telegraph.—Press Association. Auckland, Last Night. A meeting of creditors in the bankrupt estate of Hammond and Cracknell, solicitors,' was held to-day. The Official Assignee stated that Hammond’s private liabilities were £1846 and there were practically no assets. The liabilities included £lOOO, a contingent claim on a guarantee. The investigating accountant reported general neglect of the book-keeping side of the business. The position disclosed to date was that trust moneys received on behalf of clients and not represented by securities totalled £46,171 and ordinary trade creditors £239. The credit balance in the trust account was £ll6. Book debts totalled £12,870. There were some instances in which claims might arise where properties had been sold and loans not paid off. A great many of these loans were made in the time of the former partnership on unregistered mortgages, and in some cases properties had been sold without provision for repayment to the lenders. In all cases the firm continued to pay interest to the mortgages. About £40,000 was not accounted for. The accountant said that had a correct balance of the books been insisted upon the irregularities could have been disclosed years ago. The Official Assignee said the present system was grossly at fault in that the continuation of the services of an auditor was absolutely in the hands of the firm whose books he was auditing. An auditor of trust accounts should be in such a position as to feel that whether his report was favorable or not his position would be secure. In reply to a creditor, he said bankrupt’s book could not have been audited. The meeting carried the following motion: “That the creditors are strongly of opinion that the state of affairs disclosed by this bankruptcy calls for more stringent regulations for the auditing of trust accounts.”