Reports of Bankruptcy and Company Cases Volume 3 (Paperback)

This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1896 edition. Excerpt: ...end of each year; and a summary of all the accounts showing the total value of such stockin-trade. The summary was signed by the manager, and the value as shown by it was adopted by the auditors, and was inserted as an asset in the balance-sheet, but " as per manager's certificate." The summary always corresponded with the accounts summarized, and the auditors ascertained that this was the case. But they did not examine further into the accuracy of the accounts summarized. The auditors did not profess to guarantee the correctness of this item. They assumed no responsibility for it. They took the item from the manager, and the entry in the balance-sheet showed that they did so. I confess I cannot see that their omission to check his returns was a breach of their duty to the company. It is no part of an auditor's duty to take stock. No one contends that it is. He must rely on other people for details of the stock-in-trade on hand. In the case of a cotton mill he must rely on some skilled person for the materials necessary to enable him to enter the stockin-trade at its proper value in the balance-sheet. In this case the auditors relied on the manager. He was a man of high character and of unquestioned competence. He was trusted by every one who knew him. The learned Judge has held that the directors are not to he blamed for trusting him. The auditors had no suspicion that he was not to be trusted to give accurate information as to the stockin-trade in hand, and they trusted him accordingly in that matter. But it is said they ought not to have done so, and for this reason. The stock journal showed the quantities, i.e. the weight in lbs., of the cotton and yarn at the end of each year. Other books showed the quantities...