eBooksRead.com books search new books
Ernest Evan Spicer.

Practical auditing online

. (page 1 of 57)
Online LibraryErnest Evan SpicerPractical auditing → online text (page 1 of 57)
Font size
QR-code for this ebook
PRACTICAL AUDITING



BY



ERNEST EVAN SPICER, F.C.A.,



AND



ERNEST C. PEGLER, F.C.A.

of the Firm of SPICER & PEGLER, Chartered Accountants,
60, Watling Street, London, E.G.



21s. NET.



LONDON :
H FOULKS LYNCH & CO., 9, FENCHURCH STREET, E.G.



1911.

{Entered at Stationers' Hall. All rights reserved.'}







BY THE SAME AUTHORS.



By SPICER and PEGLER.

BOOK-KEEPING AND ACCOUNTS. (Second Edition.)
INCOME TAX IN RELATION TO ACCOUNTS. (Third Edition.)
EXAMINATION NOTE BOOK FOR ACCOUNTANT STUDENTS. (Second

Edition.)

AUDIT PROGRAMMES. (Second Edition.)
UNDERWRITERS' ACCOUNTS. (Second Edition.)
TABLE A : A COMPARATIVE ANALYSIS. (Second Edition.)



By RANKING, SPICER and PEGLER.

EXECUTORSHIP LAW AND ACCOUNTS. (Third Edition.)
MERCANTILE LAW.
PARTNERSHIP LAW.
ARBITRATION AND AWARDS.



By RANKING and SPICER.

A PRIMER OF COMPANY LAW.



By D. F. de 1'HOSTE RANKING, M.A., LL.D.

RIGHTS AND DUTIES OF LIQUIDATORS, TRUSTEES, AND

RECEIVERS. (Tenth Edition.)
BILLS OF EXCHANGE. (Fourth Edition.)
PARTNERSHIP ARTICLES EPITOMIZED AND EXPLAINED, I

AND THE LIMITED PARTNERSHIPS ACT, 1907. (Sixth '

Edition.)



By ERNEST EVAN SPICER, F.C.A.

AN OUTLINE OF THE MONEY MARKET.

THE ACCOUNTS OF AN EXECUTOR. (Second Edition.)

INTERNAL CHECK IN RELATION TO A MANUFACTURER'S

BUSINESS. (Second Edition.)
RESERVES, ANNUITIES AND SINKING FUNDS. (Second

Edition.)

INCOME TAX CLAIMS AND APPEALS. (Second Edition.)
A SUMMARY OF THE INCOME TAX PROVISIONS OF THE

FINANCE (1909-10) ACT, 1910. (Second Edition.)
INCOME AND' SUPR>tfAX, AND ITS LEGAL EVASION.
DISSOLUTION, AMALGAMATION AND RE-CONSTRUCTION

ACCOUNTS.
!>' MS' L!-: PROFITS ANl) DIVIDENDS.



By ERNEST C. PEGLER, F.C.A.

SOME NOTABLE FRAUDS IN ACCOUNTS. (Second Edition.)
AN AUDIT OF TRUST ACCOUNTS.



PREFACE.



THE present work has been undertaken, at the request of
many members of the Profession, for the purpose of providing
a text-book on the subject of Auditing, which should be at once
practical and comprehensive. No pains have been spared to arrive
at this result, and we hope the book will be found worthy of its
title.

The subject of Auditing is so many-sided that a logical
arrangement of the matter to be dealt with becomes of great
importance, and special attention has been paid to this. The
first portion of the book deals with the general principles and
practice of Auditing. This is followed by several Chapters on
the Audit of Limited Companies, and the law thereof as affecting
Auditors; while succeeding Chapters are concerned with the
Audit of Partnership Accounts, Audits under Statute, and Special
Points affecting different classes of Audits. A separate Chapter
has been included on the Audit of Accounts of Local Authorities,
which it is hoped will be found useful ; and a short Chapter has
been added on Investigations.

We have endeavoured to facilitate reference to any point on
which information may be desired, by providing a full Index,
which is exhaustively cross-referenced ; a Table of Contents ; a
separate Synopsis of each Chapter ; a Table of Cases quoted ; and a
Table of Statutes, which contains a summary of each Section of
the Acts printed in the Appendix, or referred to in the text.

Our thanks are due to many members of the Profession and
others for the benefit of their experience on various points of
practice, and in particular to Mr. PERCY H. GREEN, Chartered
Accountant, and our partner Mr. G. ALEXANDER ROBERTS,
for their valuable criticism and suggestions; also to Mr. A. F.
SAUNDERS, A.S.A.A., and other members of our staff, for their
material assistance.

ERNEST EVAN SPICER.
ERNEST C. PEGLER.
00, WATLING STREET,

LONDON, E.C.

January, 1911. 241716



TABLE OF CONTENTS.



PAGE

Table of Statutes xiv

Table of Cases ...... . xxiii



CHAPTER I.
THE PRINCIPLES OF AUDITING.

1. The Origin of Auditing .. .. .. .. .. .. .. 2

2. The Nature and Definition of an Audit . . . . . . . . . . 4

3. The Objects of an Audit . . . . . . . . . . . . . . 5

(a) The Detection of Fraud 5

(6) The Detection of Errors 8

(1) Errors of Omission .. .. .. .. .. .. 8

(2) Errors of Commission . . . . . . . . . . 9

(3) Clerical Errors 10

(4) Errors of Principle 11

(5) Compensating Errors .. .. .. .. .. 11

4. Various Classes of Audits, and their Advantages . . . . . . . . 12

(a) Audits under Statute 12

(I) The Audit of the Accounts of Private Firms 16

(c) The Audit of the Accounts of Private Individuals . . . . 18

(d) The Audit of Trust Accounts 20

5. The Conduct of an Audit 22

(a) Continuous and Final or Completed Audits . . . . . . 22

(1) Continuous Audit 22

(2) Final or Completed Audit 25

(6) Considerations on the Commencement of a New Audit . . 26

(c) Audit Note Books 28

(d) Method of Work 30

6. The Qualities Required of an Auditor 32

7. The Liability of Auditors 34



CHAPTER II.
THE AUDIT OF CASH TRANSACTIONS.

1. Internal Check as regards Cash .. .. .. .. .. .. 37

(a) Receipts 37

(6) Payments 39

2. Vouching Payments . . . . . . . . . . . . . . 39

(a) General Considerations 39

(6) Missing Vouchers 45

(c) Capital Expenditure

( 1 ) Freehold and Leasehold Property . . . . . . . . 46

(2) Buildings 46



ii PRACTICAL AUDITING.

CHAPTER II (continued).
THE AUDIT OF CASH TRANSACTIONS (continued).

PAGE

(3) PJant and Machinery 47

(4) Patents 47

(5) Payments under Hire-Purchase and Instalment Agreements 47

(6) Investments 48

(7) Loans 48

(8) Office Furniture, Fixtures and Fittings 48

(d) Special Payments

(1) Agents' and Travellers' Commission .. .. .. 49

(2) Travelling Expenses

(3) Insurance Premiums..

(4) Bank Charges 50

(5) Salaries 50

(6) Petty Cash 50

(7) Bills Payable

(8) Bills Receivable Dishonoured . . .... . . 50

(9) Freight and Carriage 5.1

(10) Custom Duties

(11) Partners' Drawings 52

3. Wages 53

(a) Internal Check as regards Wages . . . . . , . . 53

(1) Time Records ' 54

(2) Piece -Work Records 55

(3) The Preparation of Wages Sheets

(4) Payment of W T ages . . . . . . . . . . . . 56

(6) The Auditor's Duty as regards Wages 56

4. Vouching Receipts 57

(a) General Considerations . . . . . . . . . . . . 57

(6) Credit Sales 58

(c) Cash Sales 59

(d) Special Receipts . . . . . . . . . . . . . . 60

(1) Income from Investments .. .. .. .. .. 60

(2) Rents Receivable 61

(3) Interest on Loans and Bank Deposit 61

(4) Bad Debt Dividends 61

(5) Sale of Investments 62

(6) Bills Receivable 62

(7) Miscellaneous Receipts . . . . . . . . . . 62

5. The Pass Book . . 02

(a) Payments into Bank . . . . . . . . . . . . 62

(6) Payments out of Bank . . . . . . . . . . . . 64

(c) Reconciliation with Cash Book . . . . . . . . . . 66

6. Verification of Cash in Hand and at Bank 67

7. Petty Cash 69

(a) General Considerations 69

(&) Internal Check as regards Petty Cash 71

(c) The Auditor's duty in relation to Petty Cash 72



CHAPTER III.
THE AUDIT OF TRADING TRANSACTIONS,

1. Purchases . . .... 76

(a) Internal Check as regards Purchases 76

(6) Ihe lought Journal 77

(c) Vouching Invoices . . . . . . . . . . . . 78

2. Purchase Returns . 81



TABLE OF CONTENTS. ill

CHAPTER III. (continued).
THE AUDIT OF TRADING TRANSACTIONS (continued).

PAGE

3. Sales 82

(a) Credit Sales . , 82

(6) Cash Sales 83

(c) Goods on Sale or Return . . . . . . . . . . 84

(d) Goods on Consignment . . . . . . . . . . . . 86

(1) Consignor's Books .. .. .. .. .. .. 86

(2) Consignee s Eooks . . . . . . . . . . . . 88

(e) Sales for Future Delivery . . . . . . . . . . 89

4. Sales Returns .. ,. 90

5. Packages and Empties . . . . . . . . . . . . . . 90

6. Allowances 90

7. The Journal 93

8. The Bought Ledger 94

9. The Sales Ledgers 97

(a) Internal Check 97

(6) The Verification of Postings 98

(c) The Verification of Balances 99

(d) Bad and Doubtful Debts .. .100

LO. Total Accounts and Sectional Balancing 106

(a) Total Debtors' Account 107

(6) Total Creditors' Account 108

(c) Sectional Balancing 109

11. Loose-leaf and Card Ledgers .. .. .. .. .. .. Ill



CHAPTER IV.
THE AUDIT OF THE IMPERSONAL LEDGER.

1. The Impersonal Ledger .. .. .. .. .. .. ..115

2. Outstanding Liabilities and Assets .. .. .. .. ..119

(a) Outstanding Liabilities . . . . . . . . . . . . 121

(1) Purchases 121

(2) Wages 122

(3) Rent, Rates, &c 122

(4) Freight . . . . 122

(5) Trade Expenses 123

(6) Legal Expenses 123

(7) Audit Fee ' 123

(8) Travelling Expenses 124

(9) Travellers' Commission 124

(10) Interest on Loans . . . . . . . . . . . . 125

(&) Outstanding Assets' 126

(1) Rent Receivable 126

(2) Interest and Dividends 127

(3) Commission Receivable 127

(4) Rent, Rates, &c., paid in advance . . . . . . 127

(5) Insurance paid in advance . . . . . . . . . . 128

(6) Advertising 128

3. Apportionment of Expenditure between Capital and Revenue . . 128

4. Deferred Revenue Expenditure . . . . . . . . . . . 130

(a) Alterations to Plant 131

(6) Advertising

(c) Preliminary Expenditure in connection with a new business 132



PRACTICAL AUDITING.

CHAPTER IV. (continued)

THE AUDIT OF THE IMPERSONAL LEDGER (continued),

PAGE

5. The Valuation of Assets . .

(a) Fixed Assets

(6) Floating Assets

(c) Wasting Assets 134

G. Depreciation ."'

(a) General Considerations 1<>5

( 6 ) The Principal methods of providing f or Deprecia tion a s a fleeting

different classes of Assets 137

(1) Freehold Land

(2) Freehold Buildings 139

(3) Leasehold Land and Buildings



(4) Fixed Plant and Machinery

(5) Loose Plant and Tools

(6) Furniture

(7) Fixtures and Fittings



. . 143

. . 145

. . 145

. . 145

(8) Patents.. .. ~ 146

(9) Copyrights . .

(10) Horses 147

(11) Goodwill 147

7. Repairs and Renewals

8. Reserves 149

(a) General Reserves . . . . 150

(6) Specific Reserves

(1) Reserve for Bad Debts . . . . . . . . 152

(2) Reserve for Discounts . . . . . . . . . 153

(3) Reserve for Depreciation of Investments

(4) Insurance Reserves . . . . . . . . . . 155

9. Contingent Liabilities . . . . . . . . . . . . 156



CHAPTER V.
THE VERIFICATION OF ASSETS.

1. General Considerations .. .. .. .. .. .. ..159

2. Land and Buildings 162

(a) Freehold Property 162

(6) Leasehold Property 163

(c) Copyhold Property . . 163

3. Investments . . . . . . . . . . . . . . . . . . 163

(a) Registered Stocks and Shares 164

(&) Inscribed Stocks 165

(c) Bonds to Bearer, and other Securities . . . . . . 166

(d) Verification of Values . . 168

4. Stock-in-Trade 169

(a) Method of Stocktaking 170

' (&) Basis of Valuation 171

(1) Raw Materials 172

(2) Goods in course of Manufacture . . . . . . . . 172

(3) Finished Goods 173

(4) Stores, &c 174

(c) The Auditor's Duty in relation to Stock-in-Trade . . . . 174

5. Loans on Security 176

(a) Loans on Mortgage .. .. .. .. .. .. 178

(1) Loans on Investments . . . . . . . . . . 179

(c) Loans on other Security .. .. .. .. ..180



TABLE OF CONTENTS. V

CHAPTER V. (continued}.
THE VERIFICATION OF ASSETS (continued).

PAGE

6. Bills Receivable . . . . ' 181

7. Other Assets 182

(1) Book Debts 182

(2) Cash at Bank and in Hand 182

(3) Endowment Policies 182

(4) Assets Abroad 183

(5) Machinery and Plant 183

(6) Patents.. .. 183

(7) Copyrights 184



CHAPTER VI.
THE AUDITOR OF A LIMITED COMPANY.

1. The Appointment and Remuneraton of Auditors . . . . . . 186

(a) Auditors appointed on behalf of the Company . . . . 186

(ft) Joint Auditors 188

(c) Local Auditors 188

(d) Auditors appointed on behalf of classes of Shareholders or

Debenture-holders . . . . . . . . . . 189

(1) On behalf of Preference Shareholders 189

(2) On behalf of Founders' Shareholders 190

(3) On behalf of Debenture-holders 190

2. The Status of the Auditor 191

(a) As Agent of the Shareholders .. .. .. .. ..191

(b) As an Officer of the Company .. .. .. ..192

3. The Powers of the Auditor 194

4. The Duties of the Auditor 196

5. The Auditor's Report 199

G. The Publication of the Balance Sheet and Auditor's Report . . . . 203

7. Statement in the Form of a Balance Sheet required to be filed with

the Annual Summary . . . . . . . . . . . . . . 206



CHAPTER VII.
THE COMPANIES (CONSOLIDATION) ACT, 1908.

1. The various Classes of Companies 210

(a) Limited and Unlimited Companies ( 2, 115) .. ..210

(b) Public and Private Companies ( 121) .. 211

2. The Memorandum ( 3, 4, 7) 213

3. The Articles of Association ( 10, 11, 13) 215

4. The Register of Members ( 25, 27, 30, 32, 37) 217

5. The Annual List of Members and Summary (26) 219

6. Issue of Share Warrants (37) 223

7. Differentiation in respect of Calls (39) 224

8. Reduction of Paid-up Capital by Return of Profits ( 40) . . . . 224

9. Alteration of Share Capital (41) 226

10. Reorganisation of Share Capital (45) 227

11. Reduction of Share Capital ( 46-53) 228



i PRACTICAL AUDITING.

CHAPTER VII. (continued).
THE COMPANIES (CONSOLIDATION) ACT, 1908 (continued).

PAGE

12. Creation of Reserve Liability (59) . . 233

13. Unlimited Liability of Directors ( 60, 61) 233

14. First Statutory Meeting (65) 234

15. Annual General Meeting (64) 235

16. Extraordinary General Meeting (66) 235

17. Extraordinary and Special Resolutions ( 69, 70) .. .. .. 236

18. Minute Books (71) 237

19. Appointment and Qualification of Directors ( 72-74) . . . . 238

20. Register of Directors (75) 239

21. The Prospectus ( 80, 81) ..239

22. Statement in lieu of Prospectus (82) 243

23. Liability for Statements in Prospectus (84) 243

24. Allotment of Shares ( 85, 86) 245

25. Restrictions on Commencement of Business (87) 247

26. Return of Allotments (88) 248

27. Commissions and Discounts ( 89, 90) 249

28. Payment of Interest out of Capital ( 91) 252

29. Issue of Share and Debenture Certificates, &c. (92) . . . . 253

30. Registration of Mortgages and Charges ( 93, 96, 99) . . . . 253

31. The Register of Mortgages ( 100) 254

32. Register of Debenture-holders ( 102) . . 256

33. Irredeemable Debentures (103) 256

34. Re-issue of Redeemed Debentures ( 104) 257

35. Statement to be Published by Banking and Certain other Companies

( 108) 259

36. Investigation by Board of Trade Inspectors ( 109) 260

37. Investigation by Inspectors Appointed by the Company ( 110, 111) 262

38. Auditors ( 112, 113, 114) '..262

39. Liability of Directors and Officers for Misfeasance or Breach of Trust

( 215, 279) 264

40. Penalties for False Statements ( 281) . . . . 266



CHAPTER VIII.
TABLE "A" OF THE COMPANIES (CONSOLIDATION) ACT, 1908.

1. The Application of Table " A " 268

2. Table " A " 269

(a) Shares 269

(6) Calls on Shares 269

(c) Forfeiture of Shares . . . . . . . . . . . . 270

(d) Alteration of Capital 271

(e) Directors 272

(/) Powers and Duties of Directors . . . . . . . . 273

(g) Disqualification of Directors 274

(h) Dividends and Reserves . . . . . . . . . . 274

() Accounts 275

(?) Audit 277



TABLE OF CONTENTS.



VL1



CHAPTER IX.
THE AUDIT OF A LIMITED COMPANY.

1. Considerations on Appointment as Auditor . .
(a) The Appointment of the Auditor
(6) Remuneration of the Auditor . .
(c) Inspection of Books and Documents

(1) Memorandum and Articles of Association



PAGE
279
279
280
281
281



(2) Prospectus 282



2.



(3) Contracts

(4) Balance Sheet, Accounts and Reports

Share Capital

(a) Various Classes of Share Capital



282
282

283
283



(1) Preference Shares 283



285

285
286



(2) Ordinary Shares

(3) Founders' or Deferred Shares

(4) The Distinction between Stocks and Shares

(6) Shares issued for Cash 286

(c) Shares issued for other Consideration . . . . . . 287

(d) Shares issued at a Premium 289

(e) Share Books . . . . 290

(/) Share Transfer Audit 291

(g) Forged and Blank Transfers 292

(h) Forfeited Shares 295

Calls paid in Advance 295

Interest payable out of Capital during Construction . . 296

(k) Alteration or Reduction of Share Capital . . . . 296

3. Mortgages 297

4. Debentures 298

(a) Definition of Debenture . . . . . . . . . . . . 298



(b) Issue of Debentures

(1) Debentures issued at a Premium ..

(2) Debentures issued at a Discount

(3) Debentures repayable at a Premium

(4) Debentures issued as Collateral Security for a Loan

(c) Redemption of Debentures

5. Preliminary and Formation Expenses

6. Commission on issue of Shares .



10.



11.



299
300
301
302
302
303

306
308
311

313

(a) Purchase of Business 313

314
316

317
317
318
324
324
325

Minute Books 326

(a) Directors' Minute Book 326

(6) Shareholders' Minute Book 327

Reserve Funds 327



7. The Statutory Audit

8. Adjustment of Accounts with Vendors



(6) Apportionment of profit prior to Incorporation
(c) Receipts and Payments on behalf of Vendors



Directors

(a) Liability of Directors to Account
(&) Remuneration of Directors

(c) Directors' Qualification . .

(d) Directors' Travelling Expenses . .

(e) Managing Directors



12. Secret or Internal Reserves

13. Income Tax . ,



332
339



Viii PRACTICAL AUDITING.

CHAPTER X.
DIVISIBLE PROFITS AND DIVIDENDS.

PAGE

1. Depreciation of Fixed and Floating Assets

(a) Legal Decisions 344

(1) Lee v. Neuchatel Asphalte Co., Ltd.

(2) Bolton v. Natal Land and Colonisation Co., Ltd. . . 346

(3) Verner v. General and Commercial Investment Trust Ltd. 347

(4) Wilmer v. Macnamara & Co., Ltd.

(5) Dovey v. Corey (National Bank of Wales case) . . 350

(6) Bond v. Barrow Haematite Steel Co., Ltd. . . 352
(6) Legal Decisions considered .... . . 355

2. Capital Profits 361

(a) Legal Decisions . . . . . . . . . . . . 362

(1) Lubbock v. British Bank of South America . . . . 362

(2) Foster v. New Trinidad Asphalte Co., Ltd.

(6) Legal Decisions considered . . . . . . . . . . 364

3. Divisible Profits . . 365

4. Dividends 365

(a)- Interim Dividends . . . . . . . . . . . . 366

(6) Final Dividends 369

(c) Preference Dividends .... ..371

(d) Arrears of Cumulative Preference Dividends . . . . 372

(e) Dividends paid out of Capital 374

(/) Scrip Dividends 375

(g) Vouching Dividends 376

(*) Unclaimed Dividends 377

(') Provision of Moneys for the payment of Dividends . .

(?) Reserves for Equalisation of Dividends . . . . . . 379



CHAPTER XI.
THE FORM OF ACCOUNTS.

1. The Form of Accounts 381

(a) The Single Account system 382

(6) The Double Account system 382

2. The Profit and Loss Account 384

3. The Balance Sheet 386

(a) Definition 386

(6) The Debit Side 387

(c) The Credit Side 388

4. The Form of Published Accounts 391

5. The Criticism of a Balance Sheet 392



CHAPTER XII.
THE LIABILITY OF AUDITORS.

1. The Liability of Auditors 396

2. Liability under Statute 396

(a) Companies (Consolidation) Act, 1908, 215 . . . . 396

(6) Ditto ditto 281 .. .. 397

(c) The Larceny Act, 1861 398

(d) The Falsification of Accounts Act, 1875 399



TABLE OF CONTENTS. IX

CHAPTER XII. (continued).
THE LIABILITY OF AUDITORS (continued).

PAGE

3. Legal Decisions 399

(a) Leeds Estate Building and Investment Co. v. Shepherd . . 399

(6) In re London and General Bank . . . . . . . . 400

(c) In re The Kingston Cotton Mill Co., Ltd 404

(d) The Irish Woollen Co., Ltd., v. Tyson and others . . . . 406

(e) The London Oil Storage Co., Ltd. v. Seear, Hasluck & Co. 407

4. Legal Decisions considered . . . . . . . . . . . . 408

(a) Liability for Negligence under Common Law . . . . 408
(6) Liability for Misfeasance .. .. .. .. ..411



CHAPTER XIII.
THE AUDIT OF PARTNERSHIP ACCOUNTS.

1. The Partnership Act, 1890 417

2. Partnership Deeds . . 420

3. The Adjustment of the Rights of Partners inter se 421

(a) Interest on Capital . . . . . . . . . . . . 422

(b) Partners' Salaries 423

(c) Partners' Drawings 423

(d) The Adjustment of Income Tax 424

4. The Limited Partnerships Act, 1907 425

5. Audit on behalf of an individual Paitner or Creditors 427

(a) Audit on behalf of a Limited Partner 427

(b) Audit on behalf of a Sleeping Partner 428

(c) Audit on behalf of a Retired Partner 429

((/) Audit on behalf of the Representatives of a Deceased Partner 430

(e) Audit on behalf of Creditors . . . . . . 431



CHAPTER XIV.
OTHER STATUTES AFFECTING AUDITORS.

1. The Companies Clauses Consolidation Act, 1845 434

2. Railway Companies Acts . . . . . . . . . . . . . . 435

3. Gas and Water Companies Acts . . . . . . . . . . 437

4. Electric Lighting Companies Acts . . . . . . . . . . 437

5. The Assurance Companies Act, 1909 . . . . . . . . . . 438

6. Building Societies Acts 439

7. Friendly Societies Acts . . 439

8. Industrial and Provident Societies Acts 441

9. Trustee Savings Banks Acts . . 442

10. Executors' and Trustees' Accounts . . . . . . . . 442

(a) The Public Trustee Act, 1906 442

(b) The Judicial Trustees Act, 1896 ..444

11. Miscellaneous Statutes 444

(a) The Licensing Act, 1904 444

(6) Territorial and Reserve Forces Aci, 1907 ..

(c) The Port of London Act, 1903



SI PRACTICAL AUDITING.

CHAPTER XV.

SPECIAL POINTS IN DIFFERENT CLASSES OF AUDITS.

PAGE

1. Assurance Companies .. .. .. .. .. .. 447

2. Banks 449

3. Branch Accounts ' 451

4. Breweries . . 454

5. Building Societies . . . . . . . . . . . . ' . . . . 455

6 Charitable Institutions .. .. ..458

7. Churches N . . ..458

8. Clubs '. ... . . , 459

9. Collieries 460

10. Contractors , 462

11. Co-operative Societies .. .. .. .. .. .. .. 463

12. Electric Lighting Companies . . . . . . . . . . . . 464

13. Estate Agents, Auctioneers. Surveyors, &c. . . . . . . . . 465

14. Executors' and Trustees' Accounts . . . . ... . . . . 466

15. Foreign Mines 468.,

16. Friendly Societies 469

17. Gas Companies .. .. .. .. .. .. .. .. 470

18. Hotels 472

19. Insurance Brokers . . . . . . . . . . . . . . . . 473

20. Landed Estates 473

21. Motor Omnibus Companies . . . . . . . . . . . . 474

22. Newspapers 475

23. Publishers 476

24. Rail w ay Companies . . . . . . . . . . . . 478

25. Retail and Co-operative Stores .. .. .. .. .*. .. 481

26. Rubber Companies 481

27. Schools, Colleges, and Universities 483

28. Shipping Companies . . . . . . . . . . . . . . 483

29. Solicitors 486

30. Stockbrokers 489

31. Stockjobbers 494

32. Theatres 496

33. Tramways 498

34. Trust and Finance Companies 499

35. Trustee Savings Banks . . V . . 502

36. Underwriters 503

37. Water Companies . . 504



CHAPTER XVI.
THE AUDIT OF ACCOUNTS OF LOCAL AUTHORITIES.

1. Classification of Auditors of Local Authorities 507

2. District Auditors 507



TABLE OF CONTENTS.



CHAPTER XVI. (continued).
THE AUDIT OF ACCOUNTS OF LOCAL AUTHORITIES (continued).

PAGE

3. Auditors of Municipal Corporations .......... 510

-4. Professional Auditors .............. 511

5. Procedure at Audit .............. 512

6. Rates ................... 514

(a) Borough Rate .............. 514

(6) General District Rate ............ 515

(c) Distinction between Borough and General District Rates . . 515

(d) Audit of Rate Accounts " . . . .- ...... 516

(1) Borough Fund ............ 516

(2) District Fund ............ 516

7. Other Income . . . . . , . . . . . . . . . . 517

8. Payments .................. 517

9. Outstandings . . . . . . . . . . . . . . . . 518

10. Exchequer Contributions and Grants in Aid ..... . .. 519

11. Capital Expenditure ...... ........ 520

12. Raising Capital Moneys . . . . . . . . . . . . . . 522

(a) By Issue of Stock ............ 522

(6) By Granting Mortgages upon Property and Rates . . . . 523

(c) By Issue of Bills of Exchange .......... 524

(d) By Issue of Debentures, &c ........... 525

13. Corporation Stock ........ ........ 525

14. Repayment of Capital Moneys . . . . . . . . . . . . 530

15. Depreciation of Capital Assets ............ 532

16. Statutes and Bye-Laws ......... . . . 535



CHAPTER XVII.
INVESTIGATIONS.

1. The Nature of Investigations 538

2. Investigation on behalf of a Proposed Company . . . . . . 539

(a) The extent of the Investigation . . . . . . . . 539

(b) Course of Procedure . . . . . . . . . . . . 540

(c) The usual Adjustments necessary . . . . . . . . 544

(d) The Certificate of Profits 546

3. Other Investigations . . . . . . . . . . . . . . 547

4. Investigations for Fraud 548



APPENDIX OF STATUTES.

1. Parliamentary Companies 555

(a) The Companies Clauses Consolidation Act, 1845 . . . . 555

(6) The Companies Clauses Act, 1863 . . 559

(c) The Companies Clauses Act, 1869 559

2. Railway Companies 560

(a) The Railway Companies Act, 1867 560

(6) The Regulation of Railways Act, 1868 561



Online LibraryErnest Evan SpicerPractical auditing → online text (page 1 of 57)
Using the text of ebook Practical auditing by Ernest Evan Spicer active link like:
read the ebook Practical auditing is obligatory.

Leave us your feedback | Links exchange | RSS feed 

Online library ebooksread.com © 2007-2014