ABSTRACT
The following interlocutory remarks on the duties of auditors, reprinted from the last issue of the Law Journal, are of great interest, and it is matter of some surprise that they should so long have remained unobserved:— Lord Herschell on Auditors.
Some unreported interlocutory observations of Lord Herschell in In re The Kingston Cotton Mills Company, on the duties of auditors, are very pertinent: “No doubt,” says that high authority, “auditors have to check the books to see “that the accounts are correct, but it would be stretching the “duty of an auditor considerably beyond what is reasonable “to say that he is to go into all the business of a company so “as to be able to check the valuation. In a banking company, “for instance, are the auditors to take the bills and to estimate “the character of the people and the standing of the firms “whose names are on the bills, and to determine whether they “might turn out not to be good bills? Yet the true position “of the company might depend on that An auditor “may certify the accounts as correct, and be perfectly “honest in the full discharge of his duty, yet the “accounts, nevertheless, may not truly represent the “position of the company. Is an auditor supposed “to go through an independent stocktaking of a great “concern and put his own valuation upon it? Most auditors “would be absolutely incompetent to do anything of the kind; “they are thoroughly versed in accounts, but not necessarily “versed in the valuation of every kind of business.” This is common-sense, and we may well pause for a reply.
