ABSTRACT
Mr. Fredk. Whinney recently gave an address in his capacity of President to the Birmingham Chartered Accountants Students’ Society on this subject. In the course of his remarks he said that an auditor’s certificate should not be hastily given or without a proper examination of all the matters it purported to deal with. It should be based upon information obtained by the exercise of all reasonable and necessary care. In that he thought they would find the keystone to the whole difficulties of an auditor. Ignorance of commercial transactions, of bookkeeping, want of skill in the examination of accounts, and insufficient remuneration were no excuse whatever for a certificate which was inaccurate. That had been expressly decided in courts of law. At the same time it was true the duties imposed on auditors were not perfectly clear. He thought they might lay down as a principle that no auditor should sign any Balance Sheet unless he believed it was true, and he must take all reasonable means to satisfy himself that it was true. He thought it was desirable that the public should really understand something of the position and responsibilities of an auditor. If they did he thought they would see that it was very desirable, in appointing an auditor, to have a man who really knew what he was about, and was capable of judging whether accounts were really true or not. A Balance Sheet should, as far as it was able to ascertain, correctly and faithfully represent what were the assets of a concern. Balance Sheets which were bad generally erred in the assets being stated at an excessive amount. He thought he could give them two or three hints so as to enable them to exercise the requisite reasonable care. In the first place, as an auditor he should insist upon books being kept by double-entry: then they· should be careful to check Balance Sheets out from the books. The checking out of Balance Sheets taught an auditor a good deal of what had been done in the working of the company whose affairs he was examining. He did not mean a mechanical checking, but a thorough examination, which frequently enabled him to detect anything wrong in the accounts. An auditor should be sure that figures represented facts, because the whole object of an audit was to ascertain whether figures were facts. Those few words represented the whole duty of an audit. It was necessary to be alive to the slightest trace of fraud in the accounts; but he did not mean to say that in checking accounts they were to suspect everybody, and fancy every entry they saw was fraud. They would, in conducting audits, occasionally come across something that they did not like, and if a company was going to the bad there was sure to be something they would not like. But in such circumstances it was even better to insist upon their certificate being a true representation of the facts than that egregious errors should be passed over. If they had to deal with something that was clearly wrong, his advice was, “Don’t pass it.” He was not speaking of very small things covered by contingent funds, but anything that was clearly and flagrantly wrong. He was quite sure that good auditors, men who had the courage of their opinions, were of very great use in a company; and directors and officers who wished to do their duty did not take offence at suggestions made by auditors if they looked upon them as safeguards.
