The Sully County watchman. (Clifton, Dakota [S.D.]) 1883-1894, 1891-12-05

aged on q system which does not readily
lead itself to examination without
notice.
That kind of examination which con.
sists in checking entries, footing Up
columns and trusting to trial balance Is
far from being an ideal one and yet with
the system in vogue little more can be done
by an examiner He is at all times liable
to be deceived by false securities, substi-
tion of securities, or clever manipulation.
He has not the time for an exhaustive ex-
animation as n periodical examination
must be to make it efficient He does
nothing but examine banks and is there
fore so ous of the commercial world that
he can know nothing of the status of
the borrowers. The ledger account Is
nothing but a mass of figures showing
balance agreeing with total OF a
memorandum list of notes, but this
memorandum list may have in it notes
which were received subsequent to the
time up to which he examined or be notes
las in the Keystone CASEY which have never
been entered.
POINT FROM THE KEYSTONE BANK.
Beside this the keystone affords plain
evidence of the case with which notes re-
ceived by the bank for discount can, under
the present sy stem, be kept out OF the
books of record Again, the depositors
books cannot be criticised by such an ex'
aminer. The Keystone bank shows how
the depositors accounts can be manipulated
and say unhesitatingly that the national
bank examiners cannot detect such manip'
ulation. He has no time to compare the
depositors' books with the ledger. and un-
less that is done the examiner is
entirely at the mercy OF the bank cfh'
ciais.
Collections form very impor tant part
| of the business of national bank. Yet
the original entry of the account for the
collection is purely memorandum, and
the defAlcatious from this account which
have been made public show how easy II
is to steal from this, and no examiner can,
under the present S. stem, De sure OF Tue
correctness of this record.
/ NON PROFESSIONALS WON T DO.
As to the examinations by bank direct
ors and court examiners Mr.. Warrington
said:
"Such examinations cannot be depended
upon for similar reasons, but beside these
there are others which do not seem to bt
generally appreciated. None of these tx
aminers are professional accountants, al
though ! believe the examiners for TIT
courts have the power to sepd for pro
fessional accountant Not being profes
sionaDs, it is almost beyond the range q
possibilities that they would discover an,
fraud unless it was very patent. Thes
examinations are generally periodical an,
preceded by notice to the ctficials. Eve,
where there is no reason to suspect fraut
and where the accounts actually are cor
rect such examinations practically amoun
to an acceptance of the statements mad
by the officials.
Such examinations are rarely made TO
date later than two weeks prior to til
actuai examination. and 1t needs We,
little acun en- to see what IA spena.
chance for manipulau II the officers hav
aud how beautifully they can hood vim
the examiners. Bank history furnishe
only 100 nany instances of this bein
| done have seen mortgages derositc
AZ collateral without any assignment t
the borrower. have seen deeds hagran'
! y imperfect put in as collateral. | hav
seen security bonds drawn where two pei
sons became security where the word
,, we Jointly and seyerally, were omitted
have seen insurance policies filed wh!c
neither contained the distance OF the l.
! from a given point nor the number of III
house | have seen the note describe on
! kind of collateral actually deposited to t
: different Once recollect seeing abol
$50, 900 worth of securities entered by VIA
of memorandum and not scratch OF
> pen to show that those which were ci
tered were all which should have bee
$ entered
: Time would fall me to recount all ii
4 errors Of omission and commission whic
d in an experience of thirty years ha,
e passed under my notice. But in all II
: cases mentioned committees of director
Y and in some cases court examiners. h
;, failed to notice the irregularities. PHI
d delphia Times