The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1899-08-27

ords Of the corporation
AUDITING.
The following routine may safely be followed By
auditors to the examination Of ordinary books
subject however to such variations character
OF the business may require and instructions re-
ceived from the appointing power
He should obtain list of all the books kept BY
the corporation, firm business, together with all
financial statements and balance sheets showing the
resources and liabilities, and with all vouchers &C.
counts etc., relating thereto
II he deems it advisable he should receive n brief
explanation of the system Of accounting with which
Information he is better prepared to commence his
audit.
The auditor must not certify to any statement as
correct, of his knowledge until he has investI-
gated 1t from beginning to end. He may, however
accept as correct in many cases. various facts and
figures. on proper authority of the parties whose
accounts are being audited.
The minute book must be carefully examined to
ascertain the actions Of the directors and stockhod-
ers making notes Of such specific resolutions as may
Affect the accounting and checking to see if same
have been properly carried out
The subscription book and stock ledger must be
examined to see how, by whom and upon what
conditions the subscriptions have been made the
amount paid thereon delinquents or forfeitures if
any. Compare the amount of subscriptions paid with
the installment book the installment scrip book
If the corporation is one compare the certif-
icates of stock issued with the instaIment scrip
book.
In the event that capital stock account in the
general ledger has received its credit from the cash
book by subscriptions they were paid and not
on the 1nstallment principle then check each stock
holders account in the stock ledger with the cash
book to that the accounts represent the actual
amount paid in The sum total of these entries from
the cash book will balance the amount to the debit
Of capital stock account in the stock ledger
CAPITAL STOCK ACCOUNT
See that the capital is neither more nor less than
authorized by the charter and articles of association
Ascertain If the capital contains preferred or guar
anteed shares, whether it Is made I'D of common
stock.
Examine critically the opening entries. and If
there is treasury stock working OF operating capital
note the character and how produced
If there is treasury stock on hand not fully paid
separate statement Of this should be made for the
benefit of the stockholders In case liquidation Of
the company the stockholders would be liable pro
rata for the amount unpaid treasury stock or for
such rata part thereof might be necessary to
pay the liabilities Of the company; In other words
they would be responsible for that would
be due by other parties the other parties the
holders of the stock
See that the titles to all purchased property have
been duly recorded and all costs, etc., properly en-
tered Ascertain if mortgages, bonds etc. have been
recorded and registered according to law.
CASH BOOK RECEIPTS
Compare and check all items Of cash receipts with
the auxiliary books and the different sources from
which cash is received, according to the nature OF
the business 1t Is important to see that there are
no omissions Of receipt entries and this sometimes
requires critical examination. Carefully look for the
transpOsition of figures
Ledger accounts have been known to contain cash
credits which appeared on the cash book and
amounts received have been transposed in entering
same Say, for Instance payment is made of 3d.
S66 and is credited the book as 81 696 there
is difference Of $780, thus the original entry can
be made wrong, and the correct amount posted TO
the account in the ledger The ledger account would
appear correct ON it's face. Such discrepancy is
usually covered up balanced" in merchandise ac
count or some account there is little likelihood OF
being examined critically then what is to prevent
the bookkeeper putting the $3.50 In his pocket?
The same errors Of fraud can be executed on
either side of the cash book therefore necessary
to examine this book with both eyes wide open
Carefully examine the additions of all columns IN
the cash book that there is no transpositiop IN
carrying forward the footngs balances from page
to page Check every item of receipts in the cash
book with its respective account in the ledger.
CASH BOOK DISBURSEMENTS
Compare and check all items of cash dishurse-
ments with the vouchers receipts Lock care
fully for duplicate receipts duplicate entries and
for the transposton of figures Ascertain if the dis
bursementS Of cash authorized by resolutions
duly recorded in the minute book Examine all tie
bank pass books and check books and see whether
the balances of the two books agree, that is from
the bankers balance, shown by the pass book
deduct the amount of outstanding checks; this should
reconcile the bank account as shown by the check
books. When the bank account is kept in the ledger
you will check it as you would any other account
Count the cash hand, which, added to the bal
ance should correspond with the balance called for
by the cash book, unless separate account is kept
with the bank in which cash the cash book will rep-
resent the amount Of cash which should be in the
safe.
A great percentage of shortages are to be found
by examining the footings of the cash book When
an error is purposely made in the addition it re-
quires corresponding to be made some other
account, or in the footngs of the journal sales
book. etc, that when trial Balance is taken of
the ledger accounts the debts and credits win be
equal. Double mistakes and forced balances are
usually intentional; they rarely occur by accident
The trial balance does not prove the correctness Of
the ledger the accuracy of the Details the post
ing; it is only presunptory proof that bookkeeper