The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1899-08-27
accrued interest, profit and loss should be debited
with the amount.
ACCOUNTS RECEIVABLE.


Ascertain the time they were to run and If over.
due. why they have not been collected Provision
Should be made for bad and doubtful accounts other
wise they will appear among the assets which can
not De collected Good dividends are sometimes paid
iro" assets or this kind, whereas. had proper
amount oeen charged off to offset bad debts a ma
ter1a reduction in dividend might have been declared
IL is part OF the auditors duty to see that the ac-
counts receivable properly valued and the d.
Fectors should aid him this end Accrued interest
is treated in the manner as with bills receivable
ACCOUNTS PAYABLE
Ascertain If the company owes the nersona1 ac
counts. and If there are any outstanding acconnts
which have not been credited Accrued interest ia
treated In the same manner with bills payable
INVOICE BOOK
1t Is quite simple, and needs no explanation to
audit this book, yet 1t should require close attention
as fraud Is sometimes practiced by increasing the
credits OF some accounts In order to pocket money
ana charge it to the account which has been IN
creased. The amounts In this book should be COM
pared with the original Invoices order book letter
book etc.
SALES BOOK
All cash sales should be entered in the cash book
where such entries are examined
Cfedit sales should receive careful attention; from
tns source BAD and doubtful debts arise. 1t also
simple operation to examine this book, but every
AMOUNT shouId De examined IL fraud is suspected
The addition Of columns etc., should be verified If
the auditor suspicious any accounts in this book
after comparing the ledger the original order should
be referred to, or he write the customer for a
duplicate Of the bill and receipt these amounts can
be checked with the credits
False entries are sometimes made in the sales
DOCK IN this way: A good paying customer pur.
chases goods on credit amounting to $500 The
amount would be changed and his account charged
WbaDf tho
the customers account is credited with $500 to bal
ance his account charged The check or draft
would be placed in the cash. and $10O in currency
distracted, thus keeping the cash in balance It
can be learned from the banker as to any Identical
check or draft deposited by you on any certain date
which would lead to the detection of such fraud
STOCKS AND BONDS.
If corporation holds stocks and bonds see
whether they are as represented by the books on
hand or whether they have been pledged or hypothe
Gated The auditor should inform the stockholders
of any liability attached to stock which is held for
investment
SECURITIES.
If advances have been made on securities see
that they are accompanied by the necessary bonds
and mortgages and be careful that documents al
ready Inspected being held against loan are not
reproduced as the security deposited other loans
If losses sustained any class of securities the
amount should be distinctly stated and not conceal
ed In any item of expenditure
GENERAL EXPENSES
Examine the principal items as they may contain
some unauthorized payments
INVENTORY
The auditor should see that all stocks and bonds
are inventoried at their market value When mer-
chandise. material real estate plant etc, are in.
Ventoried he should be present with a competent
appraiser to work in concert with the officers an.
pointed by the company
Property should be carefully examined whenever
any statement is made showing financial standing or
gains and losses before declaring dividends
Should the auditor find that property has increas.
ed in value since the purchase he should debit tho
account representing the property with the amount
of increase, crediting profit and loss. and where
property has deprecated, vice versa
DEFALCATIONS
Honest and conscientious bookkeepers and direct.
ors always invite examination investigation and
criticism knowing that the outcome will rebound 70
their credit and business standing with the pro-
pfletorS or stockholders, while the defauter will
usually be iltempered and cross carefully watching
every move and operation of the auditor.
Extensive embellishments or aefaIcatfons are
usually the work of those skilled in accounting and
possessing thorough knowledge of the books anu
the routine of the business and they cevery cover
up their tracks that the auditor has often to tax Ills
skill to the utmost to unearth the fraud
If defalcation Is suspected examine every tFansac
ton infinitely, erasures, alterations ETC. for even a
certain dot, dash character may have been made
for some certain purpose therefore. pass any
thing which looks suspicious without a thorough and
satisfactory explanation.
Check every transaction from its original entry to
its account in the ledger, that all transactions
are properly entered in the books Of original entry
from the invoices orders, receipts, checks freight
bill correspondence etc, check every posting and ex
anime the items Of expense account. Take the total
amount of cash received and disbursed and see if
the difference represents the cash on hand. Care
fully check the bank account and examine the
checks to see if amounts and signatures are corce.
Find the total purchases and sales look for dis
creancies in the accounts which represent them tx
anime the feotngs Of all books of original entry
Foot every account in the ledger whether ruled ND
and closed or still remaining OPEN and note any
items unchecked, examining same carefully Elk.
anime carefully all cash book entries and compare
payments with vouchers receipts. See that the
inventory is footed correctly, and the amounts IN
same properly extended Trace back to original en-
try any alterations interIning
Take trial balance as shown by the ledger