Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1914-05-11
H. GOODING FIELD
ANSWERS QUERIES
ASKED in LETTER
Duty of Auditor of Territory Is
Defined by Accountant in
Reply to Questions
CARL S. SMITH INCIDENT
is GIVEN FURTHER LIGHT
Records Show Attorney Collect.
edo Before Assignment
or Authorization Given

in letter, signed Commune Bonnm,
which appeared In your issue of FRI
day last, refer TO matters of vital inn
portance in the Hawaii county graf
situation. and b q large order says
III. Gooding Field 81 win be as brie
as possible IN answering the same.
Aouestiou Nd. t. Can you explain
as an expert accountant, whether Ter
ritorial Auditor Fisher followed tht
law BY accepting. without q check, tht
annual statements which he received
from the county auditor of Hawaii
II he had compared same with pre-
vious statements, were the figures
submitted so complied that he could
have detected Irregularities?
The provisions of Section S5 oil
Act 80 the County Act of 1905,--re
| ferred to by the Territorial Auditor
as the limitation OF his duties as af.
fecting county auditors, reads as fol
!! lows.
ut shall be the duty OF the auditor
Of the territory to confer from time
to time with the several county audi.
tors relative to the books to be kept
by county officers and the forms there
Of. and the form Of report required TO
be made, and to institute uniform
system throughout the several coun-
ties. And it shall be the duty Of
each county auditor to see that the
instructions Of said territorial auditor
in this respect are carried out, and
OF each county officer to keep his
books and accounts and make his re-
ports in the form prescribed by said
territorial auditor. >
The above laws Is mandatory as to
the territorial auditor instituting a
uniform system OF accounts for the
counties, with proper forms. ETC.. to-
gether with the form Of report re-
quired to be made To be made to
whom? In the first instance, at stat
ed periods. by county officers to the
county auditor, and at the end of each
fiscal year, By te county auditor to
the territorial 4iditor. The figures
contained inS these annual financial re-
ports to the territorial auditor are
embodied IN the annual report of the
territorial auditor TO the governor, and
are included in the. governors annual
report to the secretary of the inte.
rior
81 win answer the first part Of the
above query by quoting from the Prac.
teal Manual for Auditors, Second
American Edition, 1909, the standard
work on auditing Liabilities and AuF
ditors (page 2901 by Lawrence r..
Dicksee, M. Com, r. G.. A, of the Lon
don School of Economis and Political
Science university of Londonl
However desirable 1t may be to,
know exactly the bare extent OF the:
legal responsibility (of an auditory,
the real professional responsibility
ought always to be the ideal: and,
further, an auditor will be the worst
of friends to his profession II he stud
iously exert himself to narrow the
responsibilities, and so TO dwarf the
importance of his position.
Even cursory examination and a
comparison of the several annual re-
ports would have shown the irregular
tiles in the figures. drew the atten-
ton of the territorial auditor to the.
in August, 1912, but no
action was taken by him.
Question No. 2. The claim was
made by the territorial auditor in 1912
that he had found the trial balances
of the Hawaii county books regular.
ly made by the county auditor. Your
report states that none were made.
Did not the territorial auditor violate
both public and ethical trust in So
wrongfully stating the case?
No trial balance Of the accounts OF
the general ledger of the county OF
Hawaii had been made from the COM
OF county government
July 1st, 1905) to March S1st, 1913
1.-THE final date of my inyestigation1
/ am safe In stating also that there
was no trial balance taken as Of De-
cember 31st, 1913-the end of the last
fiscal year.
will quote again from Dicksee's
Manual on Auditing-the trial balance
-(page 45):
"It should be the auditors aim, so
far as possible, to carry each depart
ment of his investigation right up to
the trial balance at the same sitting;
the auditor must always remember /
that there is material danger in leay- |
ing any portion unfinished In the
hands Of bookkeepers or cashiers,
who-for all he can know to the con-
trary-may manipulate the figures
during the course Of the audit. The
auditor should keep everything in his
own hands until the audit is complet-I
ed as far as the trial balance. Having /
once secured a trial balance that he i
knows has not been tampered with,
the auditor may cease to trouble him.
self about the materials from which |
It was built upthey may be manipu-
lated and altered up and down, but he |
holds in his own hand the key to the
whole situation.
Question No. 8. Was 1t not the most
important duty of the territorial bank
examiner to inspect, as to value, the
notes and securities held by the First
Bank of Hilo, Limited. as collateral
fContinued on mage twol