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


.The questions propounded to me
in letter. sigped Commune Bonum,'
which appeared IN your issue OF Frl.
day last, refefeto matters of vital i'm,
portance in tue Hawaii county graft
situation. and Is large order, says
a. Gooding Field. II will be as brief
as possible in answering the same.
Question No. 1. Can yon explain,
as an expert accountant, whether Ter.
ritorial Auditor Fisher followed the
law by accepting, Without check. the
annual statements which he received
from the county auditor of Hawaii?
If he had compared same with pre-.
yious statements, were the figures
submitted so compiled that he could
have detected Irregularities? !?
The provisions of Section 85 of
Act 39the County Act of 1905, IRE
ferred to By the Territorial Auditor
as the Limitation Of his duties as af.
fecting county auditors, reads as fol.
lows:
ct 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 z
The above laws Is mandatory as to
the territorial auditor instituting a
uniform system Of accounts for the
counties, with proper forms, etc, to-
gefler with the form OF report re-
Quired to be. ma de. 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 the county auditor to
the territorial auditor The figures
contained in 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. S.
Il will ansWer;the first part Of the
above query by quoting from the Prac.
tical Manual for Auditors, Second
American Edition, 1909, the standard
work on auditing Liabilities and Au-
ditors (page 290) by Lawrence r.
Dicksee, M. Com, F. G. A., Of the Lon
don School of Economis and Political
Science university of, Londonl
However desirable it may be to.
know exactly the bare extent of the
legal responsibility fof 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
of his position. "
Even a cursory examination and q
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. The claim was
made by the territorial auditor In 1912
that he had found the trial balances
Of the Hawaii county books regular.
" made by the county auditor. Your
report states that none were. made
Did not the territorial auditor violate
both q public and ethical trust in SO
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 lst, 1905) to March 31st, 1918
(the final date of my investigation) -
| am safe in stating also that there
was no trial balance taken az OF De.
cember 31st, 1913-the end of the last
fiscal year. .- l<..>..- ~: :. *
will quote again from Dicksee's
Manual on Auditing-the trial balance
-(page 49,. ' -s... i. .>, ,s..s-.,s
at should be the auditors aim, so
ar as possible, to carry each depart
nent of his investigation right up to
he trial balance at the same sitting;
he auditor must always remember
hat there is material danger In leay-
ng any portion unfinished in the
lands of bookkeepers or cashiers,
vho-for all he can know to the con-
manipulate the figures
Turing the course of the audit. The
auditor should keep everything in his
,wn hands until the audit is complet: !
ID as far as<the trial balance. Having
nee secured a trial balance that he
Inows has not been tampered with, |
he auditor may cease to trouble him. |
elf about the materials from which |
was built up-they may be manipu- |
ated and altered up and down, but he |
lolds in. his own hand the key to the
vhole situation.
Question No. 3. Was it not the most !
important duty Of the territorial bank |
Examiner to inspect, as to value, the
lotes and securities held by the First .
,ank of Hilo, Limited, as collater
~ (