The Hawaiian gazette., 1916-12-12
Hg0OD|NCfIE[D +.
CONTRADICTORY !
". COMPANY AUDITOR
Esl ttp. a,s7T /, 9, - Irrr. .ns
Utilities commissiOh Resumes
Hearings On Methods Of In
ter-island Corporation
.
GRAHAM SUBJECTED TO
RAPID FIRE OF QUESTIONS
Forbes and Garden Rain Inteifo
cations Upon Him But He
Stands To His Guns

Contradicting point after point made
by H. GoodiRg Field in his audit of the
Inter. Island Steam Navigation Com
pany's books for the public utilities
commission, Matthew NJ. Graham, audi.
tor for the company, yesterday at the
resumption of the commission hearings
IN the Inter-Island case reopened the
subject Of the concern s methods Of &c
counting and their relation to rates.
Submitting nine fluctuations of fig
ures taken from the cOmpany's books
in contradistinction to similar sets com.
piled by Auditor Field, Auditor Ora.
ham was examined by l.. J. Warren,
company attorney, with lengthy inter.
posed cross examination by Charles r
Forbes, chairman of the commission
and W. T. Garden, commissioner.
Points Made By Graham
The points brought out by Auditor
Graham b testimony we're:
That the capital Of the company
December 81, 1904, before the purchase
Of theWilder Steamship Company was
1884, 708.S8 instead Of $500, 900 as
clniIned by Auditor Field.
That the capital Of the company
after the purchase was 1868, 956.99 in
stead Of Sl,l0o,000 as claimed by Audi
tor Field.
That the percentage Of net earnings
Of the company's steamers on their
book ,valne, averaged for eleven years
to. date, was 5-21 per cent instead Of
6.22 as claimed by Auditor Field.
That, far from the utility end Of the
business being drawn on to support or
establish the non-utility end Of the
business, more money was drawn from
the combined surplus of the company
to increase the capital stock on account
Of purchase Of steamers since 1900 than
has been earned as profit from the
steamers from 1886 to 1915.
That Auditor Fields statement that
the construction and repairs account of
the company Yves closed out March l,
1916, on account Of payment Of a stock
dividend was incorrect. AS matter
Of fact the account contained a bal
ance Of $4,000, Auditor Graham
claimed and submitted figures from the
company's books to maintain his point.
That insurance charges have not
been made against the steamers at an
excessive rate.
Old Figures Once More
The hearing started with the revival
OF the frayed and word-worn figures
$d32 ,020.70, the amount wiped out of
the depreciation account and deducted
from the book value of the steamers
December 81, 1918, Of which Auditor
Field states "the capital assets of the
company were impaired or suffered
loss in this amount"
Auditor Graham denied that any
charges made by the company for other
accounts or for depreciation had i'm
paired the capital. "'The $432, 020.7 10,
for instance, constituted an estimate of
depreciation up to that time he said,
land as such an estimate it was de
Quoted from the floating assets. There
was no impairment of capital, and it
was a transaction which the company
had perfect right to make"
Referring to rccOmmc ndation Of
Auditor Field that a sum of $4,000
charged to capital account in 1908 be
wiped out of this account, Auditor Ora
ham said that he would have reported
the appearance Of this amount in a re
port If he had been the commission
ruditor, but would not have made the
recommend atiOn made by Auditor Field.
Danger For Auditors
"An auditor is always liable to be
called to account" said Graham, "fOr
criticising values. He will always be
sure to be asked to prove by a com
pany any adverse statements he makes
as to the justification of a transact IN
involving values when those values &re
criticised. -
TO show the error Of Auditor Field 5
statement that the construction and re-
Iairs account was closed out March ],
1916 on account of payment of a stock
dividend, Auditor Graham submitted
three fluctuations. One showed struc
tural repairs account started in 1908,
from which balance of $lOS,942l9
WIS transferred TO construction and re-
PAIRS account in December, 1911. An.
other showed u maintenance and re
pairs account started in December,
1903, and closed out December, 1913,
when the balance of $l7 ,63l.97 was
transferred to construction and repairs
account The third showed the main
construction and repairs fund with the
balance AZ Of March !, 1916 after $f2,-
tl.47 had been withdrawn for StOek
dividend, at $l5000O. w. ~
Back To Field Again
Referring TO Auditor Field tnbula.
ton showing the "actual investment or
shares of capital contributed" since
1908 at 81 100000, Auditor Graham de-
clared that the two terms were not
synonymous. He claimed that the ac-
tual investment meant not only the
shares of capital contributed but the
profits of the company left in the bust
ness rs an asset as we'll. In this regard
Auditor Graham includes surplus and
insurance funds as well as capital stock
Rs actual investment, and maintains
that the rate of dividends should 10
Inquired on this basis and not on the
hnsis of ~ 10000 which Auditor Field
claims represents the only shares Of