Arizona republican., 1922-03-13
BUSINESS NOW
LOOKING MORE
TOACCOUN
Conservative Business De-
pends Upon Reports Of
Accountants

In this day OF safe and sane busi-
ness the certified public accountant
is being called upon more and more
to determine where credit should be
extended and to discover leaks and
other defects in establishments that
are not progressing as they should.
r. Il. Garrett of Lee and Garrett,
certified public accountants. gives
the following valuable information
on this phase of his work:
That we are beginning to start
the upgrade climb TO a normal busi-
ness condition has been thrust upon
the merchants and manufacturers
for so long that it has about lost
its power 10 cause feeling OF any
kind. either skeptical or optimistic.
Conditions today seem the same as
those of yesterday, and not much
better than those of last week. But
We find that bankers arc ready and
willing to loan money TO those who
are entitled to credit, and those who
propose TO use such credit along con-
servative business policies.
''The fact that there is available
credit from both wholesalers and
bankers to those merchants whose
financial condition and methods of
doing business are satisfactory
brighter future.
I'VE are engaged from time to time
upon Investigations by the banks or
wholesalers to whom a merchant
has made an application for larger
line Of credit. 1t is not generally un-
derstood that the position of the cer-
titled public accountant is not merely
that of verifying the clerical ac-
curacy of book figures. He is an
outside. impartial investigator who
gives his opinion and observations
of all phases of the business. 1t is
true that oftentimes some auditors
do not feel concerned with this phase
of their employment. but bankers de-
sire and are securing such informa-
ton for the best interests of all con-
cerned.
Hardly any business man is con-
tent TO have his business remain sta
tionary. He wants to expand, to in
crease his profits. 10 reduce his ex-
pense ration, or he may be actuated
merely by the ambition to outstrip
his competitors. A banker is always
interested in the plans of the bor-
rover. An auditor may find future
contracts entered into which may
greatly affect the credit of the bor-
rover, about which he may have said
nothing to the banker If his current
debts are bothering him, he is handi-
capped and seeks new loans to re-
iieve the situation. Whereupon If
the loan is forthcoming he may pro-
ceed to expand and the money is i'm
mediately lost in new liabilities with
out increasing his working capital.
Facts relative to previous business
experience, possible embarrassments
from speculation. etc. are available
from the mercantile agencies, but the
inside personnel of the company are
best viewed through the eyes of the
professional accountant and auditor.
Experience is ripe with the fact that
where partners quarrel, trouble fol-
lows. Internal troubles OF manage
ment have wrecked many concerns
which the bankers thought were
good risks. solely from their credit
statements. or again. one depart
ment may be weak. The merchant
may be a good buyer, and persuade
the banker sitting at his desk that
the loan asked to make a large pur-
chase would be good business, when
it might be found that the selling
organization was weak and losing
ground steadily.
Frequently, and only the profes-
sional accountant and auditor knows
how frequently, statements are given
to banks, which show the true en-
tries on the books. an consequently
make a good credit showing. which
are utterly false as TO fact. Upon
investigation it is found that the as
sets were written up" by buying the
asset from a dummy" Payment
was made by issuing a note stock or
even cash to the dummy for an eX-
cess valuation, and a goodly profit
was diverted to the pocket of some
individual The apparent book fl
nancial condition was good. But a
statement from a certified public ae-
countant would be altogether differ
ent, and would disclose true facts in
the case
CAS- stated previously. credit is
available TO merchants and business
men whose financial condition and
administrative policies are satisfac-
tory, and it is justly so that TO only
these should credit be extended.