Duties of auditors, Business Law and Ethics

DUTIES OF AUDITORS:

The duties of auditors are explained in the following cases.

1. RE: KINGSTON COTTON MILL CO. (1896)(CHANCERY)

For some years before a company was wound up, balance sheets signed through the auditors were published by the directors to the shareholders in which the value of the company's stock-in-trade at the end of each year was grossly overstated.  The auditors relied on certificates, willfully false, given by J., one of the directors who was also manager, like to the value of the stock-in-trade.  Therefore dividends were paid for some years on the footing that the balance sheets were correct but if the stock-in-trade had been stated at its true value it would have appeared that there were no profits out of which a dividend could be paid.

NOTE:

i) In each case the amount of stock-in-trade at the end of the year was entered in the balance sheet "as per manager's certificate".

ii) The manager was a man of great business ability and of high repute , and up to the stoppage of the company was trusted by everyone; but he had designedly exaggerated the value of the stock-in-trade in order to make the company appear prosperous.

Posted Date: 1/15/2013 2:28:54 AM | Location : United States







Related Discussions:- Duties of auditors, Assignment Help, Ask Question on Duties of auditors, Get Answer, Expert's Help, Duties of auditors Discussions

Write discussion on Duties of auditors
Your posts are moderated
Related Questions
Explain Self determination Self determination is actually the foundation of United Nations (UN) Charter. It is defined as a right of people to determine and to choose their ow

Moto Knappy is a manufacturer of automobile motors. The manufacturing process takes a couple of months. The company produces several standard and custom models. To simplify this

American Courts, though vested with considerable Constitutional authority, are limited in power by the other branches of the government, the States to some extent, and the people.

Implied Powers:                                     The statement of Lord Cairns in 1875 in Ashbury Rail Co Ltd v Riche (22) to the effect that a contract beyond the objects o

Contributions of Equity Contributions of Equity as: Developed the so called maxims of equity and Provided additional remedies and Provided for the discovery of

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Benefits of non-accepting shareholders: The minority whose shares are acquired compulsory under s.210 are entitled to all the benefits included in the original offer and accep

Mode of Reduction: S.68 (1) expressly states that a company may reduce its capital "in any way". There is therefore no statutorily prescribed mode of reduction and the actual

Question 1 The doctrine laid down in Salomon v Salomon & Co. Ltd has to be watched very carefully. The Courts can and often do draw aside the veil. Discuss. Question 2

Question 1 "CSR can play a key role in contributing to sustainable development while enhancing Europe's innovative potential and competitiveness" Critically analyse the link be