130
Ex.0
Ex.P
Ex.R
Ex.
P.26
P.27
Aз an auditor I would not have allowed collateral security
loms item to be in balance sheet. They should be entered
as unsecured loans, Company lent $761,100 according to its
books. Ex.0 is Cash Book.
According to it loans were made
in June, July 1927, bulk on June 10th, last on July 15th.
During whole of this period Company never had the cash to
main these loans, balance cash in hand on 1.6.27 was $9,330
(Ex.0). During June received various amounts totalling about
$50,000 in actual cash. In July $19.58. They never had cash
in hand to make these loans to shareholders. Amount of loans
made in June was $619,100, in July $142,000. Ex.P (N.I.B.18)
Application & Allotment Book put in. During that period
probably not more than 20,000 was received for share capital.
They therefore had about $80,000 in all with which they pur-
ported to make loans amounting to about 7 lakhs.
The result is that on one side of cash book an amount is shown
as received as share capital, and on some date payment of same
amount is shown as made to eeme man. It is just a cross entry
There was no security at all.
Item Mortgage & Long Term Loan $266,630.
I saw no mortgage at all held by bank. I know of none. If
there were none this entry would be absolutely false. I
analysed how this entry was made up. One item $4,000; one
$2,500; one $130, and last it on $250,000 owing from Hong Kong
branch. This last wasn't a mortgage loan. It was a cro83
entry with Hong Kong branch, it appears in Head Office hook
(Ex.R). By no means could this entry of $260,000 be an asset.
Entering this item in balance sheet as an asset is absolutely
false.
This entry could not have been made by mistake. N.I.B.25(Ex.Q)
is loan rogister. It is impossible that entry can have been
It has been taken out of a general heading in
overlooked.
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