CO129-555-6 Banking crisis 24-9-1935 - 18-10-1935 — Page 74

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It is undoubtedly essential that auditors should

be fully qualified, but, without knowing the full

circumstances in Palestine, it is difficult to make useful

comments. In India either a certificate from a local

Government or membership of an approved institution

is necessary, and the position, so far as technical

competence is concerned, is generally thought to be

satisfactory.

As regards liability for negligence, it is at

present possible in India for auditors to be relieved

by an indemnity clause in the Articles of Association of

a company, and it has been strongly urged that this

should cease. Another proposal that has found considerable

support is that auditors should be liable, not merely

for false statements, but also for omission to state

material facts in their reports.

(It has been proposed

that Bank directors should have similar liabilities.)

Another evil to which considerable attention has

been directed in India - I do not know whether it has any

place in Palestine is the practice of employing a bank's

auditors for other work, such as accountancy, in return

for remuneration fixed by the management and not revealed

to the shareholders. It is proposed to remedy this by

making all payments to auditors, for whatever purpose,

subject to confirmation by the shareholders.

We should entirely agree with the criticisms that

have been passed on the omission of the Report to recommend

publication of the prescribed bank statements. In addition

to the official channels of publicity, compulsory display

of a full balance sheet in all bank premises is favoured in

India.

The