BUSINESS PBAOTICE AND ACCOUNTS FOR COOPERATIVE STORES. 51 



A most important rule for the auditor to follow is to allow no 

 changes in the system of accounts, once established, except upon the 

 written recommendation of the auditor, confirmed hy the hoard of directors. 

 Wliat appears to the bookkeeper or manager as an insignificant change 

 may be of vital importance to the business, 



A very erroneous opinion often exists regarding the duties and re- 

 sponsibihty of an auditor. The auditor's principal duties are: (1) To 

 check and verify the manager's and other officers' reports; to ascertain 

 whether or not the reports are based on and agree with the permanent 

 records of the business; (2) to verify assets and fiabihties — first as to 

 their existence, and, second, as to their value; and (3) to report on 

 the system of accounts and the manner in which they are kept up. 



It is not his duty to balance the books, nor to assist in preparing 

 reports, nor is he responsible for bad accounting unless in his report 

 to the membership he fails to call attention to the defects. Another 

 important rule for the auditor to observe is to require the complete 

 halance sheet from the hoolcTceeper hefore he begins the audit. 



The best result will be obtained if the audits are neither too numer- 

 ous nor too few. Perhaps a partial audit by a committee every 

 three months will be sufficient, while a complete audit should be 

 made once a year by an expert accountant or auditor. 



It is very important that the auditor follow a definite routine in 

 his work. Generally this should be as foUows: (1) See that the 

 reports are complete, in proper form, and in balance; (2) investigate 

 any unusual item which may appear in the report; (3) check the report 

 with the general ledger, and ascertain that the latter is in balance; 

 (4) check the inventories and other schedules of accounts with the 

 reports; (5) see that the valuation of both assets and liabilities is 

 correct; (6) check the cash receipts (a) with the cash register, 

 (b) with the original daily summary, (c) with the bank deposits 

 (the total receipts must equal the deposits plus the change fund; 

 the auditor should adopt a private mark, and check every item); 

 (7) check the cash payments (a) with the original vouchers, (6) with 

 the canceled checks, (c) as to distribution, (d) as to totals and bal- 

 ance; (8) check the journalizing and posting;'' (9) check the time 

 sales and customers' ledger, if any, (a) with the original sales slips, 

 (b) with the controlling account in the general ledger; (10) check the 

 creditors' accounts in the same manner; (11) check the secretary's 

 stock records; and (12) check the minutes, and see to it that nothing 

 has been entered which is in conflict with them. 



A complete audit consists of three parts: (1) Audit of the resources 

 and liabilities; (2) the cash audit, and (3) audit of revenue. Whether 

 or not it is possible for the auditor to complete such an audit satis- 

 factorily depends on the condition of the books and reports when he 

 takes them, and the time given to the work. 



