A SURVEY OF TYPICAL COOPERATIVE STORES. 19 



a regular audit is made. Of these, 13 required that the audit be made 

 weekly, 11 monthly, 3 bimonthly, 2 quarterly, 3 semiannually, and 

 10 annually. In addition to these, several others stated that they had 

 an audit at more or less irregular intervals. When questioned as to 

 the auditors, 21 stated that the auditing was done by a committee 

 elected from the membersliip, while 17 reported that the services of 

 a professional auditor were secured. When further questioned as to 

 the cost per year of the auditing, only 15 stores reported a regular 

 outlay for this purpose. Of these, the highest gave an annual cost 

 of $300, while the lowest was $30, the average for the 15 stores being 

 $56 each. 



The results of this survey demonstrate that the precariousness of 

 the cooperative mercantile business is due to inefficient accounting and 

 auditing more than to any other single cause. Where complete records 

 are kept of the business, and where these are used as the basis of a 

 regular monthly financial report, there is furnished a continuous 

 barometer by which a board of directors can take w^arning at the first 

 signs of mismanagement or failing business. In addition to this, at 

 the end of each fiscal year some competent outsider, preferably a cer- 

 tified public accountant, should be hired to audit the records for the 

 year. 



Of course it must be recognized that efficient bookkeeping and ex- 

 pert auditing cost more than the small cooperative business can 

 afford. Much progress toward efficiency, however, may be secured by 

 the adoption of some simple standardized system of bookkeeping and 

 business practice that will give complete and accurate records which 

 can be easily interpreted. To meet this need the United States 

 Department of Agriculture has devised a system which is described 

 in Department Bulletin No. 381, entitled " Business Practice and 

 Accounts for Cooperative Stores." 



The auditing committee elected by the members should not under- 

 take to do the annual auditing itself, unless it enjoys the rare advantage 

 of having a certified public accountant in its membership. The mem- 

 bers of the committee should know enough of bookkeeping to appre- 

 ciate the necessity of accuracy. They should see to it that this is 

 accomplished, and the association should make provision for the 

 necessary expense. 



These conclusions have been borne out by the long experience of 

 the Rochdale stores in England. Their experience is summarized in 

 the preface to "A Manual of Auditing," published by the Coopera- 

 tive Union (Ltd.), with headquarters at Manchester, England, for 

 the guidance of the societies. The author says : 



It is essential to the interest of members of societies generally that great 

 attention be paid to the importance of strict audit, first, for self -protection • 



