BUSINESS PRACTICE AND ACCOUNTS FOB 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 by the board of directors. 
What 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- 
sponsibility 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 liabilities — 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 
balance sheet from the booltkeeper before 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 follows: (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, (b) with 
the canceled checks, (c) as to distribution, id) 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. 
