16 BULLETIX 381, XJ. S. DEPARTMENT OF AGEICVLTITEE. 
by subtracting the percentage of gain, based on the last accurate 
rate of profit (58), from the net sales. Thus, if the net sales were 
820,000 for the three months after the last statement, and the net 
purchases 815,000, the approximate inventory, based on the last 
gross trading profit (17.3 per cent), would be 814,900 plus $15,000, 
or 829,900— less 82.7 per cent of 820,000, or $16,540— and the inven- 
tory would be 813,360. 
AUDITOR'S REPORT. 
The importance of the Auditor's Report is often overlooked. It 
should be directed to the stockholders and contain (1) a certificate 
of the condition of the books and office methods, whether or not they 
agree with the report, and (2) recommendations for improvement in 
any phase of the business. It should be read by the auditor himself, 
or by the secretary, immediately after the Manager's Report, and 
should be adopted and spread on the minutes. If the Manager's 
Report is printed for distribution among the members, the Auditor's 
Report should be published also. It is quite impracticable to give 
even a general form of an Auditor's Report, since this will vary 
greatly according to circumstances. Frequently the auditor analyzes 
the Manager's Report by means of comparative summaries and 
graphs (Form 8). 
The percentages shown in the merchandise and expense statements 
may be truly called the barometers of the business. They should be 
the object of constant study by the management. Not only should 
the current figures be studied, but they should be compared month 
by month and year by year. This is accomplished by the Comparative 
Statement (Form 8). A graphic representation of the various sets 
of figures may be very profitable. Regarding the duties of the 
auditor and methods, see page 50. 
PRESIDENT'S REPORT. 
It is an excellent practice to require an annual written report from 
the president as a part of the permanent record of the association. 
This requirement will often stimulate greater activity in the board 
at a corresponding profit to the association. The report should con- 
tain (1) a review of the activities of the board and actions at previous 
meetings; (2) a recapitulation of the financial operations of the year; 
(3) a tentative budget for next year's operations; (4) recommendations 
respecting the policy of the association; and (5) any other matter 
which, in the opinion of the president, should come before the annual 
meeting. The summary of last year's business and the budget, of 
course, should be based on the manager's and auditor's reports. 
Hence, the audited report should be in the hands of the president 
before his report is prepared. The president or the secretary should 
read the report to the stockholders, by whom it should be approved 
and ordered filed or spread on the minutes. The stockholders then 
proceed to act on the suggestions. 
