vides a very necessary control upon the operations of
directors, and enables the shareholders to obtain an independent opinion on the transactions and position of the
companies in which they are interested. The Legislature
evidently did not find it easy to formulate at all clearly
the duties of auditors, and it seems reasonable to suppose
that any general definition will - prove an impossibility,
as the work which auditors undertake must vary very
widely, and depends largely upon the scope of the operations the accounts of which are to be examined; at the
same time, the provisions made mark a distinct advance
in company law, and will probably create a considerable
increase in the demand for the services of accountants.
The duties of practising accountants cover a very wide area: they act as trustees, liquidators, receivers, and Duties managers of businesses, the owners of which are in default or their affairs in liquidation, both under the direction of the courts and by appointment of creditors and others; they are largely engaged as arbitrators, umpires, and referees in differences relating to matters of account or finance; they prepare the accounts of executors and trustees, and the necessary statements of affairs in cases of bankruptcy, both of firms and companies ; they prepare accounts for prosecutions in cases of fraud and misconduct; and they are constantly called upon to unravel and properly state the accounts of complicated transactions. Their services are commonly required to certify the profits of businesses intended to be sold, either privately or to companies by means' of a published prospectus ; and, in cases of compulsory purchases of businesses by railway companies and public bodies, the statements of the profits of the businesses to be acquired are generally made by them. In a very large number of financial operations they are called upon to give advice and prepare accounts, and in few business matters requiring arithmetical calculations or involving the investigation of figures, and particularly where a considerable acquaintanceship with the principles of law is needed, are their services not utilized. One of the most important duties undertaken by accountants is the audit of accounts, and this duty has, of late years, been widely extended. Originally, auditors were appointed to examine and vouch statements of receipts and payments; but the provisions made in Acts of Parliament in relation to audit, and the requirements of most articles of association of limited Auditors comPanies put much graver responsibilities on auditors, who are now generally required to certify to the accuracy of balance sheets and of revenue and other accounts, the performance of which duties involves far more knowledge of accounts than was once required. The efficiency, in most cases, of audits conducted by skilled accountants has led the public to attach exceptional value to their audit certificates, and to demand extensive knowledge and ability in the conduct of the audit of the accounts of public companies. One other requirement which is generally regarded as indispensable, is that the work of audit should be very expeditiously performed; for it is easy to understand that, were the presentation of the accounts of a company and the distribution of dividends materially delayed in consequence of the audit, much inconvenience would result, while the value of the criticism of the accounts of business operations would be much deteriorated if it could not be made very shortly after the accounts were closed. In these circumstances, in the cases of large concerns with wide ramifications and numerous transactions, it is necessary that auditors should have the help of trained assistants, and thus the personal examination of details by the auditor himself is, to a large extent, rendered unnecessary and the cost of audit materially reduced. This delegation of duty by auditors is generally well understood, and is in accordance with the requirements of those concerned; but there has been a tendency of late years to enlarge the responsibilities of auditors to an extent which, if persisted in, might render it dangerous for men of reputation and means to accept the duties. It is to be hoped that future legislation may, on the one hand, secure the faithful performance of difficult work by competent men; and, on the other, not leave an auditor responsible to the extent of his means either for some carelessness on the part of a clerk, or for an inaccurate decision at a time of pressure on a matter respecting which he is probably unable to obtain competent advice without disclosing that which it is his duty to keep secret.
While the number of practising accountants has of late years been steadily increasing and their services are correspondingly appreciated, the necessity for controlling those exercising the profession and for improving its status has naturally become apparent. The first important steps in this direction were taken by the accountants in Scotland—the Society of Accountants in Edinburgh being incorporated by royal charter in 1854; similar societies in Glasgow and Aberdeen being also incorporated by charter in 1855 and 1867. The Institute of Accountants was formed in London in 1870, but did not receive a royal charter until the 11th May 1880, when all the then existing accountants’ societies and institutes in England were incorporated as the Institute of Chartered Accountants in England and Wales, and means were provided by which all the then practising accountants in these countries could claim membership thereof. In the year 1885 the Society of Accountants and Auditors was incorporated, but has obtained no charter; this body, while numbering among its members a considerable number of practising accountants in the United Kingdom, also includes treasurers and accountants to cities and boroughs in England, as well as clerks to chartered and other accountants. A large proportion of its members also consists of accountants practising abroad. In 1888 an Institute of Chartered Accountants was formed in Ireland, and a great many institutes and societies have been formed in the British colonies and in the United States, some of which have local charters. It is curious to note, however, that, outside the United Kingdom, it was only in the British colonies, and lately in America, that associations of practising accountants existed, until, in 1895, an Institute of Accountants was founded in Utrecht for Dutch accountants; when, although the principles of accountancy have been well understood and practised in Holland since the 16 th century, and probably earlier, it was found necessary to borrow the words “ accountant ” and “ accountancy ” from the English language to convey to the Dutch an idea of the meaning of the terms.
The Institute of Chartered Accountants in England and Wales, on the 1st June 1900, numbered 3195 members, of whom 2469 were practising in England and Wales, and 119 were practising abroad; the majority of the other members (607) having passed the qualifying examinations of the Institute. In the three chartered bodies in Scotland there were, at the end of 1899, 698 members, of whom about four-fifths were in practice; and the Irish Institute numbered 50 members, of whom 42 were in practice. The list of 1344 members of the Society of Accountants and Auditors in the United Kingdom, dated June 1900, does not enable a classification to be made between those practising as accountants and those otherwise engaged; but it may fairly be assumed that about five-eighths of this number were practising. Making
