impracticable as in the case of a Railway. The actual extent in any particular case will thus be very largely a matter of arrangement and of expediency.

The following considerations may, however, be safely submitted, as they will in every case require to be dealt with in more or less detail.

Ascertain that freights and passage money are duly accounted for; that the apportionment of shore expenses is equitable; that the Cost Accounts are not improperly manipulated (especial care being required where one Cost Account is kept for a whole fleet); that only structural improvements are debited to Cost Account; that proper depreciation is allowed -especially in regard to boilers; that outstanding freights and agents' balances are provided for in accordance with the documentary evidence; that unclaimed return passages are in order; that proper return of insurance premiums has been obtained for the time during which any vessel has been “laid up," and, generally, that insurance matters are in order; that the question of foreign exchanges has been dealt with upon a proper basis; and that no profits are taken credit for on account of uncompleted voyages.

In order to prevent misunderstanding, it seems desirable to point out, for the benefit of the reader who has no experience of Shipping Accounts, that the "Cost Account" is really neither more nor less than a Capital Expenditure Account, and must on no account be compared with the Cost Accounts kept by manufacturers.

Some shipowners, instead of insuring with underwriters against risk of total loss or damage to their vessels, raise an Insurance Fund wherewith to meet such losses by periodical charges against Revenue. The effect, of course, is that, instead of Profit and Loss being debited with insurance premiums, it is debited with an instalment-probably somewhat in excess of that which would have been thus paidwhich is credited to the Insurance Fund. At the same time, to make the Insurance Fund really effective when required, it

is desirable that a corresponding amount of cash should be invested in readily realisable securities, the Insurance Fund thus becoming for all practical purposes a Sinking Fund, rather than a mere reserve. When any loss is incurred, the cost of replacing it is debited to the Insurance Fund Account, a corresponding amount of investments being realised to provide the necessary cash. It need hardly be pointed out that an Insurance Fund can only become an effective provision against loss in the case of companies owning a large fleet of vessels, so that within their own experience they get a reasonable average of risk. Even here, however, it will sometimes happen that a loss occurs which will more than swallow up the whole of the accumulated fund, and the question then arises whether it is reasonable to bring forward the debit balance of the Insurance Fund Account as an asset upon the Balance Sheet. If there is a reasonable probability that this debit balance can be extinguished out of future instalments within a reasonable time, there is probably no objection to this course of procedure; but, in any event, it seems desirable that it should appear as a special item in the Balance Sheet, so that no shareholder may be deceived as to the actual position of affairs; and, in addition, the Auditor would do no harm by drawing attention to the facts in his certificate.

SINGLE-SHIP COMPANIES almost invariably make no provision for depreciation: the Auditor need not waste his time upon any efforts to convince his clients of the imprudence of this course, but he should not forget to append the necessary qualification to his certificate. The Auditor of Single-Ship Companies must bear in mind that, as regards fraud, there is no such thing as safety in numbers" here, for the accounts are usually all in one person's hands-let him, therefore, not omit to examine the Voyage Account Book in detail. In a recent case it transpired that the same manager had control of the funds of several Single-Ship Companies; and, by an ingenious process of "ringing the changes," was enabled for many years to conceal from the auditors the fact that there were serious deficiencies in his Cash Balance.

(c) TRAMWAYS.-With the exception of the few tramway undertakings that are governed by the legislation affecting railways, there is no prescribed form in which the accounts of Tramway Companies are to be presented; considerable variations will therefore be found in the mode adopted by different companies. It is possible, however, that if-as appears likely -any considerable number of undertakings fall into the hands of local authorities, public attention will be sufficiently directed to the subject to cause a uniform system to be prescribed for the use of all Tramways.

The accounts are usually prepared upon the "Double Account" system; permanent way, rolling-stock, and horses constituting the items of Capital Expenditure. With regard to the first two items, on account of the extreme difficulty of making any periodical estimate of their value, the method adopted is, perhaps, the most convenient one-the work being maintained in a state of perpetual efficiency rather than reduced by depreciation and increased by renewals. As regards "Horses," however, the unpermanent nature of this item appears-in spite of the fact that such a course is unusual-to lend itself more readily to the "Single Account" method of treatment—namely, by writing off depreciated value and debiting the account with fresh purchases. The certificates of the responsible officials must always be obtained for the efficiency of the assets represented by the Capital Expenditure.

The traffic receipts must be carefully tested, and it is not unusual for the Auditor to consider it necessary for him to go over the whole of this work in detail, commencing with the tickets, guards' books, or way-bills (as the case may be), and tracing the receipts on to the traffic sheets and daily and monthly traffic books, and seeing that the whole amount received has been duly banked. Where the system employed does not provide a perfect internal check, it would seem to be very desirable for the Auditor to examine every detail, for it is here, especially, that a leakage is likely to occur. It may, perhaps, seem superfluous to suggest the propriety of seeing that receipts are accounted for upon every day of the year.

The only other source of revenue of any importance will be advertising; but as this is almost invariably sub-let to a contractor, it needs no comment.

The expenditure-which should always be made by cheque, no payment out of traffic receipts being on any account permitted-must be carefully vouched; while the analysis thereof must, so far as possible, be verified. In particular the apportionment between Capital and Revenue must be thoroughly scrutinised.

The Horses Account is one that might easily be manipu lated, and must be particularly watched; the number of horses shown on the account should, of course, agree with the number stated on the vet.'s certificate.

Tramway statistics for short periods will be of but little value to the Auditor as a general check upon the satisfactoriness of affairs; but statistics of longer periods may prove most useful, if intelligently applied.

VI. ACCOUNTS OF LOCAL AUTHORITIES.-The accounts of local authorities, and their audit, are subject to the provisions of numerous statutes; the principal Acts being the Municipal Corporations Act 1882 (for the accounts of the Borough Fund), the Public Health Act 1875 (for the accounts of sanitary authorities), the Local Government Act 1888 (for the accounts of county councils), and the Local Government Act 1894 (for the accounts of parish councils), in addition to such Special Acts as may have been obtained. In Appendix "A" will be found extracts from such portions of the General Acts as are of professional interest.

For some reason best known to the Legislature, there is no statutory form for the accounts of the Borough Fund, but a return of "Receipts and Expenditure" must be made annually to the Local Government Board. The term "Receipts and Expenditure" is, of course, in itself from an accountant's point of view-entirely meaningless, and it is generally under

stood that the account required by the Legislature is an Account of Receipts and Payments (or Cash Account). Every consideration of convenience, however, points to the desirability of all local authorities submitting their accounts in the form of an Income and Expenditure (or Revenue) Account, so that the actual financial result of each year may be clearly comprehended. The result is that many local authorities prepare and publish accounts, which do not have to be-and probably are not-submitted to the Local Government Board for their approval; but it is understood that in some cases the actual Revenue Account has been filed instead of the prescribed Cash Account, and that it has been accepted.

Accountants will sometimes find themselves in the position of elective Auditor, but, generally, their appointment will be held independently of, and in addition to, the elective audit and direct from the corporation. It would seem that the elective Auditor has no power to enquire into, or to question, the legality of any payment; but a professional Auditor would probably be subject to no such restriction. Some doubt has, however, been thrown upon this view by the Court of Appeal in the case of Thomas v. Devonport Corporation.

The accounts must be made up and audited half-yearly, and printed and published annually, within one month of the close of the financial year. Both on account of the shortness of the time thus allowed for audit, as also upon more general considerations, it is, however, both advantageous and usual for the professional audit to be a continuous one.

The Accounts of the Sanitary Authority are upon the form settled by the Local Government Board. Where the authority is not also the council of the borough, the audit devolves upon the district Auditor, who is an official nominated by the Local Government Board; but where the sanitary authority is also a borough council, the accounts are Audited by the Auditors of the borough fund.

It is the opinion of most experienced Auditors that no efficient audit can be made without an exhaustive examination