Abstract The Dominion Companies Act of 1934, amended in 1935, and the English Companies Act of 1929 have many sections, which are identical or almost identical, and this is particularly true of the sections that deal with the audit of accounts. Both acts require that the accounts of companies granted limited liability shall be audited by an auditor or auditors appointed annually by the shareholders in general meeting; that the auditor shall report to the shareholders; and that a copy of the balance sheet, profit and loss account, and auditor's report shall be sent to shareholders before their annual general meeting. In practice, of course, the management chooses the auditor, and the board of directors has the power to fill vacancies during the year in the office of auditor, but no change in the auditor can otherwise be made without notice being given in advance to the auditor and to the shareholders of intention to propose a change. The auditor is entitled to attend any meeting of shareholders at which the audited accounts are to be discussed.

Abstract If the reserve is established as a percentage of receivables it makes little difference how a bad-debt recovery is treated as a credit to the reserve account or as a credit to an income account. A balance sheet at the end of a period would not be affected by a choice in the method of treating a recovery during the period. To the extent that a recovery is credited to the reserve account during the period the usual addition to the reserve at the end of the period will be less. The final balances in the accounts for outstanding receivables and the reserve will not be affected by a choice in the method of recording recoveries. Furthermore, net profit would be the same in either case. In one case a larger bad debt expense would be exactly offset by the income of bad debt recoveries. If the reserve is on a budgetary basis, increased by a percentage of sales, the question of bow to treat a recovery becomes pertinent because the balance sheet and net profit will be affected by the decision. A credit to the reserve account is conservative but theoretically the answer to the question will depend on how the percentage was determined.