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premiums in the broker's account should equal the totals of the Premium Books for each month. The same will apply to the Salvages, Claims, and Re-insurances respectively. Consequently if these are taken out into an Analysis Book, and divided properly under their respective months, the totals for each month in the latter book should agree with the totals of the corresponding subsidiary books.

The annexed form of the Analysis Book is divided into six principal divisions, to represent a period of six consecutive months, and sub-divided according to the number of names respectively on both debit and credit sides. It is not essential to have separate columns for the Premiums and Salvages, as the latter can be entered in red ink both in the Ledgers and the Analysis Book to distinguish them. And the same will apply to the Claims and Re-insurances on the credit side, the latter being entered in red; this expedient avoiding the labour incurred in unnecessary repetition of the brokers' names. It is not, however, advisable to have columns for more than six months on a page, both on account of the dimensions of the book and the constant use to which it is put.

This book should be entered and proved monthly, and, if this or some similar check is performed, the Auditor will find himself able to dispense with a considerable amount of detail work which would otherwise be necessary. At the same time, let it be understood that the existence of such a system, however perfectly it may be conceived and executed, will not absolve the Auditor from making independently adequate tests of detail, the nature and extent of which his judgment must determine.

Having satisfied himself of the accuracy of these subsidiary books, he will check the postings of their totals into the Private Ledger. The Cash Book must be thoroughly vouched, cast,

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and agreed with Bank Pass Book, and the whole of the postings checked into their respective Ledgers, the discount items receiving particular attention.

The individual accounts in the Brokers' Ledger must be thoroughly investigated, and it should be seen that adequate provision is made against bad debts. With regard to the question of Discount, the Auditor will ascertain whether the final amount standing to the credit of the Reserve Account is sufficient to cover the discounts outstanding in the balances, and for this purpose some considerable knowledge of the technicalities of the business will be required.

The Private Ledger will require very careful examination, each account being thoroughly scrutinised. It must be seen that only those items which should by agreement be debited to the Charges Account are included therein. The various Underwriting Accounts open will naturally be closely investigated by the Auditor, who will see that the entries made in each of them relate to the particular years to which they respectively appertain, and that each account is kept open for a period of at least three years. If, however, the alternative system-viz., that of keeping each account open for a period of two years only, and creating a reserve to provide against subsequent contingencies, he should ascertain that such reserve is reasonably adequate.

Although in ordinary mercantile businesses it is customary and reasonable, when exercised in moderation, to draw in anticipation of profits, in underwriting this should not be done; and until the profits on any one year's operations are finally ascertained, no amount should be withdrawn in respect thereof. As this principle entails waiting for a period of at least two, and

advisably three, years before handling the profits of any particular year, a tendency to violate it may frequently arise, and in such a case it behoves the Auditor to exercise his utmost influence to restrain any premature division, the fallacious nature of which, and the serious consequences which may ensue therefrom, have already been emphasised.

The securities represented in the Investment Ledgers will be produced to the Auditor, who will also obtain a certificate from the bankers as to the cash balances.

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