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- Title
MEANINGLESS CERTIFICATION.
- Abstract
The decision given by judge Cardozo in a case of Ultramares Corp. v. Fred Stern & Co. Inc. brings up the question whether certificates in their present form have any real significance. In the Stern certificate auditors certified to two things, the agreement of the balance sheet with books and their opinion of the correctness of the balance sheet. Concerning the former, it should be recognized that in the U.S. practice there is no demand for a statement of the correspondence between books and published balance sheets. The correspondence is implied by the acceptance of the statement, if the management has no confidence in it and refuses to accept it, outsiders will certainly never see it. In English practice, with auditors appointed by and responsible to stockholders, a definite reason for certifying to the correspondence exists. This half of the certificate might well have been omitted without subtracting from the worth of the whole. As to the opinion of correctness, the very vagueness of terms certify and opinion ought now to condemn their use. Judge Cardozo made no attempt to analyze their meanings, he was content, quite properly, to infer that auditors put forth the balance sheet as a correct statement of financial condition.
- Subjects
UNITED States; FINANCIAL statements; MISLEADING financial statements; ACCOUNTS; FRED Stern &; Co. Inc.; ULTRAMARES Corp.; ACTIONS &; defenses (Law); AUDITORS; STOCKHOLDERS; LEGAL judgments
- Publication
Accounting Review, 1931, Vol 6, Issue 2, p144
- ISSN
0001-4826
- Publication type
Editorial