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22 HASKINS & SELLS March "For Ways That Are Dark" PE N I T E N T I A R Y terms have fallen to the lot of certain individuals who have specialized in inter-company tangles. Odium has been the portion of others who have turned tricks of high finance, some apparently innocent, some intended to deceive. What will be the fate of the individual who conceived and staged the treacherous little drama described below is difficult to foretell. It is to be hoped that contact with one of our offices will teach him the error of his ways and the utter futility of hoping for success while such tactics are employed. The story is related substantially in the words of our office concerned, in a letter to the Executive offices, as follows: "In the preparation of our balance sheet for the Lateska Corporation of Indiana, as of December 31, 1920, we shall appreciate having you advise us by wire on the following: "The cash account as per the books showed at December 31, 1920, a debit balance of some 375,000, represented principally by moneys on deposit with the Bullard Bank & Trust Company. The confirmation received from the Bullard Bank & Trust Company certifies that the Lateska Corporation of Indiana had such amount to its credit as of December 31, 1920. "Upon investigation, however, we find that on January 3, 1921, the bank debited the account of the Lateska Corporation of Indiana in the sum of approximately $75,000. Upon discussing the matter with Mr. W. F. Sutton, president, we find the transaction to be as follows: "On December 31, 1920, the Lateska Corporation (of Illinois) the parent corporation, gave to the Lateska Corporation of Indiana (a subsidiary corporation, the audit of whose books and accounts we are at present discussing) its check in the sum of approximately $75,000 as part payment on account of the amount owing by it to the Lateska Corporation of Indiana which check the latter deposited to the credit of its account in the Bullard Bank & Trust Company. "Mr. Sutton further advises us that he made a personal loan to the Lateska Corporation (of Illinois) of some $75,000 by sending his check to that company which check was to be deposited to meet the check of that company which had been issued to the Lateska Corporation of Indiana; however, owing to lack of time, he was unable to forward to the bank funds to meet the check drawn by him on his personal account and he notified the Bullard Bank & Trust Company not to clear the check of the Lateska Corporation (of Illinois) which he had deposited on December 31, 1920. "Mr. Sutton frankly states that his whole idea in this transaction was to show a substantial cash balance in the accounts of the Lateska Corporation of Indiana and feels that so long as the Bullard Bank & Trust Company certified that at December 31, 1920, there was $75,000 to the credit of the Lateska Corporation of Indiana, we should show it on the balance sheet of that company. "We, however, take the stand that the transaction was an incomplete one inasmuch as the check of the Lateska Corporation (of Illinois) had not been cleared and therefore the original transaction of the deposit of this check becomes null and void. "Mr. Sutton advises that it is quite customary for corporations to have transactions of this nature, either by means of loans for two or three days, or otherwise, at the close of their fiscal periods, to enable them to show substantial cash balances on their statements.
For ways that are dark
Banks and banking -- Accounting
Lateska Corporation of Indiana
Bullard Bank & Trust Co.
Sutton, W. F.
Haskins & Sells Bulletin, Vol. 04, no. 03 (1921 March 15), p. 22-23
|Source||Originally published by: Haskins & Sells|
|Collection||Deloitte Digital Collection|
|Digital Publisher||University of Mississippi Libraries. Accounting Collection|
|Identifier||HS Bulletin 4-p22|