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Birmingham Corporation Savings Bank:
Auditors
Shortly after the Birmingham Corporation Savings Bank (BCSB) commenced business on September 29th 1916, the City Treasurer (T H Clare)  presented a report to the Bank's Management Committee meeting on October 10th 1916, that included the following:
 
The Treasurer reminds the Committee that the regulations provide for the appointment of an auditor or auditors. It would be convenient if the appointment were made at an early date, in order that the arrangements for internal audit may be made to co-ordinate with that carried out by the official auditor.
 
At the same meeting, the Manager (J P Hilton) also presented a report:
 
MANAGER'S OBSERVATIONS AS TO AUDIT ARRANGEMENTS.
 
1 The Rules require that the audit shall take place yearly and in my opinion this is adequate for the purposes of a Savings Bank, inasmuch as there are no intricate account books to be kept, and existing arrangements provide for daily checkings  and balancing.
 
2 The audit should be held, say, one month after the close of the half-year, and notice given to the Manager as to the date of commencement of same.
 
3 The Manager should give public notice of the audit and depositors should be asked to bring or send their Pass Books to the audit for examination so as to procure as many Pass Books as possible for examination and inspection by the Auditor.
 
4 The success of the Bank depends to a large extent on obtaining and retaining the confidence of the depositors, and any knowledge regarding the transactions should be limited so as to minimise the risk of disclosure.
 
5 From the wording of the Rules and the general expressions in the Act and Regulations, it is implied that the Auditor should be someone quite distinct from the Corporation, and, in my opinion such an appointment would tend to create a feeling of confidence amongst depositors.
 
6 Upon the subject of internal audit I would remark that under Rule 5 of the Regulations I must not allow access to the Bank or any books or accounts in my custody except to officers of the Council appointed to assist in carrying on the Bank; therefore, for any internal audit arrangement it would be necessary for such officers to be individually appointed for the purpose. Any advantage which may accrue from an internal audit system are, in my opinion, more outweighed by the dislocation of work which such an audit would necessarily entail.
 
7 Surprise visits by an internal audit staff, while being a safeguard where large undertakings are concerned, appear to me to be totally unnecessary in connection with the Savings Bank, for the following reasons:-
 
(1) The coupons are kept by the Treasurer and only a limited supply made to me for counter purposes.
 
(2) Any takings at the counter are banked the same day or first thing on the following morning, while the cash book is balanced and the cash and unused coupons handed to me after each day's transactions.
 
(3) The Treasurer receives direct from Lloyds Bank particulars of any sums paid in by me,   and
 
(4) The Petty Cash account is too small a matter, as only 5 requests will be made to the Treasurer.
 
The Municipal Savings Banks Regulations, 1916 stated that
 
The rules shall provide to the satisfaction of the Chief Registrar of Friendly Societies for the examination and audit of the accounts of the savings bank by a qualified accountant once at least in every year.
 
The Rules for the Corporation Savings Bank stated:
 
The committee shall appoint annually one or more chartered or incorporated accountants as auditors, but not out of their own body, to audit and examine the books, securities and vouchers and to report in writing to them not less than once every half-year. Such accountant or auditor shall (inter alia) examine and test the accuracy of the cash books and ledgers, and shall certify as to the correct amount of the whole liabilities and assets of the bank. A retiring auditor shall be eligible for re-appointment.
 
Although the Regulations and Rules that governed the operation of the Bank were quite specific that a half-yearly audit was required to be conducted by a qualified accountant from an outside body, the Committee (perhaps confused by the arguments relating to an internal audit) resolved at their October 10th meeting:
 
That the consideration of the half yearly and internal audit be deferred until a later meeting.
 
That meeting was held a few days later (October 19th) when it was resolved:
 
That Mr Johnson of the Treasurer's Department be appointed to audit the accounts of the Bank.
 
Although that resolution does not specify whether Mr Johnson's appointment is as internal or external auditor, his employment in the City Treasurer's Department would seem to preclude him from being the Bank's external auditor as required by the Rules and Regulations. However, at a meeting of the Consultative Sub-Committee held on April 18th 1917, the Chairman (Alderman A D Brooks) submitted a letter received from Mr Johnson relinquishing his duties as auditor subsequent to his being granted a commission with the military authorities, and being posted to France. Consequently, the Consultative Sub-Committee resolved:
 
that steps be taken to secure the services of a Chartered Accountant as Auditor, and that the matter be referred to Mr Chamberlain and Mr Councillor Appleby to consider and recommend the name of a suitable person or firm.
 
At the next meeting of the Consultative Sub-Committee (June 21st 1917) the Chairman reported that he had been in communication with Messrs Agar, Bates, Neal & Co, Chartered Accountants, of Edmund Street, who were willing to act as auditors. The General Committee were recommended to approve this firm to audit the accounts of the Bank up to 31st March last, and the question of fees be left to the Chairman and Mr Councillor Appleby to arrange.
 
On June 28th 1917, the General Committee approved the appointment of Messrs Agar, Bates, Neal & Co, but the question of their fee was left to the Chairman in consultation with the City Treasurer. The appointment of this firm of Chartered Accountants satisfied the requirements of the Bank's Rules and Regulations, particularly as they were required to retrospectively audit the Bank's first half-year of trading to March 31st 1917.
 
In due course, the auditors produced accounts for the half-year ended March 31st 1917, attached to the following letter:
The letter from Agar, Bates, Neal & Co referred to the "very valuable work done by the Treasurer's staff", and details of this work were provided by the City Treasurer in a separate report.
 
The City Treasurer also (on January 18th 1918) reported to the Consultative Sub-Committee on
 
the steps he had taken to assist the Staff at the Bank to make out a proper statement of the Finance affairs as at 30th September last by the engagement of a qualified accountant on the audit staff of the Treasurer's Department, who was to be allocated to Savings Bank work without cost to the Bank, for the next six months. The Treasurer also conveyed to the Sub-Committee his idea of the responsibility attached to him as Treasurer of the Bank, and pointed out that if the responsibility was to be attached to him he should have the power of directing the accounting operations of the Bank. It was understood that the Manager would be kept informed of all such arrangements which the Treasurer made, or proposed to make for the reorganisation of the Bank Staff.
 
The addition of a qualified accountant to the staff of the Bank appears to have led to an improved system of accounting, as commented upon in a letter from the auditors dated November 21st 1918:
Continued ....
 
Birmingham Corporation
Savings Bank