How does this compare with existing law?
It takes the place of certain provisions of Section 113 in the 1908 Act. Subsection (4) of Section 156 is new. In subsection (1) the obligation to sign the profit and loss account is new.
Is there any particular merit in getting the profit and loss account signed, apart from the balance sheet? Is there any purpose there?
It is a very important document. At least one very eminent expert in company law has advised that this is desirable.
Does it not usually happen that, in the presentation of accounts to members, the profit and loss account and the balance sheet are virtually the one document? They are not actually the one document but they are presented together and the signature on the balance sheet is implicitly taken to cover the signature on the profit and loss account.
Yes, but they are two separate documents.
In a sense, a summary of the profit and loss account has to be taken into the balance sheet.
If it is justifiable to have the balance sheet signed, it would be justifiable——
It seems strange to have to legislate for it.
And the directors' report.
The practice at the moment I think would be to refer to the balance sheet only. Professor Gower has recommended that the profit and loss account is such an important document that it also ought to have the signature of the directors. It might not be necessary that there should be two sets of signatures but the signatures should relate clearly to the two documents.
I think in general it is very desirable to bring home to directors that they are fully responsible for the profit and loss account. It can happen that they may wash their hands of responsibility once an auditor certifies the account and fail to make clear to the auditor all of the background to the accounts, which they should do.
Section 113 is the section under which, under the 1908 Act, the auditor signs the certificate, is it not?
Yes, I think it is mentioned in Section 113; it is an omnibus section. But the provision corresponding to subsection (1) here is subsection (3) of Section 113.