ACCOUNTS 
169 
The secretary may be responsible in some cases for the 
conduct of foreign branches of his company, or of agencies. 
No section of the accounts of a company is more difficult 
to control than this; personal inspection can only be main- 
tained at comparatively long intervals and at an expense 
which is apt to become onerous. In very large businesses a 
travelling audit is conducted from the head office, and in 
some cases the book-keepers of the various foreign branches 
interchange visits at uncertain intervals determined by the 
head office. In such cases as these the secretary at the head 
office may arrange for a series of reports which will assure 
him of the well-being of the branches. But short of this it 
will be his duty, in conjunction with the accountant, to 
ensure the good and proper conduct of the branches so far 
as is possible under distant control. The most difficult part 
of this problem will obviously concern the cash at the branches, 
and this can be most effectively controlled by the following 
system, which has been successfully used by a number of 
companies having foreign branches. 
Each foreign branch has two accounts opened at a local 
bank, into one of which all collections are paid without any 
deduction. A certain amount of control of these collections 
is maintained by the head office, owing to the fact that the 
latter is aware of the debts owing each month by customers 
in connection with each branch. From this first or No. 1 
account (over which no official at the branch has any power 
other than that of lodging amounts collected) there is 
transferred automatically by the banker at the end of each 
month to a second or No. 2 account a fixed monthly sum, 
calculated by experience to be sufficient to meet the ex- 
penses of the branch for the ensuing month. The manager of 
the local branch has power to draw upon this second account 
only. By this means, although the possibility of fraud or 
defalcation is obviously not avoided, yet the time during 
which defalcations might remain undiscovered is limited, 
and the amount endangered is also limited. At the same 
time the personnel at the local branch are aware that by the 
means described there is a constant, but not in any way 
humiliating, check sustained by the head office. 
The remaining balance in the first account can either be 
drawn upon by the directors as need arises, or instructions 
can be given to the foreign or branch bankers to transfer 
either fixed amounts at irregular intervals, or irregular 
amounts at {ir d intervals to the company’s main banking 
account. 
Similar procedure may be adopted in those cases where 
Foreign 
Branches.