Re =

Auditors held responsible

Levee
aecoun fession it
on the chin recently when a
Quebec. eepation ac Court

Judgment held a firm of
tors responsible to

shareholders who claimed
‘they suffered losses as a
result of -
sintements ina

pros
Justice John: Nolan's
down

Helliwell and Ch ’
now Thorne Hi and Co,
The decision is. being

widely studidd by the

profession and will: lik

ead to a revision of

Canada's auditing standards
set by the 30,000member

Canadian Institute of

Chartered intan!

Accountants,
Justice Nolan ruled the
auditing firm failed to en-
sure the accuracy of a
balance sheet which was
part of a 1971 prospectus

- offering stock of Pan

American Mines Ltd

He awarded six
shareholders of the now
defunct Montrealbased

misleading |
" “Thorne,

uranium venture more than
$142,000 in damages.

The case focuses on two 1s-
sues which auditors and law-
yers have been grappling
with for years — auditors’
legal Habllity to third parties

and dependence on the work .

of a secondary auditor.

Gunn had
depended on the work of
Seidman and Seldman, a

- United States firm with

which it iad an gency
agreement, for part of the fi-
nancial in information in the
prospectus

The space precedent |

set by court on an
aul ’e legal responsibili
to third parties is the mane
disturbing of the two issues.

Some accountants are
afraid the decision could
open the door to a circus of
litigation, =.

In the U.S., shareholders

have almost unlimited en-.
‘titlement to sue their
company’s auditors.

’ While some precedents

exist in Canada on the issue,
Justice Nolan's judgment
takes it beyond what ac-

Alberta report says
raise the taxes there

EDMONTON (CP) — Tax
increases: for homeowners,
farmers, hospitals,
universities and churches
aie rocequneuded in a

vernment report calling
fr a revinies, of municipal
Tropartytax ;
Alberta. .

The ‘svete
couneil nance council
report's 64 =) recom:
mendations contain

. tradition-breaking proposals
which Municipal Aftaira

es ana i ae
may - or any
Alberta politictan to handle.

The recommendations in-
clude:

— Assesment of homes at
full market value with an
escalator clause to allow
taxes to rise with inflated
home values determined

d,

— A municipal tax on
unre tals, hind ing homes,

ve vy | ges,

fy cd getior éttinens
non-profit housimg at a
municipality's :

— A speculation tax on
suburban agricultural land
and recreational sites which
would be accumulated an-
nually and then paid an sale
or development.

— An end to the split mill
rates citles use to transfer
aome of the property-tax
‘load to businesses from
residences,’

The recommendations
include a revised form of
revenue sharing but not the
sharing of provincial tax and

royalty revenue
municipalities have been
Municipalities would be
able to enter into revenue-
sharing plans with each

other 50 a municipality with
a heavily-taxed industry

probably would not

could share some of the
wealth with a neighboring
community that helps serve
the industry.

The council is a group of

’ provincial, municipal and

school board representatives

in. who spent four years .
Feviewing the property-tax

system

Moore said he will spend
the next year going aver the
recommendations but said

many of the more ‘¢con- '

‘proposals

adopted. AE

He said the tax on farm:
homes would probably be
forgotten, the termination of
the split mill rate would be
very unpopular and the’
taxation of church land
would be highly contentious
and lead to undesirable

troversial

taxation differences across -

the province,

Moore said the retroactive into Insurance and Sheet Metal Shop
tax on suburban developable Family Protection
‘arm as some merit, +—Mortgage Insurance
But he noted that use of the ‘Busiees Insurance | te ae _ Charlie Belang er

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countants have been lable
for up to now, sald lawyer
Mortimer Constantini, who -
pergeanted the "suing
8

Armed with this judgment
and Quebec's class action
legislation, “the .. whole
public benefits," Constantin! :

One shareholder, for
example, could bring a
collective: suiton behalf of all
Shareholders’ ‘againgt an
auditor who has no
knowledge of them.

known limited-class, usua
the immediate client such as
the board of directors of -a
company.

Peter "chant an” &c-
counting professor at McGill
University, said he was
pleased with the judgment

.because it reaffirms that an

accountant must serve the
general public, -

But he warned it could
induce Erivolous litigation of
the kind which has placed
US. accountants. in 4 legal
straitjacket. In the US.,

‘once an auditor signs

financial statements, he is
liabie for any damages by
anybody who might use the
Statements, -

The Quebec Securitles

Commission — ‘cakes a
narrower view ‘of the
decision.

Commission secretary
Louise’ Lebel-Chevaller sald.
the Nolan judgment appiles
only to financial statements
ina prospectus, She sald she
is not certain the judgment
will extend to all classes of
third parties.

Ms. Lebel-Chevaller added
that accountants “will be
more on their toes)” as a
result of the decision.
However, she continued, “in
the due cours: 2f business,

you cannot avoid this sort of |

Donald Snell, director of
the auditing standards
division of the Canadian
Institute of Chartered Ac-
countants- said he supposed
the judgment means the
world is changing. “I
shudder to think of what will
happen to professional’

liability insurance rates.”

But Ron Pearl, of Clarkson
Gordon and Co., said it was
an interesting case which
may new groun
with he apparent change ta

@ apparen nge in
the public mood over
auditors.

“The accounting
profession can adjust to
anything,'’ Pearl said.

‘the alarm and all escaped
unharmed.

HOT
SHOTS
JAILED

KAMLOOPS, B.C, (CP)
— Thomas Krousenek, 16,
and Douglas Penner, 19,
who gave the RCMP in
Clearwater a hot time by
setting fire to their de-
tachment headquarters
and river boat last year,
will get two years leas a
day in the cooler, |

two men from
nearby Clearwater were
sentenced in provincial
court Wednesday after
being found guilty of two
counts of causing
damage. and another of
public mischief, -

The: $20,000 fire Oct, 22
started in the boat which
was placed against the
detachment _ building
which received damage
to one wall.-

The building includes.
the house of detachment
commander Jim Switzer.
seg ta
8 a C)
fire and there were two
heii + the building's

A night guard sounded

SNOW LAKE, Man. (CP)
— E. Peter Gush, president
of Hudson Bay Mining and
Smelting Co. Lid., said
Thuraday the opening of a
new $33-million concentrator
here may lead to more new
mines and more jobs for
Manitobans.

Gush, taking part in
ceremonies to cfficially open
the new. mill that will employ
§0, said the Toronto-based
company has decided to
Place more emphasis on

“In fact, this year our
exploration expenditures in
the province will Increase by
some 20 per cent to a tatal of
about $4 million.”

About half of the money
will be spent in the Flin Flon-
Snow Lake area, Snow Lake,
with a population of about

” 1,000, is about 12 kilometres

east of Flin Flon.

Brian Ransom, Manitoba
mines minster, opened the
new facility which will treat
‘one millim tons of ore a

" year, or 3,800 tons a day.

The mill is gea to
produce 160,000 tons of
copper and zinc concentrates

- a year for processing at the

a
a
Bes:

The Herald, Friday, June 29, 1979, Page 13

New concentrator will

company's metallurgical
operations in Flin Flon,

By producing the concen-
trates here, Hudson Bay
Mining will save the cost of
transporting the raw ore to
Flin Fisn, as well a8 250,000
tons a year of mine backfill-
material.

“The savings in trans-
portation costs as a result of
this . very substantial
reduction of tons hauled was
the main reason for the
declaion to bulld a mill at
Snow Lake," a company
spokesman said,

Gush sald one of the
longerterm benefits of the
mill will be “‘the effect it has
upon the economics of
bringing other deposltsin the
Snow ))Lake area into
production.”

He said tha new mill will
also free the concentrator at
Flin Flon for other work
which he said would make
the development of un-
developed deposits in the
Flin Flon area more eco-
nomical.,

“This extra capacity will
enable us to mine at higher
Tates or, hopefully, to open
up new mines.”’

mean mines, more jobs

Gush said the company
was considering the
possibility of increasing the
capacity of the Filn Flon zinc
plant,

“Studies are uncer way
and the outcome could result
in considerable capital
expenditures, but the result
would be more efficlent and
less costly operations — a
very significant step in
optimizing our asset base
here in Manitoba,”

On Jan. 3, 1978, the com-
pany brought the Western
Mine into production and
currently is involved in pre-
production and development
of the Spruc Spruce Point Mine, ail

“Therefore, we have made
a significant. switch in our
own exploration program

and @ are placing considerable
’ emphasis on
Monitoba,” ,
Last November, the

company acquired a 37-per-
cent interest in Tantalum
Mining Corp. of Canada
which haa a mine at Bernice
Lake, Man.

Wat

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DOLLAR

MONTREAL (CP) — U.S,
dollar in terms of Canadian
funds at 3:30 pm. EDT
Thursday was up 9100 at
$1,1679. Pound sterling was
up 1,31 at $2.5414,

In New York, the Canadian
dollar was down : 7-10) at
$0.8562, and pound sterling
Was up 19-20 at $2.1760.

STOCKS

~ Oakwood P:

TORONTO (CP) — The
Toronto stock market was

moderately hi at the
close of active trading
ursday.

The TSE 900 index rose

,210 to 1,814.59, a record-

mig and gus issues provided
most of the strenghth,
increase in

compared with 6.06 million
Wednesday.

Among industrigls, Husky
Qil advanced 3% te $0%,
Hudson's Bay Oil and Gas
2% to $75%, Costaln Ltd. 1%
to $17, Canadian Pacific
Investments 155 to $93 and
oe Life Insurance 1% to

Me.

Chrysler Corp. declined 1
to $10%, Bell Canada 4 to
$21%, Noranda Mines 4 to
$624, Faleonbrideg Nickel A
¥, to 4814 and Dome Pete %
to ABI.

rose

Veatgron
Mclutyre
$52% and Bethlehem Copper
Ay to $1044.

Canadian Superie Oil was
up lk . $143, Cear
Resources re to $9% and
% to $124.
Ranger Of] Canada was
down % to $29% and
Canadian Homatead Oils %
to $20%.

VANCOUVER (CP)
Prices advanced in heavy
trading Thuraday as the
Vancouver Stock Exchange
recorded a volume of
5,168,211 shares,

Gains outnumbered

declines by a margin of three ©

to tworas 152 issues increased

in value, 100 declined and 151
of the issues that traded |

remained unchanged.
Moat of the action was on
the curb exchange as

Neptune Resources traded —

744,994 shares and gained .34
to .76. Regis Development

Corp. gained .4 to .29 on .

420,000 shares and Golden
Shamrock was steady at .50
on 269,950 shares.

Nortek Engines Ltd, also
got into six-digit volume on
the curb exchange as it
traded 154,000 shares and
more than doubled tn value
to $1.08 from 50, Oliver
Resources gained a nickel to
.40 and Mecca Minerals
added a penny to 27,

Consolidated Boundary
Explorations led resource
iesues in volume and gained
08 to .72 on 147,400 shares.
Rio Plata Silver Mines also
put on eight cents to $1.18 on
128,700 shares and
Darkhawk Development
Corp. advanced .16 to .71 on
123,800 shares.

Liberty Petroleums put on
.20 to $2.60 on 118,125 shares,
Rhodes Resources. A
warrants were unchanged at
40 and Black Glant Mines
added .12 to $1.55,

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