The vast increase in the number and volume of commercial transactions during the past twenty years has made the use of loose-leaf ledgers and other books a practical necessity in modern accounting. In Canadian banks, particularly, the system has been in successful operation for many years. The principal objection urged against loose-leaf ledgers - the question of their validity in a court of law - appears to have died a natural death. The courts rule so plainly and the logic is so clear, that it is the original entry that counts and not the assembly of entries in the ledger, that it is now generally conceded that the loose-leaf ledger is just as acceptable as evidence in a court as a bound ledger. In fact, with the precautions observed by the banks in their use of loose-leaf books, the evidence might be considered even more competent. The following rules are generally observed:
1. The keys of all loose-leaf ledgers and transfer binders are kept in the custody of the manager or of the accountant or other officer specially authorized, by whom blank sheets are inserted as required, and the used sheets removed and filed in the transfer binder.
2. After removing the sheets, the officer who has custody of the key must place a paper seal bearing his signature in the sealing device on the front of the ledger, and, when opening the book again, must satisfy himself that his last seal has not been tampered with.
3. A separate sheet must be used for each account, and each sheet must be signed in the upper right-hand corner by the manager or accountant when the first entry is made. The officer who signs the sheet must see that the account is properly indexed.
4. A few blank sheets may be locked in the current ledger for emergency use, but all others must be kept under lock in the custody of the officer who holds the key of the ledger.
Bound books have not prevented manipulation and fraud, and the above precautions combined with the comprehensive checking system of a bank should practically eliminate the danger of fraudulent substitution of pages. If a man is determined to be dishonest there are easier and less evident methods of defrauding than by switching ledger leaves.