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existence, on the farm as well as in the mart; but the keynote of that reformation must be the marriage of efficiency to moral excellence in governmental as in private business. To secure this governmental efficiency, accounts will, by the force of events the logic of history-be made uniform, as the measure and test and aid of efficiency of administration. The needs of higher life, the demands for increased expenditures, are all factors which, sooner or later, will force accounts to the aid of the efficient administration, and substitute the efficient for the wasteful and shiftless public officer. Here the Stars are fighting against every Sisera of corruption and of sloth; here we have the promise of that thorough regeneration of accounts to the needs of which our officials have been convicted, and in a large degree been converted.

Municipal Accounting as the Basis for Publicity of Municipal Affairs

HARVEY S. CHASE, C. P. A.
Boston

"Conviction, Conversion, Regeneration" is the picturesque way in which Dr. Powers summed up the scope of the triptych, which will present to you in three papers the same number of viewpoints concerning publicity of municipal affairs and uniformity of municipal accounts.

My part in this triplicate, or triumvirate, has been assigned as the second one, "Conversion," namely: some brief statement of the changes which are proposed and of the actual methods by which these changes are to be brought about in municipal bookkeeping and in forms of financial reports in order to realize in practice the many advantages which the advocates of "uniform municipal accounting" have long emphasized.

Having had considerable experience in various cities of the country in close contact with practical applications of the principles of standardization of municipal accounts, perhaps I cannot better illustrate my subject than by describing what steps have been taken, in some of these cities and what the results have been.

In the main, attempts to reorganize municipalities' accounts along uniform lines must follow the same general course, although with marked variations in detail in different cities according to the methods then in use in each city and to the requirements of law therein Here we strike the first serious obstacle to the municipal accountant's progress-the fixed requirements of law. In private enterprise no matter how large the

The Fixed Requirements of the Law

corporation or how complicated its transactions it is a comparatively simple matter to obtain authority to make changes in methods or even to reorganize the accounts completely. A board of directors, a general manager, a comptroller or auditor, possibly a few others, must first be convinced of the necessity and practicability of the proposed changes, whereupon the matter is settled, the authority is given, and the changes are inaugurated. All of these men in such a corporation are fully alive to the needs of their company. They are open to forceful argument and they desire to waste no time.

How different is the situation in a municipality, both as to the type of men and as to the bestowal of authority! The municipality of itself has no sovereign power. What power it

as is derived from enactments by the state legislature. enactments in the forms of city charters, of general laws applicable to all cities in the state and, frequently, of special statutes applying solely to one city, must first be studied and mastered by the accountant who proposes to reorganize a city's bookkeeping. Next the ordinances of the city council must be digested and frequently the first practical step to be taken is to redraft, or amend, a number of these ordinances, then to get these amendments accepted by various committees and finally passed by the city council, which often consists of two antagonistic chambers. It is evident that the path of the accountant even at the outset is not bestrewn with roses. In fact in all cases other than a few exceptional ones the accountants must expect to tread a thorny roadway; one full of stumbling blocks, hidden pitfalls and far stretching circumlocutions which waste energies and impair enthusiasms. Very often, too, the delays and unforeseen political complications exhaust the appropriation for the accountant's contract long before his specified labors have been completed and he then has before him the cheerless prospect of a steadily increasing loss of money in addition to the other difficulties in carrying out his contract. No wonder many professional accountants, after one or two such experiences, decline to undertake reorganization of municipal affairs except under per diem rates or other peculiarly favorable conditions.

It would be impracticable within the limits of a paper of this

character to touch upon all of the complicated matters which require the accountant's attention in any municipality's accounts, even in those of a small city.

I must therefore confine attention to the more important problems and of these the budget or appropriation bill is the primary one. You are doubtless familiar with the nature of a "budget," although the important part which it plays in establishing municipal accounting classifications may not be so clear to you.

The Budget

The budget for the new fiscal year should be prepared as close to the beginning of the year as possible. It should be prepared either by the outgoing city government prior to the beginning of the new year or by the incoming city government immediately after the beginning of the year. The first method is preferable. The budget is based on estimates made by the heads of the departments and these estimates should be furnished promptly and in complete detail with comparisons showing the necessity for increases, if such are asked for. The reorganization and reclassification of a city's accounts should be undertaken at the same time as the preparation of the budget, and the final form of the budget as passed by the city council should follow the new classification. When enacted along these lines the arrangements of the accounts upon the city auditor's and city treasurer's books necessarily follow the new classification and a minimum of trouble is incurred. When, however, reorganization of a city's accounts occurs in the middle of a fiscal year very considerable difficulties are encountered in changing the classification and rearranging the balances of appropriations.

The first classification of a city's accounts upon the schedules proposed by the National Municipal League was published in the city auditor's report of Newton, Massachusetts, covering the fiscal year 1900. With this starting point the classification has extended all over the country, first through the adoption of it by the city comptroller of Baltimore; then by the city of Chicago so far as practicable under the laws of Illinois; then by Cambridge and various other cities in Massachusetts; next by adoption of these schedules and the application

of them in all of the cities in the State of Ohio; later by application to the forms of report of all the cities of the State of New York (other than New York City and Buffalo); then finally by the United States census in its reports upon all cities throughout the country. The latest form of the summary schedules is now presented in a volume issued by the department which compiles financial statistics for the cities and towns of Massachusetts.

It is exceedingly interesting to compare the development of the original schedule through all the evolution which has gone on during the past ten years, which has resulted Massachusetts' in the admirable comparative tables now preProgress pared by the Census Bureau and by the Massachusetts Municipal Statistics department, and by similar departments in other states. In Massachusetts it required three years of agitation in successive legislatures before an act could be obtained requiring the cities and towns to report to a state official annually upon uniform schedules prepared by that officer. This act was drafted by the writer and was finally passed in 1906. A concerted attempt is now being made in Massachusetts to enlarge the powers of the state board, making it a "local government board" and giving it authority over issuance of loans by cities as well as mandatory power over methods of accounting and reporting.

During the past ten years "uniform" classification of the revenues and of the expenses of municipalities in the manner herein indicated has become standardized and well established. Comparatively few changes may be expected in these classifications hereafter.

The next important step, which has so far been undertaken by but few cities, is the classification of accounts for a municipal balance sheet, which is a statement of assets and liabilities at the end of the month, year, or other fiscal period. The same tentative steps must be taken and the same gradual development gone through with in this matter as was done in the classification of revenue and expense. A considerable step has been taken during the past year in the reorganization of the

The Balance
Sheet

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