than that of "receipts and disbursements," is that by recording all transactions within the current year, the next administration is not affected by items properly applicable to former periods. If, however, after closing the accounts for the fiscal year, items are discovered to have been omitted, the books and reports should be so arranged as to fully exhibit that condition.

Industries and farms connected with public institutions should be placed upon a satisfactory accounting basis. While recognizing the fact that such departments are not conducted primarily for the purpose of financial gain, and as a matter of fact are looked upon as a necessary expense, it seems obviously desirable that all such undertakings be administered as nearly in conformity with business principles as is compatible with obtaining proper results, and it seems entirely feasible to keep their accounts with such correct and information-providing methods as will enable administrative officers, and the public, to know the real results, and to compare them. For illustration, two institutions may be operating farms under practically similar conditions. It may be contended that the farms are not conducted for the purpose of making money, but to provide exercise for the inmates, and that consequently it makes no difference to the state if the cost of production upon one farm is appreciably higher than that of the other. The fallacies in this contention are evident. First, if a proper analysis shows that the cost of milk, for example, produced on one farm is two cents per quart higher than the cost of milk on the other farm, a production of five hundred quarts per day means, possibly, through a lack of administrative ability, a neglect of an opportunity to save over $3,000 annually-clearly a matter for some interest and explanation. The same principle applies to all production, and especially to goods manufactured and sold for outside consumption, particularly if the selling price be based upon the cost of manufacture. Second, if the goods produced by the farm are consumed by the institution, accurate information as to their cost has a direct bearing upon the cost of operating the institution and consequently upon the amount of the annual appropriation for that purpose.

A further requisite to economical administration is the establishment of correct methods of purchasing, recording inventories of, and disbursing materials and supplies.

Uniform methods should be installed for soliciting, preserving

and filing quotations, and these should be used as a check in auditing expenditures. A monthly record should be prepared, for distribution to all purchasing agents, showing prices paid by each for various materials and supplies, engendering some competition to show the best results.

All revenue should be paid into the treasury, instead of being used for the purpose of paying current expenses, and thereby supplementing the appropriation. Even if allowance be made, at the time of preparing the budget, for estimated revenue, such estimate is liable to be conceived in error and not justified by results. By making a fixed appropriation for the year, and holding all revenue collected during that year until its close, the whole amount may serve as a deduction from the estimated amount needed to appropriate for the following year, thus eliminating that element of uncertainty.

Collections which are in the nature of reimbursement, however, for payments not contemplated as coming within the regular expenses, should be allowed to remain in the appropriation currently.

The best results cannot, of course, be secured without a centralization of supervision and general control. Some states and cities are farther advanced than others in this respect, but in practically all cases the legislation enacted regarding accounting methods and the duties of accounting officers is of so broad a character as to allow of divers interpretations. It may be in the power of the chief accounting officer to go into the work of establishing thorough-going systems of accounting of uniform character, and the audit of expenditures, as deeply or as superficially as he desires, according to the manner in which he interprets the law. In preparing bills for such legislation, care should be taken to elaborate the duties of accounting officers as far as possible, and to make the provisions mandatory. The words "shall" and may" possess a difference in meaning which perhaps stultifies the law in many cases, by leaving too much to the discretion of different incumbents, whose opinions are apt to vary.

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The ideal organization has three general accounting heads, a comptroller, a treasurer, and an auditor, each reporting directly to the governor or mayor. No two of these positions is vested in one person, nor is one official under the authority of another.

The treasurer should stand apart as the custodian of funds,

upon the recognized principle that the official who handles the finances should not control the accounting records.

The comptroller should stand alone as the chief accounting officer, and the auditor should be separate from all, as his duty is to examine and report, and it is a natural supposition that he would hesitate to report adversely upon anything in his own office, or under his control. The duties of the comptroller, then, would be confined, and properly so, to a supervision of the construction and operation of the general accounting, including in his jurisdiction all public offices, departments, boards, commissions and institutions, presenting an opportunity for establishing suitable systems of accounting, and supervision over all expenditure. He should be the constructor, and the auditor should fill his natural function of examiner. By a system of controlling accounts, the comptroller should have at all times data upon his books relating to every appropriation, and his figures should be supported by trial balances from the subsidiary departmental and institution books.

In the last analysis, while the state or city may very properly be said to be not a business undertaking, for pecuniary profit, yet business methods must be followed in the receipt and use of the common property of all kinds if the administration is to be conducted upon the economical and result-obtaining basis to which the taxpaying citizen is entitled.

Accounting System for Law Firms

BY WALTER C. WRIGHT.

Recognizing the prevailing lack of system in the keeping of accounts in the legal and similar professions, the writer has been interesting himself in gathering data and forms relative to the same, and in devising a system to meet the general requirements of such businesses.

The principles which govern the system described are universal, and the forms, if not identical with any in use, are in their general features similar to such as have come under our personal notice.

Our task has been to examine, eliminate, modify and construct. That which we have aimed at has been simplicity, conciseness, comprehensiveness-simplicity in its operation, conciseness in its forms, comprehensiveness in its scope.

DIRECTIONS TO OFFICE STAFF.

One of the essential features of any system is that it provides for a complete and accurate record of the transactions of the business, and inasmuch as all the most important entries upon the books of a law firm originate with the partners, the first thing to be provided for is a thoroughly satisfactory system of communication between the principals and the outside office, by which directions shall be given and the carrying out of them insured.

Lawyers whose practice is limited are usually their own bookkeepers. The accounting and other forms referred to later on would be equally adaptable to their use as to that of a partnership concern. But for the moment we confine our attention to that class of business in which the demands upon the time and energies of the principals make it expedient, if not imperative, that they be relieved of detail clerical work. It is a frequent custom in such cases for directions as to charges to be made to clients, or other important entries upon the books to be dictated to the stenographer, who is charged with the responsibility of carrying out such instructions, or of furnishing the data to the bookkeeper for so doing.