Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-07-18
AMOUNTi0FSHORTAGE
Condition Of Affairs in Dis
trict Auditors Office.
THE OFFICIAL REPORT
LOSS SHOWN BY ACCOUNTANTS
TO BE $7s,se7.44.
Original Figures Given by Auditor
Petty Verifed-Watson's Methods
Fully Explained.

Eu1ly Explained.
The Commissioners this afternoon re-
ceived from the Treasury Department the
special report prepared for them by Ma
thaniel NJ. Ambrose of the office OF the
controller of the treasury and James L.
Chase Of the Office ofHthe auditor for the
State and other departments on the con-
di+ion Of affairs In the District auditors
office. The Commissioners requested the
Secretary of the Treasury to have this
investigation and independent report made
for their benefit and also for the informa-
ton of the Treasury Department. as certain
OF the funds from which James M A.
Watson recently distracted large sums OF
money were moneys in which the United
States was interested.- The investigation
was to have special reference to the time
Watson was employed in the ONCE ana
had charge Of the deposit and assessment
funds.
The report makes no new disclosures and
gives the figures Of the shortage as n4eo
by Auditor Petty, namely. $73,39t4i. Inc
treasury experts, however, crltlc!se inc
system by which the money was hanoieo
in the auditors office, and make recon-
mendations which have largely already
been carried into effect by the Commits
sioners. These contemplate a complete oi-
vorce of funds from the auditors once
and an enlargement of the powers and au-
thority Of the District disbursing officer. Mr..
c. C. Rogers.
Messrs Ambrose and Chase quote from
the orders given them by the Secretary OF
the Treasury to pursue the investigation
and say:
although the scope Of the investigation
as indicated in the first paragraph OF our
instructions was to be general. yet the Inn
itations Of the second paragraph the space
nf To ho
time when Watson entered the ofhce). potn
Of the period to be covered and time 10 Do
devoted to the examination Ven oayO,
Indicate that our efforts we're expected to
be directed mainly towards ascertaining
what defalcations II any. had been mace
as publicly reported, by Mr.. watson, or IN
connection with the branch of work In
trusted to him; how such defalcations were
accomplished, and what proper safeguards
were lacking in the method OF transactlng
business in the office to prevent such de-
falcauons In the past or their recurrence
In the future. Our Investigation was prose-
cuted under limitations accordingly.
Work Not Revised.
"Mr. Watson appears to have been put in
charge of the papers and records OF the
office pertaining to permit work IN Decem-
ber 1898, and from the time Of his taking
charge until about June /. 1903. period OF
more than four years., his work does not
appear TO nave OSen IoklSeu CHeCheO ny Va
otherwise proved tested by any other
employee Of the office or by the auditor.
Two reasons were given for failure to make
such revision or test: First. the inadequacy'
of the working force OF the office, service.
after office hours being frequently required
to keep up with current work, without un-
dertaking revision; second, that the audltor
believed, upon what he considered TO pe
credible information, that from time TO
time Mr.. Watson's work was checked up by
Mr.. Lapham of the engineers office, VINO
furnished in great part data 1or vouchers
pertaining to Watson's accounts.
The report then details the various APP
preparations handled in the auditors office,
giving the systems employed and the meth
DDS Of charging against the half-cost ana
whole-cost funds. The committee declares
the methods of handling the funds prior to
Watson's connection with the office were
Objectionable for several reasons. one was
because the check issued by the auditor pc
came a commercial paper which with
genuine or skillfully forged Endorsement
might be cashed at a bank or even paid
over the counter at the treasury. The col
lector Of taxes. in making deposits In the
treasury, usually massed the funds and
this maSsing, covered by one certificate OF
deposit, rendered it difficult to verify the
actual deposit Of the particular amount OF
the disburSing officers check. The report
continues:
Some time after Watson took charge OF
the work, the method was changed so that
the auditor stated an account in his own
check to the order OF the auditor, who re-
ceipted for the same to the disbursing off,
Ger; the check was countersgned by the
auditor and indorsed by him. sometimes by
simply signing his name auditor and
sometimes to the order of the collector OF
taxes 1t was. however understood to be
the intention in each case that the check
should go to the collector of taxes to be
by him Endorsed and deposited The new
method was manifestly much more mis-
ehIevous than the former method. affording
double opportunity for the conversion of
funds. as amply shown by the facts dis
closed.
An Example Given.
For example: Audit No 54O5O, dated Oc-
tober o. 1902 is stated in favor Of J. T.
Petty, auditor. D. c.. for the amount of
half cost of work per slip herewith.
50 ,s21 so, and paid by check No 1537O5, to
the order of ]. T. Petty. auditor, D. c.. Of
even date and amount with the audit, signed
by G. c.. Rogers, by E. E. Jones. deputy dis
bursting officer. countersigned by A. Twee-
dale, acting auditor. and Endorsed by ]. T.
Petty. auditor. D. G.
This check. instead of going to the COL
lector of taxes to be by him Endorsed and
deposited in the treasury, was cashed at
the Central National Bank. indicated
by the stamped Endorsements thereon
while there are no initials on the check
Indicating that any person other than the
auditor presented 1t and received the pro-
ceeds at the bank. 1t Is alleged by Mr..
Petty and corroborated by other evidence
in his office and at the bank that he never
presented and had cashed at that bank any
official check drawn to his order, but that
the checks pertaining to Watson's work.
whether intended for deposit or collection.
were. as a rule. presented by Watson, and
that at the banks he was regarded as the
agent of the auditor for, such purposes. It
may therefore be- reasonably, IL not concu-
sively. presumed that Mr.. Watson pre-
sented the checK1and received the cash
therefor in this case, astin the case OF nine
other checks drawn on the treasury for
similar purposes. but all .cashed at the Cen
trail National Bank. and amounting in
the aggregate, including said check, to
500. OO7. 40 s.t :,
THE important, trust reposed in the audi
tor In nsactions of this character the