The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1908-03-17
SUMMARY OF THE REPORT.

/ Handy, secretary and treasurer Mr.
Raynor. however. appears to be praeti-
eally all there is to The Audit System
The Public Printer stated that this com
pany WAS selected because OF its famil-
iarity with printing plants.
Three contracts were executed by the
Public Printer with The Audit System
The first one provided for the payment
by the government OF $4,000 for the IN
staIlation Of the cost-accounting system
The second was dated April Is, 1907. and
covered the taking of an inventory of
the entire establishment. It provided for
the payment Of $3.50 per week. These
contracts ran until June 30. 1907. and la
bilities Of S4S.35O were incurred.
On July l. 1907 by third contract the
Public Printer agreed to pay $3.50 per
Week to The Audit System for the .'nec-
essary expert service 10 continue the in
stallation Of the cost audit. and inven-
tory system in the Government Printing
Office" This contract was without time
limit except the power TO terminate at
one weeks notice.
No work appears TO have been done IN
der the inventory contract with the ex-
cepton OF an inventory of supplies. which
was made by an emplOye OF the printing
Office who had made similar inventory
before the advent of The Audit System.
The Audit System, however. received S1S-
go for this alleged inventory
The persons operating The Audit Sys-
tenn formed two subsidiary paper" com
panies. the Audit system Supplies Com
pany. and the Suffolk Distributing
Company From these companies the
Puollc Printer made purchases aggregat-
ing S4.S472O
i The actual cost of installing the audit
cost system, including the inventory and
such of the material and accessory ex-
penses as can be clearly attributed TO
The Audit System operations, WAS SI3S. .IIO.
approximately $4,000 appears 10 have
been saved by the Presidents order 10
terminate the contract.
The total expense Of installing s cost
system in a large plant varies from $4,000
TO $4,000 and would seldom exceed $4,000
and this, figure is considered as an ex-
treme maximum. After inspecting the
Government Printing Office, members OF
two of 1he most important firms Of public
accountants in this country state that
they would not hesitate 10 accept a con-
tract TO systematic the establishment for
$4,000.
In order 10 maintain the cost analysis
established by The Audit System an an
nual expenditure OF s1f7 .30024 is required
compared with the expenditure OF Sl5. .2sS
covering all similar work under the old
system.
Generous accommodations were assign
ed the manager Of The Audit System and
his employees. and every possible facility
was extended to him. The purchase OF
expensive desks and file cases for the
employees Of the system were made under
conditions which justify sharp condemna-
tion.
Moreover, the purchase of ruled sheets
from a firm in New York. when accord |
ing 70 law such sheets should have been
made in the printing Office. is also open
to criticism
An unpopular move made BY the system |
was the insertion OF its advertisement
on every blank made in the office for !
use In the cost accounting.
There were numerous instances when |
recommendations by Mr. Raynor OF vari- |
Gus devices was followed by immediate |
orders to the manufacturers. In many 1
cases Mr.. RaynOr passed upon bids Of |
manufacturers while himself a bidder.
Mr.. Raynor and his assistants. although /
operating under a contract. were paid 1
for personal services. If in a legal sense
or assistants" 10 officials OF the printing 1
Office. the law was violated when thew
sold the first dollars worth Of material /
to the government
The Public Printer himself is open to /
criticism for having tolerated a bid by |
or purchase from, The Audit System or
any allied concern.
Financial Operations.
The CorornfTfaa A.
tary OF the Treasury 70 examine the
financial conditions in the printing Office
have found no evidence Of fraud or SER
ious irregularity. They report, however.
that there have been some minor irreEu-
larities, chergeable in most cases to bad
and that the methods of
keeping the books are open to criticism.
Under the appropriation for Public
printing and binding. 1905" the available
funds amounted 70 S5.2Ss.755.Os. and the
expenditures to February Is. 1903. were
SS.S4s,n3.M. The probable expenditure
from February Is to June 30. 1903. has
been estimated to be s2.OO6,OH.S2 The ap-
parent deficit, therefore, is S56S. .Sse. 30. In
addition 70 this deficit should perhaps be
reckoned contracts calling for an expendi-
ture CT $4,000 which have been signed.
but for which orders have not been
drawn.
Theoretically, the total annual disburse
ments should equal or approximate the
total value OF sales plus total expendi-
tures for plant For the period from 1906
to 1897. inclusive. disbursements in ex-
cess of sales amounted to S. .s62. .SJ7 %
while expenditures for plant properIv
chargeable to the years in question ap- \
Droximated $4,000 The difference Of al
most SOOOO0 can be accounted for only
by operation Of the establishment at a
loss some part however, of this ap-
parent deficit in operation may have been
due TO unwise or overlberal purchases
OF material which could not be classed
as plant or as material used for
sales, although this OF course represents
loss under another name.
The conclusion seems justified that
since 1900 at least. Congress has been i
Mourning Tor the maintenance of the Gov
eminent Printing Office an expenditnre
)f approximately S6GG.OO0 wear over the
AMOUNT which the Office has charged TO
Is customers for product.
The cost OF labor during the last sly .
months of the year was s2321. .757S7 in
~. S2,zS4,O6o.S5 In 1895. and S21s5. .46O.76 in
800. The portion Of such expenditure
hat WAS paid as compensation for non
productive employees was S3sI. .Ss4 % ar
SO per cent, in 1904; S275, ,43O.I7, or f6S ner 7
'ent, IN 1905. and S5l5,osl5s OF 25.4 per cent.
n 1907 !
Comparison OF the last six months of
90 with the corresponding period for
907 shows that the total expenditure for
abor decreased sJ76. .2gT IL Dtiri,,c. .ht
interval the compensation OF the nro- ]
luctive force decreased S25s.5267s while
hat of the nonproductive force Increased s
lS2 11g 67 I