Ellsworth American., 1914-08-05
MODERN MUNICIPAL
ACCOUNTING.
Extracts from address by F. Ernest Holman,
z. p, A., delivered before the Mems club Of

Sounsahcyf 4 hu WoTklng uhru 10 lutrO-
duee in the State OF Maine, a uniform
system Of municipal and town accounting.
How much such system is needed can
hardly be imagined until one sits down
with the annual reports OF our twenty
nation tries to compare the results of
city management. 1t is case of figures,
figures everywhere and not a drop to
drink-Gn the cities; haven't tried the
towns YETI
In the days when our cities were towns,
it was thought to be a check on the hon.
esty Of town officials, il the names of the
parties to whom money was paid were all
printed in the town report. The utter use
lessness and foolishness OF such PROPOSE
tion as this is self-evident. City report
after city report that have examined
this year is full of such information as
December2. Q. Paid Walter ]. Clark, jr., for
printing postal cards, two sides, 1925, and
Nov. 4. Paid Ellsworth Automobile Co. for
use OF car to Ellsworth Falls, so.
Page after page, filed with information
that is OF no use to the city, the voter or
anybody else.
Now, gentlemen, q city is nothing but a
corporation. Can you imagine an in
dustrial corporation, in making a report
to its stockholders, telling them to whom
1t had paid money during the year? If
you were a stockholder in Mr.. Hazards
fine shoe factory, for instance, would you
expect to find in his corporations annual
report twenty five or thirty pages OF such
TENS as
Nov. IL. Paid boy for errand 10
Aug. 70. Paid woman for washing
windows .35
You know you would not, and yet, the
cities OF Maine 60 on year after year max
ing and publishing thousands Of pages OF
figures to show to whom the money Of the
cities was paid, and il you desire to find
out for what the money was expended,
from these same reports, you will have to
sit down and do lot of figuring before
you can ascertain the real facts.
You see, gentlemen, the system of mu-
nicipal accounting in vogue in most Of
our cities,Iwas established yearsago, when
the scope of municipal activities was very
much less than it is to-day. Planned in
the days when municipal ownership Of
water works, lighting plants or anything
else, was entirely unheard of.
No greater change has happened in our
day than the change that has occurred in
modern corporation accounting. 1t has
become necessity in these days for
corporation to know it's financial condi-
tion at least monthly. 1t must have q
complete financial statement, with an
analysis OF its profit and loss account,
supported by detailed cost sheet, at
least twelve times year. But municipal
accounting has gone on in the same old
rat, and you would be surprised il l
should tell you how hard it is to convince
city governments that their system is OBJ
solete and old fashioned. AS matter Of
fact, it takes less time to keep standard
system OF municipal expenditures, than it
does to keep record, arranged alphabeti-
cslly, Of the parties to whom money is
paid.
Tests made by me have demonstrated
that on an average not ten voters out OF a
hundred understand the average city re-
port at all This is not as it should be.
Municipal reports should show concisely
where the money comes from to run the
city, and the objects for which it is ex-
pended, and the time has arrived when
municipal accounting must become an aid
to the managers and voters of the city, in
stead OF being used to cover up wasteful
administrative policies and for campaign
purposes. At the beginning Of every
fiscal year the men in charge OF city es-
innate the amount of money that the city
will need for that year, and appropriate"
it.
Mind you now, gentlemen, any appro-
priation is nothing but an estimate "a
guess. Yet there seems to be general sat-
isfaction all around if the expenditures
in any department do not exceed the ap-
preparation for that department. This
should not be so. Many a man who is
a poor guesser, may be a good manager,
and many an appropriation that shows an
overdraft at the end of the year has ac-
complished more for the city-and when
say the city l mean the citizens-than
many another appropriation which at the
end of the year carries a large unex-
pended balance.
Now every city carries an account that
is used as burying-ground for extrava-
gances and poor bookkeeping. This ac-
count is usually called ''CONTINGENT".
Overdrawn appropriation accounts are
boosted by creditsIifrom Contingent, until
in many municipal reports it is hard to
tell where an appropriation account leaves
off and Contingent begins.
The dictionary meaning of contingent
is; Something that is liable to occur"
The municipal use of the word seems to
mean that it is not only liable to occur -
but always does.
In comparing the item of Contingent, as
handled by various cities.of Maine, among
other things find the following: