A REPORT 
 
 ON 
 
 THE ACCOUNTS OF THE STATE 
 OF ILLINOIS 
 
 BY 
 
 GEORGE E. FRAZER, C. P. A. 
 
 PREPARED FOR THE 
 
 EFFICIENCY AND ECONOMY COMMITTEE 
 
 CREATED UNDER THE AUTHORITY OF THE 
 FORTY-EIGHTH GENERAL ASSEMBLY 
 
 STATE OF ILLINOIS 
 
 Cv ' 
 
 SENATORS 
 
 WALTER I. MANNY, Chairman - Mt. Sterling 
 
 W. DUFF PIERCY - - - - Mount Vernon 
 
 LOGAN HAY - - - - - - Springfield 
 
 CHARLES F. HURBURGH - - - Galesburg 
 
 REPRESENTATIVES 
 
 CHARLES F. CLYNE, Secretary - - Aurora 
 
 SPEAKER WILLIAM McKINLEY - - Chicago 
 
 JOHN M. RAPP Fairfield 
 
 EDWARD J. SMEJKAL - - - - Chicago 
 
 JOHN A. FAIRLIE, Director - - - Urbana 
 
THE WINDERMERE PRESS, CHICAGO 
 
 191 
 

 CONTENTS „ 
 
 T 1 . 
 
 Introduction S-6 
 
 I. The Present Accounts of the State of Illinois 7.37 
 
 A. Constitutional Provisions 7-10 
 
 Historical N ote 7 
 
 Legislative Control • V.'.* 7 
 
 Financial Administration t/( '*.**."** 8 
 
 Extent of Constitutional Provisions .*.*.*.*.*.**.*.* 9 
 
 B. Legislative Procedure 10-13 
 
 Appropriation Acts U 
 
 C. Statutory Provisions for Auditing and Accounting 13-21 
 
 Auditor of Public Accounts .13 
 
 State T reasurer 15 
 
 Accounting 'and Auditing other than by Auditor* and Treasur^ 
 
 Auditing Powers of Governor ] Ig 
 
 Auditing Powers of Secretary of State and ’ State ’ Board ’ of * *Co^^ 
 
 tracts ‘ 2g 
 
 Auditing Powers of the Civil Service Commission 19 
 
 Auditing Powers of the Board of Prison Industries 20 
 
 Auditing Powers of the State Architect 21 
 
 The Court of Claims *'.'*.*.*.*.! *21 
 
 D. Accounts and Accounting Procedure in the office of the State Au- 
 
 ditor 21-31 
 
 1. Revenue Procedure and Auditing 21-25 
 
 Accounting for the Collection of State Taxes.* .22 
 
 Accounting for the Collection of Inheritance Taxes 23 
 
 Collection of Revenue other than for Taxes 23 
 
 “Receipt Book and Receipt Ledger” *. ! *.23 
 
 Auditing of Receipts !.*!.*!.*! .24 
 
 Cash Audits .25 
 
 2. Disbursement Procedure and Auditing *.*.*.* .25-29 
 
 Appropriation Ledgers .*.*...26 
 
 • Auditing of Disbursements **27 
 
 3. Classification of Receipts and Disbursement Accounts 29 
 
 4. Perpetual Inventory ’ 3 q 
 
 5. Reports 7 * ] ’ ’ * [ 7. *.!*.!*.! *31 
 
 E. Accounts and Accounting Procedure in the Office of the State 
 
 Treasurer 32-36 
 
 Register of Warrants 32 
 
 Accounting for Cash Received *..**..**..**..**..**.!*. .* *. .* *. .* .* ’. .* .* .* ! !32 
 
 Accounting Procedure for Disbursements .33 
 
 “Cash Ledger” * 33 
 
 Local Bond Cash Transactions 33 
 
 Monthly Reports of the Treasurer 35 
 
 State Depositories • .**..*!.**..*!.*!.*!.*!* 35 
 
 Biennial Report of the Treasurer .*].*!.*].**..**..* *. .* *. .*!.’] .* *. ! *. .* *. ! .* ] .*36 
 
 F. Conclusions 36-37 
 
 List of Forms .*.*.*..*.*.*..*.*.*.*..*.*.*.*.*.*.*.*. .37 
 
Page 
 
 II. Accounting Needs of the State of Illinois 38-64 
 
 Introduction 38 
 
 Auditing Requirements of the State 39 
 
 The Need for Financial Information 40 
 
 Accounting Information Needed by Members of the General Assembly 40 
 
 Schedule 1. Statement of Budget Proposals by Funds 43 
 
 Schedule 2. Statement of Estimated Revenues for the General Revenue 
 
 Fund 44 
 
 . Schedule 3. Statement of Appropriation Requests from the General 
 
 Revenue Fund 44 
 
 Schedule 4. Comparison of Appropriation Requests 45 
 
 Reports Needed by the Governor 49 
 
 Reports Needed by the State Tax Board 51 
 
 Reports Needed by the State Board of Equalization 51 
 
 Accounts and Reports of the Auditor of Public Accounts 51 
 
 Accounting Needs of the State Treasurer 53 
 
 Accounting Needs of Revenue Collecting Agencies,..,. 53 
 
 Accounting Needs of Heads of Departments and Boards in charge of State 
 
 Institutions 54 
 
 Schedule 5. Budget Proposals for the, State Normal School 55 
 
 Schedule 6. Department of, Free Balances in Allotments 57 
 
 Accounting Needs of Institutional and Departmental Executives. 58 
 
 Accounting Needs of Employes of Departments and Institutions .'..59 
 
 Accounting Needs of the Public 59 
 
 A Plan of Accounting for the State 61 
 
 Constructive Accounting Work to be Done 63 
 
INTRODUCTION. 
 
 The resolution of the Forty-eighth General Assembly creating the 
 Efficiency and Economy Committee, provided that the committee “shall 
 have full power and authority to investigate all departments of the 
 State government, including all boards, bureaus and commissions which 
 have been created by the General Assembly, such investigation to "be 
 made with a view of securing a more perfect ’system of accounting, 
 combining and centralizing the duties of the various departments, 
 abolishing such as are useless and securing for the State of Illinois 
 such reorganization that will promote greater efficiency and greater 
 economy in her various branches of government.” 
 
 After its organization, the committee gave careful consideration to 
 the work possible of performance under this resolution before the 
 meeting of the Forty-ninth General Assembly, especially with regard 
 to the sum appropriated by the General Assembly for its investigation. 
 The committee was of the opinion that its energies and funds could 
 best be expended on the consideration of a plan for the reorganization 
 of the administrative work of the State. It recognized the importance 
 of scientific and adequate accounting, and the desirability of providing 
 a permanent constructive accounting authority to prepare adequate 
 accounts for the use of State officers. But it was believed that any 
 system of accounts could do no more than reflect the organization of 
 the State, and that major results towards efficiency and economy could 
 best be secured by a reorganization and consolidation of the greatly 
 elaborated system of administrative bureaus, offices and departments. 
 
 The present accounting system of the State is inadequate, and 
 constructive accounting is imperatively needed. This report presents 
 an outline of the present accounting methods, and of the accounting 
 needs of the State. In a separate report, there is presented an illus- 
 tration of an adequate accounting system in the form of a proposed 
 system of accounts for the State penal institutions. 
 
 The report prepared by George E. Frazer, C. P. A., on the 
 present accounting system of the State was made for the use of the 
 committee, to the end that the present accounting methods might be 
 had in mind in planning reorganization of various State activities. 
 The report is now published because it gives in brief and readable form 
 a summary of the accounting that now obtains for the State. Mr. Frazer 
 has also prepared a brief statement of the accounting needs of the 
 State, which is submitted herewith, with the recommendation that pro- 
 vision be made for a program of constructive accounting work, and 
 especially for a scientific State budget and control over the obligations 
 incurred by departments and institutions that must subsequently be 
 met from State funds. 
 
6 EFFICIENCY AND ECONOMY COMMITTEE. ] 
 
 Professor Spurgeon Bell, of the University of Texas, has prepared 
 for the committee a report outlining a comprehensive system of ac- 
 counts for the penal institutions of the State, with special reference to 
 the financial control of penal institutions under the proposed board of 
 prison administration. 
 
 These reports taken together will serve to acquaint the members 
 of the General Assembly and the citizens of the State with the account- 
 ing needs of the State, and with the results that may be expected if 
 an adequate system of State accounting is provided. The reports do 
 not present a system of accounts for the State, since such a system of 
 accounts as the State needs can be prepared and installed only after 
 a careful and detailed analysis of all of the financial transactions of the 
 State, of the organization of the State, and of the functions of each of 
 the State departments and institutions. Such an accounting and finan- 
 cial study is needed, arid provision should be made for it. 
 
 John A. Fairlie. 
 
REPORT ON ACCOUNTS. 
 
 7 
 
 I. THE PRESENT ACCOUNTS OF THE STATE OF ILLINOIS. 
 
 A. CONSTITUTIONAL PROVISIONS. 
 
 Historical Note. 
 
 Article II of the first State Constitution contained two sections 
 relating to appropriations and expenditures, as follows : 
 
 Sec. 20. No money shall be drawn from the treasury but in consequence 
 of appropriations made by law. 
 
 Sec. 21. An accurate statement of the receipts and expenditures of the 
 public money shall be attached to and published with the laws, at the rising 
 of each session of the General Assembly. 
 
 In the second State Constitution, the above provisions were con- 
 tinued and combined in Section 26 of Article III. Another section of 
 the same article added the following: 
 
 Sec. 22. Bills making appropriations for the pay of members and of- 
 ficers of the General Assembly, and for the salaries of the officers of the 
 government shall not contain any provision on any other subject. 
 
 The Constitution of 1870 continued the first and third of the fore- 
 going provisions, and further elaborated the requirements and restric- 
 tions relating to appropriations and loans. 
 
 Legislative Control. 
 
 Under the Constitution of 1870, the General Assembly is given 
 control over the finances of the State. Section 18 of Article IV provides 
 that each General Assembly shall provide for the ordinary and con- 
 tingent expenses of the various departments of the State by making 
 appropriations for the period ending with the first quarter after the 
 adjournment of the next regular session of the General Assembly. 
 
 In order that the General Assembly may be provided with informa- 
 tion as a basis for the making of appropriations it is provided, in Sec- 
 tion 21 of Article V, that all public officers and departments shall report 
 to the Governor at least ten days preceding each regular session of 
 the General Assembly ; and that “the Governor may at any time require 
 information in writing, under oath, from the officers of the executive 
 department and, in Section 7 of Article V, that the Governor shall 
 present at the commencement of each session of the General Assembly 
 “estimates of the amount of money required to be raised by taxation for 
 all purposes.” Section 10 of Article IX of the Constitution provides: 
 “the General Assembly shall provide such revenue as may be needed by 
 
 levying a tax, by valuation, ” on real and personal property, 
 
 and by levying fees for licenses, franchises, and privileges. 
 
 It is provided in Section 18 of Article 4 of the Constitution that 
 “the State may, to meet casual deficits or failures in revenue, contract 
 debts,” never to exceed $250,000. The Constitution does not provide 
 
8 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 how any debt may be contracted, and the matter of arranging for the 
 contracting of debt is left by inference to the General Assembly. (See 
 Section 389 of Chapter 120 of the Revised Statutes, empowering the 
 Governor, Auditor, and Treasurer, under certain circumstances, to 
 negotiate loans to the extent of $250,000.) 
 
 It is seen that the constitution of Illinois provides that the Governor 
 shall make recommendations to the General Assembly; and that the 
 General Assembly shall raise revenue, and control public expenditures 
 by the passing of appropriation laws. 
 
 Limitations are, however, imposed on the General Assembly in 
 making appropriations and authorizing expenditures. Section 16 of 
 Article IV, provides that : 
 
 The General Assembly shall make no appropriation of money out of the 
 treasury in any private law. Bills making appropriations for the pay of 
 members of the General Assembly and for the salaries of the officers of 
 the government shall contain no provision on any other subject. 
 
 Under Section 19 of Article IV, it is provided that: 
 
 The General Assembly shall never grant' or authorize extra compensa- 
 tion, fee or allowance to any public officer, agent, servant or contractor, 
 after service has been rendered or a contract made, nor authorize the pay- 
 ment of any claim, or part thereof, hereafter created against the State 
 under any agreement or contract made without express authority of law; 
 and all such unauthorized agreements or contracts shall be null and void; 
 Provided, the General Assembly may make appropriations for expenditures 
 incurred in suppressing insurrection or repelling invasion. 
 
 Section 20 of Art le IV provides that: 
 
 The State shall never pay, assume or become responsible for the debts 
 or liabilities of, or in any manner give, loan or extend its credit to, or in aid 
 oh any public or other corportion, association or individual. 
 
 Section 25 of Article IV, provides that the General Assembly shall 
 provide a legal procedure for the letting of State contracts for fuel, 
 stationery, and the printing and binding of public documents, subject 
 to the approval of the Governor. 
 
 Financial Administration. 
 
 The enforcement of the will of the General Assembly as to the 
 collection of revenue and the disbursement of public funds ^under appro- 
 priations is placed by the Constitution in the hands of the Auditor of 
 Public Accounts and the State Treasurer. Under Section 17 of Article 
 IV, the disbursement of public funds is dependent on an appropri- 
 ation that is passed by the General Assembly, and on the presenta- 
 tion of a warrant issued by the Auditor of Public Accounts. The 
 same article makes necessary the keeping of accounts in that it requires 
 the Auditor within sixty days after the adjournment of each session of 
 the General Assembly to “prepare and publish a full statement of all 
 moneys expended at such session, specifying the amount of each item, 
 and to whom and for what paid.” In Section 7 of Article IX of the 
 Constitution, it is provided that all taxes levied for State purposes are 
 to be deposited in the State treasury. 
 
 In Section 1 of Article V of the Constitution, it is provided that 
 
 the Auditor of Public Accounts and the Treasurer shall reside at the 
 
REPORT ON ACCOUNTS. 
 
 9 
 
 State Capitol during their term of office, and “keep the public records, 
 books and papers there, and shall perform such duties as may be pre- 
 scribed by law.” 
 
 The Constitution apparently contemplates that all departments and 
 institutions of the State government shall be subject to the auditing 
 powers of the Auditor of Public Accounts; but it does not concentrate 
 all of the accounting responsibility in his office, and indeed it distinctly 
 provides that the Governor is to account directly to the General 
 Assembly for all funds subject to his order. (Section 7 of Article V.) 
 
 Extent of Constitutional Provisions. 
 
 It will be seen that the Constitution of 1870 provides, either directly 
 or by inference, for practically all of the processes of governmental 
 accounting. 
 
 In the first place, the Constitution itself provides for a complete 
 State budget in that : 
 
 A All State officers and institutions are required to make reports 
 in the form prescribed by the Governor at least ten days preceding 
 each regular session of the General Assembly, and the Governor may 
 specifically require reports as to financial condition. (Section 21 of 
 Article V.) 
 
 B At the commencement of each regular session, the Governor 
 is required to present a report to the General Assembly, summarizing 
 the condition of State departments and institutions, and including an 
 estimate of the money required to be raised by taxation for all purposes. 
 (Section 7 of Article V.) 
 
 C The General Assembly is required to provide necessary revenue 
 by the levying of taxes and fees (Section 1 of Article IX), and to pro- 
 vide for the proper disbursement of public funds by the passage of 
 appropriation laws covering all expenses for the period ending with 
 the first quarter after the next General Assembly. (Section 18 of 
 Article IV.) 
 
 D It is specifically provided that contract debts of the State shall 
 never exceed $250,000, except in time of war or invasion (Section 18 
 of Article IV), and that the State of Illinois shall never be made de- 
 fendant in any court of law or equity. (Section 26 of Article IV.) 
 
 A careful study of the Constitutional provisions will show that 
 the present Constitution provides complete powers and the necessary 
 machinery for the installation in the State government of a scientific 
 budget system. 
 
 The Constitution also specifically provides for the enforcement 
 of budget control by the Auditor of Public Accounts, and for the safe 
 keeping of public funds by the State Treasurer. The General Assembly 
 is given power to pass laws providing for the necessary financial pro- 
 cedure in the office of the State Auditor arfd in the office of the State 
 Treasurer. 
 
 While the Constitution makes necessary the keeping of accurate 
 revenue and appropriation accounts it is silent as to the keeping of 
 accounts showing the detailed cost of each of the activities of the vari- 
 ous State departments. It may, however, be safely assumed that the U 
 heads of departments cannot fully comply with the Constitutional re- 
 
10 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 quirement as to biennial reports to the Governor and that the Governor 
 cannot fully comply with the Constitutional requirement as to the char- 
 acter of his biennial message to the Legislature, unless there is a 
 complete system of cost accounting for each of the State offices and 
 institutions. 
 
 The Constitution is silent as to the keeping of such accounts, either 
 in the office of the State Auditor or elsewhere, as will show the assets 
 and liabilities of the State and of its several departments. The Con- 
 stitution does require that the contract debts of the State shall never 
 exceed the sum of $250,000. It is difficult to see how this provision 
 of the Constitution can be enforced unless an account is kept in each 
 of the State departments and institutions of the outstanding contract 
 obligations of that department or institution. 
 
 To summarize, it may be said that the Constitution authorizes the 
 General Assembly to pass laws requiring the executive officers, or any 
 one of them, to keep : 
 
 A. Revenue accounts. 
 
 B. Appropriations accounts. 
 
 C. Cost accounts. 
 
 D. Asset and liability accounts. 
 
 B. LEGISLATIVE PROCEDURE.- 
 
 Up to the present time, there has been little or no preliminary work 
 before the meeting of the General Assembly in compiling and analyzing 
 the estimates and requests for appropriations. Estimates and proposed 
 bills have been prepared beforehand by the various officers, depart- 
 ments and institutions; and a long list of appropriation bills are in- 
 troduced by individual members. Since the creation of the Board of 
 Administration, estimates for the charitable institutions are prepared 
 by this board, and the amounts recommended are included in two bills — 
 one for ordinary expenses and one for special appropriations— each 
 of these bills covering all the charitable institutions. Separate bills are 
 introduced for each of the other public institutions and for some of 
 the other State offices and departments; and a large number of the 
 offices and bureaus submit their requests to the Appropriation Com- 
 mittee, to be included in the so-called omnibus bill for the ordinary 
 and contingent expenses of the State government. 
 
 After the session of 1913 had begun, a compilation of appropriation 
 bills was prepared, with comparative figures showing the appropriations 
 made two years before. But this contained no data as to the expendi- 
 tures and unexpended balances ; while the various items showed a wide 
 variation in the form and detail of the proposed appropriations for the 
 different offices, departments and institutions. 
 
 The Act of 1913 creating a Legislative Reference Bureau requires 
 this bureau to prepare a detailed budget of proposed appropriations. 
 It is made the duty of the bureau : 
 
 Sec. 5d. To cause to be prepared, printed and distributed for the use 
 xof the members of the General Assembly, a detailed budget of the appro- 
 priations which the officers of the several departments of the State govern- 
 ment report to it are required for their several departments for the biennium 
 
REPORT ON ACCOUNTS. 
 
 11 
 
 for which appropriations are to be made by the next General Assembly, 
 together with a comparative statement of the appropriations by the preceding 
 General Assembly for the same purpose. 
 
 Sec. 6. The officers of the several departments of the State govern- 
 ment shall make duplicate reports by the 1st day of November next pre- 
 ceding the convening of the next regular session of the General Assembly 
 of the appropriations which are required for their several departments for 
 the biennium for which appropriations are to be made by such General 
 Assembly. One of said duplicate reports shall be filed with the Governor 
 and the other with the secretary of said Reference Bureau. 
 
 These provisions form the first step towards the preparation of 
 a preliminary budget of estimates of appropriations. But it should be 
 noted that the proposed budget will be simply a compilation of the 
 estimates of the several departments; that there is no provision re- 
 quiring these^ estimates to be prepared on a uniform or systematic plan ; 
 and that there is no provision for including a statement of expenditures 
 to compare with the previous and proposed appropriations. There 
 may also be some doubt as to how comprehensive this compilation of 
 estimates will be. Does the phrase '^departments of State government” 
 include the State institutions and elective officers, or is it limited to 
 those officers and bureaus whose appropriations are included in the 
 omnibus bill? 
 
 Each house of the General Assembly provides for a committee to 
 which appropriation, bills are referred. The membership of these 
 committees is large — the House Committee on Appropriations in the 
 Forty-eighth General Assembly had forty-four (44) members, and the 
 Senate committee had thirty-seven (37) members. There are also 
 several other committees dealing with financial measures — on claims, 
 contingent expenses and on revenue. 
 
 Uporf the organization of the Appropriation Committee, sub- 
 committees are appointed by the chairman to visit each of the State 
 institutions, and report to the full committee. Joint hearings of the 
 appropriation committees are held, at which the heads of the various 
 institutions appear to explain and urge their requests for appropriations. 
 After these hearings, the committees pass on the, various bills, and pre- 
 pare the omnibus bill, making such changes as are agreed to. 
 
 With the exception of deficiency and emergency appropriations, 
 the approoriation bills are not reported to the house until nearlv the 
 close' of the session. At this stage, the chairmen of the committees 
 are said to have practical control of the appropriations ; the committee 
 recommendations are rarely changed in either house. Tf changes are 
 made in one house and not accepted by the other, the bill goes to a con- 
 ference committee, whose report is almost invariably accepted. 
 
 After passing both houses, appropriation bills go to the Governor, 
 who may disapprove any of these bills or any item in any of them, 
 within ten days. A considerable number of appropriations are regularly 
 disapproved by the Governor, and the aggregate appropriations reduced. 
 
 Appropriation Acts. 
 
 The absence of any comprehensive preliminary estimates and the 
 numerous bills introduced are reflected in the appropriation Acts as 
 passed. In the session of 1913 there were 94 separate appropriation 
 
12 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 Acts passed, covering 116 pages in the volume of session laws. Some 
 of the leading characteristics of these measures may be noted in the 
 following summary: 
 
 SUMMARY OF APPROPRIATION ACTS— 1913 
 
 Ordinary and contingent expenses of the State gov- 
 ernment (omnibus bill) — 
 
 State school fund 
 
 Other items (96 paragraphs) 
 
 Pay of members of 49th General Assembly and sal- 
 aries of State officers, no items 
 
 Charitable institutions — 
 
 Ordinary expenses, 6 items 
 
 Special appropriations, 131 items 
 
 University of Illinois, U. S. grants . . 
 
 Normal schools, 33 items 
 
 Penal and reformatory institutions — 
 Five bills 
 
 National Guard, 9 bills. 
 
 Highway Commission, 4 bills. 
 
 Total, 23 bills 
 
 Other bills 
 
 Grand total 
 
 $6,000,000.00 
 , 5,863,825.24 
 
 $11,863,825.24 
 
 
 
 2,600,000.00 
 
 $7,904,637.42 
 , 2,636,405.47 
 , 615,408.57 
 
 11,156,451.46 
 
 4,600,000.00 
 
 1,235,500.00 
 
 ,$4,500,000.00 
 , 100,000.00 
 
 ,$1,489,150.00 
 
 57,839.44 
 
 .$1,431,655.12 
 . 318,090.53 
 
 1,547,009.44 
 
 1,749,745.65 
 
 1,107,500.00 
 
 
 
 $35,860,031.79 
 
 2,055,326.14 
 
 
 $37,915,357.93 
 
 The various Acts offer the most startling contrasts in the extent to 
 which appropriations are itemized. That for the pay of members of the 
 General Assembly and the salary of State officers appropriates $2,600,- 
 000 in one sum. The amounts paid to each person is regulated by the 
 salaries provided in the various statutes; but the appropriation bill 
 does not show the amount for each office, not even the totMs for the 
 General Assembly, the executive officers or the judiciary. The appro- 
 priation for ordinary expenses of the charitable institutions ($7,904,- 
 637.42) is made in six items, three for each year; and the appropria- 
 tion for the state University ($4,500,000) is made in four items, two for 
 each year. 
 
 On the other hand, the omnibus bill, while including the school 
 grant of $6,000,000 in two items, appropriates about the same sum in 
 96 paragraphs, most of which are itemized in detail. The special ap- 
 propriations for charitable institutions are specified in 131 items, 
 besides a number of reappropriations of unexpended balances, not 
 specified in the Act. 
 
 The appropriations for the five normal schools are included in one 
 Act, with 33 items. But the appropriations for the penitentiaries and 
 reformatory are in five separate Acts; those for the Highy^ay Com- 
 mission are in four Acts; and those for the National (juard are in 
 
REPORT ON ACCOUNTS. 
 
 13 
 
 nine Acts. Several of these bills include provisions for the reappro- 
 priation of unexpended balances of former appropriations, the amounts 
 of which are not specified. 
 
 Much the larger part of the appropriations are included in 23 Acts ; 
 while 71 other Acts make separate appropriations aggregating about 
 $2,000,000. One appropriation Act for sewer improvements at Ottawa 
 is for $286.50. 
 
 The entire list of appropriations covers about 1,500 separate items; 
 but there is the widest variation in the character of the items. While 
 in a number of cases, several million dollars are appropriated as one 
 item ; in many other cases, the amounts for salaries and expenses are 
 ‘ specified in minute detail. Thus the appropriation for the Grain In- 
 spection Department includes such items as $75 a year for rubber 
 stamps, $50 a year for inspection pans, $50 a year for steel bars, and 
 $75 a year for twine; the appropriation for the State Board of Ex- 
 aminers of Barbers includes an item of $60 a year for the secretary's 
 bond; and the appropriation for awards made by the Court of Claims 
 includes an item of $7.90. 
 
 This minute specification of minor items serves no useful' purpose ; 
 while the mass of such details makes more difficult an understanding 
 of the purposes of the appropriations. On the other hand, the large 
 lump sum appropriations practically transfer the real work of appro- 
 priation to the managing boards of the departments or institutions. 
 The appropriations for each office or institution should be made on the 
 same general plan, showing separately the amounts for salaries, for 
 other current expenses, and for land and permanent improvements, with 
 specifications of the more important items under each of these main 
 divisions. 
 
 C. STATUTORY PROVISIONS FOR AUDITING AND ACCOUNTING. 
 
 The General Assembly has provided accounting and auditing pro- 
 cedure both in general laws and in provisions in appropriation accounts. 
 
 Auditor of Public Accounts. 
 
 In Section 7 of Chapter 15 of the Revised Statutes,^ the auditing 
 and accounting procedure to be employed by the Auditor of Public 
 Acounts is very specifically set forth. The Auditor is required to 
 “audit all accounts of public officers who are to be paid out of the State 
 treasury, of the members of the Legislature, and all persons authorized 
 to receive money out of the treasury, by virtue of any appropriation 
 made or to be made by law particularly authorizing such account.” The 
 Auditor is further required, under Section 7, to keep the accounts of 
 the State “with any State or Territory, and with the United States, 
 with all public officers, corporations and individuals, having accounts 
 with this State.” This wide sweeping statement of duties was passed 
 in 1845, and has not since been amended. 
 
 It is further specifically provided in Section 8 of Chapter 15 that 
 “on ascertaining the amount due any person from the Treasury, the 
 Auditor shall grant his warrant on the treasury for the sum due.” 
 
 ^References are to Section numbers in Hurd’s Revised Statutes, 1911. 
 
14 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 Sections 9, 10 and 11 provide that a fair record shall be kept of all 
 warrants drawn, by their numbers, that the Auditor shall, in all cases, 
 personally sign all warrants, and that warrants are to be counter-signed 
 by the State Treasurer. To carry out this provision, it is further pro- 
 vided in Section 19 of Chapter 15 that “the Auditor shall credit the 
 Treasurer’s account with the amount of cancelled warrants returned to 
 him monthly by the Treasurer, and give him a receipt for the same, and 
 shall enter the date of cancellations of such cancelled warrants in his 
 warrant book.” 
 
 In issuing warrants, the Auditor is to take into consideration, as a 
 set-off, any claim that may be due to the State. (Section 12 and Section 
 13 of Chapter 15.) 
 
 Proper auditing protection is required in the issuance of duplicate 
 warrants on account of warrants that have been lost or destroyed, in 
 that the payee is required to give a bond in double the amount of the 
 warrant, and to pay all costs and charges, should the State afterwards 
 be compelled to pay the original warrant. (Section 14 of Chapter 15.) 
 
 These provisions are summarized in Section 17 of Chapter 15 by 
 the statement that “the Auditor shall keep a correct record of all 
 accounts by him audited in books to be kept for that purpose.” 
 
 It will be noted that the statutory requirements, so far as expendi- 
 tures are concerned, provide only for the auditing and recording of 
 disbursements in this particular from the State treasury. The statutory 
 requirements in this particular do not seem to extend to the auditing 
 and accounting by the State Auditor of the expenditures of public 
 credit. 
 
 Under Section 17 of Chapter 15, the State Auditor is required to 
 “keep an account of all taxes or other moneys which may be due by 
 any person to the State, and also on account of all amounts which may 
 be paid into the State Treasury.” To carry out this requirement, it is 
 provided in Section 20 that “the Auditor shall counter-sign all receipts 
 for money issued by the Treasurer, and charge the Treasurer with the 
 amount thereof.” 
 
 It will be noted that the Auditor is required to keep an account 
 of revenues as well as an account of receipts. The statute is very plain. 
 The Auditor must “keep an account of all taxes or other moneys which 
 may be due by any person to the State, and also an account of all 
 moneys which may be paid into the State Treasury.” The Auditor is 
 specifically required to keep an account with the entire revenue receiv- 
 able of the State, whether the revenue receivable is taxes receivable, fees 
 receivable, or moneys receivable from fines, forfeits, sales, or the like. 
 
 It will be noted that the statutes provide a careful auditing pro- 
 cedure by the requirement of the exchange of countersigned warrants 
 'and countersigned receipts between the offices of the State Auditor 
 (the auditing agency of the State) and the office of the State Treasurer 
 (the cash depositary of the State). No such auditing procedure is 
 provided for the control of accounts payable, or accounts receivable. 
 In order that the exchange of countersigned warrants and receipts 
 may have more auditing effect, it is provided, in Section 21 of Chapter 
 
REPORT ON ACCOUNTS. 
 
 15 
 
 15, that “no person shall be employed as clerk in the Auditor’s office 
 who is, at the same time, employed in any capacity in the Treasurer’s 
 office.” 
 
 As a means of enforcing the auditing duties of the State Auditor, 
 the statutes provide that the State Auditor shall subscribe to an oath, 
 and shall give a bond in the sum of fifty thousand dollars ($50,000) 
 for the faithful discharge of his duties. The Governor is given the 
 right to require an additional bond whenever he shall deem it necessary. 
 (Section 3 of Chapter 15.) This power vested in the Governor should 
 seem to make him in a sense responsible for the character of the audit- 
 ing and accounting in the office of the State Auditor, in so far as the 
 proper protection of the credit and funds of the State is concerned. 
 
 An important statutory provision is found in Section i of Chapter 
 15, requiring the Auditor “to deliver up all papers, books, records and 
 other property appertaining to his office, whole, safe and undefaced to 
 his successor in office.” 
 
 The chief public protection provided by the statutes is that found 
 in Section 18 of Chapter 15, page 112. “The Auditor shall make out 
 and present to the Governor, at least ten days before each regular 
 session of the General Assembly, a report showing the amount of 
 warrants drawn on the treasury, to whom and for what account they 
 were drawn, and if drawn on the contingent fund, to whom and for 
 what they were issued. He shall also, at the same time, report to the 
 Governor the amount of money received into the treasury, stating, 
 particularly, the source from which the same may be derived, and also 
 a general account of all the business of his office.” 
 
 State Treasurer. 
 
 The most important duty of the State Treasurer is that specified 
 
 in Section 7 of Chapter 130: “The State Treasurer shall receive the 
 
 revenues and all other public moneys of the State, and all moneys 
 
 authorized by law to be paid to him, and safely keep the same.” In 
 
 Section 22 of Chapter 130, approved March 7, 1908, it is the duty of 
 the State Treasurer to “deposit all moneys received by him on account 
 of the State within five days after receiving same in such banks in 
 the cities of the State as in the opinion of the Treasurer are secure 
 and which shall pay the highest rate of interest to the State for such 
 deposits. The money so deposited shall be placed to the account of 
 the State Treasurer.” In addition to taxes, it is provided in Section 11 
 of Chapter 102 that certain specified officers and departments are to 
 deposit into the State Treasury all revenues that they collect. In Sec- 
 tion 12 of the same chapter, it is provided that all such officers and 
 departments are “to keep in proper books a detailed itemized account 
 
 of all moneys received and from what source, or sources, received, 
 and are to report such receipts under oath 'to the Auditor of Public 
 Accounts at the end of each calendar quarter. The departments 
 specified seem to include all State departments and institutions with 
 the exception of the State Board of Agriculture, the State University, 
 and the State Normal Schools. 
 
 In Section 24 of Chapter 130, it is specifically stated that the State 
 Treasurer is “personally responsible for the faithful performance of 
 
 
16 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 his duties under the law and for a proper accounting of all moneys 
 paid to him as State Treasuiter.’’ It appears, therefore, that it is the 
 duty of the State Treasurer to safely keep the moneys of the State by 
 depositing them in banks that, in his opinion, are secure. He is re- 
 quired to select banks which “pay the highest rate of interest to the 
 State for such deposits.” It does not appear that the State Treasurer 
 need deposit money in a bank offering a higher rate of interest than the 
 depositary he has already selected. It is his first duty to safely keep 
 the funds and his second duty to secure as much interest on them from 
 banks as is consistent with the security required. 
 
 Section 12 of Chapter 130 provides that the State Treasurer “shall 
 keep regular and fair accounts of all moneys received and paid out by 
 him, stating, particularly, on what account each amount is received 
 or paid out.” 
 
 The State Treasurer has no responsibilities as to the auditing of 
 warrants for disbursements. Under Section 11 of Chapter 130, he is 
 required to countersign any warrant that is presented him to be 
 countersigned, and tO' keep a record of it. Auditing protection is 
 afforded in the requirement of Section 13 of Chapter 130 that warrants 
 shall be cancelled by cutting or perforation and by the requirement of 
 Section 14 of Chapter 130 that the Treasurer shall “at the close of 
 each month, report to the Auditor the amount of money received and 
 paid out by him during the month, stating on what account the same 
 was received and paid; and shall, at the same time, deposit with the 
 Auditor all warrants, properly cancelled, which he may have paid, and 
 take the Auditor’s receipt for the same.” 
 
 Section 10 of Chapter 130 specifically places auditing responsibility 
 upon the Auditor rather than upon the Treasurer, by providing that 
 “The Treasurer shall not pay out of the treasury any money, except 
 upon the warrant of the Auditor.” 
 
 The Auditor is likewise made responsible for the auditing of all 
 receipts of the State. Section 8 of Chapter 130 provides that the 
 Treasurer shall be removed from his office if he receives money into 
 the State Treasury otherwise than upon an order from the Auditor. 
 Section 9 of Chapter 130 provides that the Treasurer shall issue dupli- 
 cate receipts to persons paying money into the treasury, and that such 
 receipts shall be counter-signed by the State Auditor. 
 
 Under Section 7 of Chapter 130, the Treasurer is to receive all 
 revenues of the State as well as all moneys. This section provides 
 for the deposit with the Treasurer of bonds and other credits owned 
 by the State. As an auditing protection, it is provided in Section 17 
 of Chapter 130, that “every United States or other bond now in the 
 State treasury, or that may hereafter come into the treasury, shall 
 immediately be indorsed with the words following, viz: ‘Property of 
 the State of Illinois, not transferable by the Treasurer, without the 
 consent of the Governor indorsed thereon.’ ” 
 
 It will be noted that the statutes provide rather complete auditing 
 protection so far as the receipt and disbursement of money is con- 
 cerned, and so far as the deposit of bonds and other credit papers is 
 concerned. It is to be especially noted that bonds owned by the State 
 
REPORT ON ACCOUNTS. 
 
 1 / 
 
 and deposited with the Treasurer are transferable only upon the en- 
 dorsement of the Governor. In this case, the Governor is made the 
 auditing officer rather than the Auditor of Public Accounts. 
 
 As Treasurer, the Treasurer is not required by the statutes to pro- 
 tect the State in the disbursement of public credit. This auditing duty 
 devolves upon a board composed of the Governor, Auditor, and Treas- 
 urer. (Section 389 of Chapter 120.) 
 
 To insure the fulfillment by the State Treasurer of his duties, he 
 is required to take an oath upon assuming office and to deposit a bond 
 in the penal sum of five hundred thousand dollars, conditioned for the 
 faithful discharge of his duties. This bond is to“ be approved by the 
 Governor and two justices of the Supreme Court. The Governor may 
 require additional bonds. (Section 1 and 3 of Chapter 130.) The 
 Treasurer is allowed the sum of five thousand dollars from the State 
 treasury as payment on the premiums on the bonds given by him as 
 Treasurer. (Section 23 of Chapter 130.) Under Section 6 of Chapter 
 130, the Governor is authorized to institute suits under the bond 
 either against the Treasurer or against' his sureties, without first ob- 
 taining judgment against the Treasurer. As a protection, it is re- 
 quired that the bond of the Treasurer shall be filed in the office of 
 the Secretary of State. (Section 1 of Chapter 130.) 
 
 An important protection afforded by the statutes is that found in 
 Section 1 of Chapter 130, requiring the Treasurer '‘to deliver up all 
 moneys, papers, books, records and other property appertaining to his 
 office, whole, safe, and undefaced to his successor in office.” One of 
 the chief protections to the public as to the discharge by the Treasurer 
 of his duties is found in the requirement of a biennial report. “He 
 shall also make out and present to the Governor, at least ten days 
 before each regular session of the General Assembly, a full report of 
 all moneys by him received and paid out, and also a general account 
 of all the business of his office.” (Section 15 of Chapter 130.) 
 
 Auditing and Accounting Other Than By Auditor and Treasurer. 
 
 Practically all of the statutes quoted heretofore were first passed 
 in 1845 under the Constitution of 1818, the first Constitution of the 
 State. These statutes have not since been changed. The Constitutional 
 provisions and the statutes heretofore referred to seem to contemplate^ 
 that the auditing and accounting responsibilities shall be centered in 
 the office of the State Auditor of Public Accounts. The General 
 Assembly has, however, provided special auditing and accounting 
 agencies for numerous classes of transactions. We have already noted 
 that the Governor is an auditing officer with respect to the bonds of 
 the State Auditor and the State Treasurer, and also with respect to 
 the transfer by endorsement of bonds and other securities owned by 
 the State. Other auditing and accounting duties have been laid by 
 the General Assembly upon the following officers and departments: 
 
 1. Governor, exercised through the Institutional and Depart- 
 mental Auditor. 
 
 Secretary of State and State Board of Contracts. 
 
 Civil Service Commission. 
 
18 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 / 4. Board of Prison Industries, as to the purchase of furniture 
 
 \ and other supplies. 
 
 ^ 5. State Architect, as to building transactions. 
 
 Auditing Powers of Governor. 
 
 The auditing powers of the Auditor of Public Accounts have been 
 supplemented in the case of most of the appropriation Acts made for 
 the support of the executive departments by the requirement that the 
 Governor shall approve bills for traveling expenses, pay rolls, and, 
 indeed, all bills submitted to the Auditor as charges against such ap- 
 propriations. (See pages 119 and 120 of the session laws of 1913 for 
 aii example of the tenor of such appropriation Act provisions.) To 
 aid the Governor in this particular, the position of Institutional and 
 Departmental Auditor has been created. This Institutional Auditor 
 has no authority as of his own office, but acts for the Governor. 
 
 The effect of this requirement of appropriation acts that the 
 Governor shall approve individual bills before the Auditor of Public 
 Accounts shall pay them is to place a very considerable auditing power 
 in the hands of the Governor, or rather in the hands of his Institutional 
 Auditor. While, in point of law, the Auditor of Public Accounts still 
 has the final audit, the prestige of the Governor’s office is undoubtedly 
 such as to make the approval of the Institutional Auditor in the name 
 of the Governor practically a final audit. 
 
 Section 8 of Chapter 102 of the Revised Statutes provides that 
 /'an account shall be kept by the officers of the Executive department, 
 / and of all the public institutions of the State of all money received 
 ^ or disbursed by them severally from all sources and for every service 
 1 performed, and a semi-annual report thereof be made to the ’Governor 
 ^^f the State under oath.” This semi-annual report must be made in 
 the form prescribed by the Governor. This requirement gives the 
 Governor a very real power in the prescription of accounting systems 
 for executive departments and institutions, inasmuch as he may require 
 a report in such form as to make necessary the keeping of certain 
 prescribed accounts. It may be well to add that this power of the 
 Governor has never be^n exercised, other than to require institutions 
 to report in detail receipts and disbursements classified only as to ap- 
 propriation Acts. 
 
 Auditing Powers of Secretary of State and State Board of Contracts. 
 
 Under Section 5 of Chapter 124 of the Revised Statutes, the Sec- 
 retary of State is given control over the office space in the State Capitol 
 Building, over the furniture in the State . House, and is required to 
 furnish office supplies to his own office and to the Governor, Treasurer, 
 Auditor, Superintendent of Public Instruction, and Attorney General. 
 The same provision is applied to other offices by the statutes creating 
 them. 
 
 It has been customary to appropriate a sum of money to the Secre- 
 tary of State out of which supplies are purchased for the use of the 
 various executive departments. It has been customary to appropriate 
 such sums to the Secretary of State as may be necessary to maintain 
 
REPORT ON ACCOUNTS. 
 
 1 ) 
 
 the State House and to keep it lighted and heated. (See paragraph 
 8 on page 97 of the session laws of 1913 for example of such an appro- 
 priation.) 
 
 The actual purchase of stationery and printing is done by the 
 Secretary of State, under contracts awarded by a commission on State 
 contracts, composed of the Attorney General, Secretary of State, State 
 Treasurer, and the Auditor of Public Accounts. (Chapter 127, Re- 
 vised Statutes.) To aid this Commission on Contracts in the handling 
 of State printing, an officer is appointed, known as Printer Expert. 
 (Section 21 of Chapter 127.) The Printer Expert is presumed to 
 enforce the contracts of the Commission on Contracts. The Printer 
 Expert is supervised by the Secretary of State (Section 22 of Chapter 
 127), and is required to audit all printing bills. (Section 23 of Chap- 
 ter 127.) 
 
 It will be seen that the Secretary of State has a considerable audit- 
 ing power, using the term in a broad sense, in the service that he is 
 required to perform for other State officers. The Secretary of State, 
 thrbugh the Printer Expert, has practically final auditing power, in so 
 far as paying of bills for State printing is concerned. To be sure, 
 Section 23 of Chapter 127 provides that a contractor for State printing 
 may carry a bill, disapproved by the Printer Expert, to the Commission 
 on Contracts, and that the Commission on Contracts shall have final 
 power to adjudicate such a disputed bill. In this limited number of 
 cases, the Auditor of Public Accounts has some direct auditing power 
 over printing bills, in so far as he is ex officio a member of the Com- 
 mission on Contracts. For all practical purposes, it may be said that 
 the Printer Expert is the auditor of State printing bills. The appror 
 priation made in 1913 for State printing and binding (including paper 
 and the State Blue Book) amounted in all to $347,300. (See Sections 
 15, 16 and 17 on page 98 of the session laws of 1913.) 
 
 Auditing Powers of the Civil Service Commission. 
 
 Under Chapter 24a of the Revised Statutes, the Civil Service 
 Commission is given very large auditing powers over the employment 
 of servants of the State. Under Section 11 of Chapter 24a this power 
 of the Civil Service Commission extends to all persons on the pay roll 
 of the State excepting elective officers ; officers, boards and commis- 
 sions appointed by the Governor subject to confirmation by the Senate ; 
 officers and employees of the Legislature; judges and officers of the 
 court; employees of the State military service: instructional staff of 
 the State University and Normal Schools; employees at the executive 
 mansion ; attorneys ; building and loan and bank examiners ; officers 
 of charitable, correctional and penal institutions ; one private secretary 
 or stenographer in the elective offices and offices of the president, dean 
 of men and dean of women of the University of Illinois, and in the 
 offices of the presidents of the Normal schools; all clerks and watch- 
 men in the offices of elective officers ; and students at the University 
 of Illinois and the Normal Schools. While the exemptions to Civil 
 Service requirements appear to be numerous in effect a very large per 
 cent of the employees of the State are in the classified service and hence 
 subject to the auditing power of the Civil Service Commission. 
 
20 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 Under Sections 27 to 31 inclusive, of Chapter 24a, it is provided 
 that the State Auditor and the State Treasurer shall pay salaries for 
 the services of "any person employed in the classified service of the State 
 only upon certification by the Civil Service Commission that the em- 
 ployees named “have been appointed, or employed, or promoted in 
 pursuance of law and of the rules made in pursuance of this Act.” 
 
 It is interesting to note that under the caption of “Auditing 
 Officer,” Section 27 of Chapter 24a provides that the Governor shall 
 not approve any voucher for any claim of any public officer for the 
 services of any person employed in the classified service of the State 
 in violation of the provisions of this Act.” This Section 27 is a frank 
 statement of the auditing powers of the Governor. 
 
 Auditing Powers of the Board of Prison Industries, 
 
 Under Sections 75 to 102 of Chapter 108 of the Revised Statutes, 
 the Commissioners of the Illinois State Penitentiary at Joliet, the 
 Commissioners of the Southern Illinois Penitentiary at Chester, and the 
 Board of Managers of the Illinois State Reformatory at Pontiac are 
 created a Board of Prison Industries. This board is given very sweep- 
 ing powers to manufacture by convict labor in the penitentiaries and 
 reformatories all articles that may be required for State use. State 
 officers and State institutions are required to purchase such articles 
 from the Board of Prison Industries as the Board of Prison Industries 
 may cause to be manufactured and offered for sale. “No articles so 
 manufactured shall be purchased from any other source for the State 
 or public institutions of the State, unless said Board of Prison Indus- 
 tries of Illinois shall certify that the same cannot be furnished. . . . 
 
 and no claim therefore shall be audited or paid without such certificate.” 
 
 It will be seen that the Auditor of Public Accounts is not author- 
 ized to draw his warrant in payment for supplies purchased from com- 
 mercial vendors, if it shall appear that such supplies are manufactured 
 and sold by the Board of Prison Industries, and if it shall appear that 
 the Board of Prison Industries has not certified that the particular sup- 
 plies, covered by the bill for which the warrant is drawn, cannot be 
 furnished from the prison industries. 
 
 The President of the Board of Prison Industries of Illinois, the 
 President of the State Board of Administration and the Auditor of 
 Public Accounts of Illinois are created a Board of Classification under 
 Section 90 of Chapter 108, and, as such, are required to fix the prices 
 for all products furnished to State departments and institutions by the 
 Board of Prison Industries. 
 
 It will be seen that the Board of Prison Industries and, particu- 
 larly, the Board of Classification have a very considerable financial 
 control over State departments and institutions in that such depart- 
 ments must buy supplies from the Board of Prison Industries at the 
 prices fixed by the Board of Classification. The only share of the 
 Auditor of Public Accounts in this financial control comes in the fact 
 that he is ex officio a member of the Board of Classification, and that, 
 under Section 90 of Chapter 108, he is required to devise and furnish 
 a proper system of accounts for the transactions of the Board of 
 Prison Industries. 
 
REPORT ON ACCOUNTS. 
 
 21 
 
 Auditing Powers of the State Architect. 
 
 Under Sections 13 to 17 inclusive, of Chapter 10a of the Revised 
 Statutes, the Governor is empowered to appoint a State Architect of 
 Public Buildings and Improvements. All State departments and in- 
 stitutions are required to avail themselves of the services of the State 
 Architect in the preparation of plans for new buildings and in the 
 supervision of the construction of all public buildings and works. For 
 this service, the departments and institutions are required to pay to the 
 State Architect a commission of two and one-half per cent of the cost 
 of the work. 
 
 Nothing is said in the sections creating the office of State Architect 
 and defining the duties of that officer as to his auditing powers. It is 
 the evident intent of the law, Jiowever, that the State Architect shall 
 be responsible for the honesty and efficiency of the plans and the con- 
 struction work on public buildings. While the Auditor of Public Ac- 
 counts remains the financial auditor in connection with the payment 
 of bills on account of the construction of public buildings, it would 
 seem that the State Architect bears the responsibility as to the actual 
 worth of the materials and services represented by such bills. 
 
 The Court of Claims. 
 
 All claims disputed by the officers in charge of executive depart- 
 ments and State institutions, or disallowed by the State Auditor may 
 be brought for final adjudication before a Court of Claims created by 
 Sections 331 to 341 inclusive, of Chapter 37 of the Revised Statutes. 
 This Court of Claims consists of three judges appointed by the Gov- 
 ernor. The Auditor of Public Accounts is ex officio clerk of this court. 
 Qaims allowed by the Court are reported by the Auditor to the Gov- 
 ernor, and by the Governor to the General Assembly. The General 
 Assembly may or may not make appropriations covering such adjudica- 
 tions. The action of the Court of Claims is final so far as the claimant 
 is concerned. 
 
 A bill disallowed by the State Auditor may, therefore, be brought 
 before the Court of Claims and the Court of Claims by adjudication 
 may bring the bill with their endorsement to the General Assembly 
 The supreme and final auditing power in the State, therefore, re.<tsA 
 with the Legislature. For all practical purposes, the Auditor of Public 
 Accounts may be considered as the final auditor. Bills disallowed by 
 him, because of their illegitimate or illegal character, will seldom be 
 revised before a Court of Claims- of which the Auditor is ex officio 
 clerk. The legislative intent in creating the Court of Claims seems to 
 have been the provision of a judicial body’ for the settlement of ex- 
 traordinary claims, such as claims for personal injuries alleged to have 
 been received in the public service of the State. « 
 
 D. ACCOUNTS AND ACCOUNTING PROCEDURE IN THE OFFICE OF THE 
 
 STATE AUDITOR. 
 
 1. Revenue Procedure and Auditing. 
 
 The Auditor of Public Accounts and the State Board of Equaliza- 
 tion, of which the Auditor is usually chairman, maintain a compre- 
 
22 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 hensive procedure in the determination of valuations for the purpose 
 of State taxation. A description of that procedure is not given here. 
 
 Accounting for the Collection of State Taxes. 
 
 The county clerk of each county in the State is required to make 
 an annual report of the total valuation of property listed for taxation 
 in his county, and of the taxes charged thereon, including taxes due for 
 previous years. The form of this report is prescribed by the State 
 Auditor. (See form 1.)^ This statement of valuation and taxes is 
 made up by the county clerk from the report of equalized valuation 
 made out by the State Board of Equalization. The report of the. State 
 Board of Equalization is based upon the local assessments as corrected 
 by the County Board of Review. The amount due from the county on 
 taxes is computed by the county clerk by applying the State rates 
 fixed by the Board of Equalization to the valuations agreed upon by 
 the State Board of Equalization. The county clerk is notified of 
 the rate of taxatibn on account of general State purposes, State school 
 purposes, and the University of Illinois Mill Tax Fund, by a circular 
 letter sent out by the State Auditor. (See form 2.) 
 
 The valuation and taxes reported by county clerks are entered by 
 the revenue clerk in the office of the State Auditor in a bound book 
 entitled ‘‘revenue book by collectors of counties.” This book has the 
 following columns ; 
 
 1. Date 
 
 2. Item 
 
 j. Valuation 
 
 4. Revenue 
 
 5. School 
 
 6. University 
 
 7. Total 
 
 The “revenue book” has the same columns on both the debit and credit 
 sides. 
 
 When taxes have been received by the county treasurer (who is 
 ex officio county collector), they are paid into the county treasury and 
 the county treasurer comes to the office of the State Auditor in person 
 for the purpose of making tax settlement. The county treasurer brings 
 .with him a statement of the account of the county collector. (See 
 form 3.) This statement on the debit side gives the same information 
 as to taxes receivable as is contained in the report of the county clerk 
 ■ shown in form 1, and as has been posted in the debit side of the account 
 of the county in the “revenue book.” The county collector’s statement 
 shows on the credit side the taxes collected and paid into the county 
 treasury. After the information given in form 3 by the county col- 
 lector has been compared with the information given in form 1 by the 
 county clerk, a settlement is made and the revenue clerk in the office 
 of the State Auditor makes out an order directing the State Treasurer 
 to receive the tax moneys from the county collector. (See form 4.) 
 From this order and from the settlement made as shown on form 3 as 
 to errors on real property, insolvencies and removals on personal prop; 
 
 2Form numbers are those of the writer. 
 
REPORT ON ACCOUNTS. 
 
 23 
 
 erty, collector’s commission, and collector’s mileage, items are credited 
 by the revenue clerk on the credit side of the account maintained as 
 to each county collector in the “revenue book.” 
 
 It will be seen that the “revenue book” shows on the debit side 
 the assessed taxes charged to the county collector, and shows oi4 the 
 credit side^the manner in which the county collector has met this re- 
 sponsibility, either by handing over cash, or by a statement of errors, 
 insolvencies, taxes in arrears, commissions, and mileage. The “revenue 
 book” is, therefore, of great importance. It will be seen later that it 
 is possible to audit the “revenue book” by comparing postings made to 
 the account with a county collector with the account kept for the county 
 in the “revenue ledger”. 
 
 Accounting for the Collection of Inheritance Taxes. 
 
 Inheritance taxes are collected by county treasurers and are paid 
 by them into the State treasury through the office of the State Auditor. 
 The county treasurer is required to turn over the full amount collected 
 to the State Treasurer, less appraiser’s fees, fees of county clerks, and 
 such other expenses as may be certified to as reasonable by the county 
 judge. 
 
 On the 1st Monday of March and of September of each year, the 
 treasurer of each county is required to report under oath the amount 
 of inheritance tax collections. (See form 5.) The money collected 
 must be turned over, however, as soon as it is received by the county 
 treasurer. The duplicate of the tax receipt issued by the county treas- 
 urer must be counter-signed by the State Treasurer. (See form 6.) 
 
 When the county treasurer turns over taxes collected under the 
 Inheritance Tax Law, an order is made out by the revenue -clerk in 
 the office of the State Auditor directing the State Treasurer to receive 
 the money. This order is posted by the revenue clerk to a book en- 
 titled “account of receipts into the treasury” and from there to a 
 “revenue ledger.” 
 
 Collection of Revenue Other Than from Taxes. 
 
 Revenue is paid into the State treasury through the office of the 
 State Auditor on account of license fees, receipts from the sale of 
 public property, and miscellaneous receipts. Such moneys usually 
 come to the office of the State Auditor or to the office of the State 
 Treasurer, accompanied by a voucher of the department making the 
 collection. These vouchers vary in form according to the nature of 
 the receipts transmitted. The revenue voucher forms used for mis- 
 cellaneous purposes are designed by the departments making the col- 
 lections, and sometimes consist only of typewritten letters referring 
 to a draft enclosed and the character of revenue that the draft covers. 
 Under strict legal procedure, all such revenue should come directly to 
 the State Auditor. Some of them, however, are mailed to the office 
 of the State Treasurer. In either case, the State Auditor makes an 
 order upon the State Treasurer directing him to receive such revenue 
 and credit it to the revenue fund of the State. (See form 7.) 
 '‘Receipt Book” and "Receipt Ledger.” 
 
 All moneys are received into the State treasury on orders signed 
 by the Auditor of Public Accounts. These orders are issued in dupli- 
 
24 
 
 EFFICIENCY AND ECONOMY COMMITTER 
 
 cate, and from the duplicates the revenue clerk in the office of the 
 State Auditor posts to a book entitled “account of receipts into State 
 treasury.’’ This book has the following columns; 
 
 1. Date. 
 
 2. Number (of order). 
 
 .3. From whom. ^ v 
 
 4. County. 
 
 5. Years tax. 
 
 6. Ledger page. 
 
 7. From what bond fund. 
 
 8. Revenue. 
 
 9. School. 
 
 10. University. 
 
 11. Special. 
 
 12. Sinking fund. 
 
 13. Local bond funds. 
 
 14. Total. 
 
 The entries in the “receipt book” are chronological entries, i. e., 
 entries are made according to the consecutive numbers on receipt 
 orders. The total in the “total” column for any day, week or month 
 should show the receipts into the State treasury for that day, week or 
 month. The total of the columns headed “revenue,” “school,” and 
 “university” should agree with the total of the credit columns simi- 
 larly headed in the “revenue book by collectors of counties.” It will 
 be remembered that the “revenue book by collectors of counties” con- 
 tains an account for the collector of each county. By taking a trial 
 balance ♦of the “revenue,” “school” and “university” credits in the 
 accounts in the' “revenue book,” it should be possible for an expert book- 
 keeper to get the same totals as appear in the “revenue,” “school,” and 
 “university” columns in the book entitled “account of receipts into State 
 treasury.” While this would be a laborious process, it is mentioned 
 here to show the adequacy of the present records from the bookkeeping 
 standpoint. 
 
 Each order is posted into the book entitled “account of receipts 
 into State treasury.” The entries there are posted into “revenue 
 ledgers.” All the entries *are posted into a cash account and then are 
 posted a second time into accounts with each fund. The total of the 
 postings into fund accounts will equal, of course, the total of the post- 
 ings into the cash account. 
 
 Auditing of Receipts. 
 
 The procedure described provides for an audit of receipts derived 
 Equalization. 
 
 Receipts derived from inheritance taxes are audited so as to strike 
 out any deductions on account of the expenses of the county treasurer 
 as the collector of such inheritance taxes not specifically allowed by the 
 provisions of the Inheritance Tax Law. 
 
 It must be admitted that the procedure described does not provide 
 in itself an adequate auditing machinery as to the moneys collected 
 by various State departments and institutions on account of licenses, 
 
REPORT ON ACCOUNTS. 
 
 25 
 
 fines, fees, departmental sales, and the like. The Legislature of 1913, 
 however, provided a special appropriation of ten thousand dollars 
 ($10,000) for the State Auditor to enable him to employ professional 
 accountants to audit the original records in the various fee collecting 
 offices of the State. 
 
 Cash Audits, 
 
 The Accounts of the State Auditor are periodically reconciled with 
 the accounts of the State Treasurer. This reconciliation affords a 
 rather complete check on the actual cash receipts and disbursements 
 of the State Treasurer. The procedure will be described in connection 
 with the accounting procedure of the office of the State Treasurer. 
 
 2. Disbursement Procedure and Auditing. 
 
 The appropriation laws passed by the General Assembly com- 
 monly provide that the State Auditor shall draw his warrant upon the 
 State Treasurer in the payment of bills incurred by the various execu- 
 tive officers, State departments and State institutions, upon receipt and 
 audit by the State Auditor of vouchers certified to as correct by the 
 executive officers, heads of the State departments, or officers of the 
 State institutions. 
 
 The first step, then, in the payment of money from the State 
 treasury is taken in the office of the department that has incurred the 
 expense that is to be paid. The officer in charge of the department, or 
 officer of the board of trustees in charge of an institution, prepares a 
 voucher showing the items to be paid in detail and certify to these 
 items as correct. The various State officers, department heads, and 
 institutional officers have devised forms of vouchers that in their 
 opinions are suitable for their several interests. These vouchers are 
 not uniform in size or character, and there appears to be no uniformity 
 in the detail that the vouchers bear. The vouchers used by the Board of 
 Trustees of the University of Illinois, samples of which are submitted 
 herewith, will serve to illustrate the form in which bills commonly 
 come to the attention of the office of the State Auditor. 
 
 All vouchers are received by the chief warrant clerk or the assistant 
 chief warrant clerk, who audits the vouchers to make certain that they 
 bear the signatures of officers as required in appropriation Acts, and 
 that ‘the itemized accounts upon these present legitimate charges in 
 proper form. It devolves upon these warrant clerks to see that each 
 voucher is charged against a proper appropriation, and that no voucher 
 is passed against an appropriation in excess of the amount appropriated. 
 The warrant clerks obtain this information by inspection of the appro- 
 priation ledger, or warrant ledger, which will be described later. 
 
 If all the requirements are complied with, the vouchers are 
 stamped as being filed in the office of the Auditor of Public Accounts 
 as of that date, and the vouchers are then distributed among the warrant 
 clerks, who proceed to draw warrants in payment of the vouchers. 
 
 If there are a number of vouchers chargeable to the same appro- 
 priation, or to the appropriations made by the General Assembly to the 
 same department or institution, they are compiled on a “list of war- 
 rants” form. (See form 8.) This form shows the number of the 
 
26 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 warrant, to whom issued, the amount of the warrant, and to whom the 
 warrant is to be mailed. At the top of the form the total amount of 
 the vouchers listed is distributed as a charge against one or more 
 appropriations. The vouchers and warrants, together with the lists,- 
 are then turned over to one of the warrant clerks, who numbers each 
 voucher and the warrant made out for its payment with the same 
 number. The warrant is then entered in a book known as the “entry 
 clerk’s record book.” This book shows a chronological record of 
 warrants issued, the amount of the warrant, and the appropriation 
 against which it is to be charged. The “entry clerk’s record book” is 
 later used as a posting medium for the “warrant ledger,” the appropria- 
 tion ledger. 
 
 The warrants and vouchers are then handed to the “journal clerk,” 
 who makes a full record of the warrant on a form known as “warrant 
 journal.” (See form 9.) This form has the following columns: 
 
 1. Ledger page. 
 
 2. Date. 
 
 3. Number of warrant. 
 
 4. To whom issued. 
 
 5. For what issued. 
 
 6. Appropriation purpose. 
 
 7. Appropriation amount. 
 
 8. Total. 
 
 9. Received, or mailed to. 
 
 This “warrant journal” is the official posting medium for the appro- 
 priation ledger. Where warrants are handed out over the counter to 
 clalimants,; they are required to receipt for the warrant in the column 
 provided for that purpose. Nearly all warrants are mailed, however, 
 and the place to which the warrant is mailed is indicated in the column 
 so headed. 
 
 The journal clerk makes a comparison of voucher and warrant to 
 make sure that the correct number appears on each. The vouchers 
 are then folded and backed and are filed in the vault consecutively by 
 numbers in document files. This inconvenient method of filing seems 
 to be made necessary by the various sizes of vouchers used by various 
 departments and institutions. After the warrants and vouchers have 
 been compared, the warrants are sent to the State Treasurer to be 
 counter-signed. 
 
 The State Treasurer countersigns the warrants and registers them. 
 They are then returned by the State Treasurer to the office of the 
 State Auditor. The journal clerk sorts out such warrants as are to be 
 handled over the counter and places them in a box properly indexed for 
 prompt distribution. The vouchers to be mailed ouf are turned over to 
 the mail clerk, who mails them in envelopes that^have been addressed 
 by the warrant clerks at the same time that the warrants were type- 
 written. 
 
 Appropriation Ledgers. 
 
 The “warrant journal” and the “entry clerk’s record book” give 
 practically the same information and are used in making charges 
 
REPORT ON ACCOUNTS. 
 
 27 
 
 against various funds in the appropriation ledger. In the appropria- 
 tion ledger, an account is kept with each appropriation made by the 
 General Assembly. The appropriation ledger is known as the “warrant 
 ledger” and has the following columns : 
 
 1 . 
 
 2 . 
 
 3. 
 
 4. 
 
 5 to 17, inclusive. 
 
 18. 
 
 Date. 
 
 Number of warrant. 
 
 To whom issued. 
 
 For what issued. 
 Appropriation columns. 
 Total. 
 
 Three appropriation ledgers are maintained. One appropriation ledger 
 contains only the accounts administered by the State Board of Admin- 
 istration. 
 
 It will be noted that thirteen (13) appropriation columns are 
 provided in the appropriation ledger (“warrant ledger”). These 
 columns make it possible to keep all of the appropriation accounts with 
 one institution or department on one double page, since it seldom 
 occurs that a single department -or institution has more than thirteen 
 appropriations. 
 
 At the beginning of each year, the amounts of appropriations are 
 entered at the head of appropriation columns. Balances are obtained 
 from time to time by subtracting the total of charges made against an 
 appropriation from the amount of the appropriation. Such balances 
 are frequently indicated in red ink. If any balance remains unspent at 
 the end of the first quarter following the adjournment of the next 
 General Assembly after that of the General Assembly making the 
 appropriation, such balances are “lapsed” by red ink entries indicating 
 the expiration of the appropriation period. 
 
 Auditing of Disbursements. 
 
 The first auditing officers with respect to disbursements are the 
 officers in charge of executive departments, or of institutions, whose 
 duty it is to certify vouchers to the State Auditor for payment. While 
 this certification may be considered to be an administrative a,ct rather 
 than an audit, there is much evidence to show that the officers in charge 
 of the larger departments and institutions audit bills carefully. These 
 officers, in fact, are the only officers who can certifv as to the quantity 
 and quality of the materials received, and the length and quality of the 
 services rendered. 
 
 Bills and pay rolls coming from the executive departments of the 
 State are audited in the office of the Governor by the institutional 
 auditor. In several important particulars, the institutional auditor 
 bears the same auditing’ relationship to such departments as that of the- 
 Attorney General, as does the fiscal supervisor of the Board of Admin- 
 istration to that board, and the comptroller of the Board of Trustees 
 of the University to the University. 
 
 . The Auditor of Public Accounts, as an auditor of disbursements, 
 is concerned primarily with the auditing of bills as charges against 
 appropriations. The Auditor of Public Accounts may be said to be the 
 auditing officer whose duty it is to enforce the intent of the Legisla- 
 
28 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 ture in making an appropriation for a specific purpose. The office of 
 the Auditor of Public Accounts is apparently alive to its responsibilities 
 as to appropriation charges, and the procedure in the office of the 
 Auditor of Public Accounts is adequate to protect the State against 
 misappropriation of funds. 
 
 The Auditor of Public Accounts has a second important auditing 
 function in the reconciliation that is made betv^een the books of the 
 State Auditor and the books of the State Treasurer. It is the duty of 
 the Auditor to safeguard the State with respect to the methods 
 employed in the payment of moneys. From examination of the pro- 
 cedure employed in the office of the Auditor of Public Accounts, it is 
 evident that a constant audit is exercised over the methods employed in 
 paying out State money. 
 
 While the Auditor of Public Acqounts is charged by law with the 
 final audit of disbursements in all the various aspects that such a final 
 audit may assume, the practice seems to be for the Auditor to rely upon 
 several agencies in several important auditing respects. 
 
 It has already been noted that the Auditor relies upon the heads of 
 departments and institutions for the auditing of materials received, 
 both as to quality and quantity. On several occasions, the State Auditor 
 of Public Accounts has employed professional accountants to examine 
 the records of departments and institutions as to the accuracy of such 
 local audits. 
 
 The Auditor relies upon the Secretary of State, the State Board 
 dTContracts, and the Printer Expert as to the auditing of the purchase 
 and distribution of fuel, stationery, printing and office supplies to the 
 departments housed at Springfield. The tenor of present statutes 
 practically makes necessary the reliance of the Auditor upon the Printer 
 Expert as to State printing, and the reliance of the Auditor upon the 
 Secretary of State as to the distribution of office supplies to State 
 departments located at Springfield. 
 
 The Auditor of Public Accounts relies upon the institutional 
 auditor in the office of the Governor as to the auditing of the pay rolls 
 k)f executive departments, and upon the Civil Service Commission as 
 to the auditing of the pay rolls of employees under the classified civil 
 service. Pay rolls under the classified civil service are sent by depart- 
 ments and institutions directly to the Civil Service Commission and are 
 transmitted by the secretary of the Civil Service Commission to the 
 State Auditor with the following certificate attached: 
 
 •“Springfield :..t 
 
 “I hereby certify that the persons named in the attached pay roll or 
 
 voucher of the for the month of containing 
 
 names, of which are exempt, have been 
 
 appointed or promoted to or employed in the positions or places and at the 
 rates of compensation indicated in pursuance of Civil Service Law and the 
 rules made in pursuance thereof as shown by the official roster. 
 
 Secretary Civil Service Commission. 
 
 (Form 10) 
 
 ft 
 
 The entries as to pay rolls made in the ''warrant journar’ and "warrant 
 ledger” in the office of the Auditor contain no reference to the Civil 
 Service Laws, excepting perhaps in particular cases. 
 
REPORT ON ACCOUNTS. 
 
 29 
 
 The Auditor relies upon the Board of Prison Industries for the 
 enforcement of the statutory provisions requiring State departments 
 and institutions to purchase such supplies as the Board of Prison 
 Industries may manufacture. It is customary for many of the State 
 institutions to obtain “releases” from the Board of Prison Industries 
 on certain articles manufactured by that Board which the institutions 
 desire to purchase from the open market. The numbers of such 
 “releases” are usually entered on the face of the vouchers made out by 
 the institutions in question to the open market vendor. The entries 
 in the “warrant journal” and “warrant ledger” in the office of the 
 Auditor of Public Accounts contain no reference to the procedure as to, 
 or the number of, such “releases.” 
 
 Apparently the Auditor of Public Accounts relies upon the State 
 Architect for the inspection and supervision of buildings and works 
 under construction. No procedure has* been established to indicate in 
 the records of the State Auditor that the State Architect has accepted 
 buildings and works, or parts of the constructions thereon, at the time 
 that payments are made to contractors. The bills of the State Architect 
 for the two and one-half per cent commission allowed to him under 
 State law are handled in the same manner as other vouchers. 
 
 It will be seen that the office of the State Auditor confines its 
 audit as to disbursements in the great majority of cases to an audit of 
 the appropriation charge and to an audit of the methods employed in 
 the payment of money. Indirectly, the office of the Auditor exercises 
 a very considerable and beneficial influence towards close scrutinv of 
 vouchers and pay rolls by departmental and institutional officers. This 
 influence is actively exercised from time to time and at least once 
 during each biennium by the employment of professional accountants to 
 examine the records kept in departments and at institutions, and to 
 make suggestions to the State Auditor as to possible improvements in 
 such records. 
 
 j. Classification of Rect'ipt and Disbursement Accounts. 
 
 The revenue accounts in the office of the State Auditor are classi- 
 fied so as to distinguish between receipts from (1) State taxes on real 
 and personal property; ( 2 ) State inheritance taxes; (3) collections 
 by departments and institutions on account of fees, sales, etc. Re- 
 ceipts on account of State taxes are further classified as between : 
 
 a. General revenue fund. 
 
 b. State school fund. 
 
 c. University mill tax fund. 
 
 d. Special (other) funds. 
 
 A separate account is maintained with each collector. This pro- 
 vides a classification of State taxes by counties. A similar classification 
 is provided for inheritance taxes by counties. Miscellaneous receipts 
 on account of fees, sales, and the like, are classified simply by the 
 names of the departments and institutions making the collections. 
 
 Certain data as to receipts credited to the general revenue fund 
 is abstracted in the form of statistical statements. Such statements 
 may be considered as accounts. An example of such data is the state- 
 
30 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 ment filed in the office of the State Auditor as to the condition of the 
 endowment fund of the University of Illinois. Other financial state- 
 ments are prepared for the use of the General Assemh)ly and of vari- 
 ous State officers, and copies of such statements are to be found on 
 file. A typical statement of this character is the “List of Qaims 
 Against the State of Illinois’’ filed with the Auditor of Public Ac- 
 counts, considered by the Court of Claims at its session of 1908 and 
 1909. 
 
 The disbursement accounts maintained by the Auditor of Public 
 Accounts are classified as to State funds, i. e., the general revenue 
 fund, the State school fund, the University mill tax fund, etc. Dis- 
 bursements are further classified under these funds as to appropri- 
 ation accounts. It has been noted that the “warrant ledger” is so 
 arranged as to show all of the appropriations made to a department 
 or institution on a single double page. By these means, the dis- 
 bursements on account of any institution are shown in one place in 
 the appropriation ledger and it may be considered that the Auditor 
 of Public Accounts maintains a classification of disbursements by 
 departments and institutions. This latter classification is quite in- 
 complete as to many of the departments, for the reason that a large 
 number of departments receive supplies, fuel, and other maintenance 
 through appropriations made to the Secretary of State and to the 
 State Board of Contracts. An incomplete system of accounts show- 
 ing the distribution of such supplies and maintenance items is main- 
 tained in the office of the Secretary of State, and, if taken in connec- 
 tion with the accounts maintained in the State Auditor’s office, can 
 be made to provide a classification of disbursements by departments 
 for the executive departments concerned. 
 
 4. Perpetual Inventory. 
 
 A very interesting law was passed by the General Assembly of 
 1913, requiring officers in charge of departments and institutions to 
 make inventory reports to the State Auditor of Public Accounts. (See 
 page 6, Session Laws of 1913.) 
 
 The Auditor of Public Accounts was given an appropriation of 
 $6,500 for extra assistants in enforcing this law. (P. 7, Session 
 Laws, 1913.) This law required every officer, board, commission, de- 
 partment, and institution of the State government, except the Board 
 of Administration, to file with the Auditor of Public Accounts, on or 
 before September 1, 1913, “an inventory of all of the property, both 
 real and personal, belonging to the State of Illinois under the charge, 
 care, management, custody or control of said officer, board, commis- 
 sion, department and institution of the State government respectively. 
 
 “Such inventory shall contain a true and correct legal description 
 of the real estate under the care, custody or control of such officer, 
 board, commission, department and institution, and shall contain a true 
 and correct description of all the buildings and other improvements 
 situated on such real estate, together with a statement as to the value 
 ’ of such real estate and improvements. 
 
REPORT ON ACCOUNTS. 
 
 31 
 
 “Such inventory as to personal property shall contain an item- 
 ized statement of all the personal property under the care, custody, 
 control and management of such officer, board, commission, depart- 
 ment, and institution respectively, together with the value of same.” 
 
 This inventory requirement was very onerous. It is presumed that 
 the State Board of Administration was omitted from the inventory 
 requirement because of the inventory system maintained in the office 
 of that board at Springfield. It is understood that all other agencies 
 of the State made some attempt to comply with the requirement. Their 
 reports were received and placed on file in the office of the State 
 Auditor, but the appropriation made to the Auditor was inadequate 
 to provide him with the necessary assistants needed in the proper 
 compilation of such reports in the form of a complete State inventory. 
 
 The law of 1913 provided also that all departments and institu- 
 tions should make an inventory report every ten days to the Auditor 
 of Public Accounts, containing a list of all property of every kind ac- 
 quired, destroyed, or disposed of, since the time of the last report, 
 together with a statement as to the value of the same. It is understood 
 that this requirement has been disregarded for the most part. The 
 office of the Auditor of Public Accounts is not adequately manned to 
 take care of the great mass of detail that such reports would furnish. 
 Moreover, the law is so broad in its requirements as to make its ful- 
 fillment a matter of the greatest practical difficulty. For example, 
 the officers of the University of Illinois have not been able to devise a 
 method under which they could report, once in ten days, the exact 
 amount of supplies consumed in that institution during the ten-day 
 period. 
 
 It may not be out of place to cite this inventory law as an exam- 
 ple of an accounting requirement plausible in theory, but exceedingly 
 impracticable in operation. 
 
 5 . Reports. 
 
 All departments and institutions, including the Auditor of Pub- 
 lic Accounts, are required to make a biennial report to the Governor, 
 giving a complete statement as to receipts and disbursements. All 
 departments and institutions are required to make a report to the 
 Governor as to receipts and disbursements, at the close of each six 
 months period, on April 1 and October 1, respectively. These reports 
 are received by the institutional auditor in the office of the Governor 
 and placed on file for the information of the Governor. The semi- 
 annual reports of departments and institutions are accompanied by 
 lists giving the name of each person from whom money has been 
 received and the name of the person to whom each disbursement has 
 been made during the six months period. 
 
 The Auditor of Public Accounts has access to the reports on file 
 in the office of the Governor and they constitute a valuable auditing 
 check for the use of the office of the State Auditor in connection with 
 particular cases of alleged misappropriation or fraud. It is not known 
 to what extent the reports on file in the office of the Governor are 
 used in this particular. 
 
32 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 The Auditor of Public Accounts makes a report at the close of 
 each fiscal biennium. This report, for the most part, is a transcript 
 of the ledgers maintained in the office of the Auditor, and in addition 
 contains numerous tables originally compiled for the use of the Board 
 of Equalization. A feature of the report worthy of some mention is 
 the detailed manner in which receipts into funds and disbursements 
 from appropriations are described. For example, the first statement 
 in the report is a ‘‘statement of receipts and disbursements of the gen- 
 eral revenue fund.” The statement of receipts into the general rev- 
 enue fund gives a detailed list of miscellaneous receipts with such ex- 
 planations as “from F. W. DeWolf, Acting Director of Geological 
 Survey, for sale of bulletins,” and “from John B. Jackson, Anna, net 
 balance due State from ordinary and special funds of Southern Hos- 
 pital for the Insane.” In a similar way, in statement number three, 
 a list of disbursements is given, classified under departments by appro- 
 priation acts. 
 
 The biennial report of the office of the Auditor of Public Ac- 
 counts gives an adequate statement of the accounts maintained in that 
 office. 
 
 E. ACCOUNTS AND ACCOUNTING PROCEDURE IN THE OFFICE OF THE 
 
 STATE TREASURER. 
 
 The office of the State Treasurer is concerned with the keeping 
 and handling of cash. It is not an auditing office. 
 
 Register of Warrants. 
 
 Warrants must be countersigned by the State Treasurer before 
 they are issued by the State Auditor. At the time that warrants are 
 received in the office of the State Treasurer for countersignature, they 
 are registered consecutively by numbers in a “warrant register.” This 
 “warrant register” gives the date and number of the warrant, the 
 name of the payee, and the amount. The '“warrant register” main- 
 tained by the State Treasurer is checked periodically with the “war- 
 rant journal” maintained in the office of the State Auditor. 
 
 Accounting for Cash Received. 
 
 All cash received into the State treasury is officially received on 
 an order issued by the State Auditor. (See form 4 as an illustration 
 of such an order.) The amount received is posted to a “cash book” 
 having the following columns. 
 
 1. Date. 
 
 2. Order number. 
 
 3. Description. 
 
 4. Items amount. 
 
 5. Totals amount. 
 
 Receipts are, of course, posted to the debit side of the “cash book.” 
 
 The office of the State Treasurer makes no audit as to moneys re- 
 ceived excepting to inquire as to the character of commercial paper 
 such as checks and drafts, when presented as a payment into the 
 treasury. v 
 
REPORT ON ACCOUNTS. 
 
 33 
 
 Accounting Procedure for Disbursements. 
 
 The cashier in the office of the State Treasurer maintains a “cash 
 book” in which are listed canceled warrants as they are received. (See 
 form 11.) Canceled warrants usually come to the office of the State 
 Treasurer from banks. It is customary for the cashier to enter war- 
 rants received from a given bank in his “cash book” in a group of 
 entries with the name of the bank written in as a sub-heading. A 
 separate sheet in the cashier’s “cash book” is maintained for each 
 day’s business. This enables the cashier to trace the total paid war- 
 rants handed to him by any bank on any given date. The cashier also 
 enters in his “cash book” the number and amount of any warrant 
 paid by him over the counter. 
 
 The warrants paid and canceled on each day are also entered con- 
 secutively by numbers on an adding machine form bearing the heading 
 “warrants paid and canceled.” ^ 
 
 I. Number. 
 
 . 2. Amount. 
 
 3. Number. 
 
 4. Amount. 
 
 5. Number. 
 
 6. Amount. 
 
 This adding machine form is a very convenient form. It is made 
 to fit into a loose-leaf binder as a permanent record, and from it post- 
 ings are made to the credit side of the “cash book.” A separate “war- 
 rants paid and canceled” sheet is used each day for each State fund. 
 
 The total amount of the “warrants paid and canceled” sheet for 
 each fund is posted each day to the credit side of the “cash book” 
 with the explanation “as per list.” 
 
 “Cash Ledger'' 
 
 The debits and credits in the “cash book” are posted each day to 
 a “cash ledger.” This ledger is in the usual ledger form. Accounts 
 are maintained in the ledger with each of the funds of the State. 
 
 Local Bond Cash Transactions. 
 
 Under Chapter 113 of the Statutes, the various municipal cor- 
 porations of the State have issued the bonds of such corporations to 
 aid in such local improvements as the building of railroads and other 
 public utilities. These bonds are secured by special taxes, which have* 
 been collected into the State treasury and are accounted for under 
 what is known as the “Local Bond Fund.” The coupons on these 
 bonds are usually payable semi-annually, and are commonly paid by 
 banks throughout the State upon their presentment by bondholders, 
 although such coupons are also honored over the counter of the State 
 Treasurer. As the amount of money paid to any one holder of such 
 bonds is usually small, a convenient procedure has grown up in the 
 office of* the State Treasurer for the handling of such bond trans- 
 actions directly by the Treasurer, with only periodical review by the 
 State Auditor. 
 
34 
 
 J EFFICIENCY AND ECONOMY COMMITTEE. 
 
 Coupons paid by banks are mailed by them to the office of the 
 State Treasurer at the same time and in the same way as the banks 
 present State warrants which they have paid. Such coupons paid by 
 banks are entered by the cashier in his “cash book.” (See form 11.) 
 The cashier also enters in his “cash book” payments of coupons made 
 by him over the counter. 
 
 A separate cash book is maintained for bond transactions known 
 as the “daily bond cash book.” It has the following columns : 
 
 1. Date. 
 
 I 2. Items. 
 
 jl 3. Debit. 
 
 ‘ 4. Credit. 
 
 5. Balance. 
 
 In this .“daily bond cash book” the bond taxes transmitted by the 
 / County Treasurer are debited as received. Daily payments are cred- 
 ited by items. After crediting daily payments by coupon numbers, the 
 coupons paid under each bond issue during the day are placed in small 
 envelopes. The receipts from county treasurers, debited in the “daily 
 bond cash book,” are transferred item by item to a similar cash book 
 known as “bond cash book number two.” The form of this cash 
 book is the same as that of the “daily bond cash book.” The credits 
 to this “bond cash book number two” are the warrants issued periodi- 
 cally by the Auditor. From time to time the Auditor, or his repre- 
 sentative, comes to the office of the Treasurer and draws a warrant 
 covering all bond coupon payments for which he has not drawn a 
 warrant. It is these periodical warrants that are credited in the “bond 
 cash book number two.” 
 
 It will be seen that the procedure in handling the payment of 
 local improvement bond coupons is much the same as that employed 
 in a commercial house for the handling of petty cash items. 
 
 During the period in which coupon payments -are carried on the 
 first bond cash book without the authority of the State Auditor’s war- 
 rant, the sum of such payments is carried in the reports of the State 
 Treasurer as an asset item similar to cash for which the State Treas- 
 urer is personally responsible. 
 
 The State Treasurer is in effect the auditor of the payment of 
 registered local bond coupons, although he is relieved periodically of 
 * his responsibility by the drawing of the Auditor’s warrant. The State 
 Treasurer has in his vault a file of local improvement bonds indexed 
 by counties, cities and towns. The office of the State Treasurer also 
 maintains a “bond register.” A page of thia “bond register” is used 
 for each bond issue of each county, city or town. The register gives 
 such information as the name of the municipal corporation issuing 
 the issue, the names and titles of the officers signing the bonds, the 
 ' place where the bpnds are payable, the total amount of the issue, the 
 date of the issue, the due date of the issue, the interest rate, the dates 
 and amounts of the issue disposed of at various times, and the dates 
 and amounts of the issue paid at various times. The State Auditor 
 
REPORT ON ACCOUNTS. 
 
 35 
 
 makes an abstract from this “bond register” and includes a typewritten 
 statement as to each issue with his report to the county officers at the 
 time of tax levying. 
 
 Monthly Reports of the Treasurer. 
 
 At the end of each month, the State Treasurer makes a complete 
 report to the State Auditor. (See form 13.) This report shows the 
 amount received in each State fund and to the credit of each local 
 bond fund and the amount paid from each State fund and from each 
 local bond fund^ The monthly report is accompanied by a detailed 
 statement of receipts into local bond funds during the month ( form 
 
 14) and of the warrants paid and canceled against State funds ( form 
 
 15) and against local bond funds (form 16) during the month. 
 
 The office of the State Auditor audits this monthly report, check- 
 ing,.the Treasurer’s statement as to fund receipts against the duplica- 
 tion of Treasurer’s receipts on file in the office of the State Auditor, 
 and against the duplicates of Auditors’ orders on file in the office of 
 the State Auditor, and checking the State Treasurer’s statement of 
 fund disbursements against the “warrant journal” in the office of the 
 State Auditor. 
 
 State Depositaries. 
 
 Under State law, the State Treasurer is required to deposit funds 
 in such banks as he may select. To protect himself in such deposits 
 the State Treasurer requires banks to deposit securities with the bank 
 that is the chief depositary of the State Treasurer. The requirements 
 concerning such securities are set forth in a printed notice sent by 
 the State Treasurer to each depositary. (See form A.) One of the 
 securities required by the State Treasurer is the adoption of a resolu- 
 tion giving the State Trea.surer power over the securities deposited. 
 (See forms B and C.) 
 
 The State Treasurer maintains a ledger. On a separate sheet 
 for each depositary, the Treasurer makes a record of the securities 
 deposited by that depositary and the return of such securities to the 
 depositary. On another sheet in the same ledger, the State Treasurer 
 makes a record of the money deposited with each depositary and of 
 the transfers of such money from the depositary to Chicago banks, 
 through which State warrants are cleared. 
 
 At the end of each month, the State Treasurer requires his office 
 to make a report to him showing on the debit side the amounts depos- 
 ited in the several State depositaries, the amount of coupon payments 
 not as yet relieved by the warrant of ihe State Auditor, and the amount 
 of cash on hand. On the credit side of this report, is given the cash 
 balance in each of the funds in the State. Supplementary to this bal- 
 ance sheet, a report is made to the Treasurer of the receipts into, and 
 disbursements from depositaries during the month, and receipts into 
 and disbursements from State funds during the month. 
 
 It will be seen that the Treasurer has for his personal use a double 
 entry trial balance, as between depositaries, coupon payments, and cash, 
 on the one hand, and the balances in State funds, for which he is re- 
 sponsible, on the other hand. 
 
36 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 Biennial Report of the Treasurer. 
 
 The Treasurer makes a biennial report showing the receipts into, 
 and the disbursements from the several State funds dui*ing the bien- 
 nium. 
 
 F. CONCLUSIONS. 
 
 In preceding pages, an attempt has been made to give an 
 outline of the accounting system of the State. The study made in 
 gathering materials for this working outline has been by no means 
 exhaustive or conclusive. It may be valuable, howevei^ to state certain 
 general conclusions formed during the progress of the report. 
 
 1. The present Constitution of the State makes ample provision 
 for the establishment of a scientific budget and appropriation control, 
 of cost accounts, and of asset and liability accounts. 
 
 2. The Constitution does not center all of the accounting respon- 
 sibility in the office of the Auditor of Public Accounts, but, by infer- 
 ence, leaves the establishment of accounting responsibility to such laws 
 as may be passed by the General Assembly. 
 
 3. The General Assembly has by law made various agencies in 
 the State government responsible for the auditing of various classes of 
 transactions. 
 
 4. The office of the Auditor of Public Accounts is the agency 
 through which the tax rate of the State is computed and the tax laws of 
 the State are enforced. 
 
 5. The accounting and auditing procedure in the office of the 
 Auditor of Public Accounts is concerned chiefly with the enforcement 
 of appropriation laws to the end that departments may not exceed 
 their appropriations, and to the end that departments may not make 
 charges against appropriations not contemplated by the General 
 Assembly. 
 
 6. The present system of appropriation laws is far from being a 
 scientific one. The State Auditor will be greatly aided in his work if 
 appropriations are passed in the form of a classified budget. 
 
 7. The State Treasurer is not an auditing officer, but has large 
 responsibilities in the handling of cash. 
 
 8. The present accounting procedure in State offices is confined 
 to cash receipts and cash disbursements, and is both adequate and well 
 enforced as a system of cash bookkeeping. (Some slight duplication of 
 work has been noted. Upon investigation it may be found that this 
 duplication of work is more than offset by the extra protection it 
 affords.) 
 
 9. No attempt is made to record accounts payable of various 
 departments and institutions in the office of the State Auditor. It would 
 seem that some system showing accounts payable and orders and con- 
 tracts outstanding should be maintained, either by departments and 
 institutions, or by the State Auditor. 
 
 10. The present reports of departments and institutions, and of 
 the State Auditor, give a very great deal of detail with regard to names 
 of persons paying moneys into the State treasury, and with regard to 
 names of persons to whom State warrants are made payable. It would 
 
REPORT ON ACCOUNTS. 
 
 37 
 
 
 seem that some of this detail might be well replaced by accounts giving 
 a more systematic analysis of the purposes for which appropriations 
 are expended by departments and institutions. In this connection, 
 reference is made to the report of the Comptroller of the University of 
 Illinois, for the biennium ending June 30, 1913. 
 
 11. The present inventory law is impracticable and should be 
 replaced by a more practical system for the recording of the properties 
 owned by the State. 
 
 List of Forms. 
 
 Number 
 
 Valuation of property listed for taxation 1 
 
 Auditor’s circular letter giving tax rate 2 
 
 County collector’s statement of account 3 
 
 Auditor’s order for Treasurer to receive taxes from county collector 4 
 
 '^County treasurer’s report of inheritance tax collections 5 
 
 Copy of inheritance tax receipt 6 
 
 Auditor’s order for Treasurer to receive money 7 
 
 List of warrants *. 8 
 
 Warrant journal 9 
 
 Pay roll certificate of Civil Service Commission (See page 37) .... 10 
 
 Cashier’s cash book 11 
 
 Warrants paid and cancelled 12 
 
 Treasurer’s monthly report of Local Bond Funds received 13 
 
 Treasurer’s monthly report to Auditor 14 
 
 Treasurer’s monthly statement of warrants paid and cancelled. ... 15 
 Treasurer’s monthly statement of Local Bond Fund warrants paid 
 
 and cancelled 16 
 
 Statement of securities required of depositaries A 
 
 Forms of adoption of resolution giving Treasurer power over 
 securities deposited B-C 
 
II. ACCOUNTING NEEDS OF THE STATE OF ILLINOIS. 
 
 INTRODUCTION. 
 
 The State of Illinois needs a complete system of accounting. The 
 present accounts of the Auditor of Public Accounts, and of State 
 departments and institutions, are confined to records of cash receipts 
 and disbursements. The present accounts satisfy the requirements of 
 the Illinois statutes as to legal safeguards for the handling of public 
 money. But every business man who has had occasion to refer to 
 Illinois financial reports knows that the present cash accounts do not 
 adequately reflect the important work of the State, and that such 
 accounts cannot be used intelligently in planning the ever increasing 
 work of the State. The business men of Illinois are accustomed to 
 conduct even small commercial enterprises by constant reference to 
 clear cut balance sheets and carefully classified statements of revenue 
 and expenditure. 
 
 It is not to be inferred that forms and methods of commercial 
 accounting should be installed in State offices. The accounting of the 
 State of Illinois must be governmental accounting — it must be based on 
 the legal organization of the State. The accounts of the State must be 
 of service in governmental transactions and for governmental purposes. 
 Indeed, governmental accounts cannot be used in many ways that com- 
 mercial accounts are used. The balance sheet of a commercial organiza- 
 tion is frequently used as a credit instrument in the borrowing of 
 money. But the State cannot mortgage its land and buildings and, 
 hence, does not need a balance sheet for borrowing purposes. The 
 State does need a record of its assets for governmental purposes, such 
 as the safeguarding of public property and the computation of amounts 
 needed for the repair and replacement of buildings. 
 
 While the specific uses of State accounts, differ widely from the 
 specific uses of commercial accounts, the accounting system needed by 
 the State of Illinois and the accounting system needed by any business 
 enterprise agree in two fundamental requirements : 
 
 1. The provision of auditing safeguards over the custody and use 
 of money, credit and permanent property. 
 
 2. The provisions of records and reports of financial transactions 
 for the information of those who plan and carry out such transactions. 
 
 The purpose of this report is to point out in some detail the present 
 accounting needs of the State and to suggest a basis for complete 
 accounting. This report is not an attempt to set out a system of 
 accounts as such. 
 
 The preparation and installation of a complete accounting system 
 for the State will involve a very considerable amount of constructive 
 
REPORT ON ACCOUNTS. 
 
 ( work of the first order. This report will serve its purpose if it attracts 
 i attention to the pressing need for constructive accounting work. The 
 ■ General Assembly should create an authority charged with the duty of 
 •' installing and maintaining proper accounts for the business of the 
 State of Illinois, and this authority should engage a permanent staff of 
 competent accountants. It will take time and effort to install proper 
 accounts, to maintain proper accounts, and to revise the accounting 
 system to meet changing conditions. 
 
 AUDITING REQUIREMENTS OF THE STATE. 
 
 The following auditing safeguards should be provided by the 
 accounting and reporting system of the State : 
 
 1. The receipt and disbursement of public money should be safe- 
 guarded to prevent fraud and embezzlement on the part of officers 
 charged with the financial transactions of the State. 
 
 2. The records and audits of receipts should make certain, first, 
 that all money collectable has been collected or accounted for, and, 
 second, that all money collected has been collected under law and by the 
 methods set forth in the law. 
 
 3. The records and audits of disbursements should make certain 
 that all public money disbursed has been disbursed under law and by 
 the methods prescribed by law. 
 
 4. The records and audits of disbursements should make certain 
 that the State has received full value for each disbursement of public 
 money. 
 
 5. The records and reports of outstanding encumbrances on 
 account of contracts, open market orders, and salary obligations, should 
 make certain that the credit of the State is pledged only to the extent 
 provided for in appropriation laws. 
 
 6. The records and reports of the permanent assets of the State, 
 and the verification of such records and reports by actual inspection, 
 should make certain that the property of the State is properly used, 
 safeguarded, and accounted for. 
 
 These accounting requirements are fundamental, and must be 
 squarely and fully met by any accounting system devised for any de- 
 partment or institution of the State government. 
 
 The Constitution and laws of the State of Illinois adequately 
 provide for the fundamental requirements of good' governmental 
 accountancy. The Constitution and laws provide that no revenue shall 
 be collected and that no money shall be spent, excepting under legis- 
 lative enactment. The Constitution specifically provides that appropria- 
 tions shall be made from biennium to biennium. In this way, the 
 General Assembly is compelled to set up a financial program for each 
 successive biennium. The Constitution provides that the Governor 
 shall lay recommendations before the General Assembly as to the 
 revenues and appropriations necessary for the next biennium. In this 
 way, the Constitution clearly contemplates the modern budget method 
 of State finance. The Constitution provides for a State Treasurer and 
 for an Auditor of Public Accounts. The Constitution provides that the 
 bonded debt of the State shall be limited to two hundred fifty thou- 
 
40 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 sand dollars, and the inference is plain that the contractual obligations 
 of the State shall be kept within the appropriations passed by the 
 General Assembly for each biennium. Wrongful use of public property 
 is made a misdemeanor, and the State law provides for inventory 
 reports to the office of the Auditor of Public Accounts. 
 
 The safeguarding of State money. State credit, and State property 
 is clearly a duty of the officers of the State, irrespective of specific laws 
 and Constitutional provisions. 
 
 THE NEED FOR FINANCIAL INFORMATION. 
 
 But a plan of accounting for the State of Illinois must do more 
 than protect public money, and public credit, and public property 
 against embezzlement. 
 
 In addition to providing protection as to the handling of public 
 money, the financial and accounting system of the State must afford 
 data needed by all of those who have to do with the planning and 
 carrying out of the financial program for each biennium. The account- 
 ing system of the State must aiford information for the following 
 officers : 
 
 1. The members of the General Assembly. 
 
 2. The Governor. 
 
 3. The State Tax Board. 
 
 4. The State Board of Equalization. 
 
 5. The Auditor of Public Accounts. 
 
 6. The State Treasurer. 
 
 7. The heads of departments and members of boards in charge of 
 institutions. 
 
 8. The employees responsible for activities of departments and 
 institutions. 
 
 The public at large will also make demands upon the accounting 
 system of the State ; first of all, as taxpayers from whose pockets the 
 necessary revenue must come to meet appropriations ; and second, as 
 citizens interested in one or more of the various departments and 
 institutions^ of the State, because of the connection of those depart- 
 ments with their private business and private life. The publication of 
 financial reports in understandable form will in itself increase the 
 interest of citizens in the public welfare service performed by each 
 State department and State institution. 
 
 ACCOUNTING INFORMATION NEEDED BY MEMBERS OF THE 
 GENERAL ASSEMBLY. 
 
 To carry out their responsibilities in enacting the financial pro- 
 gram of the State, the members of the General Assembly need, first, 
 information upon which revenue laws and appropriation Acts can be 
 based ; second, a record kept up from day to day during the session 
 of the General Assembly as to the effect upon the complete financial 
 program of the State of revenue laws and appropriations as they are 
 passed ; and, third, a final budget to be prepared at the conclusion 
 of the session, showing an estimate of revenue and a statement of 
 appropriations under the laws passed. 
 
REPORT ON ACCOUNTS. 
 
 41 
 
 Each department and institution of the State should be required 
 to report to the Governor, or to some authority designated by the 
 Governor, an estimate of its needs for the next biennium, classified so 
 as to show the estimated cost of each kind of service and material 
 needed for each activity of the department or institution. Each depart- 
 ment and institution acting as a collecting agency should report to the 
 same authority an estimate of the revenue collectable during the next 
 biennium. The basis for this estimate should be existing revenue laws. 
 There should be prepared an estimate of the revenue collectable dur- 
 ing the next biennium from State taxes, if tax rates and tax laws re- 
 main the same as they were during the biennium at the close of which 
 the General Assembly meets. From this information, the Governor, 
 or the budget-making authority designated, should prepare a “proposed 
 budget.” 
 
 This statement of budget proposals should compare requests for 
 appropriations with an estimate of the revenue available for the bien- 
 nium under existing revenue laws and rates. 
 
 This comparison should be by funds, e. g., the requests for appro- 
 priations from the general revenue fund should be compared with an 
 estimate of the revenue collectable for that fund. The revenue of the 
 State is now segregated into the following funds: 
 
 1. The general revenue fund. 
 
 2. State school fund. 
 
 3. University mill tax fund. 
 
 4. State game protection fund. 
 
 5. State fish protection fund. 
 
 6. State food commission fund. 
 
 7. Board of administration fund. 
 
 8. Miners’ examining fund. 
 
 9. School text book fund. 
 
 Some of these funds are without definite meaning, in that the 
 present policy of the State does not seem to require the setting aside 
 of money for the exclusive use indicated by the titles of the funds. 
 But some of the specific funds, such as the school fund and the uni- 
 versity mill tax fund, do express established public pqlicy. The bud- 
 get proposals should be classified by funds if for no other reason than 
 that such a classification will test the necessity for each fund. 
 
 The estimate of revenue for each fund should be classified so as 
 to show the amount of each kind of revenue collectable by each col- 
 lecting agency of the State. Such a classification will bring into re- 
 view biennially the machinery under which each kind of State revenue 
 is collected. Estimates of revenue collectable cannot be scrutinized 
 intelligently without reference to collection agences ; first, because such 
 estimates will originate with collection agencies, and, second^, the 
 method of collection has very much to do with the amount of revenue 
 actually collectable under any revenue law. For example, the office 
 of the Attorney General supervises the administration of inheritance 
 taxes. It is to be expected that budget-making authorities will con- 
 sult the office of the Attorney General in fixing an estimate on inherit- 
 ance taxes collectible during a biennium, and it is to be expected fur- 
 
42 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 ther that the Legislature will consider the personnel, organization and * 
 procedure of the office of the Attorney General in reviewing the esti- 
 mate. 
 
 The estimate of revenue collectable by each collection agency 
 should be classified as to kind of revenue; since a given agency may 
 turn receipts into the State treasury derived from widely varying 
 classes of revenue. The office of the Secretary of State, for example, 
 collects such widely different revenue as that derived from automobile 
 licenses and that derived from fees for the filing of papers of incor- 
 poration. 
 
 Appropriation requests from each fund should be classified so as 
 to show the total amount requested by each department and institu- 
 . tion. Many of the departments of the State are beneficiaries under 
 general appropriations for salaries and for printing, supplies and the 
 like administered by the State Board of Contracts and the Secretary 
 of State. Appropriation requests should be so classified in the state- 
 ment of budget proposals as to show the amounts requested by each 
 department for its direct use, and so as to show also the amount that 
 each department expects to share in general appropriations. The effect 
 of such a classification will be to fix responsibility for the use of public 
 supplies even although general appropriations are continued as a 
 means of purchasing and other administrative economy. 
 
 The appropriation requests of each department and institution 
 should be classified first of all, as between requests for land, buildings 
 and permanent equipment, and requests for operation and maintenance 
 expenses. Land, building and equipment requests should be further 
 classified by projects. Operation and maintenance requests should be 
 classified by units of operation so that the Legislature may know how 
 much each department and institution requests for each of its internal 
 divisions, activities or functions. The statement of proposed expendi- 
 ture for each activity should be supported by estimates of the cost of 
 each kind of service and each kind of material needed in carrying on 
 the activity during the biennium. For example, the office of the 
 Auditor of Public Accounts should give information along the fol- 
 lowing lines in support of the appropriation requests for the office: 
 
 1. From the general revenue fund — 
 
 A. For permanent equipment. 
 
 (1) Furniture and fixtures. 
 
 B. For operation and maintenance. 
 
 (1) General administration. 
 
 (a) Salaries and wages. 
 
 (b) Stationery and postage. 
 
 (c) Telegraph and telephone. 
 
 (d) Freight and express. 
 
 (e) Office supplies. 
 
 (2) Audit of revenue collections. 
 
 (a) Salaries and wages. 
 
 (b) Stationery and postage. 
 
 (c) Telegraph and telephone. 
 
REPORT ON ACCOUNTS. 
 
 43 
 
 (d) Freight and express. 
 
 (e) Office supplies. 
 
 , (3) Audit of disbursements under appropriations. 
 
 (a) Salaries and wages. 
 
 (b) Stationery and postage. 
 
 (c) Telegraph and telephone. 
 
 (d) Freight and express. 
 
 (e) Office supplies. 
 
 (4) State inventory. 
 
 (5) Examination of banks, trust companies and loan com- 
 
 panies. 
 
 (6) Etc.^ 
 
 The purpose of the ‘‘proposed budget” is to show an estimate of 
 revenue for the next biennium, set over against the' appropriation re- 
 quests for the next biennium. In order that these estimates and re- 
 quests may have a definite meaning and connection with the previous 
 financial policy of the State, the estimates of revenues should be com- 
 pared with actual receipts ; and appropriation requests should be com- 
 pared with actual disbursements for the two bienniums preceding the 
 biennium for which the appropriations are asked. Inasmuch as the 
 General Assembly meets during the second year of the biennium next 
 preceding the biennium for which appropriations are asked, it will be 
 necessary to set up an estimate for that year, both as to receipts and 
 as to disbursements. A form for a summary of budget proposals by 
 funds is shown as Schedule 1 ; a form for the comparison of revenue 
 estimates with previous receipts is shown as Schedule 2, and a form 
 for the comparison of appropriation requests with disbursements is 
 shown as Schedule 3. These schedules are introduced to illustrate the 
 comparison essential to budget-making. ^ 
 
 SCHEDULE 1. 
 
 for the Biennium ipi^-ipiy. 
 
 Estimated Revenue Appropriation !^equests 
 
 Fund Amount Fund Amount 
 
 General Revenue Fund General Revenue Fund 
 
 *Excess of Requests 
 
 School Fund School Fund 
 
 *Excess of Requests 
 
 University Mill Tax Fund, 
 etc. 
 
 *The 'essential point is that the appropriation requests from each fund shall be con- 
 trasted with the estimate of revenue. for each fund. The summary may take several forms. 
 
44 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
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SCHEDULE 4. 
 
 Comparison of Appropriation Requests for the Biennium ipiyipiy 
 With Appropriations for the Biennium ipij-75. 
 
 Request Request Appropriation Appropriation 
 
 REPORT ON ACCOUNTS. 
 
 45 
 
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46 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 The best test that the proposed budget can have lies in the com- 
 parison of the estimate of revenue and appropriation requests with the 
 actual and estimated receipts and disbursements for the two preceding 
 bienniums. An additional comparison of great value is a comparison 
 of the estimate of revenue and appropriation requests with the estimate 
 of revenue and appropriations enacted by the preceding General 
 Assembly. The form of such a comparison is shown in Schedule 4. 
 It may be noted in this connection that the State law now provides for 
 budget data in this form, to be compiled by the Legislative Reference 
 Bureau. 
 
 The form of the “proposed budget” suggested, provides for a 
 classification of revenue estimates and of appropriations, first of all, 
 under funds, and then, by collecting agencies for revenue and by de- 
 partments and institutions for appropriations. It will be found desirable 
 to set up a summary, so as to show the total estimate for each kind of 
 revenue, no matter to what fund the revenue is to accrue, or by what 
 collecting agency it is to be secured. A similar summary should be 
 made for the proposed appropriations for similar activities under de- 
 partments and institutions. Thus, for example, a summary may be 
 made of the requests for carrying on health and sanitation work, bring- 
 ing together in one schedule the provision made for such work in the 
 requests of different departments and institutions. 
 
 The General Assembly as a body, and especially individual mem- 
 bers, will be particularly interested in the appropriation requests of a 
 particular department of the State, such as the Illinois National Guard, 
 or of a particular institution, such as the Eastern Illinois State Normal 
 School. In addition to the schedules already discussed, data concerning 
 each particular department and institution should be set up in separate 
 schedule form, and these separate schedules should be accompanied by 
 supporting statistics as to the work done by the departments and institu- 
 tions under each of their activities. 
 
 The provision for separate budget schedules for each department 
 and institution is of fundamental importance. In order that the Legis- 
 lature may have before it a summary of the appropriation requests of 
 all the departments and institutions it will be necessary for each depart- 
 ment and institution to make its requests under a standard classification. 
 But the requirements of the standard classification need go but little 
 further* than .the fundamental distinction beween requests for addi- 
 tion to land, buildings and equipment and requests for operation and 
 maintenance. Each department and institution of the State has its own 
 field of work and should be permitted to express its requirements in 
 terms of its own field. This is, of course, the particularly difficult 
 problem of classification that must be solved by the authority engaged 
 in the preparation of the statement of budget proposals for the Legis- 
 lature. The problem is emphasized here because of the tendency of 
 budget making authorities in a few States and cities to impose a hard 
 and fast uniform classification of requests upon widely varying kinds of 
 departments and institutions. 
 
 In addition to the financial data provided for in the schedules 
 discussed above, a careful digest should be made of the revenue laws 
 
REPORT ON ACCOUNTS. 
 
 47 
 
 and appropriation acts in force during the biennium, at the close of 
 which the General Assembly meets. This digest of revenue laws and 
 appropriation acts should follow the same classification as that given for 
 revenue and appropriations in the “proposed budget.’’ 
 
 Such information as to the present status of the law will enable the 
 General Assembly to consider the estimate of revenue and appropria- 
 tion requests in connection with existing law. Such consideration must 
 be given if the will of the General Assembly as to the estimate of 
 revenue and appropriations is to be fully accomplished by changes in 
 the laws. Further, these laws reflect the present legal accounting 
 classification that the Auditor of Public Accounts, departments and 
 institutions are compelled to keep. If officers and citizens are to think 
 aright on public questions they must have reports based on carefully 
 classified accounts. It must be emphasized that accounting classifica- 
 tion is determined by statutory requirements. 
 
 The summary of revenue estimates and appropriation requests will 
 place squarely before the General Assembly the problem of financing 
 the needs of the State for the next biennium. Revenue laws and tax 
 rates must be so revised and appropriation requests must be so increased 
 or reduced as to bring revenue estimates and appropriations into 
 balance in the final budget compiled at the close of the legislative 
 session. 
 
 All of the above information should be compiled by the office of 
 the Governor, or by the budget making authority; printed and pub- 
 lished, so that it may be available to members of the General Assembly, 
 and to the public generally, at least one month before the General 
 Assembly meets. The statement of budget allotments will of course 
 contain summaries setting forth the appropriations requests made 
 against each fund of the State. These summaries should be accom- 
 panied with data showing the increase of taxes, fees, licenses, etc., 
 necessary if the total amount of the appropriation requests are granted. 
 
 The statement of the budget proposals should contain the recom- 
 mendations of the Governor as to each appropriation request. The 
 exact time at which the Governor should present his budget and budget 
 recommendations is a matter of considerable difficulty, because the 
 term of the Governor commences on the first day of the legislative 
 session. If a budget is prepared in advance of the legislative session it 
 will be difficult for the Governor-elect to make his recommendations ; 
 and the Governor whose term is expiring may not be disposed to 
 make responsible recommendations which he will be unable to defend 
 before the General Assembly because of the expiration of his term. 
 The best working plan will doubtless be for the Governor then in office 
 to include tentative recommendations in the statement of the budget 
 proposals that is published thirty days before the General Assembly 
 meets. These tentative recommendations from the then Governor, can 
 be supplemented or revised by the newly elected Governor in messages 
 to the General Assembly at or after the beginning of the legislative 
 session. 
 
 When the General Assembly meets, or as soon as possible there- 
 after, a copy of the '‘proposed budget” should be handed to each 
 
48 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 member, together with a message from the Governor, giving executive 
 recommendations as to each estimate of revenue and as to each appro- 
 ^priation request contained therein. These copies of the “proposed 
 budget” should be put in such form that members of the finance com- 
 mittees of the General Assembly can enter their own recommendations 
 on the face of the several schedules, and thus make use of the classifica- 
 tion already prepared by the budget making authority. The clerks of 
 the finance committees may very well have as one of their duties the 
 keeping of the recommendations of the finance committees in the 
 same classification as the “proposed budget.” The clerk should note 
 further any changes that may be made in revenue laws and appropria- 
 tion acts, and should classify such changes in the same way as the 
 digest of the revenue laws and the appropriation laws are classified in 
 the “proposed budget” report. As the General Assembly passes new 
 revenue laws and new appropriation Acts, the clerks of the finance 
 committees should report the progress of the budget, so that members 
 of the General Assembly can, at any time, find out how far the financial 
 program of the State has been affected by the passage of any particular 
 revenue law or appropriation. This will pave the way for the enact- 
 ment as one bill of a complete State budget of revenue estimates and 
 appropriations. Such a desideratum will evolve from the plan herein 
 proposed although it must come gradually, having in mind the force of 
 present legislative traditions. 
 
 At the end of the legislative session, the Auditor of Public 
 Accounts, cooperating with the Secretary of State (who is the legal 
 custodian of State law) should compile and publish a final budget, 
 containing an estimate of the revenue collectable under the revenue 
 laws passed by the General Assembly, and containing a statement of 
 the appropriations provided by the General Assembly. This final 
 budget should be classified and summarized in the same form as the 
 “proposed budget,” so that officers of the State and interested citizens 
 may readily compare the final budget with the “proposed budget.” 
 
 It will be noted that the classification suggested for the “proposed 
 budget” provides that each department and institution shall place before 
 the General Assembly a statement of the appropriation needed for each 
 kind of service, and each kind of materials, to be secured for each 
 activity of the department, or institution. It will be easily seen that 
 .data in such classified detail is necessary if the legislature is to thor- 
 oughly consider any particular appropriation request. It by no means 
 follows that the Legislature should enact appropriation laws carrying 
 such detail. In most, if not in all cases, the General Assembly should 
 provide lump appropriations for departments and institutions, distin- 
 guishing simply between appropriations available, on the one hand, for 
 land, buildings, and equipment, and, on the other hand, appropriations 
 available for operation and maintenance expenses. In turn, the heads of 
 departments and governing boards of institutions should set up annual 
 departmental or institutional budgets making allotments from the funds 
 supplied by the General Assembly. These departmental budgets should 
 provide allotments for each particular project under land, buildings 
 and equipment, and for each particular activity of the department or 
 institution under operation and maintenance. 
 
REPORT ON ACCOUNTS. 
 
 49 
 
 REPORTS NEEDED BY THE GOVERNOR. 
 
 As the Chief Executive of the State, the Governor is constantly 
 consulted by the members of the General Assembly as to the proposed 
 financial program of the State ; and the Governor is directly and con- 
 tinuously concerned with State finances after appropriations are passed 
 by the General Assembly. The Constitution provides that the Gov- 
 ernor shall make a report to the General Assembly setting forth the 
 financial needs of the State. The Governors of Illinois have never 
 complied with the requirements of the Constitution, except indirectly 
 as they chose to advise with the various members of the legislative 
 body. 
 
 After the Governor has presented the “proposed budget” for the 
 consideration of the General Assembly, and the General Assembly has 
 enacted revenue and appropriation laws, the Governor needs a com- 
 plete report setting forth in accounting form the results to be ex- 
 pected from the legislation. The Governor needs this information, 
 first of all, as a member of the State Tax Levy Board, charged with 
 the responsibility of fixing the tax rate. The Governor needs this in- 
 formation further in checking the legal audit performed by the Auditor 
 of Public Accounts, and in checking upon the legal accounts main- 
 tained in the office of the Auditor. The Governor needs this informa- 
 tion if he is properly to advise the departments and institutions of the 
 State as to revenues available to them for carrying on the work for 
 the next biennium. Finally, the Governor needs such a report at the 
 close of the legislative session, if he is to acquaint the public with the 
 financial situation in the State in a definite and clear-cut way. 
 
 After the General Assembly has provided a financial program, the 
 Governor needs reports from each of the revenue collecting agencies 
 of the State, showing the manner in which it is proposed to collect 
 revenue ; and a report from each of the departments and institutions 
 of the State, showing the manner in which each department and each 
 institution proposes to spend the money made available to it for the 
 next biennium. The Governor should have for his information 'depart- 
 mental and institutional budgets that will, on the one hand, take into 
 account the revenue available to the department or institution for the 
 biennium, and will, on the other hand, take into account the allot- 
 ments to be made within the department or institution for the various 
 activities of the department or institution for each year of the bien- 
 nium. The form of the departmental or institutional budget is dis- 
 cussed further in considering the accounting needs of departments and 
 institutions. 
 
 After the Governor has received a report from each revenue col- 
 lecting agency of the State as to the revenue collecting plans for the 
 biennium, the Governor should have access to monthly and quarterly 
 reports showing how the revenue is being collected. Without access 
 to such reports, the Governor will be unable to make an intelligent 
 study of the revenue collection. Similarly, after the Governor has 
 placed before him the internal budget of each department and of each 
 institution, the Governor should also have access to monthly and 
 
50 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 quarterly reports showing the disbursements and outstanding encum- 
 brances under each one of the allotments made for the internal guid- 
 ance of each department and institution. 
 
 The governor should have access to frequent reports, perhaps 
 monthly reports, showing the kinds of service and materials purchased 
 in carrying out the work of each one of the activities of each depart- 
 ment and institution. Without free access to such cost data, the Gov- 
 ernor cannot be expected to exercise any check upon the efficiency and 
 economy with which departments and institutions are conducted. 
 
 It will be seen that the Governor needs five classes of reports. 
 First of all, the Governor needs such data as will enable him to make 
 a report to the General Assembly comparing the financial needs of 
 the State with the revenue and expenditure of the State for the last 
 preceding biennium and for the biennium at the close of which the 
 General Assembly meets. Second, the Governor needs a report at the 
 conclusion of the meeting of the General Assembly setting forth in 
 definite form the revenue expected under the revenue laws passed by 
 the General Assembly, and the disbursements possible under the appro- 
 priations passed by the General Assembly. Third, the Governor needs 
 a statement as to the proposed internal budget of each department 
 and institution of the State for the coming biennium, showing how 
 each department and institution expects to spend the money available 
 for its use in carrying out each one of its various activities. Fourth, 
 the Governor should have access to monthly and quarterly statements 
 as to disbursements and outstanding encumbrances under each one of 
 the allotments provided for the carrying on of the work of each depart- 
 ment and institution. And, fifth, the Governor should have cost data 
 available for his use, showing the kinds of service and kinds of mate- 
 rial purchased and ordered by each department and institution in carry- 
 ing out its activities. With these reports at hand, the Governor will 
 be enabled to write his message to the General Assembly; to stimulate 
 public interest in public business ; to answer in a satisfactory way the 
 questions raised by citizens who have been made interested in any one 
 of the activities of any department or institution; and to intervene 
 intelligently in the management of departments and institutions both 
 by the allocating of responsibility and the ready checking of such detail 
 as may become important in its relation to the larger problems of the 
 State. 
 
 The office of the Governor is now provided with an institutional 
 auditor whose duty it is to check the receipts and disbursements of 
 most of the departments located at Springfield. The duties of this 
 officer arise under appropriation Acts providing that disbursements 
 under such appropriations shall be approved by the Governor. The 
 Institutional Auditor also reviews the semi-annual financial reports as 
 to receipts and disbursements now made to the Governor by the de- 
 partments and institutions of the State. 
 
 Under the plan of the accounting proposed herein, the Institutional 
 Auditor would be in a position to call for reports from departments 
 and institutions and to review them for the Governor, as well as to 
 make certain that the Governor has prompt access to any one of the 
 
REPORT ON ACCOUNTS. 
 
 51 
 
 reports contemplated by the accounting system of the State. The Insti- 
 tutional Auditor will then be enabled to call for such further special 
 reports as the Governor may need in addition to the regular monthly, 
 quarterly and annual reports. 
 
 REPORTS NEEDED BY THE STATE TAX BOARD. 
 
 It is the duty of the State Tax Board (composed of the Governor, 
 the Auditor of Public Accounts, and the State Treasurer) to fix such 
 a rate of taxation as will provide receipts for the various funds of the 
 State, sufficient in amount to care for the appropriations passed by 
 the General Assembly. The State Tax Board meets for work at the 
 close of the legislative session, and must, therefore, know the status 
 of the revenue laws and of appropriation estimates as fixed by the Acts 
 of the Legislature. After the State Tax Board has fixed the various 
 rates of State taxation, a public report should be made showing the 
 bases on which the rates have been fixed. 
 
 REPORTS NEEDED BY THE STATE BOARD OF EQUALIZATION. 
 
 The State Board of Equalization is charged with the duty of 
 equalizing the assessment rolls for the various counties of the State, 
 and with the further duty of assessing the values of railroad property 
 and of the capital stock of corporations. In performing their duties, 
 the members of the Board of Equalization need to have before them 
 a very considerable amount of financial data having to do with values 
 for assessment purposes. The Board of Equalization should be fur- 
 nished with financial data in classified form. If a staff of constructive 
 accountants is employed by the State for constructive accounting work, 
 such accountants may very well be called upon to assist in properly 
 classifying the data needed by the State Board of Equalization. 
 
 The needs of the State Tax Board and of the State Board of 
 Equalization will become the needs of the State Tax Commission or 
 of the State Einance Commission if such a new body is established. 
 
 ACCOUNTS AND REPORTS OF THE AUDITOR OF PUBLIC ACCOUNTS. 
 
 After the General Assembly adjourns, the responsibility for the 
 carrying out of its will, both as to raising revenue and as to the ex- 
 penditure of public money and public credit, devolves upon the Auditor 
 of Public Accounts. The Auditor of Public Accounts must necessarily 
 keep such accounts as will enable him to prove that moneys collected 
 have been collected under law, and such accounts as will enable him 
 to prove that disbursements have been made in accordance with ap- 
 propriation Acts. Any real reform in the accounts maintained by the 
 State Auditor must, therefore, originate in the budget-making proc- 
 ess of the Legislature. If the General Assembly does not "enact a 
 scientifically classified system of taxation and of revenue laws, nor a 
 scientific classified system of appropriation laws, it cannot very well 
 expect the State Auditor to maintain scientific accounts under the laws 
 enacted. Of course, it is quite possible that the State Auditor may 
 maintain two sets of accounts, so that he accounts for public money 
 under law and also under a scientific classification of receipts and dis- 
 
52 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 bursements. It is doubtful whether such an artificial system can long 
 continue under a representative or democratic system of government. 
 It is to be expected that the State Auditor will emphasize the accounts 
 that he is absolutely required to keep, and that he will minimize the 
 keeping of records that will aflord information not necessary for the 
 discharge of legal responsibilities, however necessary and valuable the 
 information may be in the proper interpretation of the financial pro- 
 gram of the State. 
 
 The State Auditor’s records are of vital importance in any con- 
 sideration of the financial system of the State. From the records main- 
 tained by the State Auditor, must be prepared the data as to receipts 
 and disbursements for preceding bienniums necessary for the use of 
 the Legislature. The State Auditor should, therefore, keep revenue 
 accounts so analyzed as to permit of the making of comparisons for 
 budget purposes, as well as to permit of a careful audit as to revenue 
 collectable and outstanding. The Auditor’s accounts as to the dis- 
 bursements under appropriations should also afford the analysis of 
 disbursements necessary in setting up the disbursement side of the 
 budget report. 
 
 It would be possible for the Auditor to maintain a disbursement 
 account so as to show the disbursements for each of the activities of 
 each department and institution, and also so as to show the disburse- 
 ment for each kind of service and each kind of materials purchased 
 for each such activity. Such an extended analysis of disbursements 
 would, however, greatly hamper the efficiency of the Auditor’s office 
 as a collection and disbursement agency. The same information is 
 needed at each of the departments and institutions. The purpose can 
 be served if each department and institution is required to keep proper 
 revenue and disbursement accounts. There should be a constructive 
 accounting authority with power to prescribe standard cost accounts 
 and standard revenue accounts. The Auditor should review monthly 
 and quarterly reports of departments and institutions so as to make 
 certain that proper revenue analysis and cost accounts are being main- 
 tained. The Auditor should also require monthly and quarterly re- 
 ports from departments and institutions as to outstanding encum- 
 brances and free balances of the internal allotments of the departments 
 and institutions. In no other way can the Auditor assure himself that 
 departments and institutions are financing their work in such a way 
 as to insure the sufficiency of the appropriations provided by the Leg- 
 islature for the whole period during which such work must be car- 
 ried on. 
 
 If the Auditor maintains the accounts so far discussed, and if the 
 Auditor audits the accounting systems prescribed for departments and 
 institutions as to internal allotment balances and as to revenue analysis 
 and cost data, the Auditor will have such a system of accounts as he 
 needs in making a proper check upon the receipts and disbursements of 
 the State Treasurer. 
 
 The present State Law requires the State Auditor to maintain a 
 perpetual inventory upon all the property of the State, based upon 
 detailed reports submitted every ten days by departments and insti- 
 
REPORT ON ACCOUNTS. 
 
 53 
 
 tutions. The present law is impracticable and should be repealed. 
 The Auditor should require each department and institution to main- 
 tain a perpetual inventory, and to make at least quarterly reports to 
 him of additions to the inventory or disposal of property. The Auditor 
 should maintain control accounts over the perpetual inventories main- 
 tained by departments and institutions, and should audit and review 
 the quarterly and annual reports of departments and institutions so 
 that he may be able to certify that the permanent property of the 
 State is protected by proper inventory and accounting methods. To 
 this end, departments and institutions should follow a prescribed 
 classification of permanent property in maintaining their perpetual 
 inventories. 
 
 The records so far discussed provide for controlling accounts in 
 the office of the State Auditor with revenue collections and revenue 
 collectable and with disbursements under appropriations and outstand- 
 ing encumbrances against appropriations. The records provide fur- 
 ther for controlling accounts summarizing the perpetual inventories 
 of the permanent property maintained by departments and institu- 
 tions. From this data the State Auditor should set up a consolidated 
 balance sheet for the State showing the total assets and liabilities of 
 the State as at the close of each year. The Auditor should, set up such 
 further balance sheets as may be necessary to show surplus of the 
 State invested in permanent property for various classes of use, and 
 the surplus of the State available in cash and stores for the business 
 transactions of the coming year. 
 
 ACCOUNTING NEEDS OF THE STATE TREASURER. 
 
 The State Treasurer requires accounts showing his transactions 
 as the custodian of public money. For all auditing purposes accounts 
 showing receipts and disbursements by funds are sufficient since full 
 detail must be kept by the State Auditor. 
 
 At the present time, the State Treasurer maintains a ledger show- 
 ing the amounts of public money deposited in the banks selected as 
 depositaries of State funds. This ledger is not an official record. 
 Even though the State Treasurer is liable on his bond for the entire 
 amount of public money in his charge, it seems obvious that there 
 should be a public record of the depositaries in which State money is 
 deposited. There should be daily reconcilements between accounts 
 with the depositaries and the accounts showing the cash balances in 
 each of the funds of the State. 
 
 Further than this, it is to be noted that the treasurer at present 
 acts as the agent of the State in paying interest on certain public bonds. 
 This part of the work of the State Treasurer’s office should be fre- 
 quently reviewed by the State Auditor, and the State Treasurer should 
 be required to keep such accounts as will clearly set forth his trans- 
 actions in this particular. 
 
 ACCOUNTING NEEDS OF REVENUE COLLECTING AGENCIES. 
 
 The revenue collecting agencies of the State should make monthly 
 reports to the State Auditor showing the amount of each kind of rev- 
 enue collected by them during the month and the amount of revenue 
 collectable outstanding at the close of the month. These monthly re- 
 
54 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 ports of receipts and revenue collectable should be made in schedules 
 entirely separate from any reports that may be made as to disburse- 
 ments, excepting in the case of industries of the semi-commercial 
 nature, such as the industries of the State prison. It should be borne 
 in mind that nearly all of the revenues of the State are only indirectly 
 related to disbursements under appropriations. 
 
 ACCOUNTING NEEDS OF HEADS OF DEPARTMENTS AND BOARDS IN 
 CHARGE OF STATE INSTITUTIONS. 
 
 The executive officers of departments and institutions need, first 
 of all, to have in their possession a copy of the budget proposal con- 
 sidered by the General Assembly and a copy of the budget passed by 
 the General Assembly. This information is needed so that department 
 and institution officers may properly allocate their departments and 
 institutions as integral parts of the State financial program. 
 
 After the General Assembly adjourns, the heads of departments 
 and institutional officers should be furnished by the State Auditor with 
 specific information as to the revenue available for their use during 
 each year of the coming biennium. The State appropriations available 
 for the use of departments and institutions, together with an estimate 
 of the revenue collectable by the department or institution that may be 
 retained under law, constitutes the available income under which the 
 work of the department or institution must be carried on. The officer, 
 or governing board, should build up a budget showing the available 
 income of the department or institution as over against allotments 
 covering the estimated cost of carrying out each one of the activities of 
 the institution. This departmental budget should be approved by the 
 head of the department, or enacted by the board of trustees in charge of 
 the institution, before the beginning of each year of the biennium. 
 
 The procedure in making the local budget for a department or 
 institution should follow the same lines as the procedure already indi- 
 cated for the State budget. The responsible executives of the depart- 
 ment or institution should first of all compile a statement of budget 
 proposals. Allotment requests should be classified so as to show the 
 amounts requested for each project under additions to land, buildings 
 and permanent equipment, and so as to show the total amount requested 
 for each sub-department or activity under proposed operation and main- 
 tenance expense. The request for each allotment should be supported 
 by detail giving an estimate of the cost of each kind of service and of 
 each kind of material needed in carrying on the work of the activity 
 for which the allotment is requested. The financial data for each 
 project and activity should be detailed in a supplementary statement 
 together with data as to the work program proposed under the project 
 or activity for the year. The allotment requests should be summarized 
 as over against an estimate of the revenue available to the department 
 or institution for the year. This estimate of revenue should be classified 
 by sources and kinds. The budget proposals should be compared with 
 the revenue and disbursements of at least three preceding years. The 
 form of such a statement of budget proposals for a State normal school 
 is shown in schedule 5. The items given are hypothetical and the 
 schedule is shown by way of illustration only. < . , . . 
 
SCHEDULE 5 . 
 
 Budget Proposals for the State Normal School for the 
 
 Year igi/-ipi8. 
 
 REPORT ON ACCOUNTS. 
 
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56 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 The statement of budget proposals for the year should be accom- 
 panied by a digest of State laws and regulations directly affecting the 
 finances of the department or institution. 
 
 After consideration, the governing board of the institution or head 
 of the department should adopt a final budget for the year. Allotments 
 in the final budget should be by projects and activities and should not 
 be detailed as to expense items. Expense items and wages of non- 
 technical employees should be left to the discretion of responsible 
 executives. There are, however, important arguments to support the 
 view that the local budget of each department and institution should 
 give the salaries of permanent positions in detail. 
 
 The final budget of the year should be placed in the hands of the 
 financial officer of the department or institution as the official basis for 
 receipts and disbursements and for accounts. 
 
 The statement of budget proposals with its auxiliary statements 
 of work programs by activities, the digest of laws and the final budget 
 should be made a matter of systematic record even in the case of small 
 departments and institutions. The larger institutions of the State now 
 have such procedure, although in some cases the allotment requests and 
 work programs, and even the final allotments, are made informally 
 and without sufficient record for systematic administration. The re- 
 quirement of such records in writing before the beginning of each fiscal 
 year insures careful planning and affords an authentic basis for finan- 
 cial administration and accounting. 
 
 The monthly reports of departments and institutions acting as 
 revenue collection agencies should include schedules showing revenue 
 collected and revenue receivable classified by kinds of revenue. Such a 
 monthly report as to revenue will afford a record of receipts and will 
 afford also a statement of accounts receivable and revenue collectable 
 comparable with the estimate of revenue contained in the departmental 
 or institutional budget and summarized in the State budget. 
 
SCHEDULE 6. 
 
 Department of 
 
 Statement of Free Balances in Allotments for the Month 
 
 REPORT ON ACCOUNTS. 
 
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58 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 Those in charge of departments and institutions will need a report 
 at the close of each month showing the disbursements and outstanding 
 encumbrances under each one of the allotments made by them. Such a 
 report may properly be put in the form shown in Schedule 6. 
 
 The monthly statement of disbursements and encumbrances under 
 allotments will serve, first of all, to acquaint the officers of the depart- 
 ment or institution with the balance in each allotment, against which 
 further open market orders, contracts and salary assignments can be 
 placed. The monthly statement of disbursements and of encumbrances 
 will also be comparable with the statement of allotments contained in 
 the departmental or institutional budget for the year and will be com- 
 parable with the appropriations for the biennium contained in the State 
 budget. 
 
 Recent writers on governmental accounting have been insistent in 
 demanding records of accounts payable. Records of open market 
 orders outstanding, of contracts outstanding, and of salary assignments 
 should be inclusive both of accounts payable and of contractual obliga- 
 tions for goods and services not yet received but for which the credit of 
 the State is pledged in a practical sense. Reports from such records 
 must be constantly studied if administrator^ are to keep the expenses 
 of a year within the legal appropriations for the period. 
 
 Accounts should be maintained showing the kind of services and 
 kinds of materials purchased under each of the allotments made for 
 carrying out each activity, and this cost data should be brought together 
 in such form that it may be analyzed by responsible executives and 
 trustees in connection with any of the plans of the department or insti- 
 tution. A perpetual inventory should be maintained of property of the 
 department or institution, and quarterly reports should be made as to 
 additions to permanent property and as to disposal of permanent 
 property. 
 
 It should be possible to set up an annual balance sheet from the 
 records of revenue collectable and outstanding encumbrances and from 
 the perpetual inventory records maintained by each department or insti- 
 tution. In addition to the general balance sheet, it will be found desir- 
 able to set up a separate balance sheet at the close of each year for any 
 trust fund held by the department or institution. 
 
 Not less frequently than once a year each department and institu- 
 tion should issue a public report setting forth the receipts under each 
 kind of revenue collected by it and the disbursements for each of its 
 activities, together with a balance sheet giving a summary of the assets 
 and liabilities of the institution with supporting schedules summarizing 
 the perpetual inventory of permanent property. It is advisable that 
 such published reports should contain statistics as to the various kinds 
 of work carried on by the institution, so that the citizens of the State 
 may compare the amounts expended for each class of work with the 
 actual work accomplished. 
 
 ACCOUNTING NEEDS OF INSTITUTIONAL AND DEPARTMENTAL 
 EXECUTIVES. 
 
 The responsible executives and subordinate officers and heads of 
 departments need to have before them all of the information which we 
 
REPORT ON ACCOUNTS. 
 
 59 
 
 have discussed as desirable for review by boards of trustees and heads 
 of departments. That is to say, these officers should have a report 
 setting forth the budget passed by the General Assembly, so that they 
 may allocate their activities with those of the State at large. The 
 officers should have an institutional or departmental budget with 
 monthly reports as to disbursements, outstanding encumbrances and 
 available balances in allotments. The officers should have monthly 
 reports giving cost data and statistics showing the kind of service and 
 kind of materials that they themselves are purchasing for their own use. 
 Further, the officers should have at last quarterly reports on the 
 inventory of the property for which they are responsible. 
 
 The officers mentioned will be responsible for the making out of 
 the reports discussed under preceding headings. They should be pro- 
 vided by the State Auditor with regulations as to accounting methods 
 and prescribed classifications of accounts with definitions. 
 
 If such accounting systems are maintained at the institutions and 
 departments as will enable the officers to prepare and have before them 
 the reports mentioned, it is obvious that accounts must be kept from 
 day to day showing each one of the difiFerent classes of information. 
 These accounts will be frequently referred to by officers, and various 
 abstracts of data may be secured from the accounts of value in solving 
 particular problems of administration.* 
 
 ACCOUNTING NEEDS OF EMPLOYES OF DEPARTMENTS 
 AND INSTITUTIONS. 
 
 The employees in each one of the sub-departments of a depart- 
 ment or institution should be informed from month to month as to the 
 status of the allotment made for the support of their own activities. 
 More than this, such employees should be provided with cost data not 
 less frequently than once a month, so that they themselves may feel a 
 sense of responsibility for the volume and kinds of services and mater- 
 ials they are using. Such employees will have a direct responsibility 
 in connection with the safeguarding and maintenance of permanent 
 property, and for that reason should have access to the perpetual 
 inventory records of the department or institution with which they are 
 connected 
 
 ACCOUNTING NEEDS OF THE PUBLIC. 
 
 The citizens of the State will be concerned, first of all, as tax 
 pavers, and for that reason can be expected to welcome and use a 
 published State budget. The citizens should have an opportunity to 
 examine and discuss the proposed revenue collection and the proposed 
 appropriations before the General Assemblv goes into session. Citizens 
 should be given an opportunity to talk with members of the General 
 Assembly. Interested citizens will avail themselves of this opportunity 
 whether or not they have before them a complete statement of the 
 financial needs of the entire State and of the particular financial needs 
 of each department and institution of the State. If such a complete 
 statement is before them, citizens can be expected to use far more in- 
 telligence in the pressure that they bring upon their representatives in 
 the General Assembly, and upon the Governor as to financing of par- 
 ticular activities. 
 
60 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 At the conclusion of the legislative session, the General Assembly 
 should be put squarely on record before the citizens of the State by 
 the publication of a statement setting forth the revenue collection 
 authorized by the General Assembly for the next biennium, and the 
 appropriations enacted, classified in such a way that the citizens may 
 understand the work that is to be carried on under the appropriation 
 Acts. This statement may also be used by the State Tax Board in 
 announcing its reasons to the public as to the fixing of State tax rates. 
 
 The citizens of the State have a right to expect that the report of 
 the State Auditor shall show the safeguarding of public money and 
 public credit so far as the report provides a check upon the cash tran- 
 sactions through the State treasury. This much the present report of 
 the State Auditor does. The report of the State Auditor should include 
 a budget summary for the biennium, and should include further an 
 analysis of State revenue by (1) kinds of taxes by years levied; 
 (2) various kinds of fixed licenses and permits; (3) various kinds of 
 receipts of institutions and departments. The report of the State 
 Auditor should set forth disbursement accounts under legislative appro- 
 priations, so analyzed as to show the amounts of public money expended 
 for each department and institution of the State, and so analyzed also 
 as to show the amount of public money spent for each principal function 
 of State government in each one of the State departments and institu- 
 tions and for the State as a whole. The report of the State x\uditor 
 should contain a summary of the perpetual inventories maintained by 
 departments and institutions, and balance sheets exhibiting the assets 
 and liabilities of the State in summary form. 
 
 The present form of the State Treasurer’s report should be con- 
 tinued for the use of the public, and, in addition thereto, the public 
 should be given information as to the amount of money handled by 
 each bank acting as depository of State funds. 
 
 The budget reports and the reports of the State Auditor and State 
 Treasurer should furnish the general information desired by the public. 
 Particular classes of the public will be interested in each one of the 
 departments and in each one of the institutions of the State. Each 
 department and each institution should print and publish annually a 
 financial report setting forth the revenue available for the department 
 or institution, classified as to the source of its collection, and the dis- 
 bursements of the department or institution on account of each one of 
 the activities carried on by it. Such annual reports may very well 
 give the budget of the department or institution as passed by the board 
 of trustees or executive head at the beginning of the fiscal year, together 
 with a statement of the budget as at the close of the year reported. 
 Further than this the printed report of each department and institution 
 should summarize the inventory of permanent property of the depart- 
 ment or institution, and should present a balance sheet exhibiting the 
 assets and liabilities of the department or institution at the close of the 
 year. The reports of the departments or instituions will be made very 
 much more valuable for the use by the public generally, and especially 
 for use by persons particularly interested in the work of a particular de- 
 partment or institution, if the reports combine statistical data as to the 
 activities of the institution with the statements of revenue and expendi- 
 ture. 
 
REPORT ON ACCOUNTS. 
 
 61 
 
 A PLAN OF ACCOUNTING FOR THE STATE. 
 
 If the accounting needs of each of the various classes of officers 
 and citizens that we have discussed are met, there must be established 
 in the State a definite plan of reporting and accounting. The following 
 system of reports is suggested : 
 
 1. Upon the adjournment of the General Assembly, the Auditor 
 of Public Accounts shall prepare and publish schedules setting forth 
 the budget of the State* as passed by the General Assembly. This 
 published statement may very well include a record of the action of the 
 State board in the fixing of State tax rates. 
 
 2. The Auditor of Public Accounts shall open accounts on his 
 books with each of the sources of revenue set forth in the State budget, 
 and with each of the appropriation Acts at the beginning of the bien- 
 nium, during which the budget is to have eflFect. 
 
 3. The State Treasurer shall open accounts with each of the State 
 funds authorized by law, and with each of the depositaries in which 
 money is deposited. 
 
 4. The Auditor of Public Accounts shall notify each revenue 
 collection agency of the revenue to be collected by the agency during 
 each year of the biennium, and shall notify each department and insti- 
 tution of the authorization contained in the budget for its support. 
 
 5. Each department and institution of the State shall prepare an 
 internal budget of allotments, definitely assigning a portion of the 
 income at its disposal for the support of each one of the activities that 
 it carries on. These internal budgets shall be formally approved by 
 the board of trustees of each institution, or by the responsible heads 
 of departments, before the beginning of each year of the biennium, 
 and copies of the internal budgets so approved shall be sent to the 
 State Auditor for the information and guidance of the State Auditor 
 and of the Governor. 
 
 6. The financial officer of each department and institution shall 
 open accounts with each of the sources of income for the department 
 or institution, and with each of the allotments contained in the internal 
 budget for the department or institution. Under each of such accounts, 
 he shall maintain such an analysis and classification of data as shall 
 be prescribed for his use. 
 
 7. Each department and each institution shall open and maintain 
 perpetual inventory accounts, giving complete report of the permanent 
 property held by the department or institution, following such classifica- 
 tion as may be prescribed by the constructive accounting authority 
 of the State. 
 
 8. The financial officer of each revenue collecting agency shall 
 report to the State Auditor from month to month the revenue collected 
 by him, and shall fully account for such revenue as having passed into 
 the hands of the State Auditor for transmission to the State Treasurer 
 
 9. At the close of each month, the financial officers of each de- 
 partment and institution shall make a complete report as to the receipts 
 and revenue collectable under each of the sources of revenue of the 
 department or institution, and as to the disbursements, outstanding 
 encumbrances and available balance in each of the 'allotments contained 
 
62 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 in the internal budget of the department or institution. Copies of this 
 report shall be furnished to the executive head of each department, or 
 to the members of the board of trustees in charge of each institution, 
 and to the State Auditor. Under the direction of the head of the de- 
 partment, or of the board of trustees, as the case may be, the financial 
 officer shall transmit information as to the disbursements, outstanding 
 encumbrances and free balance in each allotment to such employees 
 of the department or institution as may have occasion to use such in- 
 formation in carrying out the purpose of the allotment. 
 
 10. At the close of the quarter, a report similar in scope to the 
 monthly report shall be made by the financial officer of each department 
 and institution, and shall be presented to the State Auditor. The State 
 Auditor shall audit such reports and compare them with his controlling 
 accounts. Whenever possible, such reports shall be made a matter of 
 record in the printed minutes of the governing boards. 
 
 11. At the close of each quarter, each department and institution 
 shall make a report to the Auditor of Public Accounts as to the perpetual 
 inventory of permanent property of the department or institution. 
 
 12. At the close of each year, each department and institution 
 shall publish a financial report addressed to the Governor of the State, 
 and certified as correct by the Auditor of Public Accounts, giving a 
 detailed analysis of the collection of revenues, and giving detailed 
 analysis of disbursements under allotments, together with a balance 
 sheet and summaries of the permanent property held by the depart- 
 ment or institution. 
 
 13. At least sixty days before the beginning of each legislative 
 session, each department and institution of the State shall prepare a 
 statement in detail of its disbursements for the preceding biennium, 
 and an estimate of its disbursements for the present biennium, together 
 with an estimate of its needs for the coming biennium ; and shall 
 present this report to the budget-making authorities of the State and 
 to the Governor of the State. 
 
 14. The budget-making authorities of the State shall combine the 
 reports transmitted by the departments and the recommendations of the 
 Governor into a statement setting forth the proposed financial program 
 of the State. This report shall be printed and distributed to the mem- 
 bers of the General Assembly and to the public at large at least thirty 
 days before the meeting of the General Assembly. 
 
 15. At the close of each biennium, the Auditor of Public Accounts 
 shall prepare and publish a report setting forth a summary of the ac- 
 counts of his office, and showing the revenue collected and money dis- 
 bursed under the budget adopted by the General Assembly for the 
 biennium under review. This report shall include a reconcilement 
 with the accounts of the State Treasurer, and a balance sheet with 
 summaries of the inventories of permanent property of the State. 
 
 It will be seen that this plan of reporting and accounting pro- 
 vides (1) for a budget for the State; (2) for departmental and insti- 
 tutional budgets under the general provisions contained in the State 
 budget; and (3) for monthly, quarterly and annual reports by depart- 
 ments and institutions following classifications to be prescribed by the 
 
REPORT ON ACCOUNTS. 
 
 63 
 
 . » 
 
 constructive accounting authority of the State. , This system of report- 
 ing and accounting will periodically furnish the information needed 
 b,y heads of departments and boards of institutions in making internal 
 budgets for their departments and institutions, and in presenting their 
 needs to the budget-making authorities of the State. The system will 
 periodically furnish the data needed for a complete State budget for 
 consideration by the General Assembly. The plan provides a com- 
 plete report by the Auditor of Public Accounts at the close of the 
 biennium as to the results obtained under the budget for the biennium, 
 and provides also for a complete annual report by each department 
 an»d institution. 
 
 It is obvious, of course, that a great deal of constructive account- 
 ing work must be done in providing the proper classification of rev- 
 enue and expenditure, and in providing a proper classification for the 
 perpetual inventories to be maintained by departments and institu- 
 tions. The plan proposed will not increase the volume of accounts 
 as OYer against the present volume of data made a matter of record 
 at d(ipartments and institutions, and in the State offices. The plan 
 provides for systematic reporting of data maintained under uniform 
 classifications to be prescribed, and for the enforcement of the system 
 by audits of the Auditor of Public Accounts. 
 
 , CONSTRUCTIVE ACCOUNTING WORK TO BE DONE. 
 
 To provide the system of accounting described in this report, a 
 caref ul study must be made of the present State organization. Charts 
 should be prepared showing the organization of the State by units of 
 orgamization, and by functions. 
 
 A careful study must be made of the present laws of the State, 
 and digests should be set up so as to show in outline form the status 
 of the present laws as to revenue collections, disbursements, custody 
 of public money, auditing of transactions, and care of public property, 
 as well as to showing the financial organization of the State. 
 
 The present financial reports of the State should be carefully 
 analyzed so as to show the kinds of revenue now collected and the 
 nature of present disbursements and present appropriation Acts. 
 
 A budget classification should be set up for the State and for 
 each department and institution. Classifications of accounts should be 
 presc.ril^d for each department and institution and the accounts named 
 in such prescribed classifications should be carefully defined. The 
 form.'s of schedules in reports suggested should be prescribed, methods 
 should be provided for the auditing of accounts and reports, and care- 
 ful study should be done in the establishment of accounting procedure. 
 Finally, the installation of such an accounting system as the one asked 
 for in this report demands the training of State employees so that they 
 may be able to understand the requirements of the proposed system 
 and make intelligent use of the data that the system affords. 
 
 It will be seen that the problem of constructive accounting for 
 tffe State of Illinois is a problem large in scope and difficult in its 
 rcjquirements. Something can be accomplished toward better State 
 accounting by efforts made in the accounting offices of the departments 
 
64 
 
 EFFICIENCY AND ECONOMY COMMITTEE. 
 
 and institutions, since better accounting at any State institution or by 
 any State department in itself tends to improve the accounts kept at 
 other State offices. Something can also be done by recommendations 
 by such bodies as the present Economy and Efficiency Committee, 
 since such recommendations will be studied by those concerned with 
 the administration of departments and institutions and it is to be 
 expected that many of the recommendations will be adopted. The 
 actual installation of the complete system of accounts for the State 
 can best be accomplished, however, by the creation of a constructive 
 accounting agency, either within the office, of the State Auditor or 
 under the control of the Governor, as a part of a State Tax Commis- 
 sion or State Finance Commission. A permanent staff of constructive 
 accountants of experience and ability should be employed not only to 
 install a system but to review its operations and to effect changes needed 
 by changing conditions.