park openings. He also expressed the opinion that the examination will disclose certain facts which may form the basis for recommendations to the Legislature looking to the establishment of the Street Assessment Fund of the city on a more just and equitable basis.

4. (a.) Reconcilement of Comptroller's balances with Chamberlain's balances as of December 31, 1909.

(b.) Analysis of Special Accounts to determine which can be written off the books and how.

5. Analysis of Fund Ledgers from January 1, 1910, to December 31, 1911, showing by funds:

(a.) Credit journal entries segregated as to reconciliation and other;

(b.) Cash refunds;

(c.) Debit journal entries segregated as to reconciliation and other;

(d.) Vouches registered, net;

(e.) Contracts registered, net.

6. Compilation of detailed schedules of each class of funds, showing the balances according to the books of the Chamberlain, Comptroller and outside departments, together with the elements accounting for the differences existing between the three sets of books above mentioned.

These schedules are to serve as a basis for:

(a.) Making the adjusting entries on the Comptroller's old General Ledger and on the books of the Chamberlain as of December 31, 1909, so as to bring the accounts carried therein into accord with the figures established by reconciliation work; and

(b.) Establishing the correct opening entries for the new General Ledger as to cash balances, unapplied balances, unaudited vouches and warrants payable.

In addition to the work being undertaken by the staffs before mentioned, the following, which require the services of men of experienced in the handling of the city's accounting matters, has been assigned to the supervisors.

1. Formulation of a new procedure to be followed by all departments that collect cash or draw vouchers on account of assessment bond funds, now treated as special accounts. It has been determined that these accounts should be treated in the same category as other permanent bond funds or corporate stock funds.

2. Formulation of a new procedure for use by all departments drawing vouchers for refund or revenues.

3. Revision and completion of detailed procedure for operating the General Ledger.

4. Formulation of procedure for the division in charge of the Auditor of Receipts and the Auditor of Disbursements.

5. Revision of Sinking Fund records.

6. Revision of Chamberlain's system of accounts to conform to the new system adopted by the Comptroller.

7. Revisions of forms of reports upon which are based the General Ledger Journal entries.

The Examiner, in his letter to the Comptroller, under date of May 17th, reported that the above work was under way and that considerable progress has already been made. The special revenue bond fund ledgers had been analyzed as to receipts and expenditures for the year 1910. The statement of balances of the appropriation accounts and corporate stock funds as to December 31, 1909, have been completed showing code and title account or fund, department balances, Comptroller's balances, journal adjustments, unaudited vouchers and Chamberlain's balances. His letter also contained the following:

"The installation of land liability records, for which a form of advice to be required from the Corporation Counsel and a register were recently devised, has not been accomplished, for the reason that periodical reports have not been received from the Corporation Counsel, although a request for such reports was made some time ago. The matter of land liabilities as well as that of judgment liabilities were considered on the 14th inst., in a conference held in the office of the Corporation Counsel in Messrs. ARCHIBALD R. WATSON, DOUGLAS MATHEWSON and the undersigned participated. As its conclusion, MR. WATSON promised to issue directions to have the monthly reports submitted to the Comptroller as had been expected."

EXHIBIT A.

PROGRESS OF INSTALLATION OF NEW ACCOUNTING SYSTEM SINCE THE REPORT TO CHAMBER OF COMMERCE IN 1909.

(1.) The extension of the accounting system to the minor offices was not undertaken until the end of 1911, when it was ordered installed as of January 1, 1912. July 1, 1912 it had been installed in all departments and offices but was operating defectively in a considerable number of them. Control, therefore, was not complete.

(2.) The work of "following up" the installations in the larger offices, partially begun in the autumn of 1911, was not resumed until July 1, 1912. The plan is to continue simultaneously the supervision of the operation of the system in the lesser offices.

(3.) The work of bringing the accounts of the departments into reconcilement with those of the Department of Finance was begun in

July 1910, and is now described as practically completed, except in instances where technical questions remain to be determined. Many of the reconciling entries, however, have not yet been made in the Department of Finance.

(4.) Departments and offices were required to furnish the Comptroller with the monthly statements of their balances as prescribed, and observance of this requirement has been followed up, but owing to the disagreements in the accounts these statements were not fully utilized in his office.

(5.) Until the middle of 1911 engrossment with more pressing matters compelled postponement of the extension of the system of expense accounting, which the Board of Estimate and Apportionment by resolution in November 1910, directed should furnish the data for the estimates of the subsequent budget. Expense accounting is now installed in twenty-two of the large departments.

(6.) All the departments and offices were required to furnish schedules of invoices received, and all but a few of them have been doing so; but these schedules have not yet been used in the accounting processes to establish the city's invoice liability, although registers and forms were provided therefor.

(7.) All departments and offices were required to furnish schedules of open market orders issued, and have generally furnished the same. On May 1, 1912 accounts were opened to establish the amounts of encumbrances against the allowances which the orders created. The machinery to enable their full use is not yet in operation.

(8.) The procedure governing the letting of contracts and the expenditures thereunder, was perfected so that the Comptroller might be fully informed of the transactions from their inception to the final payment made. Execution of this improvement is now almost complete, and the contract liabilities account is now operating satisfactorily.

(9.) Instructions were promulgated, and generally enforced, to have all departments and offices use the system of open market orders in purchasing supplies and for services, wherever practicable.

(10.) The subsidiary ledgers now definitely control the expenditures against each allowance, preventing overdrafts and confining the outlays to the purpose for which the allowance was made.

(11.) The plan for obtaining control over receipts was perfected; financial stationery was provided for each class of miscellaneous revenue; books and forms were provided for accounting control, covering both accruals and receipts, and were quite generally installed. This control is not yet fully executed as designed, and the audit control is only partially operative although the machinery therefor is provided.

(12.) Both the Auditor of Receipts and the Auditor of Disbursements now furnish the Chief Auditor of Accounts with the daily reports prescribed, but these are still imperfect because some of the requisite data are not as yet available.

(13.) To the extent that the necessary reports are furnished these

have been carried to the General Ledger accounts, but the latter are still far from complete.

(14.) The collation of data to establish the real property accounts is under way, and the plans to obtain the facts to establish the personal property accounts are being perfected. The introduction of land liability and judgment liability accounts awaits the final approval of the forms and procedure by the Corporation Counsel. The rent liability account is actually installed. An examination of the delinquent assessment records is being made to determine the amount of these and of the uncollectable items. A substantial number of accounts have been eliminated from the General Ledger on the ground that they were unnecessary.

(15.) The process of auditing claims perhaps has made the greatest improvement. By concentrating into one suite of rooms, under one executive head, all the persons required to handle vouchers, the time required was reduced so that 97 per cent. of all are now settled within seven days, the remainder being cases where conditions not dependent upon procedure cause delay. Vouchers are registered as received, thus providing means for a daily proof of the accounting. A record was established to show the progress of each voucher to payment and a report of every case of delay, stating reasons, is required.

(16.) Beginning with January, 1911, a more definite control over pay-roll disbursements was begun, by providing a system enforcing accountability by the schedules of segregations by grades and rates of salaries and wages in the Budget. This served to correct numerous irregularities, notably the non-discriminating charges for "over time." But the process is still imperfect from the standpoint of complete control.

(17.) Progress was made in the development of the improved budget system to provide for the more definite specification of allowances, so that the Budget for 1912 comes nearer being the businesslike instrument contemplated.

(18.) An improvement in the method of paying general taxes was introduced, followed by the system of semi-annual payments, which will operate beneficially to the city.

(19.) The work of providing a method of standardizing salaries was begun early in 1912.

(20.) Plans for the re-organization of the Stock and Bond Division were considered.

EXHIBIT B.

WORK STILL TO BE DONE.

(1.) Actual operation of the accounting system in some of the large and most of the minor offices.

(2.) "Following up" of the accounting system in the larger departments and the correction of defects.

(3.) Actual completion of the reconciliation of accounts on the

books of the Comptroller and keeping them reconciled with the current monthly reports of the departments and prompt verification of the latter.

(4.) The inclusion in the accounts of all the encumbrances created by all departments and offices, and of the accounts payable represented by invoices not vouchered; and enforcing the prescribed regulations governing these transactions.

(5.) Perfecting the control over receipts and accruals and instituting and maintaining efficient audit of the receipts.

(6.) Bringing into the accounts the numerous other elements still lacking to provide the General Ledger with every fact required for complete exhibits of the city's financial condition.

(7.) Preparing and publishing current periodical statements of the financial condition, as contemplated by the Manual, and a useful annual report in lieu of the almost useless "charter report," and within a reasonable period after close of the year.

(8.) Perfecting the system of control over payroll disbursements and providing for the adequate maintenance thereof, utilizing the results in connection with expense accounts.

(9.) Developing a system of efficiency records for employees for every department and office, to reduce the cost of services and the simplification of methods.

(10.) Completion of the plan for the standardization of salaries.

(11.) Developing and carrying out the plan for following up delays in payments of bills by departments.

(12.) Strengthening the inspection service so that it may accomplish its purpose more effectively.

(13.) Completing the revision of the reorganization of the Stock and Bond Division.

(14.) Developing and completing the installation of the expense accounting system.

EXHIBIT C.

LIST OF DEPARTMENTS AND OFFICES OF THE CITY.

Class 1. Major Departments, Boards, Offices, etc.