Abstract This article considers the conceptual problem of allocating general and administrative expenses. It seems clear that a production-related base is more acceptable to government auditors than any other. This is justified where a significant portion of the general and administrative expenses are production-generated. However, where the pool includes little, if any, production-generated expenses any base which is representative of the year's activity should be acceptable. In addition, the article includes recommendations which may help in solving practical problems in allocating administrative expenses.

Abstract The article focuses on intermediate accounting. A case study is presented wherein the variations in the value of the smelter is used to reinforce the logic of the accountant's concepts of verifiable objective evidence and cost as a measure of value. In 1953, the U.S. government entered into a long-term contract with Nickel Smelting Co. for the development of a substantial nickel deposit owned by it, but heretofore unused. Under the terms of the contract the company was to build the smelter with capital funds advanced by the government. The smelter was built during 1953-54, and began producing in quantity in 1935. Initial construction costs were $21,000,000, and an additional $1,800,000 was spent during 1955-56 for replacements and improvements, all of which were capitalized. After making all the calculations it was concluded that at least eight different values, ranging from zero to $15 million were identified. These differing values indicated why many accountants consistently adhere to recorded cost, with all its weaknesses, and to verifiable, objective evidence.

Abstract For too many years accounting by governmental bodies has been looked on as a necessary evil; one whose contribution was limited to a historical record of each transaction and to approving obligating documents when funds were available. Techniques of financial control have only recently been used to any extent. There are thousands of governmental units that are not now using the better management methods. The greater use of accounting data in planning and control may come as a surprise to some familiar only with the more traditional role of accounting in government. Greater awareness and acceptance of the need for variable patterns of accounting compatible with assignments of managerial responsibility and the type of operation being conducted represents a maturing of governmental accounting. Earlier, budgetary ceilings on available cash caused attention to be directed only to cash controls, while control of operations and other available resources was minimized or non-existent.

Abstract Accounting and auditing personnel of the U.S. Department of Defense constantly receive suggestions from accountants, from its contractors and their trade association representatives and from procurement personnel within the Department that its contracts should only place an obligation on its contractors to maintain an accounting system in accordance with generally accepted accounting principles and practices. The purpose of this article is to consider these suggestions and to indicate the accounting and auditing problems facing the Department of Defense in connection with its procurement contracts. Cost-type contracts require most contract costs be readily ascertainable. Generally accepted accounting principles provide standards for the evaluation of the financial position of an enterprise and for the measurement of income and expense over a given period of time. Fixed price contracts may also incorporate an incentive feature. Under this type of contract a unit target price is agreed upon during the initial negotiations with the contractor. The usual annual audit by independent auditors is directed toward the determination of the reliability of management's representations contained in the client's financial statements. The major audit effort is placed on balance sheet items with somewhat less emphasis on income and expense accounts.

Abstract Reviews the book "Allowance for Funds Used During Construction," by Lawrence S. Pomerantz and James E. Suelflow.

Abstract Reviews the book "The GAO: Untapped Source of Congressional Power," by Richard E. Brown.

The article reviews the book "Program Budgeting: Program Analysis and the Federal Budget," edited by David Novick.

Abstract Recent progress has outmoded many traditional standards of financial administration of governmental units. Among the more significant changes in concept are (1) greater recognition that financial management must be an integral part of total management at each level to be effective; (2) greater emphasis on the inter-relationships of programming, budgeting, accounting and reporting, and (3) greater awareness and acceptance of the need for variable patterns of accounting compatible with assignments of managerial responsibility and the type of operation being conducted. This proposed statement is an effort to express in broad terms the current accounting and related standards of governmental financial administration. Preparation of a budget for a governmental unit should begin with a determination of the work to be done and the expenses of doing it. Such a cost-based budget and the cash requirements stemming therefrom should be submitted to the legislative branch as a basis for appropriation action. After legislative action, cost-based budgets should be used to control work being done. The cost-based budget is the standard against which the actual costs incurred are to be measured. Responsibility for review, appraisal and action rests on supervision at every level. An independent financial examination and review of operations should be made.

Abstract In the study of standard costs, the learner usually has difficulty in determining variances in the accounting for the elements of cost and in setting up entries to record these variances. Generally, less difficulty is encountered in computing and recording variances for direct materials and direct labor, where variances are usually considered to arise from two sources, price variations and quantity variations, than is encountered in computing and recording variances for manufacturing expenses, where variances are usually considered to arise from three sources, budget excess variation, idle capacity variation, and efficiency variation. This discussion will disregard the problems arising out of the handling of variances for direct materials and direct labor, it will present a method which has been used successfully by students in learning to determine and to record the three variances that arise in the handling of the manufacturing expenses. Since manufacturing expenses are entered at an applied rate, a difference will usually exist between the actual and the applied expenses at the end of the period. This difference is classified as over-or under-applied manufacturing expenses and is, in reality, a price variation.