Reviews the book "Municipal Accounting and Auditing."

At present, no balance sheet is prepared to show the financial condition of the Federal Government as a whole or of any of its agencies other than those operating business-type enterprises. There are many reasons for the lack of balance sheets but the two principal ones are (1) the use of the cash basis of accounting and (2) the failure to recognize fund distinctions. The purpose of this article is to outline briefly a system of fund accounting for the Federal Government. Such a system will make possible the preparation of fund statements that will reflect the true financial condition and operations of the Government. Although the system will enable the preparation of both fund balance sheets and fund operating statements, this article is limited to balance sheets. The Federal Government should establish three types of funds: (1) a General Fund to be used to account for all assets or other resources owned by the Government, (2) Trust Funds to be used to account for assets held by the Government in the capacity of agent or trustee for others; and (3) Business-Type Funds to be used to account for the transactions of business-type enterprises.

Budgeting involves both planning and estimating processes which present problems even during peace time. During a period of war these problems are magnified by rapid changes in conditions which make accurate forecasting difficult, if not impossible. However, many of the conditions and the budget problems to which they give rise can be anticipated. Not all municipalities will fare alike and allowance will therefore have to be made for individual circumstances. Decreases in revenues from property taxes, licenses and permits, some state shared taxes and grants-in-aid can be expected. The assessed valuation of both real and personal property will decrease. Real property assessed values will decrease because the depreciation of property as a result of wear and tear, its destruction by fire or other causes, and the reduction in its value caused by obsolescence are not being offset by new building construction. Again, increased holdings of property by the Federal government mean increased exemptions.

The article presents the importance of a common terminology in languages. The author was discussing the handling of municipal expenditures in the operating statements with an official of a large city. Complete agreement was not reached until the official was asked to define "expenditures" and the author discovered that they had been talking about the same thing. This incident illustrates the value of a common terminology, particularly its importance in written communication. For in conversation, if it is not clear what the speaker means, one can question him, but a reader cannot do this. Not only has the value of uniform terminology long been recognized but even the necessity of preparing concise definitions and presenting them in a compilation as one of the means of achieving uniformity is well established. There are two principal classes of terminologies: those prepared for general use and those related to a particular publication. General dictionaries like the Webster's New International Dictionary and the terminologies of the American Institute of Accountants and the Dominion Society of Chartered Accountants are examples of the first class.

Reviews the book "State Supervision of Local Budgeting," by Wylie Kilpatrick.

This article points out the features of "Manual of Water Works Accounting," prepared jointly by the Municipal Finance Officer's Association and the American Water Works Association. Budgetary statements are an essential part of any municipal report That municipal officers have a duty to inform the public that they have complied with the provisions of the budget is now unques- tioned. Finally statistical statements are in some respects as important if not more important for the public than balance sheets or income statements for several reasons: They are easy to understand; they present a mass of valuable information in concise form; they present some evidence of the efficiency with which officials are carrying on operations; and they show trends. Many of the journal entries will be useful to officials who have a good knowledge of accounting but who are not familiar with utility accounting. It is for the benefit of the latter class of officials that some of the more complicated aspects of water works accounting were presented.