ACCOUNTANCY BOOKS LIBRARY OF THE UNIVERSITY OF CALIFORNIA. Cliiss fS- sed ins 'ith )rts ock , of rest ■er. The general contents of the paper are designed more especially to meet the requirements of Accountant Students, and especially Examination Candidates. A concise summary of the effect of all Important Legal Decisions appears in each number. At least one original Article appears in each issue dealing with some matter of interest to Accountant Students. The lectures delivered to the various Students' Societies are also reproduced. Arrangements have been made for a Serial Com- petition, and a prize awarded to the best Answers given on Questions of general interest. The Volume commences in May each year. Vols. I. to XII., Bound Half-Calf, Gold Lettered. Price -js. 6d. r.et each, or 72/- for the set of twelve ; XIII. to A'A7., 8s. 6d. net each. ACCOUNTANTS LIBRARY, THE. 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This Work is an Index to the Accountancy Lectures and Leading Articles printed in The Accountant, The Accotintants' Journal, The Transactions of the Various Students' Societies, and other Periodicals, during the last 30 years of the Nineteenth Century, to which is added a List of the principal Treatises now in use on each of the 117 Subjects affecting Accountancy. The Work will be in Daily Requisition in Accountants' Offices. ACCOUNTANTS' (CHARTERED) CHARGES. (Third Ki.-visL-dand l.iilarged Edition.) Price los. 6y the exercise of his powers of perception and imagination that an Internal Auditor can lie said to be fulfdling his purpose. Anvone mav check the accuracy of entries from l)ook to book, whether a skilled accountant or a mere bookkeeper; it is by the continual use of his auditorial acumen that an Internal Auditor succeeds, 'i'his only tends to support what has been previously said — viz.. that to catch the spirit of real auditing a careful studv of a standard text-book, such as has been mentioned, is \ltallv necessarv. it must not be thought thai il is the bounden duty of an Internal Auditor to be always predisposed to distrust the officials whose books cjf accoiuits come within his jurisdiction. I.est that should be the case, the audit clerk is referred to the following dicta of Lord Justice Lopes in tlie Ki/if^s/oi Cotton Mills case, the facts being as reported at page 225 of The Account ail t Law Reports, Vol. X 1 1 . ; — " It is the e careful that his conception of the importance of his duties is not an exaggerated one : he should not be overbearing, but should make his requests in a firm and respectful manner, and if he should point out that he considers the subject of his request to be simply a part of his dutv. he will not find it necessary to report to his chief that any unpleasantness has arisen. Let him also not forget that he cannot interfere in the management of a department, but so long as his chief is the responsible officer for the financial arrangements of a Corporation, the accounting officer is in duty bound to adopt the methods which the financial adviser considers are necessary to meet the requirements of the particular department. Unless the modifications or additional requirements arc but trivial, an audit clerk will find it best to report his requirements to his chief, so as to have a formal and official notification of the requirement made by him to the principal of the department concerned. Neither principal likes these alterations in ihe system carried out without his cognisance, and although it is wise to point out at the time the need of such a reform to the person actually in charge of the books, yet it is always best to have the alterations made by arrangement between the principals. This, then, is considered to be an essential part of an Internal Auditor's personal equipment, that he should have patience, perception, and tact. His duties mav not alwavs run smoothlv, but he must be prepared for that. His motto is "Duty first; personal A MUNICIPAL INTERNAL AUDIT. 9 considerations second," and this, carried out tactfully, will enable him to command the (■(infidcnce of his chief and the respect of the accounting officers whose accounts come under his check, without in any way conducing either to famiharity and its consequent contempt, or open antagonism with its resultant unpleasantness. Memo. — In this handbook the words '" Chief Financial Officer " and " Treasury " refer to the chief and staff of the Finance (or, if separately conducted, the Audit) Department respectively. The '' Accounting Officer " signifies the official whose receipts are under audit, and who is responsible for the receipts being properly accounted for. 10 A MUNICIPAL INTERNAL AUDIT. CHAl'TKR III. ANTE -AUDIT. In municipal arcountancv there is a lack of uniformity in the methods by ^vhich an accounting officer is supervised. That counterfoil or other receipts must be used, and that Collecting and Deposit Books be made uj) by the accounting officer is a sine qua no)i, for truly without some such means of supervision an audit cannot be said to exist. Some departments, such as, for instance, Public Conveniences, do not need Receipt-check Books, but there must be, either by Receipt Books, Stiles, Tickets, Registers, or some other such means, clerical or automatic, a method of check. First, then, as to the form i\i Receipt-check Book. One of the questions set at the last Examination of the Institute of Municipal Treasurers and Accountants (Incorporated) called for the students' views on this identical point. ' There may be said to be three kinds : First, the Counterfoil (like the counterfoil of a bank cheque); second, the Manifold Carbon Copy ; and, third, the. Triplicate Form of Demand, Receipt, and Counterfoil, used more particularly for rate collection purposes. The thinl may be at this juncture summarily dismissed as being antiquated, and lunv (except in small parishes where the work of rate collection is performed by one official") almost entirely superseded by the Counterfoil or Manifold Carbon Copy. A MUNICIPAL INTERNAL AUDIT. II Of the other two, the fhiet (lisad\antage of the Counterfoil Receipt-check Book is that it is not difficult lo lill up a counter- foil fL>r one amount ami the actual receipt for a different sum. It is certainly cleaner, and allows of details or memoranda being noted on the counterfoil, but it is generally found that the purpose of check is best fulfilled by a manifold or carbrm copy Receipt-check Book, where a true copy of the original is, or s//on/d be, retained. This subject is discussed later. Should this form of Check Book be in use, a small point well worthy of discussion arises as to whether the " tear-out " (the receipt) or the retained copy (the duplicate) should be bound on top — that is, whether the retained leaf be the one actually written on, and the '■ tear-out " bear the impression of the carbon paper, or vice versa. It is perhaps best to bind the " tear-out " underneath the retained leaf, for the reason that, especially at a counter where the payer sees the receipt made out, it is not so easy for a collector to write out the counterfoil, and then tear out the receipt and make that out for a different amount, as it is if the "tear-out" were on top of the retained copy, when he could make out the receipt, keep out the caibon paper, and afterwards make out the retained " copy " for whatever amount he wished. A disadvantage is that it is not as easy to affix stamps on receipts underneath the carbon paper for amounts of jQi or over, and this on a busy day is a consideration. However, it is meiely a matter of opinion for the chief officer to decide. Wherever Manifold Receipt-check Books are used, the carbon paper should be two-sided, thus leaving an impression on the under-side of the leaf written on, as well as making the copy on the leaf underneath. Where Stiles or other re2isters are used, a reliable make should be adopted, and its reliability thoroughly tested lieff)re being used as a sole means of check — an arrangement which is B 12 A MUNICIPAL INTERNAL ALDIT. not to be commended wherever other additional checks can possibly be brought into service. There are, as was pointed out at the last Examination ^,^lay 1903), "certain precautions to be taken in issuing receipts to the collectors in the first instance, and afterwards in checking them." These precautions \ary in detail, as ilo many other of the audit arrangements, in different boroughs, but there are manv primary precautions to be taken which are (or should be) common to all, which may now be considered. In the first place, tio department, other than the Finance Department (the Treasurer, Accountant, or Auditor), should ever be allowed to order the Receipt Books or Tickets required for the acknowledgment of receipts. The members of the Treasury staff w-ho have as their duty the examination and verification of tradesmen's accounts, should have strict instruc- tions gi\en to them never to pass any charge made by a trades- man for Receipt Books or Tickets supplied direct to the Accounting Officer's Department, and to report to the Audit Department any occurrence of such a nature. This does not of itself remove the possibility of an accounting officer ordering and paying for out of his own pocket Receipt Books and Tickets of a similar type to the real official ones in use. Tt is as well to let each printer who deals with the Corporation have instructions that orders for Rereipt Books or Tickets are not to be accepted unless emanating from the Treasury, and also to report the receipt of any order for such books from an office other than that of the Corporation's Finance Department. 1 1 may be pointed out that this does not prevent an attempt by the accounting officer to defrauy mistake. On the completion of an order, when the books are delivered it should be the duty of a junior fo go through the books, and see that the machine numbering is correct, that no omissions or duplications exist, and that the receipts from beginning to end are in consecutive order. Tickets, whether in rolls or bundles, should be submitted to the same examination. Each ticket should be in order, consecuti\ely numbered. Mistakes by the printers and the numbering machines are not so rare as might be supposed, and in one instance a defalcation was accidentally discovered to have been committed by an officer who found ten tickets too many in a bundle of 250, the numbering machine having numbered ten in duplicate. This incident is but one of many similar, and proves that these precautions are indispensable, for an incomplete check is worse than no check at all. From what has alreadv been said, the Auditor should never allow a ticket to be accounted for as " sample," without the M ,'\ MUNICIPAL INTERNAL AUDIT. initials of the Treasury clerk being appendefl in verification of such an entry. All Receipt Books and Tickets should be kept in locked cf>mpartments, and the keys entrusted to one in authority. As thev are received from the i^rinters and checked, they shoulil be entered in a " Register of Receipt Checks."' A sample ruling of a book which works well in practice is hereunder given: — , Department. Bocks Date I Received ' No. of from Book Printers ' Consecutive Nos. of Kcceipts From To Date {jiveii out ! Requisi- tion No. Signature of Receiver. No more Receipt-check Books or Tickets should be issued at cne time than is necessary, or usual, without in the latter case an explanation. It is advisable also to require, as an authority to deliver receipt checks, tickets, &c., a requisition fmm the head if the department for whose use they are intended, just as one would with stores of materials. Any re\iew of the arrangements preliminary to the actual audit would be deficient, were it not specifically stated that of rd! the means of check by what might be called " external evidence," the Corporation Minutes of Committees are amongst the most important. A MUNICIPAL INTERNAL AUDIT. 1 5 A nuinicipal Intcnial Auditor should himself go carefully through the pnnted minutes supplied to his department by the Town Clerk, and he will there find many transactions of the different departments reported, either in iletail. or merely state- ments of such a nature as " Ceriaiii conlracls were accepted at the price now named." Where a resolution gives full i)aniculars of a transaction, and the prices, persons, and conditions, such particulars nuisl be noted. The particulars of any transaction which is not so fully reported must be obtained from the Town Clerk's Department. The value of these particulars thus ascertained before the periodical visit to the department cannot be over-estimated. Throughout the ensuing descriptions of the audit of the various departments, the student cannot but perceive the great use of which these details of a department's work may be made. To quote a very simple case, that of a committee approving the draft agreement of, say, one of its farm or cottage properties on its water-gathering ground, if the Auditor at once obtains these particulars of the tenancy from the Town Clerk's Department, an efficient check on the due receipt of the exact amount of that rent, periodically, is obtained. This instance is one of the many to prove that this perusal of the minutes is of immense use, and is but a practical repetition of the efficacy of the old adage, " To be forewarned is to be fore-armed." It has been stated that note should be made of particulars thus obtained. In Chapter IV. will be found a methodical manner of making, using, and retaining these notes, where the question of " Audit Reports " is dealt with. From this brief summary of arrangements i)rcliminary to an ^audit, it will be seen that, although they may be, and often are, varied to some extent according to a municipality s particular requirements, or the personal opinions of a chief financial l6 A MUNICIPAL INTERNAL AUDIT. officer, vet there are contained therein principles vital to the efficiency of an audit, and although additional precautions may perhaps be taken, it is submitted that it would certainly be unsafe to detract from the essential safeguards — viz., that the entire control of the supply and delivery of all receipt checks should be in the hands of the chief financial officer, and that no means of obtaining a check additional to that afforded by those books should be neglected. On these foundations the basis of an effirient audit is made. The methods and precautions which have been described are intended to ensure that all receipts are accounted for, whether the moneys received be from jirepaid sales, or payments on current accounts for goods sold on credit. Tt is necessary, therefore, to consider what ijrovisions should be made, prior to the actual performance of the audit, to obtain a check on the due entry of the sale of goods which are not at the moment of sale paid for. Leaving out of consideration at this juncture the rates, and gas, water, and electricity rentals, which are each separately dealt with, provision should be made at every department where required for the necessary books to record the entries of charges not paid for at the time, and for all outgoings of materials from stores or slock, on credit, to ensure that there are no omissions, and that the due entries are made in the appropriate Debtors' Ledger, sufficient detail being recorded for rendering accounts to the debtors at due dates. Every Sale which is not for cash, but on creilit, should be entered in a Day Book, as would a Credit Sale by any private firm. Whether the record of the Sale should be kept by means of a Deliverv Ticket, and (ioods Outward Book as well, depends on the extent of the trading undertaken. In some departments the Sales or Charges on credit are so small that A Ml'MCirAI. INTKRNAI. An)IT. Tickets and (loods Outward Book are not required, l>ut an entry of the (lelit in the Day liook or ajipnipriate Charges Register suffices. Where Delivery Tickets are necessary, the same rules as to the supply and delixery thereof as has been referred to when dealing with the Receipt-check Books slumld he adopted, and the chief financial officer should have supreme control. Particulars recorded by the duplicates of these Delivery Tickets should be entered in a Goods Outward Book, and the totals of this book posted as per the Analysis (•■)lumns to the appropriate Stock and Stores Ledger Acc(nints. Ead-i ticket for the delivery of stock or stores should come under the Auditor's check, as explained in all those dei)artments following where Credit .Sales or Charges occur. For other charges — such as Rents of Premises, Way-lea\es, Acknowledgments, &:c. — a Rent Roll should be in use, and everv rental entered therein, to be checkeil as hereinafter shown. All the means of external check ajiplii-able to the certification of the due acknowledgment of all receipts, especially the Minutes of Committees, will apply to Credit Sales and Charges. To a certain extent, the audit of cash receipts includes the audit of charges and sales on credit, whether the amount is received a month or six months later ; the jn-ecautions taken to ensure the acknowledgment of the receipt necessarily covering the proper debiting of the account owing ; it only becomes a question as to the books which the chief financial officer decides to be necessary to ensure that Gocjds, Rentals, Services, e\:c., are not supplied gratis, where charges should be made, ami that all sums owing are not lost for want of attention to their collection, and are at balancing times brought into account. With these ante-audit provisions borne in mind, the way is cleared for a consideration of the at-tual carrying out of the aur accrued. More than this, it is always time well spent to go o\ er the works or grounds from which the receipts are obtained, and to put one's powers of observation and perception to the test by carefully noting the operations taking place at the time, and seeing if there is any scope for an attempt at fraud by omitting to enter receipts from any particular sub-department's transactions. All the sources of income, actual or probable, thus obtained at a first visit, and by the examination of the Receipt Books, should be tabulated on an " Audit Memo, and Report Sheet."' As an illustration of the use to which such reports may be put. and remembering also what has been said of taking extracts from the Corporation Minutes, the following fro -forma " Audit Memo, and Report Sheet," used at a gas works audit, may be given : — 20 A MUNICIPAL INTERNAL AUDIT. o O O o H O o D "1 o o "1 x> E a. en C •5 ;i5 ^ a o o > o a r. o H a S H O -^ 2 _a < ^ d as o a. o si ^:2 c _, — 3 « 'J H . 3 o i - s ' o a Q ' "O 2^ * = a - o ■J-. ~x C u i ■-— :c ^ — "Ci ^ ^ " t- ^ p S. = fl S 3 — r; "Z X iZ — — "^ ^=.£.0 ^ 1- ^- X o C' -> ,^- 3 C U) ^ w P O 32^ is o "5 u fl I^.c • . . ... 3 o Z • CJ u a J 2-i- ■ . . > • . • 3 CA 1 -1-30 a i: 5 •- Su -" u 0) "-^ vo ^ K • fi N ''1 M 2. »-< " " ... "a c; o - Ji . CJU u •J -JO c o .u u U UU uu O o S .9 "a fi) n ^ = -Ji — n < ■Ji w« ' J . X. ■J 2S 'Si X C r. f? — T. — Ji ■J .•9 C/3 ^ u ■^J A MUNICIPAL INTERNAL AUDIT. 21 C8 O^C ,-3 r: o V o o c ■Jl ■o D UU ■J> c o .2.e-o — c — • Cfl (J ''^ q-5 s S O ■-! 3 ■j: H o 1/3 O =0 --i •J -J : 1 1 IT' c 1 S 1 K J •5'C ^i 1 1 1 1 Increase Decrease T3 -i- tn -t \ •g >0 -r In. 1 n . in •3*0 » "• ^, -n -T >n 8. t: M MOO m X in -too '«1- -t ri .0 -r 00 m tN. s. o O a M O o 'J u 'O'J •J 3 2: - tn * = ■§« c 7n 1/. "en - w J. >. 1 s 2 73 u _o2i u io c = S j: ^. ;/) — 7. f 3X 22 A MUNICIPAL INTERNAL AUDIT. (X.B. — The audit of the collection of Gas Rentals and receipts fn.m Credit Sales of all descriptions of Residuals, Fittings, &c., is presumed to be made at the chief financial officer's depart- ment, the audit of the proper entry cit all debits being performed at the gas works.) With this department taken as an example, the Audit Memo, and Report Sheet of any department may be designed; and, at the same time, this example is sufficiently elastic to allow of all or any receipts, other than those specified, peculiar to any Corporation or department, being brought under notice. All the sources are given in full, and it is left to the chief financial officer to condense or expand the details specified as he thinks best. These reports, neatly kept, are first to be submitted to the chief financial officer, at the completion of the audit, for his inspection, and instructions on any point arising therefrom. They may then be bound up at the year end, to be kept for reference; any item of a periodical nature, such as Rent, may thus be noted on the memo, form, and not overlooked when the next year comes round. The headings to the columns are self- explanatory, and the report has the merit of being practical, and is at present in actual use. The only column which may need an explanation, not having been previously spoken of, is the column headed " From other Departments." This is used as a record of inter-departmental transactions ; if one department pays any sum to another department, the accounts clerk on the Treasury staff should always notify the Internal Auditor of such an item being passed for payment, and if the Auditor at once enter the transaction on his memo, form he has a certain check on the Receiving Department accounting for the receipt of that item when the books come under his audit. A MUNICIPAL INTERNAL AUDIT. 23 When the pei'uvlica] \isii (n the department is maile. the Auihior will, wiih his list cf Ixuiks before him, call lor their production. The hooks with which he will probably deal tirst will be all the Receipt-check Books used by that department, which he will check into the Cash Account, either direct or through an intermediate summarising book, the totals only of which would be carried into the general Cash Account, or, to give it its full title, the Receipts and Deposits Account Book, RECEIPT- CHECK BOOKS. In checking receipts by means of Receipt-check Books, there are many rules to be followed, which are of a general nature and applicable to Receipt-check Books for all departments. These, then, may be here stated, and applied constantly whenever the Auditor deals with a Receipt-check Book. See that every receipt-check is consecutively machine- numbered, ensuring that none are torn out, missing, or left blank ; any cancelled receipt-check must be replaced in the Receipt-check Book. It is wise to make it a rule that no alterations or additions shall be made to a receipt-check after once it has been made out. If any amendment is necessary, let the incorrect receipt be cancelled and replaced, and a new receipt given. Once let this be understood by all the departments, and a loop-hole for fraud is at once closed, for alterations to receipts are always unsatisfactory, especially where the correction reduces the amount of the receipt. It is wise also to have fixed rules as to (a) whether a separate receipt shall be given for each class of transaction, or whether one receijjt may serve for any number (oth eruise th e accounting '^ \ 9 « A ^7* Of THE UNIVERSITY _ OF ^ 24 ■ A MUNICIPAL INTERNAL ALDIT. officer may su manipulate his counterfoils ur duplicates as to obtain possession of a blank receipt, which he may use without accounting for tlie aniuuni thus acknowledged as received) ; and (b) whether in addition to receipts at the foot of cheques sent by firms in payment of accounts an official receipt shall be attached. Every bill rendered by each department should bear at the head, in prominent type, a notice that official receipts are given, and only they are recognised as a discharge of the debt. As each receipt-check is examined, it should be cancelled by a distinctive mark being made across its face, either in the form of initials, a tick, or a stamp. In any case, this mark should be of such a kind that each audit clerk can recognise his own, as distinguished from any mark of the accounting officer or the Professional or Electi\e Auditors. The same rule would api)l\ to ticks or audit marks nuidc in the Cash Account or intermediate books. It is a difficult matter to make a tick which is not liable to easy forgery, so that perhaps the most advisable method is to cancel a receipt-check by a laxge initial letter, not so easily imitated, being made ^across its face. In the books of account either a tick or a small initial will suffice. A j)oinl which is most ailvisable is to have a distinctive lick or mark for any item in the books to which an alteration has been made before audit. This tick should differ only slightly from the ordinary tick, ami yet should suffice for the Auditor to tell at a glance whether a figure has been altered before or after his audit. Attention must not simply be confmed to the Receipt-check Books in use. Always call for the Check Books in stock not yet brought into use ; c\en if the stock be necessarily a lar^e one, and each book cannot be separately examined, a A MTMCIPAL INTEUNAl. AUDIT. 25 general examination of the books will tend to ensure care on the part oi the officer in charge., aiiil an occasional detailed examination would serve to prevent temporary deficiencies remaining undiscovered, through convenient loans of receipt- checks being borrowed from the store cupboard. If in any department there are required ti) be large numbers of Receipt-check Books, for differing purposes, kept in stock, see that a Register of books received and in use is kept, and produced at each audit for examinati(jn. Whether inter- mediate books are used to summarise the totals of the receipt-checks for transfer to the Cash Account (which method is. of course, indispensable in the case of a large undertaking), or the receipt-checks are entered direct into the Cash Account, the Auditor must start with the Receipt-check Books, and trace the receipt right through till it reaches the chief financial officer and is paid in to the bank. TICKETS. Wherever the method of check adopted in any department is bv ticket, either by the railway ticket system, or by rolls or books of tickets, the audit calls for as much care as does the checking of Receipt-check Books. The ticket rack, or, as the case requires, the rolls of tickets, should be inspected at each visit, and compared with the previous day's Ticket Slip, any discrepancy being immediately investigated. In checking a roll of tickets, look at the ticket on the inside of the roll as well as at the outside. All tickets should, at the moment of issue, be defaced by being snipped, or dated, &:c. 26 A MUNICIPAL INTERNAL AUDIT. The Ticket Stock Book should always be called for, and, periodicaJly, the whole stock checked, though at every visit the Stock Book should be examined, and the entries relating to tickets in the rack or in the rolls checked. Where the used tickets are collected, open the receptacle therefor, and see that the used tickets deposited therein correspond with the numbers in the racks or roll. Where the use of differently-tinted tickets is prescribed for different days of the week, the observation of this rule is to be verified. Additional checks on tickets applicable to special cases — such as Tramways, Baths, &c. — are mentioned at the pages devoted to the audit of such departments. TURNSTILES, REGISTERS, &c. Stiles and registers should always be examined at each visit, and compared with the slip showing the registered number at the last date of account of receipts being taken thereby. It has been previously said that stiles and registers should not be solely relied on as a means of check, if other additional means can be found. In theory nothing more need be required, but as it is claimed that this handbook is, above all else, practical, it must be at once said that, in practice, mechanical or automatic checks cannot be relied on for absolute accuracy. A Difference Book, recording " overs " and " shorts," according to the stile or register, is generally required to be kept, and where this is the case the book should be examined, and any extraordinary difference enquired into. There may be cases where the use of stiles is found to be a sufficient check, but such cases are the exception rather than the rule. ti MUNICIPAL INTERNAL AUDIT. 27 Such, then, are the rules, whicli may be said to be of a general nature, applicable to the audit of any department, and which must be read as additional to the particular details of the procedure in each department hereafter described. The totals of these primary receipt-checks must then be traced to the accounting officer's " Receipts and Deposits Account," which we for brevity call his Cash Account. Whether the amount of each receipt-check is entered separately in the Cash Account, or reaches that account through the medium of intermediate Summary Books, depends, as has been said, on the size and general arrangements of the department. In either case, the next step is the verification of the fact that the totals from each department have reached the bank. The accurate keeping of the Cash Books at the Chief Financial Oflficer's department, and the consequent crediting of the Ledger Accounts of each department's receipts, is touched upon hereafter. Each accounting officer should be provided with a Receipts and Deposits Account Book to record the particulars of the total sum he has received, and of his payments to the proper financial officer at the due dates. This book is of ordinary Cash Book pattern ruling, showing on the debit side the totals of his receipts, and on the credit* side the payments to the bank, direct, or through the Treasurer. 28 A MUNICIPAL INTERNAL AUDIT. o c o H O u in H t— < l-H y Q Q < in H 0^ I— I U u w u c c E u a- (U Q A MUNICIPAL INTERNAL AUDIT. 29 This pattern provides for the particulars of the receipt-check being entered direct in the Cash Account, or being summarised in the various intermediate books. As many Analysis columns will be inserted as are necessary to collect the items into groups for entry in the General Cash Book of the department. Care should be taken to obtain the chief accounting officer's signature to each page, thus remining all doubts as to the authenticity of the Cash Account, and, in the event of irregularities being discovered, preventing any plea of non- cognisance of the particulars of the entries. Not only must all receipts be entered, and the amounts checked into the Cash Account, but the dates of the entries must be examined. By strict survey always ensure that the official in charge of the Cash Account is prompt in his entries, and that the book is not left till the month or week-end before entry. Especially should this be ensured when the officer is to pay over his receipts weekly or daily, for in this case efficiency is better obtained by requiring the weekly or daily totals to be paid in to the exact amount, and not by lump sums on account, the full amount of the receipts being made up at the month-end. Temporary deficiencies should be guarded against as carefully as total omissions to enter the actual receipts. The regulation of the periods at which the accounting officer should pay over all moneys received by him is another matter for the chief financial officer to decide. In large undertakings — such as Tramways, Baths, Gas Works, &c.— the amount of receipts may be, and generally is, so great that daily payments to the chief financial officer or to bank are essential. With the smaller undertakings, only the particular circumstances of each department can guide the chief financial officer in making his regulations, yet it must be pointed out that the more regularly the receipts are required to be paifl in, the more is careful c 2 O A MUNICIPAL INTliRXAL AUDIT. J management and accounting secured. Moreover, the possibility of an accounting officer decami)ing with a day's or week's receipts has ahvays to be remembered, and common prudence suggests that the disastrous results of such an action will be in proportion to the amount of money left under the defaulters control. There is, besides this, the chance of the premises in which the money is kept till banking time being broken into by burglars, and it is safe to say that there are better provisions for the safe keeping of cash at the Bank, or even at the Financial Officer's Department, than at the majority of the scattered departments where the moneys are received. It has been found in practice that perfection is as nearly as possible secureil by requiring the departments whose daily receipts amount to ;^2o or more to pay over their receipts daily, and those whose weekly receipts amount to ;^5 or more to pay over weekly ; in any case, not more than ;^5 should be allowed to accumulate at the smaller departments, vnthout the chief financial officer's satisfaction as to its safe keeping. This is, of course, a matter on which every chief financial officer is competent to advise, yet to students a statement of useful prr.ctical experience may be of some service. At every department where moneys are received and paid over to the Treasury there should be a book of Cash Slips (signed by the receiving cashier) used to record the details of the cash payments to the Treasury, and this book should be checked ofif w'ith the credit entries in the Cash Account, noticing that both dates and amounts correspond. It is recognised as a good accountancy principle that receipts are to be paid over by the accounting officer in full, without any payments of any kind being deducted. An amount should alwavs be advanced to such officers as may require it A MUNICIPAL INTERNAL AUDIT. 3 1 for jietty disbursements, and a Petty Cash Arrount kept on the Imprest System. This arrangement is generally advisable, though there are cases., notably in the Magistrates Clerk's Department (q.v.), where the general practice differs, and where the net receipts, after paying witnesses, &c., are paid over. The cash in the hands of the counter or cash clerks and collectors, does not. as a rule, need to be checked, especially if the change be advanced by the chief accounting officer, who remains resf)()nsible for the amount. The procedure as to whom the receipts of the accounting officer are to be paid over differ, again, in many towns. Perhaps the designation of the chief financial officer is accountable for the greater part of these differences. In some towns the chief financial officer is given the statutory title of "Borough Treasurer '" (Municipal Corporations Act. 1882, Section 18), the Corporations Bank Account being kept at a local bank, just as an ordinar}- firm's Current Account, though possibly on special terms. In this case, the probability is that the receipts from all departments are to be paid in at the Treasurer's Department, and, after the due entries have passed through his books, the cashier rir chief of the collection staff acting under the Treasurer, pays everjthing to the account of the Corporation at the bank. ( )n the contrary, the larger departments, such as Tramways, may, with the necessary staff, deal entirely with its own cash and pay in ilirect to the bank, the Treasurer still exercising supervision o\ er all the cash arrangements. In other towns the chief financial oflficer is designated the Accountant, and the statutory title of Treasurer is conferred on the manager of a local bank at which the Corporation's account is kept. The pros, anfl cons, of this arrangement are not to be 3- A MUNICIPAL INTERNAL AUDIT. debated here, but the practice is simply pointed out. Where the Treasurer is a bank manager, and not an active Corporation official, the practice often is for the departments to pay in their receipts to the Treasurer direct, without the cash passing through the accountant's hands ; or, again, the accountant may have all the cash passing through his department and be Treasurer all but nominally. Sometimes, also, the Borough Collector and his department are independent either of the Treasurer or Accountant, and the cash is paid to him. The practice thus varies greatly, but each student may apply to his o\Mi borough the principles herein stated. The important point is that whether the cash be paid to the Treasurer, to the Accountant, to the Collector, or to the Bank direct, the chie^ financial officer's regulations on all questions of finance should be paramount, and the whole of the receipts come under his audit. The best and most general system is believed to be that by which the accounts for all Credit Sales are to be rendered and collected by the chief financial officer's staff, the receipt of moneys for Cash Sales only being deputed to the departments. This must be borne in mind constantly during the ensuing description of the departmental audit. It will be noticed that the departmental books, on which the chief financial officer relies for the particulars of his accounts rendered to debtors, are to be checked at the outside department by the Internal Auditor, the Goods Outward Book and/or Day Books being sent to the Chief Financial Officer's Department, after being checked as far as possible by the Internal Auditor, the Debtors' Ledgers of all descriptions being entereci up therefrom. The Delivery Tickets for Credit Sales must be traced thmugh the Goods Outward Book to the l^ay Book, and to the debtor's account in the Debtors' Ledger. A MUNICIPAL INTERNAL AUDIT. ;^^ Any receipts for sums in payment of current accounts should be checked as credited to the debtor's account therein, and the list of old outstanding arrears checked at each visit, with any requisite recommendation made thereon. Wherever rents are received, the basis uf check must be the Rent Roll, which must be in accordance with the Minutes of the Committee who would authorise the preparation of the agreement, and should always bear the signature of the chief accounting officer. The debit entries in the Rents Ledger should be checked from the Rent Roll, and cash payments, as they are made, checked as being credited to the proper Personal Account therein. Other charges to debtors for labour, &c., may, for the present, be considered as being all debited to the Personal Accounts in the Sundry Debtors Ledger from the Time Sheets and Wages Journal, and all the payments thereon checked as being credited to the correct Personal Accounts therein. The diversity of the charges made for credit transactions renders it impossible to mention as generally applicable all the provisions which may be made to ensure that all charges are debited which should be. The requirements of each department are better discussed separately. Another subject of general application, which now may be considered, is the manner of dealing with Bad and Doubtful Debts. The Collecting Department must first of all have made every effort to recover the amount due, and of this the Auditor should satisfy himself. A Collectors Enquiry Form, such as is produced below, has been found in practice to be of great use in this respect, tending to eliminate any doubt as to proper efforts having been made to collect the debt. 34 A MUNICIPAL INTERNAL AUDIT. Ref. No. (COUNTY) BOROUGH OF. Particiiliirs of CLiiin rccoinincndcd to be entered in Bad Debts Register. Particulars : Amount of Claim (Rate, Gas, &c.) and period covered Name and Description of Debtor Situation of Premises State fiiUy nature of enquiries and by u-hom made. Date of enquiry Particulars (To be continued on the back if necessary) Initials 190 Particulars of any previous excusals Signature of independent 1 Enquiry Officer in verification ) Approved . Borough Ticasurer {or Accountant.) A MUNICIPAL INTERNAL AUDIT. 35 After cullL-ctors lia\e failed to recover, all siuh legal proceedings should be taken as are possible, having regard to the chance oi' recovery bv sucli process, ami to the probability of " throwing good money after bad " by so doing. Whether each dejiartment is allowed to institute its own legal proceed- ings, or whether all such matters are dealt with by the Town Clerk's or Finance Department, all possible and advisable pro- ceedings at law must have been taken, and tiie chief financial officer or the chief iA' the department concerned (assuming there be a separate collecting staff for that department) personally satisfied of the impossil)ility of recovering the debt, before the amount is written off as irrecoverable. There should be kept a Register of Bad Debts, &c., at the office of the chief financial officer, and in this Register must be entered all items considered as bad, all overcharges, and credits, together with particulars cif the debt, the reason for non- recovery or overcharge, &c. After a debt has once been entered in the appropriate Debtors' Ledger, no reduction of the amount of the charge should be allowed without the authority of some such entry in the Bad Debts, Sic, Register, confirmed by resolu- tion of the Finance Committee, or some authorised sub-committee thereof. Even after a debt has been confirmed as irrecoverable, the Auditor shoukl maintain, as far as he can, an oversight over the Collecting Department, and see that the collectors watch for the possible return of absconding debtors, and any other probable means of ultimate recovery, without the debt at once passing out of sight. The whole of the receipts having now been traced into the accounting officer's Cash Account, the outstanding accounts checked, and the payments of all the receipts at their due dates to the official appointed for that duty having been verified, the additions of all books wherein the receipt-checks have been entered, and all transfers to the accounting officer's general Cash 36 A MUNICIPAL INTERNAL AUDIT. Ac('(.iunt, should be checked. The signature of the officer to whom the payments have been made should be examined, and the due entry of all the accounting officer's deposits traced into the linancial officer's books. The checking of the accuracy of the banking of the receipts to the correct Bank Accounts now demand attention. Here, again, the dispaiMties of the practice existent prevent any statement being made applicable to every case. All depends on the method of keeping the accounts of the different under- takings at the bank, but, whatever may be the rule, the payment of all moneys must be traced, not only until they reach the bank, but also till they reach the appropriate account at the bank, if the banking accounts be divided. This subject is more fully discussed when dealing with the Collectprs' Office {q.v.). Thus far attention has chiefly been called to the verification of clerical entries ; but even if the entries from book to book are in perfect order, an Auditor must not let that suffice, if an external check of any nature can be adopted in addition. He will find that frauil is quite as likely to take place by errors of omission, as well a.s by clerical mistakes or manipulations. He must constantly keep in vit;w the fact that receipts, especially of an unusual nature, may never be entered at all, and must always have in his mind's eye the different methods by which it would be possible (even though improbable) to divert receipts at their source or in any other way defraud. Each department has to be dealt with according to its own particular conditions and requirements. Various opportunities of peculation are pointed out, in most cases, in the review of the audit of the different departments following. Errors may be divided into two distim-l jiarts, unintentional and wilful, and the Auditor must use care in distinguishing between the two. Clerical errors and omissions may occur without anv rr^l attrmrt at frauil. and nlt'Tou2[h the .Auditor A MUNICIPAL INTERNAL AUDIT. 37 may often find it hard to distinguish between the two, if there should be any repetition of an apparent uniiUentional error he mav find reason to beheve that the error was not unintentional but wilful. He nuist use his own judgment, and not by reason onlv of a clerical error at once assume fraud. Much may be done, in addition to the examiiuition of the book entries themselves, by a careful comparison uf the receipts for the period under audit with the corresponding period of the year previous. To revert to the Audit Memo, and Report Form at page 20, it will be observed that provision for comparisons is made therein. Any phenomenal increases or decreases will always call for explanation, while the more detailed the com- parisons become, the closer will be the view of the differences, and the firmer becomes the Auditor's grasp on the audit of the receipts of the undertaking as a whole. Comparisons will not accomplish everything, but an Auditor who fails to make use of the assistance proffered thereby would certainly be found wanting. To complete the Report, therefore, fill in the returns for the comparative periods in such detail as afl'ords best assistance without great labour. An Internal Auditor is then prepared to report to his chief the result of his investigations. If irrejrularities should be discovered, do not wait till the whole of the audit of the departments is complete, but report to the chief financial officer at once ; he will not mind his train of thought being disturbed if probabilities of defalcations are imminent. Never fail to report regularly on the result of each periodical audit, or to suggest to the chief any well thought-out scheme for improvement on existing arrangements. When at work at a departmental office be vigilant, courteous, but firm, accepting no favours nor perquisites. When leaving the departmental office after each visit take a look round, and see that the notice to "Obtain official receipts for all piiyments '' is in a i)rominent place at the cash counter. jS A MUMCIP.AL INTERNAL AUDIT. CHAPTER V. THE AUDIT. DEPARTMENTAL. ihj: depaktmexts. CLASSIFICATION. To satisfactorily classify the departments so as to meet the requirements of individual students is a difficult task, as there is great diversity not only in the number and constitution of the departments necessitated by the work of the different Corporations, but also in the duties allotted to those departments. The most common instance of this differentiation is that of the collection of the revenues from Gas, Electric Light, Water, Rentals and Rates. In some boroughs the collection of all these items of revenue is entrusted to the staff under the supervision of the Borough Treasurer or Accountant (who is in these pages designated the Financial Officer). In others, the head of the respective departments is given charge of the collection of the revenues appertaining thereto, the financial officer's supervision being of a general nature only, with or without the subjection of the departments' books to the audit of the financial officer's own audit staff. These and many other differences have called for careful consideration to ensure a manner of classification being adopted A MUNICIPAL INTERNAL AUDIT. 39 which \voul\er to the Cash Account, the additions checked, and the periodical paying over of the moneys received verified by the Cash Slips Book and the magistrates' clerk's books, to whom the moneys are first paid, afterwards being paid over at the Rates Office. The rates should then be checked off by the Unpaid Rates Statement, and the postings of the rates to the Rate Book, and the costs to the Register of Summonses at the Rates Office, verified both in total and in detail. The Returns of Rates still Unpaid, Irrecoverable, and Recover- able, should be submitted to the chief financial officer, and the same procedure as to writing off adopted as has already been described. The final closing of the collection of the rate by the writing off of all irrecoverable sums, and the carrj'ing fonvard of all recoverable sums, remains to be supervised ; and, lastly, the figures showing the final results of the collection of the rates, along with comparisons of the collection of previous rates levied, should be submitted to the chief financial officer for his consideration. THE FINANCE DEPARTMENT. (b) GAS, ELECTRICITY, AND WATER RENTALS, AND OTHER REVENUES. The Rental Ledgers are the principal books used to record income from these sources, an account for each consumer being kept therein in columnar form. Separate Rental Ledgers will generally be kept for each department. Before the audit of collection of the amounts accrued due can be undertaken, the correctness of the debit entries must be A MUNICIPAL INTERNAL ALDIT. 55 tested. Check all arrears brought forward from last account, in detail as well as in total. Call for the Meter-state Registers, and see that they are fully made up, added, and balanced. The debit side of the Gas and Electricity Rentals Ledger, and such portion of the income from water rents as is charged by meter, should be a copy of the entries in the Meter-state Registers. These Registers are kept at the works of the different under- takings, and are sent up to the Rentals Office at intervals, as required, to provide the particulars of the charges. Check the total consumption as shown by the additions of the Registers' summaries with the total of the corresponding columns of the Rental Ledger, making '" test " cases of sample meter-states. Anv special charges for gas, electricity, or water consumed at fixed charges per agreement should be checked with the Register of Contracts, and the prices verified by a perusal of the contract itself. If there are sales in huge quantities by meter on special terms, check the meter-states relating thereto, as shown in the Meter Books. Where the water charge is based onlv on the rateable value of propertv, there is an additional difficulty to be overcome when balancing in total with the Valuation Lists, in that there may be property on w^hich rates are payable to which there may be no water supply, and vice versa, as in the case of charitable institutions, which may not be rated. If these differences be many, the only absolutely accurate check would perhaps be by checking off each debit entry with the Register of Services and the Valuation Lists ; but as this would in some cases be an immense task, it would probably suffice to check as far as possible in total by means of a Reconciliation Account, and by having columns printed in the Consumers' Ledgers, by means of which the total number of consumers could be proved by the marked Valuation Lists. In 56 A MUNICIPAL INTERNAL AUDIT. many boroughs charges for water will be made both by water rates and rents, as per meter, so that both means of check will be needed — i.e., by Meter-state Registers and the Valuation Lists. Wherever water rates are levied, the Consumers" Ledgers must contain provisions for supplemental Valuation Lists, reductions on appeal, &c., being incorporated therein. They should all be checked in detail as well as in total. Any charges for rents of meters should be checked by the Register of Hired Meters, \ouched by the chief of the depart- ment responsible therefor, and, if any agreements be entered into for the hiring, verify by means of the copies of the agree- ments that the correct charges are made. Where a municipality makes it a rule to charge for rentals of meters, any omissions to charge would need to be enquired into. In all cases the prices charged for gas, electricity, and water consumed should be checked by the Minutes of the Committee at the rates there authorised, whether for domestic supply, trade supply, or special supplies under contract. Wherever different rates are charged for different districts, verify the price in each district by the Minutes or the Agreements, if any, with the authorities of the district supplied. Inter-departmental transactions — such as Charges for Lighting Public Lamps, Tramway Traction Power, &c. — can always be checked by the accounts paid by the departments (^haiged, after having been attested by the head of the department. Any additional debit entries in the Rental Ledgers, such as Rentals of Installation of the Lighting Service, should always be traced from their source — the Hiring Agreement and the Register relating thereto. Where an agreement is entered into with electrical and other firms to supply services of gas, A MUNICIPAL INTERNAL AUDIT. 57 electricitv, or water on rental terms, call for the agreements and the copy returns to, ami receipts givtii liv. those firms for payments of rentals made by the municipality to them. The total of the debit entries having been checked, the audit of the collection of the charges now calls for attention. The use of Receipt-check Books, regulated as has been described in Chapter III., is, of course, a sine qua mm. Paren- thetically it may be stated that there is usually in the Collectors' Office a general form of Receipt-check Book in use to cover receipts from all sources, other than rates, and perhaps deposits for various items, such as are taken from gas, electricity, and water consumers, as security for the payment of accounts, &c. Whether a special form of Receipt-check be used for each purpose, or a general form be in operation, the duplicates of the Carbon Copy Receipt-check Books should for a complete audit l)e callerl o\er with the collectors' Cash Accounts, the entry in the correct columns therein verified, and the postings to the separate Ledgers checked off. Here, again, either of the two methods of check already described in the audit of rates collection may be adopted — viz., {a) a check in total, by agree- ing the total of amounts shown to have been received as per the appropriate columns in the summaries of the Collectors' Cash Books, with the totals posted to the credit of consumers in the Rental Ledgers; and {b) a check in detail, each receipt being traced from its source to its true destination in the Rentals Ledger. Wherever discounts are allowed for the more prompt payment of accounts, the detailed audit is far more satisfactor}-, as, after a certain date, no discount allowances would be passed, whereas a check in total only, might overlook an error in this respect. As a general rule, in the audit of this or any other source of revenue to be hereafter described, wherever discount is allowed, a detailed audit of the receipts and the postings is the most satisfactory. In any case, the .luplicates of the 58 A MUNICIPAL INTERNAL AUDIT. Receipt-check Books must be called over into the collectors' Cash Account, the Cash Account additions checked, and the money traced through the chief cashier's books until it reaches the bank. Whether receipts are verified in total or in detail, the list of unpaid accounts should be periodically abstracted, and submitted to the chief financial oflficer, along with the collectors' reports and rerommendations. All items written off as irrecoverable should have their authenticity founded on their entry in the Bad Debts Register, duly approved by the chief financial ofllicer, and written off by the appropriate Committee on his recommendation, as has already been stated. All external evidence — such as newspaper cuttings, notices of dividend in bankruptcy, &c. — shnuUl, as has been shown when dealing with the rates collection, be bound together and produced in support of entries referring thereto. Insistence on the chief financial officer's supervision over all arrears and outstanding amounts is the best safeguard against . items being written off as irrecoverable which have been paid and not accounted for, and in many boroughs this oversight is exercised by an independent enquiry officer on the chief financial officer's own staff making enquiries into most of the cases for the better guidance of the chief officer. Arrears for long periods should never be allowed to be run up by consumers of gas, electricity, and water, as if the arrears be existent for any length of time the service should, after short notice and consequent non-payment, be cut off, the supply not being renewed until payment both of the arrears and the charge for re-connection have been made. The Cut-off Notice Book should be kept in the form of a manifold carbon copy book, and the duplicates tested periodically with abnormal cases of arrears. Legal proceedings should always be taken where there is any chance of recovery, and a Register of Legal Proceedings be kept A MUNICIPAL INTERNAL AUDIT. 59 at the Collectors' Office, showing the results of the legal procedure. In the event of judicial orders being obtained to pay to the County Court Registrar, and especially in the case ui orders being obtained to pay by instalments, the Auditor should see that the instalments are collected from the County Court Offices periodically, and not allowed to lapse. Trace each sum recovered by legal process to its correct account in the Rental Ledgers. The arrears finally carried forward at balancing time should be closely scrutinised, and, in a well-regulated Collecting Department, be a constantly decreasing quantity. Such elementary precautions as changing the posting clerks at irregular intervals, and collectors not being given charge of a Rental Ledger to post, are presumed. Fill in Audit Form and report to the chief financial officer. THE FINANCE DEPARTMENT. (c) PREPAYMENT (COIN) METERS. Wherever prepayment meters are in use there is a difficulty as to the audit, inasmuch as the registers on the meters are not always exactly accurate. The greatest safeguard is to adopt a system by means of which peculation on the part of the accounting officers is rendered possible only by collusion. On each prepayment meter is generally a dial, which registers the consumption, and this quantity registered as consumed, worked out at the price charged, should give the amount of cash which ought to be found in the meter till ; but these amounts very often do not correspond, so that it is advisable to provirle each coin meter collector with a hand-bock, the headings to which are as follows : — E 6o A MUNICIPAL INTERNAL AUDIT. w o o « Q < X w hi o H o w •J o u to H W O O 0) C/3 (« ^ \-l a E o Qi •u *j i-i o U) A (A ^ ___ >' 1 u 1 o ■Ji > O ^ •o •T3 •«-, u) O [/} A « ^=3 o <-^ *- . ^ •B ^ U o ~ tJ -- 5-4 b i« (u (A < "K i '-^' en — •a 1 C (U QJ (A 1 U 3 6 o •^ J_^ rt 1 : ut 0) « : ! S wi o o u c> rt " ■^ : 1 6 2 u u 1. ;^ A MUNICIPAL INTERNAL AUDIT, 6 1 Two men should pay visits to the meters together — the one a meter inspector, and the other the cash collector. The inspector should, in his Meter Book, enter the register of the meter dial, see the cash counted out by the collector, and at the end of the day sign the Coin Meter Collector's Hand-book, as being in accordance with fact. Two men should not be allowed to work together for lon^. This system necessitates collusion between two persons at least, and if in addition the register of the coin meters be taken at the usual quarter days by one of the other gas meter inspectors, and the quarterly meter-states recorded in a Coin Meters Register, it will be seen that any great difference in the meter-states, as recorded by the collector and the inspector, and the corresponding amount of cash accounted for, is at once visible. Any great discrepancy should receive immediate enquiry. As has already been stated, the actual cash found in the till and the amount shown to be due by the meter dial register often differ in small amounts, so that the " Over "' and " Short " columns of the Collecting Book should receive careful attention, and any abnormal difference be explained wherever possible. If, as experience proves, two-shilling pieces be found to have been placed in the slots, and the collector is asked to refund the amount overpaid, he may be allowed to do so, but should obtain receipts from the consumer, and report the transaction in his book. The only check of the possibility of silver coins being placed in the slots unwittingly, and the collectors defrauding the Corporation by substituting the correct copper coin, is to distribute the responsibility. If suspicion be aroused, the insertion of a florin by the Auditor or the meter inspector, without notice to either the consumer or the collector, will provide a test of the honesty of the cash collector. E 2 62 A MU.XICIPAL INTERNAL AUDIT. Check, then, occasional subtractions of meter-states to show the consumption, the entries from the Collecting Hand-book to the Cash Account kept at the Collectors' Office, the additions of all cash, and the payment of all sums collected by the collector to the chief cashier, at the close of each day's collection, with consequent payment into bank. THE FINANCE DEPARTMENT. (d) GAS RESIDUALS. Call for the Gas Residuals Debtors' Ledger, and the Day Books, which will have been checked by the Auditor from the duplicates of the Residuals Credit Sales Ticket Books when at the Gas Works. Verify the amounts charged to the customers in total, and/or in detail, by calling off the Day Book quantities, prices, and amounts, with the charge made to eacii purchaser. Gas Residuals are often sold in huge quantities on special terms of supply and payment ; in all these cases the agreements should be obtained and particulars thereof kept. After ensuring that all the debit entries are made in the Debtors' Ledger, check off the total amount shown to have been received, either in total by balancing the amounts in the " Residuals "' columns of the Summary of Collectors' Cash Books with the totals posted to the credit side of the Residuals Debtors' Ledger, or by checking the postings in detail — the only safe method where discounts are allowed. In any case, check the duplicates of the ^Lanifold Receipt-check Books into the appropriate column of the Collectors' Cash Accounts. Cast the additions of all the Cash Accounts, and trace the moneys through the books of account until they reach the bank. A MVMCIPAL INTERNAL AIDIT. 63 Examine the Lists of Unpaid Accounts taken out periodically, submit to the chief officer for instructions, and see that no customer is allowed to run up a large account without having his supply stopped until payment be made. Check the amounts written off as bad and irrecoverable with the Bad Debts Register, and trace all recoverable arrears forward to the next month, quarter, or other accounting period. Complete the Audit Report Form for submission to the chief financial officer. (e) GAS, ELECTRICITY, AND WATER FITTINGS AND SERVICES. The basis for ensuring the accuracy of the debit entries for amounts due from debtors on account of sales of these materials is the appropriate departmental Fittings Day Book, which has been checked from the Tickets, and perhaps the Goods Out- w-ard Book, at each department, as is shown hereafter. Charges for workmen's time should be traced from the Wages Analysis Book (making test cases of the men's Time Sheets) through the Wages Journal. Call over the entries from the Day Book and Wages Journal to the debit side of the Fittings Debtors' Ledger, verifying each customer's account in detail, or balancing in total only. In the event of amounts being charged to customers over and above the cost price of labour and materials, two columns may be ruled in the Debtors' Ledger Day Book, &c., to show the cost price and the amounts of the extra charges. Xo difficulty will thus be found in balancing in total. The debit entries having thus been verified, check off the amounts received, as shown by the duplicates of the Collectors' Receipt-check Books, with the entries in the correct columns 64 A MUNICIPAL TNTF.RXAL AUDIT. of the Collectors' Cash Books. Ensure the accuracy of the totals of the Cash Account additions, and trace their entn.- through all or any intermediate books of account until the moneys are banked. The total amount received may be checked as to its posting.;- either in detail or in total (due care being bestowed on discounts allowed) with the credit side of the Fittings Debtors' Ledger, separate books, or separate parts of the book, being kept for each department, and separate columns being used in the Collectors' Cash Account. This should not present much difficulty, unless amounts have been entered in the \\Tong columns, and temporarilv passed unnoticed. Similar arrangements as to the {a) preparation of Unpaid Accounts Statements for submission to the chief financial officer, {b) writing off Bad Debts and Irrecoverable, and (t) the check- ing of Recoverable Arrears carried forward, are advisable in the audit of income from fittings, as in the collections of rates- and rentals. A good rule, and one that the Auditor should see enforced, is that no service is allowed to be supplied until the account for the fitting thereof be paid. (/) INTEREST ON INVESTMENTS. The Register of Investments forms the foundation of the check on income accruing due from the investment of a municipality's Sinking Funds, Reserve Funds, &c. In addition to this, there will probably be kept at the Finance Department an Investments Ledger, containing an account of each invest- ment, and showing the amount invested, repayments made (if any), and the interest accrued due periodically, with the pTrticulars of the payment thereof. The Auditor does not A MUNICIPAL INTERNAL AUDIT. 65 concern himself about the investment of the Sinking Funds, ike, to the full amount accumulated, or the fixing of the rate at which the money is lent. He should check off from the Minutes, and Lists of Cheques authorised to be drawn, the entries in the Town Clerk's Register, and verify the particulars as to each amount in\ ested, and the rate per cent, to be charged. Verifv the correct entry of all these particulars in the In\est- ments Ledger, and go through the Ledger Accounts, seeing that all the interest chargeable and the income tax deductions allowable are arithmetically correct. A list of the amounts of interest on investments should be prepared at the periodical rendering of accounts therefor. The collectors' Manifold Cash Receipt-checks should be called over with the collectors' Cash Accounts, and the posting to the credit of the Investments Ledger Accounts verified. If the lists of interest due be marked off daily, the chief financial officer can always, by a perusal thereof, exercise his supervision over the amounts outstanding from day to day, without his time being wasted by wading through the Investments Ledger (or Ledgers, if the funds be separated), and this is a consideration worth the extra clerical labour involved in the original preparation of the sheets, as the amounts at issue are often large. There should be no bad debts on account of interest or investments, but the chief financial officer should be kept cognisant of accounts out- standing and overdue, so that, if necessary, the legal provisions for recovery may be carried out. ig) RENTS. Ground Rents, Houses, Shops, Arti/.ans' Dwellings, Wayleaves, Privileges, Acknowledgments. The collection of all Rents is be.st deputed to the chief financial officer's Collecting Department, and this is here presumed to be the case; at the same time, wherever in all 66 A MUNICIPAL INTERNAL AUDIT. probability Rents are likely to be received at the office of any particular (le])artment, mention is hereafter made of any check suitable to the special circumstances of that department, in addition to the method of check described as follows. For all Rents there should be a Rents Roll and a Tenants' Ledger. The Rents Roll should state full particulars of the tenancy, and if, in addition, columns be added showing the Date Due in extcnso (in the same manner as a Bills Receivable or Payable Book), the check to the Tenants' Ledger is greatly facilitated. The particulars of all property let to tenants should be traced from the Minutes of the Council at which the Seal was authorised to be fixed to the agreements, all necessary details being obtained from the Town Clerk's Department, who w'ould have the preparation of the agreements. As every agree- ment is completed, a Notification Form, containing all necessary particulars of the tenancy, should be sent to the chief financial officer, and allocated to the attention of the audit clerk. Each Rent receivable may thus be checked, w^hether collected by the General Collecting Department or through the office of the department principally concerned. Check the debit entries in the Tenants' Ledger from the Rents Roll, and see that all arrears are correctly brought forward. Call over the duplicates of the Receipt-check Books to the correct columns of the collectors' Cash Accounts, and check the postings therefrom to the credit side of the Tenants' Ledger. See that a list of arrears is prepared periodically, and all allowances are made by the authority of the chief financial officer, entries being made in the Bad Debts Register. Whilst verifying allowances, such as Income Tax Deductions, be sure that the amount on which tax is allowed is the actual rent paid, less the statutory- one-sixth, the tenant bearing tax on any amount of assessment over and above this amount. A MUNICIPAL INTERNAL AUDIT. 67 For weekly, monthly, or other short periodical Rents, a separate Tenants' Ledger, in special form, may be used, and in cases where Rent Books are kept by the tenants, check off the periodical amounts shown to have been received with their books if possible. Trace the total amounts received through the Collectors' Cash Book, and all intermediate books, until they are paid into the bank. (h\ EXCHEQUER, &c., GRANTS. For all amounts received from H.M. Government there will b^ found sufficient verification by means of the letters of advice received from the Governmental Departments, both as accompanying periodical instalments and as final statements Avith balances. In the case of a County Borough, the amounts received from the Exchequer would be that municipality's share of the License and Probate Duties and the Customs and Excise Duties, as set out in the provisions of the Local Government Act, 1888. These amounts would be carried to the Exchequer Contributions Account in the financial books, there to be apportioned for the various purposes on which the money is to be spent. The Government contributions in lieu of local rates has already been spoken of. In the case of a Non-County Borough, the chief payments from the Exchequer Contribution Account to which the municipality is entitled are the contributions towards {a) the cost of Police Pay and Clothing, where a Borough Police Force is separately maintained ; and (b) the Salaries of the Medical Officer and Inspectors of Nuisances. The contribution should be one-half of the actual cost, though sometimes small items are disallowed by the County Auditor as being imjjroper 68 A MUNICIPAL INTERNAL AUDIT. expenditure. These grants are not received direct from H.M. Government, but from the Council of the Administrative County. Grants received per the County Council towards the expenses of the administration of the Contagious Diseases (Animals) Act, the Sale of Food and Drugs Act, the Weights and Measures Acts, and Technical (now Higher) Education, are peculiar to non-county boroughs, but the Circular Letters from the county should always be produced, whilst a reference to the County Abstract would provide an additional check. As the amounts are sometimes paid into the credit of the municipality at the bank, there may be no Receipt-checks, given, but it is as well to have an understanding as to whether such is to be the case or not. The receipt, however, should be traced through all intervening books until it reaches the appropriate account in the General Ledger, whether the money be paid direct to the bank or not. (/) ALLOTMENTS. In any borough where the provisions of the Allotments Act, 1887, are adopted, the Auditor should call for the list and par- ticulars of allotments let from the Town Clerk's Department, along with the plans of the grounds let for allotments, prepared in the Surveyor's Department, and check off the rents due at the proper dates into the Allotments Register and the Allotment Holders' Ledger. The Auditor might also, whenever opportunity affords, check off on the spot the allotments let and under cultivation. The Receipt-check Books should be called over to the collectors' Cash Accounts and to the credit side of the Allot- ment Holders' Ledger, the same procedure as to Allowances, Bad Debts, and Arrears being adopted as in the case of an audit of general rents collection. A MUNICIPAL INTERNAL AUDIT. 69 (7) SUNDRY Dr.ivroRs. In adiHtion to the afore-meiitioned sources of income, there are many miscellaneous items, from which receipts may come through the Collectors' Department if, as is assumed, the collei'- tion of all accounts not prepaid is deputed to the chief financial officer. In every case where this is so, the Day Book sent to the Treasury from each department should be called for and checked off with the entries in the Sundry Debtors' Ledger. Whilst the Auditor is paying his periodical visits to e.irh department, the Day Book should be subjected to audit, as is described hereafter, whenever any Credit Sale or charge not prepaid is likely to occur, the danger l)eing rather one of omission to enter than of clerical inaccuracy in rendering. It the Day Book of each department is thus subjected to scrutiny, the audit of the debiting of the charges therein shown to be due (by means of the Sundry Debtors' Ledger), and the verifii'a- tion of the collection (by means of the duplicates of the Receipt-check Books and Collectors' Cash Books), may be proceeded with without difficulty, so long as the rules as to Lists of Arrears, Allowances, and Bad Debts, as previously described, are closely adhered to. (k) PRIVATE STREET 1MPR0VEMENT5. Under the powders conferred on an Urban Authority by the Publice Health Acts, or obtained by the adoption of the Private Street Works Act of 1892, works of street improvement for private owners may be carried out by that authority. The provisions of these Acts differ materially, and of their contents the Auditor should be fully cognisant. His work commences by a verification of the fact that all the expenses incidental to a work of private street improvement have been charged thereto. With an efficient Stocks and Stores 7° A MUNICIPAL INTERNAL AUDIT. Department at work under the chief financial officer's control, the Auditor's work becomes simplified. He should audit the postings as shown in the Stores Journal and Wages Journal to the Ledger Account for each particular street, and see that all additions for Printing, Advertising, Supervision, and any other administrative expenses are made. This total cost of each street is apportioned by the Surveyor, generally on frontage, and as each apportionment is received the Impersonal Ledger Account for each street is closed by a transfer to the debit of the Personal Accounts of the owners of the properties, who then are charged with interest from the date of demand of the amount of the account. Call o\er the counterfoils of the Private Improvement Demand Notes, and check the date from -which interest accrues. These Personal Accounts are best kept in a Private Street Works Owners' Ledger, columnar in form, providing on the credit side for the payment of instalments with interest, as it becomes due, at the periodical dates, the balance unpaid being carried from column to column across the page. Call over the Receipt-check Books into the collectors' Cash Accounts, and trace each payment through the books to the credit of the Personal Accounts, at the same time calling for the copies of agreements entered into between the private owner and the Corporation for payments by instalments. The usual procedure as to Lists of L'''npaid Accounts has in the case of Improvements to be amended according to particular requirements, and the chief financial officer has to depend some- what on his audit staff and the private improvements clerks for his supervision of the amouiUs of mstahmnts in arrear, wherever works of private street improvement are carried out to a large extent. If the contents of each Instalment Agreement are noted in a column provided for that purpose in the Owners' A \rUNICIPAL INTKRNAI. Al Dl r. 7 I Ledger, the danger of an instalment remaining for any length of time in arrear is obviated. The Auditor should then check the instalment, debited at the proper date, and at least '• test,'" if not check in detail, the interest charged. No Bad Debts should be allowed for the cost of works of private improvements, as these costs are a charge on the property itself, and can ahvays be recovered by legal process. At the same time, allowances and transfers to the debit of High- ways Account are often made, and these should be passed through the Bad Debts and Allowances Register by approval of the chief financial officer and the appropriate Committee. A check on the postings to the debit of the Ledger Accounts for each street would enable the list of works of private street improvements executed but unapportioned to be verified at the date of the periodical closing of the books, for inclusion in the Annual Abstract of Accounts. (/) PUBLIC CONVENIENCES. The system of collection of the moneys received at Public Conveniences throughout the city or borough is one calling for great care, as the possibility of peculation occurring therein is far from remote. Experience has proved that as far as the audit of the moneys received by means of the slots in the w.c. door-governors is con- cerned, registers are not to be relied on as a check either on the attendant or the collector. To guard against fraud by tiie attendants, notices should be posted up in the most prominent places that all coins are to be deposited in the slots, and not handed to the attendant. The Auditor, on his visits, should A MUNICIPAL INTERNAL AUDIT. watch for tampering with the springs or other devices which ensure the closing of the doors. The time for visits for collection of the moneys should be altered at very short and irregular periods. The attendants may be changed about occasionally, and surprise visits paid by one of the audit staff as often as is possible without arousing too much suspicion. Where Lavatories are in use, a good plan is to wrap each towel in an adhesive label, which must be broken for the towel to be used, and the Towels Record Book kept showing the towels received and used, and the moneys received therefor. The stock in hand may be checked at each visit. These' are precautions which may always be taken as safe- guards against fraud by attendants, and, if the Auditor's suspicion be aroused, careful watch must be set, and traps laid without delay. Whenever fraud is proved, the defaulter should be summoned before a Court of summary jurisdiction, and a conviction obtained, as a warning to other attendants. As a check on the collector, it is believed that nothing short of a personal attendance by one of the audit staff at the collec- tion from the lavatories will be found satisfactory. A Cash Record Book should be kept, in which the collector must enter the receipts from each convenience, and the Auditor must see the money counted out, and initial the entries made by the collector in this Cash Record Book. A continual change of both the member of the audit staff and the collector should be kept up, and collusion thereby prevented as much as possible. If the collector be allowed to collect the moneys alone, the lava- tories attendant should see the amounts collected, and initial the entries in the Cash Record Book. In this case, the Auditor may visit the conveniences just before the collector's arrival, count and replace the moneys, and note the amount brought in A MUNICIPAL INTERNAL AIDIT. 73 by the collector as being in the sluts and collected. Any dis- crepancy would, of course, confirm the Auditor's suspicions, ami prove the dishonesty of the official. Special care must be taken to ensure that all silver coins found in the slots are reported by the collector on his return, and occasionally, as a test of the carrying out of this regulation, the Auditor may himself insert, say, a florin in a w.c. slot, and await the collector's report. On his return, or at the close of the day, the conveniences collector should write up the entries from the Cash Record Book to his Office Collector's Cash Account, and both books are then submitted to the audit of the indoor audit staff, as in the case of the general collectors. Trace the moneys received to the hands of the cashier, and to the bank, as has been shown. (m) MISCELLANEOUS RECEIPTS. For all other cash receipts by the Collectors' Department of a miscellaneous nature, the check should be by means of the particular Receipt-check Books in use therefor, or the general Receipt-check Books, as the case may be. The posting of a notice in a prominent place at the pay counter that " Official receipts are to be obtained for all moneys paid," together with a check wherever possible on the stock of any articles sold, provides a good general precaution against omission to enter receipts, whilst the checking of all duplicates of Manifold Receipt-check Books to the time they reach the bank has already been described. Wherever any additional check may be adopted in any particular case, the Auditor should always bring into use the assistance afforded thereby. 74 A MUNICIPAL INTERNAL AUDIT. THE FINANCE DEPARTMENT. Collectors' Office. CENTRALISATION AND FINANCIAL CONTROL. The Receipt-check. Books are now assumed to have beert called over, the collectors' Cash Accounts checked, and the daily totals of each column contained therein transferred to the Summary of Collectors' Cash Accounts. The cash correspond- ing with the daily amount shown to have been received by each collector, according to his Cash Account, is transferred to the hands of the chief cashier at the close of the day, receipts being given to each collector in his Manifold Cash-slips Book for the amount handed over. The cashier enters all these receipts from the individual collectors in a Cash Summary Book (as dis- tinguished from the Summary of Collectors' Cash Accounts)^ and adds thereto the amounts paid in to him by the accounting officers of the different departments, reporting to the chief financial officer at the close of the day the failure of any par- ticular accounting officer to pay in at the proper time. By this means all the cash passing through the hands of the cashier is brought together and checked, and there now remains the audit of the due payment of the moneys by the cashier to the bank. Every morning, by a stated time, the cash takings of the preceding day should be paid in at the bank by the cashier, and, say half-an-hour later, there should be sent from the bank to the chief financial officer, independent of the Collecting Department, a notification of the amounts paid in that morning. This Notification Slip is immediately handed by the chief financial officer to the principal member of the audit staff then on indoor duty (or perhaps the chief officer himself may perform the duty) for comparison with the Cash Summary, as showing the amount purported to have been paid in. By this means any chance of a cashier absconding with a day's receipts is A MUNICIPAL INTERNAL AUDIT. 75 narrowed down to the smallest possible limit of time allowance, and, at the same time, any errors in paying in to the credit of the different Bank Accounts are immediately noticed and rectified. If any departmental officer pay over to the bank direct, the same plan as to notification of payments to credit of accounts at the bank should be adopted, the Cash Account of the accounting officer being also presented at the Chief Financial Officers Department for inspection and comparison with the Bank Slip at the stated time. Periodically the payments shown by the Cashier's Summary to have been made to the credit of the different Bank Accounts should be checked direct into the bank books, and the Summary of Collectors" Cash Accounts checked into the Analysis of Receipts Book, where the details of the depart- mental receipts obtained from each Departmental Cash Account, duly audited, are added, and the grand total of all moneys banked obtained and balanced. At the same time, analyses of the total receipts are made and recorded for entrj- direct to the Cash Books of the different funds. The audit of the clerical entries, and postings of the receipts through these intermediate books to the appropriate Cash Book or Books, provides the last link in the audit of all a municipality's income from its source, as each accounting officer's receipts thus are passed through the Collectors' Office, and one grand summary of all receipts obtained. This is a system, found to work well in practice, by which the chief financial officer has a thorough oversight on the proper dealing with all the money passing through the hands of all the accounting officers, and enabling him to prevent, by means of his audit staff, any irregularities which by patient auditing and all possible precautions may be avoided. 76 A MUMCnWL INTERNAL AUDIT. Much use can be made in the Collectors' Department of a book showing the percentage of collection of all classes of income at short intervals, as compared mth previous periods ; as a guide to the chief financial officer in his supervision of the department, they can well be compared to the percentage Cost Sheets of a factory. This statement, setting out all the receipts of the Collectors' Department under convenient heads, enables the chief financial officer to at once perce '.e any diminution in the standard of efficiency displayed by any branch of the Collectors' Depart- ment, and to provide a remedy for such a defect before it has been brought to his notice in other ways, perhaps by the actual losses incurred bv the collectors' default. DEPARTMENT No. 2. THE ITNANCE DEPARTMENT. General Treasury Office. (a) CAPITAL MONEYS. The nuist important source of income usually found in the Finance Department (as distinguished from the Collectors' Branch thereof) is that of moneys raised by loans to meet capital expenditure. The manner of raising the moneys thus borrowed may be either by means of issues of stock, or by mortgages or debentures on the corporate rates and properties, secured by Deed, or by Deposit Notes, by Bills of Exchange, &c. In the case of stock issues being locally directed, the moneys, as due in instalments, See, are paid in to the bank direct, and without going through the tenders and allotment letters it would A MUNICITAL INTKKNAL AUDIT. 77 probably suffice to check o\fr the amounts of slock certificates as linally issued with the Bank Book ami General Cash Book in detail and in total, as being in agreement with the amounts shown to have been received. Trace the moneys received through all the intermediate books to the stockholder's account in the Stock Ledger, and to the entry of the name and particulars of the stockholder on the Register. These are the outlines only of the check to be instituted on the issue of stock, in the event of such an issue being made with the chief financial officer as the registrar, and not through the medium of bankers, who would in that case raise the money by their own process, the amount of the stock issued being placed to the credit of the Corporation's Bank Account, and stock certificates issued making up that amount. The audit of the issue in this case would not come within the range of the Internal Auditor, except to see that stock certificates are issued for, and interest paid on, only such an amount as has been placed to the credit of the Corporation's Bank Account. For the audit of moneys raised loy loans on mortgage, there should be interim receipts given, signed by the bankers to whom the amounts on loan are paid, but issuing originally from the Chief Financial Officers Department. Call over the duplicates of these receipts with the Bank Book, and, as each Mortgage Deed is issued and sealed in the presence of the Mayor and TowTi Clerk, between whom collusion is most improbable, the Auditor (generally at the Mayor's request) attends with the Bank Book, and sees that for every deed issued there is a record in the Minutes, and an authentic entry in the Bank Book showing the receipt of the loan. This precaution is a necessary one. Although the chief financial officer is also required to sign the deed, this additional safeguard should not be rejected. The due receipt of the money, for which the deed is issued as security, )• 2 78 A MUNICIPAL INTERNAL AUDIT. is not the only check requisite on the deed, but the particulars as to notice of repayment, interest, &c., have to be most carefully scrutinised. Trace the moneys through the Cash Book, and any other intermediate books, to the credit side of the Mortgagees' Accounts in the Mortgage Ledger, and to the enrohiient of the particulars of the mortgage in the Register of Mortgages. Moneys raised by Deposit Notes can be checked ^vith the manifold receipt-checks and the entries in the Bank Book, peculation in this branch of municipal borrowing being a difficult matter, as the Deposit Notes are to be given up on repayment, when any discrepancy would at once become evident. Nevertheless, precaution must be taken against temporary deficiencies, and the possible absconding of the defaulter in the interim. Trace the amounts received through the Bank Book, and all intermediate books of account, till the depositor's account in the Ledger be reached. Moneys raised by Bills of Exchange can be checked by the Register of Bills Issued and the Bank Account, and as bills are only issued to supply capital moneys temporarily {e.g., pending the arrangement of an issue of stock), the provision against fraud is to a certain extent self-contained, in that the bill has to be presented for payment when the amount repaid would, after allowing for interest, be checked with the amount received ; at the same time, there is the danger of temporarj- deficiencies to be kept in view. The accepted tenders for the bills, showing the discount charged, should always be produced and examined. These methods of audit would apply whether the Town Clerk's Department or the Finance Department be the medium by which the moneys were borrowed. A MUNICIPAL INTERNAL AUDIT. 79 (b) TOWN HALL F-EES. Applications for the use of the Town Hall should be mauc m a prescribed form, and submitted for the approval of the appro- priate sub-committee, the chairman of which should authorise the use of the room by his signature to the form, especially stating whether a charge is to be made or not. The fee for the use of the Towti Hall should be a recognised one, according to the length of time during which use is made of the rooms, with additions, if necessary, for lighting, heating, &c. Receipts should be given and traced to the bank, as has been shown. The due receipt of the charges for use of the Town Hall may nearly always be checked by the external evidence afforded by the local newspapers and hoarding advertisements. (c) SUNDRIES. Receipts of a miscellaneous nature — such as Transfer Fees, Sales of Burgess Lists and Treasurer's Abstract of Accounts, Charges for Repayment of Loans before maturity, Sales of Old Fixtures, and other waste materials — should be carefully watched, and, as the Auditor is generally on the staff of the chief financial officer, he should always be cognisant of the transactions taking place daily in his own department. Receipt- check Books should be in use, and as much care as possible taken to ensure that receipts are always given for amounts received — e.g., examine the Copy Letter Book for particulars of charges to be paid by a mortgagee for repayment of a loan before maturity. Call over the Manifold Receipt-checks to the Treasury Receipt and Deposit Account; check the additions and the due payment of all receipts to the Cashier's Dtpirimeni, there U) be accounted for in the manner already (le.scribeil. Complete the Audit Form, and report to the chief financial officer. 8o A MUNICIPAL INTERNAL AUDIT. DEPARTMENT No. 3. THE TOWN CLERK'S DEPARTMENT. In some municipalities, the raising of moneys by loans is transacted through the Town Clerk's Department, Init the audit of moneys received on this account having been described as part of the audit of the Finance Department, the most probable sources of income through the Town Clerk's Department will be as follows : — LICENSES. For these receipts there should always be counterfoils of the licenses issued. In the case of licenses, the manifold carbon copy receipt-check is not convenient, owing chiefly to the fact that the licensee is to sign the counterfoil of the license as agreeing to the conditions on which the license is issued. As a license, speaking generally, cannot be issued without this pro- cedure, it will be found sufficient to check off the counterfoils with the Licenses Cash Account, and trace the moneys by the Cash Slips Book till it reaches the Finance Department and the Bank. On each license issued (and the counterfoil) should be printed the price of the license, and that price accounted for ; if in addition a badge be sold, the sale of the badges should be audited and the License Badges Stock Book checked. An account should be kept, and audited periodically, of each class of badge, and the stock received, issued, and returned, each badge being accounted for. Every License Duplicate Book should be examined, whether any have been shown as issued in the interim or not, to guard against temporary deficiencies. Usually a monthly report is presented to the appropriate Com- mittee of the number of licenses of all kinds issued during the month, and the particulars of this report should be checked periodically by the Auditor. Any departmental payments {e.g., A MUNICIPAL INTERNAL AUDIT. bl Tramway Carriage Licenses) ran be iMiecked by reference to the accounts ot the department making the payment. Al ihu cm I nt each year the unused licenses should be cancelled l>y the audit staff, to prevent fraudulent use being made of them. SALES OF PROPERTY. Sales of property are generally arranged and carried out by the Town Clerk's Department. A sale of freehold or leasehold projerty cannot be completed without the affixing of the Corporation Seal to the deed ; this authority to affix- the Seal is generally contained in the printed Minutes, and thus brought to the Auditor's notice. In practice, a member of the audit staff usually attends periodically at the Town Clerk's Department, and takes from the deeds authorised to be sealed the particulars as to purchase price and the payment. These particulars are entered in a Register of Corporation Properties Acquired and Disposed of, and the due receipt of the purchase-money verified. In the event of the deposit only being paid, and the balance left to be paid by instalments, a record is thus kept, and the debit entries made in the Sundry Debtors' Ledger at the due dates, with interest from time to time charged as agreed. GENERAL. Receipt-check Books should be used as an acknowledgment for moneys received from all miscellaneous sources — such as the Hire of Voting Compartments, Sale of Burgess Lists, Stamping Fees on Agreements charged to Tenants, Old Furniture, &c.— and all cash received traced through all its stages till it reaches the bank. Town Clerk's Cash Account. This book will show the total receipts from all sources, and the dates and amounts of the deposits with tlie Finance Department Collectors' Office. Check all additions, and trace all moneys paid over till they reach the bank. 6 2 A MUNICIPAL INTERNAL AUDIT. DEPARTMENT No. 4. THE CITY (OR BOROUGH) SURVEYOR'S DEPARTMENT. (a) HIGHWAYS. With an efficient Stocks and Stores or Works Department Staff in operation, the control of the Highways and other revenues of the Surveyor's Department by the chief financial officer is much facilitated. The staff of the Stores Department (who should he under the direct control of the chief financial officer) will have, as part of their duties, the checking of duplicates of all the Materials, &c., Delivery-tickets, as sent in from the store-keepers at the different depots, verifying their entry in the Goods Inward Books and Outward Books, and keeping the necessary Works Ledgers, and Materials, Stores, and Stocks Accounts. The Auditor may thus commence his work at the Journal entries made from the " Summaries of the Materials used on Works " and the " Summaries of the Wages Books,"' checking the posting of materials used and time worked to the correct Ledger Account, and ensuring that all the debits are properly charged either to the Highways Account, the Corporation Com- mittees indebted, or the private individuals for whom the works have been carried out. The proper debiting of expenses charge- able to works of private street improvement has already received attention. To complete the audit, the debit entries charging all items of expense (other than works of private street improve- ment) recoverable from other Committees or private individuals must all be checked and traced through until the charges appear in proper form on the debit side of the Sundry Debtors' Account in the Collectors' Office. The audit of the collection of the amounts thus charged may then proceed, as has been shown, A MUNICIPAL INTERNAL AUDIT. 83 by the collectors' Cash Accounts and the Receipt-check Books. On all the receipts from other Corporation Committees there is a check provided by the examination of the accounts paid by the Committee charged, whilst the chief financial officer maintains the same supervision over the collection of ail sums due from private individuals as has been described in the audit of the collection of Gas Accounts, &c. The only part of the audit work on this account which takes place at the Highways or Stock and Stores Department is the verification of the fact that all debits for materials used and labour provided are accurately made. {b) SEWERAGE. Similar arrangements for the audit of the proper charging to the Sewerage Account, other Committees, or private individuals, of the cost of works of sewerage should be made, as for the charging of sums due to the Highway Department. The Auditor, taking up his work at the point w^here the Works or Stores Department staff show the summaries of all the transac- tions recorded by the Materials Tickets and the Time Sheets, should verify all charges to the Ledger Accounts of other departments and private individuals by the Stores and Wages Journals, and trace those charges through all intervening books till they reach the debit side of the Sundry Debtors' Ledger in the Chief Financial Officer's Department for collection; the additional charges for supervision and other administrative expenses must not be overlooked. MISCELLANEOUS. Besides these w^orks carried out for other Committees, or for private individuals by whom payment is to be made, there will be Cash Receipts of a miscellaneous nature — such as would be derived from the sale of Horses, Manure, Mortar, Scrap Iron 84 A MUNICIPAL INTERNAL AUDIT. and other old materials, Prepaid Steam Rolling Charges, Loan of Tools, Copies of Building Bye-laws, Prepaid Charges for Sewer Connections, &c., &c. The following obsen-ations will illustrate the possible means of check which may be adopted in addition to the Receipt-check Books. Needless to say, there should be no money received without an official receipt being given. A reference to the Horse Register will show the manner of disposal of any horses, and this register should be examined at intervening periods as well as at stocktaking time. Sales of manure should be made by tender, and particulars obtained from the Committee's Minutes. Scrap iron, mortar, and all other materials, should, when sold, be paid for at the Surveyor's Office, as should charges for the loan of tools, steam rolling, sewer connections, &c. Xo money should be taken at the depots. As the moneys are received a receipt should be given for the amount, and an order on the depot foreman or store- keeper issued as the authority for the delivery of the goods or the execution of the work. These orders on the foreman should be checked with the Manifold Receipt-checks issued. The duplicates of the Tickets for Materials issued and the workmen's Time Sheets, examined and analvsed bv the Works Department staff, show materials used and time spent on all works, whether the charges be prepaid or afterwards collected. Surveyor's Cash Account- Call over the duplicates of the Receipt-checks for all purposes to the Surveyor's Cash Account, and trace all the deposits with the Collector's Office of the Chief Financial Officer's Department until they are paid in at the Bank. A MUNICIPAL INTERNAL AUDIT. 85 DEPARTMENT No. 5. THE SAXITARV 1 )i:i'AKl'MF,Nr. Dealing first with Credit Sales ant I Lhargcs nut i'rcpaid, the extent of such transactions in this department will not be lar^je, scarcely necessitatins; Delivery-tickets, or Stocks and Stores Journals and Ledgers. Credit sales ol condemned foods, for tillage purposes, may take place, and charges may be made for testing drains, and for disinfectants and refuse receptacles sold. Many other similar transactions may take place ; but if in every case it be the rule that no materials are to be handed over by any workmen without an order therefor signed by the Medical Officer of Health (in duplicate) as their authority, the chances of misappropriation of moneys are lessened. This Order Book should be called over to the Day Book, and the Day Book, after being duly initialled by the Medical Officer, serves as the basis from which the accounts are made out, and the debit entries made in the Sundry Debtors' Ledger at the Chief Financial Officer's Department; the audit of the collection of these sums then becomes part of the audit of the Collectors' Department. For Cash Sales of all descriptions there should be Receipt- check Books in use, with the additional safeguard afforded by the Medical Officer's Duplicate Orders, without which no delivery should .be made. Stock Accounts {e.g., for refuse receptacles) should be kept and audited, wherever possible. Medical Officer's Cash Account. Call over the duplicates of the Receipt-checks to the Medical Officer's Collecting and Deposit Book, check the additions, verify the deposits at the Finance Department Collector's Office, and trace the moneys through the books of the cashier to the Bank. 86 A MUNICIPAL INTERNAL AUDIT. DEPARTMENT No. 6. THE GAS DEPARTMENT. At this department the audit of all Cash Sales is to be carried out, and, in addition to this, the accuracy of the Meter-state Registers, Day Books, &c., is to be proved. These books are periodically sent to the Finance Department, as supplying the information from which Accounts for Gas Rents, Sales of Residuals, &c., not prepaid, are made out and collected. As the pro forma. Audit Memo, and Report given at page 20 is the one used at the Gas Department, it will serve as a guide to the student if he make reference thereto when studying the descriptive detail following. GAS RENTALS. Ordinary Consumers. Call for the Meter-state Registers, and test entries from the meter inspector's books, as being correct records of the meter registers therein entered. Wherever deposits are to be paid by consumers as security for payment of accounts, tests may be made from the Deposits Receipt-checks, to ensure that there is an entry made in the registers of any gas consumption by those depositors. Any other check which the Auditor, taking into consideration the system of recording the registers of the meters in use, &c., may consider necessary, should be adopted to satisfy himself that the Meter-state Registers, when sent to the Finance Department, are fully and correctly kept. The examination of contracts for special supplies of gas is important, as serving both to check the accuracy of the price, &c., charged and the particular arrangement as to payment. A MUNICIPAL INTERNAL AUDIT. 87 Public Lijjiitinjr. As an Inter-departmental Account, this item presents no difficulty, so long as the basis on which the account is rendered is verified. Prepayment Meters. The Cash Receipts from this source are dealt with wholly at the Finance Department. The total consumption of gas used, recorded by these meters, can be checked approximately with the cash collectors' books already described, if separate Meter Registers for Prepayment (Coin) Meters be used. Test cases mav, however, be made by comparing the entries in the meter inspectors' books w-ith the corresponding entries in the Coin Meter Collector's Cash Record. QAS RESIDUALS.-PREPAID SALES. Coke and Breeze. Call for the Coke Ticket Books for Cash Sales. This book is generally of the manifold carbon copy type, combining the deliver)^-note and the receipt, the duplicates forming the basis of check. Check occasional deductions from gross to net weights, and test the accuracy of sample pricings-out at the given figure per cwt. or ton; always check the market price of coke and breeze ruling at the time of audit. The totals of the receipts on the pages of the Coke Ticket Book will be found added either on Daily Summary Sheets or books provided for the purpose, or perhaps on the back of a page. The total of a page of Tickets (which may contain any number from 4 to 24) is shown in ink at the foot of each page. Check the addition and the amount carried to the Daily Summary. Check the total of the Summary, and see that each day's total sum received is paid over at the close of the day by the coke weighman to the Cash Office. These daily totals from each Weigh Office are carried to the Gas Manager's Receipt and Deposit Account, and 88 A MUNICIPAL INTERNAL AUDIT. there accounted for periodically. Along with this description of the clerical portion of the audit should be read the precau- tions to be observed in the delivery of the coke to the purchaser, set out under the head of " Yard Arrangements " following. Other Residuals (Tar, Ammoniacal Liquor, Spent Oxide, &c.) For the check of Cash Sales of these residuals, &c., either a separate Manifold Receipt-check Book may be provided, or the same books as used for Coke Sales may be made to serve the purpose. In the former case, the same check as applied to the Coke Ticket Books will be efficient : in the latter, notice that at the foot of each page of the Receipt-checks the analysis of the different items is correct, and that the Summary totals are analysed accordingly. Check the " carr}- forward " of these daily totals to the Gas Manager's Receipt and Deposit Account, there to be accounted for. GAS RESIDUALS. CREDIT SALES. To check the Sales on Credit, call over the duplicates of the Delivery Tickets in the Credit Sales Ticket Books to the Day Book, and see that each page of the Ticket Book is totalled and the pages summarised daily, a weekly or monthly Summary beintc also made, and checked in total with the entries in the Day Book. The posting of the debits from the Day Book to each Personal Account in the Debtors' Ledger having been verified, the Gas Products, &c.. Debtors' Ledger becomes the basis of check on the amounts received from Credit Sales, as explained at pages 62-3, the making out of the accounts and the collection thereof being presumed to be carried out by the staff of the Rentals and Collecting Oflices respectively at the Chief Financial Officer's Department. A MUNICIPAL INTERNAL AUDIT. 89 The Auditor should be familiar with the amounls of the extra charges for delivery of coke, &c... at \arying distances from the Works, and make test cases occasionailv. The check on stock of coke and breeze can only be approximate, and reliance must be placed on the general yard arrangements (to be considered later), on the well-known principle of distributing the responsibility over as manv persons as possible. Many sales of coke in great quantities are bv contract or tender. In these cases see that the prices at which the residuals are sold are in accordance with the contract prices. In the Gas Department the check on departmental transactions is especially applicable. The most usual practice as to the sale of residual tar, ammoniacal liquor, spent oxide, &c., is that tenders for the purchase of these commodities are in\ited, and contracts to purchase for given periods are entered into. These products are usually disposed of almost entirely in this manner, Cash Sales being only for small quantities. Examine the accepted tenders and check the prices of sale. Call for the Books of Delivery Tickets for these residuals, and also the Railway Consignment Xotes and Weights, if the com- modities be consigned by rail. Check the entries from the Tickets to the Day Book, singly or in total ; and the posting of the debit entries from the Day Book to the Gas Products, &c., Debtors' Ledger having been called over, that book becomes the basis of check on the collection of the accounts for such sales. The check on the stock of these residuals, as well as coke and breeze, is only approximate, and the yard arrangements have again to be called to the Auditor's aid. 90 A MUNICIPAL INTERNAL AUDIT. The price of tar, ammoniacal liquor, &c., is very variable., and, as contracts are not entered into for very long periods, the dates, as well as prices, should be examined for fear of an expired contract being produced. It is as well, however, to be familiar with the prices ruling at the time of audit, and an occasional perusal of a technical journal will be found to be of assistance. Sundry Materials. These are difficult items to check, inasmuch as they are of an irregular nature, and, unless sold in large quantities, are not likely to be entered in the Storekeeper's Goods Outward Book. If the yard arrangements, described hereafter, are satisfacton-. there must needs be two or three implicated in any fraud, and this, needless to say, always luas a corrective and preventive effect. If the materials are sold for cash in large quantities, the Storekeeper's Goods Outward Book should be examined and the entry checked. Weighing Machine Tolls. In some gas works yards this is a very common item. If the machines be used to any great extent, a Weighing-machine Ticket Book should be provided and checked. Stoves and Orillers. All stoves sold should be accompanied by a Delivery Note, and for Cash Sales of these articles there should be separate Receipt-check Books. The Auditor should follow the same course as that described for Coke Ticket Books, and, in addition, alwaj's require an accurate record of stock to 'be kept, each stove being identified by a column for its number. The record (by Delivery Note) of every sale of a stove should be shown in a Stove Sales Account, equivalent to Day Book. Check the Delivery Notes with this Sales Record and the Sales A MUNICII'AI. INTERNAL AUDIT. 9I Record with the Stoi-k Konk, seeing that each sale is correctly entered therein. This may he thought unnecessary detail, and it may be considered sufficieiii to jnist the Stoves Sales to the Stock Book i:»eriodically in total, luil the method above detailed is always useful, and ensures absohile accuracy at stocktaking time, though it causes more initial labour. Check the postings (from the accounts passed for payment) of all stoves received, and occasionally, if the stock is not of an immense quantity, test the Stock Book l)alanrt,' bv an examina- tion of the stock of one particular class of sto\e or griller. This will ensure careful attention liy the storekeeper to his Stock Book, and, as stoves especially are high-priced articles, this matter of stock requires careful attention. Call over the Consignment Tickets of stoves or grillers let out for hire, and check the totals of these consignments w-ith the Stock Book. Trace the names of the persons entering into the Hiring Agreements from the Hired Stoves, &c.. Book or other list, or from the Consignment Tickets themselves, to the Stoves Rental Ledger, or the Gas Rental Ledger, if provision for hire of stoves and grillers be made therein. These provisions would apply whether the stoves, &:c., be sold or let out for hire from the Works, or from shops occupied by the Corporation in the town, and also whether the accounts for hire of stoves were sent out and collected by the staff of the chief financial officer or the gas manager's separate staff. Fittings (General), including Meters. Every sale of fittings should be recorded by a Delivery Note, and for Cash Sales there should be a Receipt-check Boropt;-r intervals by means of the Cash Slips Book, signed by the receiving cashier. Check the additions of all the intermediate summarising books, and the totals of the additions in the Cash Account. .Make the comparisons at the 96 A MUNICIPAL INTERNAL AUDIT. foot of the Audit Report Form, and make a note thereon of such additional information as may be of use in reporting to the chief financial officer. DEPARTMENT N... 7. MARKETS. Rents. One of the sources from which the greatest amount of income accrues in this department is the rent paid by tenants of fixed stalls and sho])s. 'I'hese are usually let by tender annually. In this case a new Roll of Rents will need to be obtained each year from the Town Clerk's Department, and verified wherever possible by the printed Minutes. The list thus obtained should be checked into the Market Tenants' Ledger, especially noticing additional charges for lighting and fur water, \:c. Subsequent payments posted to credit thereof shouM be verified. The Receipt-check Books must all be called over, and the Cash Account debited with all rents received. No allowance must be passed, or bad debt written off, without the authority of the appropriate Committee, as shown by the signed Bad Debts and Allowances Register. Weekly, &c., Rents and Tolls. Receipts for occasional rentals of stalls, tolls, or saleable articles, must all be acknowledged by the Receipt-check Books in use. Market Toll Books are usually bound up eight or ten to a page, and the amounts on the duplicate pages totalled at the foot, a Daily Sununary being made ; the amount thus arri\ed at is entered in the Collecting and Deposit Book, either direct or by transfer from an intermediate book, where all the receipts by each toll collector are summarised. To ensure that receipts are given for each payment, a good practice is for the Auditor A MUNICIPAL INTERNAL AUDIT. 97 at periodical visits to make test cases with tlio markets super- intendent, by asking a few stall-holders and vendors to produce their receipts for audit purposes, in similar manner to a tram inspector's audit. Weighing Machines. The audit of receipts for the use of the weighing-machines is supplied by Weighing-machine Tickets kept in duplicate. Check off the totals of the pages of the duplicates of these Tickets, and trace the total daily sums received till they reach the Markets Superintendent's Collecting and Deposit Book or Cash Account. Persons using the machine generally require the Ticket for a voucher of the weight, so that omissions to enter are, to some extent, guarded against. , Hawkers', &c., Licenses. These, if received by the markets superintendent, should be checked bv the signed counterfoils of the licenses issued, as explained when dealing with licenses generally. Sundries. Receipt-check Books should be in use for all sundry receipts given bv the toll collectors, and all moneys shown to have been received traced into the superintendent's Cash Account. Superintendent's Cash Account. Having ensured that the superintendent's Cash Account is complete, and contains an account of all moneys shown to have been received, check the deposits at the Collectors' Department by the Cash Slips Book, and trace the cash through to the bank. External means of check on market tolls, &c., is very difficult. The best general means of ensuring that all receipts are accounted for is, as has been said, to pay occasional surprise visits, and, in cases of grave suspicion only, prove the collector's reliability by a pre-arranged scheme. pS A MUNICIPAL INTERNAL AUDIT. DEPARTMENT No. 8. THE ELECTRICITY WORKS. ELECTRICITY RENTALS. ^At the time the Amlitor is attending at the Electricity Works io' the periodical audit of the cash receipts he shouhl. in addition to j.'rox'ng thr jjruper acknowledgment of all sums pre- paid, verify the accurm-v and ci unplt triirss df the Meter-state Registers, on which the rentals staff at the Chief l'"inancial Officer's Department relv fnr particulars of amounts to he charged to consumers of electrical energy. For all practical ])urposcs a similar niclhod of verification may be adopted as that suggested for the audit of the Gas Meter-state Registers — viz., making test cases of correct entry of the meter-states from the meter inspector's hand1)Ooks, tracing the entry of an account for ever}- consumer who has paid a deposit to secure the due jiavment of accounts as rendered, &:c. The contracts for special supplies for lighting or jxiwer {e.g., tramway traction power") should al\va\s he examined. A special feature of the \erilicalion of the fdectricity Meter- states Registers is the method which ohtains in some municipalities of charging a certain price for the nuniher of units constituting a '" maximuni ilcniand," and. after that number of units has been consumed, a lower rate per unit is charged. The method of thus making a differential charge is known as the " Brighton System." It must at once be said that in this case the Auilitor will ha\e to be content to accept the number mT units shown b\ the department as chargeable at the differing rates, just as he has to be with the record of meter-states. The method of obtain- ing the "maximum demand"" by means of inilicalors, &c., is A MUNICIPAL INTERNAL AUDIT. 99 purely a technical matter. He may still xcrify occasional transfers from the Departmental Registers in the Consimiers' Leilgers, as well as balancing the total additions. Public Lijrhting;. Charges on this account may always lie \eririe(l by the accounts rendered to, ajid paid Ijy, the Street Lighting Depart- ment, both for the correct debit and the corresjionding amount received, the charge generally being at an agreed amount per hour, rather than for the correct number of units actually consumed. 2[ctcr RciiUils should be checked by the Register of Hired Meters, as has been shown. CHARGES FOR ELECTRIC LIQHTINCi, &c., FITTINGS. These should be verified, both as to materials and labour, in similar manner to that described in the audit of gas fittings charges. There now remain the other usual sources of income of an electricity undertaking to be audited — viz.. Sales of Sundry- Materials, Rents, Testing Fees, Pupils' Premiums, \-c. Tor all sales of sundry materials, lamps, i\:c., there should be Delivery Tickets issued. If the charge be prepaid, the Ticket should be marked as " Paid,'" and in addition Receipt-check Books should be used. For such sales as are not prepaiil. the Delivery Tickets must be checked through the Goods Outward Books to the Day Book, which is periodically sent up to the Chief Financial Officer's Department for accounts to be made out and debits made in the appropriate Debtors' Ledger. The Stock Ledger must be checked at least annually with the Stock Sheets prepared on stocktaking day, and any discrepancy enquired into. Test entries should be made of stock received, as shown by the accounts passed for payment, and a good general suiJervision of the Stock Ledger obtained. lOO A MUNICIPAL INTERNAL AUDIT. Rents should be checked by Rent Roll, as has been shown. For meter-testing fees there should be Receipt-checks issued, and a Register of Meters Tested kept. No repayments of sums deposited pending the ascertainment of the accuracy of the meter should be made out of the receipts, but out of Petty Cash, all sums received being carried in total to the Cash Account. . Pupils should have their appointment confirmed by the Electricity Committee, if any portion of the fees is payable to the Corporation, and a Register of Pupils thus appointed may be kept at the Chief Financial Officer's Department. For sundry sales of old materials not passing through the storekeeper's books — such as Old Iron, Ashes, Wire, Scrap, &c. — there should be an order issued from the Cash Office to the foreman of the yard, who is only to deliver the materials when thus authorised. Call over tlie duplicates of these orders with the Receipt- check Books or the Day Book, according to whether the sale was a prepaid one or not. If old materials be sold in great quantities, it is best to sell by tender, and for records to be kept by the storekeeper of all quantities taken away by the purchasers, Delivery Tickets being used therefor. Check any contract prices, and see that all accounts as due are entered m the Day Book for collection by the Finance Department. Electrical Enjrineer's Cash Account. Check the dujjlicates of the Receipt-checks to the electrical engineer's Cash Account, and trace all deposits of the receipts through the Treasury to the Bank. A MUNICIPAL INTERNAL AUDIT. lOI DEPARTMRNT No. q. THE WATERWORKS. WATER RATES AND RENTALS. Where the income from the consumption of water is almost solely collected by Water Rates, levied on consumers according to the rateable value of the premises on which the water is con- sumed, there will not be much need fur audit at the Water Offices, so far as these charges are concerned, inasmuch as the rentals staiT at the Chief Financial Officer's Department will copy the amounts of the rateable value of the premises from the Valuation Lists, and make any alterations or additions thereto necessitated by successful appeals against assessments or supple- mental Valuation Lists respectively. The audit of this part of the Watenvorks income has already been dealt with under the head of " Rentals." At the same time, there is generally a Register of Consumers kept at the Waterworks Offices, in addition to the Consumers' Ledgers at the Rentals Office. Where this is so, columns should be inserted in this Register, and the total number of consumers shown therein checked with the corresponding columns in the Rentals Ledger : an oversight is thus gained which ensures that no consumer is overlooked when the charges are made. The audit of accounts due for water consumed and recorded by meter, to ensure the completeness and accuracy of the Meter- state Registers, mav be carried out as has alreadv been described in the audit of gas and electricity rentals. The audit of the accuracy of amounts charged fur water fittings, both as to materials and labour, may proceed on the same lines as that of gas fittings. I02 A MUNICIPAL INTERNAL AUDIT. The dthtr miscellant-dus income o\ this umlerlaking is ut such a nature as Rents of Surpkis Lands Let, Prixileges, Shooting and Fishing Rights, ,Sales of Old Materials. &:c. If there he an engineer-in-charge in residen<"e at the \\(irks, he will ]ir(il)ably be made an accounting officer, though the better plan is for the chief financial ofificer to have the receipt of prepaid simis. as well as the collection oC current a<'C(iunts. The rents and i)ri\ileges can be \erified by the Rents Roll, the Minutes and |)articulars being supplied wherever possible by the Town Clerk's De])artment. l"he granting of shooting and fish- ing rights should, if let to a club, be api)roved by the appropriate Committee and entered on the "Nfinutt's. whence the Auditor could draw his evidence of the moneys being due. Individuals mav, however, have rights granted, and in these cases especially is it better fur the receipts to be issued at the Chief Financial Officer's Department, tickets of admittance to the resenoirs and grounds being given for production to the engineer-in-charge. Sales of Old Materials, Grass and Hay, Timber, &c., should be recorded I>y keceii)t-check Books if ])rpi)aid, or Day Book if not prepaid, and verified, if possible, by the Auditor on his visits to the \\'ork.s — e.g., if he sees timber being loaded he may enquire as to the consignee. Whether the engineer-in-charge be the accounting officer or not, the Auditor should call over all the duplicate Receipt- checks to the Cash Account, and see that the moneys received are dulv i)aid o\-er to the Collectors' Offi<'c at the Finance Department and banked. A MUNICIPAL INTERNAL AUDIT. 103 DEPARTMENT No. lo. TRAMWAYS AXD OMXI BUSES. TRAFFIC RECEIPTS (INCLUDING CARRIAGE OF PARCELS). In an audit of the receipt.s from the Tram\\ay.s, the AiuHtor has to a certain extent to depend on the efficiency of the inspection by tram officials, and on the system in operation. Where the Collecting-box System is in use on the cars, the danger of fraud lies not so much with the conductors as with the cashiers at the Receiving Office, and the check on them by means of books alone is not very satisfactory, though it is facilitated somewhat by distributing the responsibility over two or more cashiers. Where the Ticket and Bell-punch System is in use, the audit (allowing for small discrepancies between the tickets and cash, which experience has shown to be existent) is more effectual, and financial supervision can be better maintained. It must be said, however, that the reliabihty of bell-punches which register the number of times they are used, &c., has yet to be proved. The Auditor in this department generally commences his work on the Waybills and Road Returns. He should, however, take steps to ensure that the ticket inspectors on the cars are efficient, and, if he has any doubt, report to his chief, for representations to be made to the Tramway Department. Check occasional Waybills, and check the Summary of each conductor's total receipts to the Daily Traffic Receipts Form. Check the additions of the Traffic Receipt Forms, and trace the money received to the debit side of the manager's Cash Account. A Register of Differences is kept at the Heatl Office as a record of each conductor's actual takings as compared with the 104 A MUNICIPAL INTERNAL AUDIT. record of his tickets, and periodically, in the case of the "shorts" exceeding the " overs,'" the conductor is called upon to pay the deficiency. Check the transfer of these sums to the Daily Road Return, and deal therewith as with actual receipts. At the end of the year, or other ticket stocktaking time, the Auditor should attend to see the stock taken, and verify the Tickets Stock Ledger, a hook which shows in great detail all the Ticket transactions of the year. All Tickets for the tram- ways should be ordered !>y the chief Ihiancial officer, and the entries of stock received in the Tickets Stock Ledger should be checked with the orders thus issued. The Auditor should also call for the Annual Summary of Revenues Book, and see that the totals transferred thereto, both of Tickets used and Cash accounted for (including differences) are in proper order, balancing in total Avith the amount of receipts passing through the Cash Office. Li addition to the Bell-punch Tickets, check all the entries in the Stock Books relating to Annual Tickets, and school children's, workmen's, and other Tickets sold at the Cash Office in bundles. This may be done at very short intervals throughout the year, the Daily Receipts Forms being checked with the entries in the Stock Books, and the Stock itself occasionally verified. If any contracts be entered into with the Post Office, manu- facturing firms, &c., see that the charge under the contract is accounted for. A Register of such contracts should be kept, and checked by the Minutes of acceptance. ADVERTISEMENTS. Advertisements on cars are generally let by tender in a lump sum. Where this is so, the audit is simplified. Call for the contract, or verify by the Minutes, and see that the amount is A iMUMCir.M. INTKRNAL AUDIT. 105 received, preferably through the Chief Financial Officer's Department. If positions and spaces are separately let, the audit would proceed like that of rents, generally. Advertisements on Tickets may be verified by the agreements or the correspondence with the advertisers. The Auditor may also examine the Tickets themselves, and, if there be an advertisement thereon, see that the charge is accounted for. Receipt-check Books should be used for all advertisement charges received. SUNDRIES. If there be any sales of old materials, and miscellaneous receipts (or if, in the case of the horse traction system being in use, there be any sales of horses, manure, Sec), Receipt-check Books should be in use, and Horse Registers kept. Tramway Manager's Cash Account. Check the total of all the traffic receipts from the Daily Traffic Receipt Forms, and the amounts shown to have been received by all the Receipt-check Books, to the Cash Account at each branch office. Call over all transfers to the General Cash Account, and trace all the deposits shown on the credit side as having been made, daily or several times per day, until they are lodged at the bank. DEPARTMENT No. ii. PARKS, GARDENS, AND RECREATION" GROUNDS. The probable sources from which receipts may arise in this department are Rents of Sports Ground, Grazmg Charges, Sales of Flowers and Grass, Bowling-green Charges, Fishing and Boating Fees, Sales of Timber, Charges for use of Chairs, &c. Io6 A MUNICIPAL INTERNAL AUDIT. Rents (e.g., Refreshment Rcums), it" for long periods, should pass the Committee, and be entered on a Rents Roll. Rents for short periods {e.g., weekly) should be charged as i)er arrangement with the parks superintendent. If possible, the parks superintendent and not the caretaker, or lodge-keeper, should be accounting officer. Arrangements necessitating charges being made should be carried out through the superintendent, and carbon copy orders giving effect to these arrangements sent to the caretaker. These duplicate orders would sui)ply a check, additional to the general Receipt-check Books in use, for such items as Sundry Occasional Rents, Sales of Flowers, Grass, Timber, Fishing and Boating Fees, and Grazing Charges. Where small amounts are received from the Ixnvling-green, or for the use of boats or chairs. Tickets should be, provided, in various colours for tlaily changes, and used as a means of check. At the pay-box the usual notice that Tickets are to be given for all sums paid should be prominently displayed. In such a case, surprise visits by the Auditor and the superintendent would' tend to prevent fraud, if the caretaker be entrusted with the collection of the moneys. Park Superintendent's Cash Account. Call over the Receipt-check Books to the Cash Account, and check the Tickets Slip with Ticket Rack ur Rolls at each visit, ensuring that all amounts shown to have been received by the Receipt Books and Tickets Slips are entered on the debit side of the Cash Account. Trace all deposits with the Treasury, as shown by the credit side of the Cash Account and the receipted Cash Slips Book, to the bank. A Mt'MCIPAI. INTERNAL AUDIT. I07 DEPARTMENT No. 12. LIBRARIES, Ml'SKLMS, AM) ART GALLKRIKS. LlBRARIi:S. The first item requiring attention in the Liiirarv Department is the amount rereived from Fines. Check the additions of the Daily Summarits of Fines Receipts, as shO)\vn liy the duplicates of the RecLii)l-rhecks. testing cases occasionally hy taking a hook brought in on the day of audit, overdue, and checking the fine shown to be due on the dating form as l)eing brought into account. If the Receipt-check Books used at the Library be ruled with columns to show the nature of the receij)t, the same receipts would be given for Fines received, Tickets and \\'aste-paper Sales, Damages to Books, and other miscellaneous Library Receipts. The borrowers' Tickets should be numbered con- secutively, and a Ticket Stock Book kept. A Record of Catalogues should also be provided. If any Rents be charged, verify by Rent Roll, as previously described. Newspapers should be sold by tender, and a list of the accepted tenders made and tluly authenticated for audit purposes. Sundry Sales should be attested by the librarian. Librarian's Cash Account. Check the summaries of each day's receipts to the Cash Account, and trace all moneys paid over to the Treasury till they are lodged at the i)ank. MUSEUMS AND ART (iALLKRIES. If anv cloak rooms be provided, receipt-checks may be used of a counterfoil pattern, the tear-out being perforated down the middle, and one half given to the depositor, the other half, of a H Io8 A MUNICIPAL INTERNAL AUDIT. different pattern and wording, being placed with the articles deposited. When the articles are reclaimed, the depositor's ticket should be exhibited lo the attendant, and placed in the letter-box receptacles provided therefor. A notice that tickets are not to be handed to the attendant, but placed in the boxes, assists in the operation of this rule. At the visit for audit, check oft' all the counterfoils of the tickets used,, open one of the receptacles, and examine the contents. Check the ticket numbers in the rolls, and the ticket slips to the superintendent's Cash Account. Where metal checks are used instead of tickets, a similar method of \-erification would apply thereto. Sales of catalogues, photographs of pictures, Sec, should be regulated l)y limited numbers being issued, and a record of Receipts and Sales kept, the stock being balanced periodically. Curator's or Superintendent's Cash Account. Check all receipts shown by the Tickets and Catalogue, &c., Slips to the superintendent's Cash Account, and verify the deposits with the Treasury, tracing their course till they are paid in at the bank. DEPARTMENT No. 13. EDUCATION DETARTMENT. (a) HIGHER EDUCATION. Siudcnts' Fees. — Call over the Receipt-check Books, and trace through the Summaries till the receipts reach the director's or secretary's Cash Account. One form of Receipt-check is generally so designed as to cover receipts feir all fees. Check the registers of the classes with the apjjropriate columns in the director's Cash Account, taking care that, where one fee covers a combination of classes, allowance is made therefor. A MUNICIPAL INTERNAL AUDIT. IO9 The transfer ot sums received from the Exchequer CoiUnbu- tiun Account (Customs and Excise Duties) of a county borough, as lieing appropriated for the furtherance of technical (now hifrher) education should be verified, and in the case of a non- countv borough verify the amount receiveil frcmi the County Council for the same purpose. Grants received from the Board of Education should be verified by copies of the claims on the department made l)y the Director of Education, and the production of circular letters from the Board of Education accompanying the remittances. SiiUs of Books and ^laicrials. — Call over the Receipt-checks used as acknowledgments of these receipts into the Cash Account, and trace all Sales from the Stock and Stores Account and Inventory, as is described in the audit of elementary education receijits following. Director's Cash Account. Trace all receipts from this source to the director's Cash Account, and verify all moneys shown as being paid over to the Treasury. yb) ELEMENTARY EDUCATION. At each school, to ensure the chief financial officer's super- vision of the moneys, &c., received, provision should be made for the jjrojjer acknowledgment of all receipts liy the use of the following books : — {a) Receipt-check Book. {b) Stock and Stores Account and Requisition Book. {c) Inventory. {d) Sales Account (equivalent to a Collecting and Deposit Book). {£) School Eees Account. H 2 no A MUNICIPAL INTERNAL AUDIT. All sums received (other than school ft-es) shoulil lie acknow- ledged 1)V an official receii)t, and particulars of these receipts entered in the del)it side of the Sales Account. As a check on all sums received, whether fr(>m Sales of Books ami Apparatus, or Furnilurt-, llie Stock and Stores Account and Tn\entory respectively are used. Stock and Stores Account. — Contains a Stoi-k Account for all school stores, classified as wonvenientiy as })ossil)le. Verify the stock in hand at commencement of period hy the Stock Sheets, and check (from the Requisition Book and Inxoices to the deliit side of the ai)propriate Stock Account) the stocks received during the given period. On the credit side provision is made for all articles handed out to teachers, l)eing acknowledged by the initials of the teacher recei\ing them. All entries not initialled should be assumed to be sales, and the price of the books, &c., accounic-d for. This will ensure the proiJer keeping of the book, and it should be seen that items are not initialled at random, but that the teacher has in use the actual numbers signed f(-r. XW books "used up" {e.g., exercise books) should not be destroyed, but periodically the Auditor should go through the stock in the stock room, the class cupboards, and the stock used up awaiting the Auditor's verification before being destroyed. The Tn\-entorv (which rt-cords all permanent apparatus and furniture) should bf prriodically examined in the same way as the Stock and Stvires Account, and all articles shown as " disposed '"' of traced. A firm chei-k on all stocks is essential in an audit of school receipts. School Fee<: Account. — Where school fees are received there should be registers in use, so designed as to show the amounts due from each class per week. The amounts received should be checked into the School Fees .\ccount. A MUNK IIWL IN TKKNAl. AIDIT. 1 I I Arrears on this airiuni a Register of Patients should be kept l)v the matron, periodically sul'milted to ami signed l>y the Meilical Officer of Health. In many munici])alities there is a charge maile for patients from outside districts atlmitted to the Hospital. In these cases, agreements are, or should he, entered inlo at the lime ol the jiatients' admittance to pay for the maintenance charges during the time of residence as in-patients. Particulars of these agreements are entered in the Register of Patients in columns pnniiled for the pur])ose. At the time of the patient leaving the Hospital, an account for maintenance is given out, and particulars entered in die Register. If payment be at once made, a receipt is given, and the account in the Register marked off as paid. If the account is to he collected, it should he traced through to the del)it side of the Sundry Debtors' Ledger at the Finance Department. Call over all agreements to the Register, ensuring that the Medical Officer of Health initials the entries of the charges Avhich are to I)e made. Voluntarv i)avments of maintenance charges should he acknowledged by official receii)ts, and it is, perhajis, advisable to publish in ihe Annual Abstracts and Medical Officer's Report all \-oluntary contributions. All sales of materials should be a<-kno\vledged by official receipts, a-id, if possible, verified by the Stores Account. Matron's Cash Account. Call over al! Receipt-checks to the Matrons CJolkcting and Deposit Account, and trace all nKjneys paid over to the Treasury till thev reach the Bank. Il6 A MUNICIPAL INTERNAL AUDIT. DEPARTMENT No. 17. POLICE. The principal item of income on this account is the contribu- tion liy the Government of the moiety of the expenditure on police pay and clothing. It is usually paid to the chief financial officer. A county borough receives this account direct from the Government as i)art of receipts on Exi'hequer Contributions Account (License and Probate Duties) under the Local Go\-ernnient Act. 1888, the apportioned part of which sum is transferred from the Exchequer Contribution Account to the credit of Police Pay and Clothing Account. This transfer should be verified. A non-countv !)ort)Ugh receives this amount through the council of the adminislrati\e count}- in which it is situatt-. Verify the receipt bv the circular letters enclosing the half-yearly remittances, as well as by the duplicate Receipt-checks. (a) CHIEF CONSTABLE'S (iENERAL CASH ACCOUNT. The other rfctipts generally are: — Rents of Policemen's Cottages and Cubidt'S (deducted from Police Pay), verified by the Rentals Roll and the Pay Sheets; Special Services of Police, verified liy the applii'ations (in a prescribed form) and the Copy Accounts Book (if possible, corroborate by the report of the constables or sergeant-in-charge) ; Con\ t\ ance of Prisoners, verified by the Home Office Remittance Forms and the Copv Accounts book; L'se of Court Room lor Inquests — by the Coroner's Api)lication forms (and the newspapers); Lock-up bees. L'se of the .Vnibulance. and Sundries — by the ordinary Recei[)t-checks. whiih will, of course, be a\ailable for the auroptrty may lie verified by the Poundage Record, sales of old clothin^^ by the Clothing Stock Account, and sundry licenses {e.g., pedlars' and chimney sweeps' licenses) may be checked by the License Counterfoils. Receipt-checks sliould in addition be used for all purposes, with the exceptitjn, perhaps, of licenses receipts and deductions irom ])olice pay. Chief Constable's Police Pension Fund Cash Account. Check all sums s'.iown to be recei\ed into the Cash Account, and trace all moneys paid over to the Treasury till they reach the Bank. The Auililor will find that an intimate acquaintance with the provisions of the Police Acts of 1890 and 1893 will be of great service to him in his audit, both of the Police Pension Fund receipts and the receipts of fees and lines per the Borough Justices' Court. DEPARTMENT No. 18. ABATTOIRS. The .S(nirces of income in this department will probably be Rents of Abattoirs appropriated to private use, Tolls on Animals Slaughtered in public abattoirs, Lairage Charges, Auctioneers' Tolls, (^razing Charges, and Sales of Sundry Materials. The jirivate rents should be in accordance with the Abattoirs Rents Roll, anil be checked by th<' Abattoirs Rental Ledger. A MUNICIPAL INTERNAL AUDIT. II9 reriodically Arrears Lists shnulil \>v prt-parnl mikI sul •milted to the chief financial officer. The tolls on animals slaughtered in puhlic abattoirs should be charged in accordance with the approved rate per animal, as per the Minutes of the appropriate Committee, and the accounts as rendered to the users of the abattoirs should be recorded in a manifold carbon copv account book. Check, from this book thf debits for all charges, tolls, lairage, and grazing, and call over from the Receipt-checks the ])ayments thereon, tracing all moneys received to the collectors' Cash Account. Any arrears should be checked as being carried forward week by week, and anv bad cases of arrears should be recovered, if necessary, by the Chief Financial Officer's Department, independent of the collector. Accounts rendered to auctioneers for the privilege of using the abattoirs sale room should be verified as being at the correct rate, either on time allowance or on the number of animals sold. A Copv Accounts Book for these charges may be kept. Toll Collector's Cash Account. Trace all amounts shown by the Receipt-check Books to have been received to the Cash Account, and all moneys paid over to the Treasurv. DEPARTMENT No. 19. WKIC.HiS AND MEA.SURES DEPARTMENT. As a check on the accounts received for the stamping and adjusting of weights and measures, there should be in use Receipt-check Books of a special pattern, allv flejinsits pa'nl by contractors for specifications, tenders^ A MUNICIPAL INTERNAL AUDIT. 1 27 &c. The practice as to ensuring the chief financial officer's supervision of these receipts cUfers : either () the accounting officer may keep a separate Deposits Cash Account therefor, repaying the deposits by postal order, 53. 54. Art Galleries. . Artisans' Dwellings, Rents of Ash Bins Audit Reports ,, ,, pro forma " Auditing " (Dicksee) " Auditors " (P'ixley) . . 59. f'3' PAGE 118 .. 8.9 ■ • C'5. 93 104 105 .. 46 4G 68 68 .. 51.58 .. 46 71 23 SS 75 .. 10-17 121, 122 70 •• 47-50 121 64, 66, 71 107 65 85. 113 15. 22, 37 .. 20-21 I 1 Uo INDEX. Auditors — Appointed by Local Government Board Conditions Governing Work of Duties of Elective Liabilities of ' Personality of Powers of Professional PAGE 42, 43. Ill 4 2.G 4 / 8 Bad and Doubtful Debts .. .. 33-35, 58, liadges Bank Accounts of a Corporation ,, Interest Calculations ,, Slips, Use of . . Banking of Receipts . . Bankruptc}' of Ratepayer Baths and Washhouses Bills of Exchange, Moneys raised on . . Board of Education Grants Boating Fees Books, Sale of, Education Department.. Borough Accountant. {See " Chief Financial Officer.") ,, Department of . . Justices' Court, Fees and Fines Rate Surveyor, Department of Treasurer. (Sec " Chief Financial Officer.") ,, Department of Borrowers' Tickets, Libraries . . Bowling Green, Receipts from Burial Act, 1900 II M. CCd •• •• •• ■■ ■■ Burials, Register of . . 63, 64 08 .69 . 71 . 80 .. 31. 3^. 74. 126 126 75 • • 31 36 . 74 . 75 • 51 • 122- 124 76 109 105 loS III . • 59-79 117, 120- 1 22 • 41 82 • • 5' J-79 107 • 105 125 24. 125 . 125 Calculations of Bank Interest. Capital Moneys, Raising of 126 76 INDEX. I \l I L PAGE Carbon-Copy Receipt-Checks, Audit of •• 23-25 Supply of 10 „ ,, Use of .. 10 Carriage of Parcels, Receipts from •• 103 Cash Account. (See Receipts and Deposit Account ) ,, Books of Departments .. 75 ,, in hands of Municipal Officers 31 ,, o^l6S •• •• •• •• •• •• •• 3. 32 ,, Slip Books • • 30. 74 ,, Summary Book . . 74 Catalogues . . 107, loS Cattle Sales.. - A .. 114 Cemeteries . . 1-4. 125 Centralisation of all Cash Receipts .. 74-76 " Chief Financial Officer " .. 9,31 Classification of Departments.. 38 Cleansing Department 112 Clerk to Justices' Department. . 120-122 ,, ,, Payment of Rates to . . ■■ 51-54 Cloak Rooms, Receipts from . . 107 Clothing, Sale of Old Police . . 118 Coin Meter Collection 59-62, 87 Coke Sales . . .. 87-90 Collectors' Enquiry Forms 33' 34. 35 Collecting and Deposit Books. (See Receipts and Deposits Accounts.) Collector's Office, Finance Department •• 59-79 Commitment of Debtors 53. 121 Committee Minutes, Use of [4, 15, 17. 56, 66 Comparisons of Receipts 37. 54. 76 " Completed" Audit .. 18 Compounding for Rates .. 46 Conclusion . . 128 Consolidated Rates Collection . . 41 Contagious Diseases (Animals) Act 68 " Continuous " Audit . . 18 Contracts, Register of 55. 103 Contributions by Government — Education 100 INDEX. Contributions by Government — In Lieu of Kates Medical Officer's Salary Rateable Police Pension Fund Sundries Towards Cost of Police Pay and Conveyance of Prisoners Corporations' Bank Accounts . . Costs of Recovery of Rate Cottages, Rent of Counterfoil Receipt-Check Books, Use Court Justices' Fees and Fines Credit Sales. . Customs and Excise Duties Cut-off Notice Book . . Clothing of PAGE •• 45. 46 .. 67 117 68 67. 115 116 31. 36, 126 52 .C>5. 93, 112, 116 10 117, 120-122 3. iC, 32 97. 109. 117 58 Daily Balances Book, Bank Interest Day Book, U«e of, General Debentures . . Debtors, Commitment of Debtors' Ledgers, Use of, General Debts, Bad and Doubtful Deductions from Police Pay . . Delivery Tickets, Use of, General Departmental Audit, Details of ,, Transactions Deposit Notes, Capital Moneys Raised on ,, of Receipts by Accounting Officer Depositors' Ledgers . . Deposits as Security, Miscellaneous Destructors' Refuse . . Dicksee's " Auditing " " Difference " Books .. Discounts Allowed to Property-owners, Rates Disinfectants, Sales of Distress for Rates 126 ■- 16, 32 • • 7G, 77 53. 121 .. 16, i2 33-35. 58, 63. G4, 68, 69, 71 117 .. 16, 32 .. 3S-127 . . 22, 121 76 .. 29-32 93 92, 93, 100, 126, 127 112 I 26, 61, 103 46 ^5, 113. "4 52 INDEX. ] r. VGE I I I 1 139 108 4 98 63, 64. 99 34-59. 9S 99 109 2, 3. 10 12 67. 109, 116 •• 47 50 ■ • 3 14 Education Act, 1902 .. Department, Elementary Higher Elective Auditors Electricity Charges, " Brighton System " ,, Fittings and Services Rentals .. Elementarj- Education Examinations of the Institute of Municipal Treasurers, &c. Exchequer Contributions Excusal of Rates Expenditure, Corporation External means of Check Fees and Fines, Borough Justices' Court .. .. 117. 120-122 ,, Meter Testing .. .. .. •• 93. 100 „ Remitted Book .. .. .. •• •• ..121 „ Scholars and Students' .. .. .. •• 108,111 Finance Department . . . . • - • • • • • • 59-79 Financial Officer, Chief . . . . ■ • • • • • 9. 3^ ,, Officer's Supervision of Cash.. .. •• •• 74-7^ Fines, Libraries .. .. .. •• •• ..107 Fire Brigade Department . . . . . . ■ • • • i " Fishmg Fees . . . • • • • • • • 102, 105 Fittings, Electricity . . . . • . • • • • 63, 64, 99 Gas .. .. .. •• •• 63, 64. 91 Water .. .. .. •• •• f>3f ^M. loi Food and Drugs Act, Sale of . . . . . • • • • • (>^ Fraud in Accounts .. .. .. (>, 12. 13. '7. 24, iO, 95. 97 Gala Fees .. .. •• •• •• •• ..124 Gardening Fees .. •• •• •• •• ..125 Gardens, Receipts from .. •• •• •• •• ir'5 Gas Department .. •• •• •• •• 22,86-96 //'o /oywd Audit Report .. •• •• 20-21 Ij4 INDEX. Gas Fittings and Services „ Rentals.. ,, Residuals ,, Debtors' Ledger ,, Works Yard Arrangements General Audit Provisions ,, District Rates Collection ,, Rate (Metropolitan) Collection Goods Inward Book .. ,, Outward Book Government Contributions in lieu of Rates Grants, Board of Education . . ,, Exchequer in aid of local rates Graves, Register of .. Grazing Charges Ground Rents PAGE 63-64. 91 ..54. 86 62, 63, 87-90 62 94 .. 18-38 .. 39-54 43 82 iC, 32, 82 • • 45. 46 109 67, 109, 116 • • 45. 46 125 105, 114, 11& .. 65 H Higher Education . 108 Highway Rates . 41 Highways Department . 82 Hired Meters, Register of . • . 56, 99 Horses, Register of . . 84, 105, 112, 113 Sale of 83,84, 105, 112, 113 Hospitals . 115 Houses, Rents of . .. 65 I Installations of Lighting Services . . . . , . . . 56 Instalments, Private Street Works ... . . . . . . 70 ,, Register of, Justices' Court .. .. .. 121 Institute of Municipal Treasurers and Accountants (Incorporated) Examinations .. .. .. .. .. 2 3, ro, 12 Inter-Departmental Transactions Interest allowed by Bank, Audit of ,, on Investments Inventory, Education . . . .22, 121 126 64. 65, 117 no INDEX. Investments Ledger . . Irrecoverable Accounts Irregularities in Accounts '.S5 I-AGK • • .. 6^,05 •• 5'.5J. 54. 64 G, I- . I J. 17. -24. Jf^ 95. 97 Justices Clerks' Act, 1S75 .. .. .. .. .. 1-22 ,, ,, Department, Fees and Fines, Audit of ..ji, 117, 120122 Court, Fees and Fines .. .. ..31,117,120-122 K Kingston Cotton Mills case Lairage Charges Legal Proceedings, Register of, (Overdue Accounts) Liabilities of Auditors Libraries' Receipts . . License and Probate Duties . . Licenses, Audit of . . List of Court Fees Loans, oMoneys Raised by Local Government Board Auditors ,, Taxation, iSgg, Report of Royal Commission on Lock-up Fees London (Equalisation of Rates) Act, 1894 „ Government Act, 1899 ,, Rating Scheme, 1901 .. So, 97, 4^ 119 58. 59 2 107 G7, iiG 17, iiS 121 76-78 43. Ill 43 116 44 42 43 M Magistrates Clerk's Department Manifold Carbon-Copy Receipt-Check, Audit of Use of Manure Sales Markets Department . . Materials (Highways, &c.) INIedical Officer of Health, Department of Memorials, Register of 31 f 117 120-122 •• 23, 25 . . 10 83. 105, 112, 113 .. 96 82 .. .. 85 I 25 136 INDEX. PAGE Meters, Rentals .. .. .. .. .. • • 56, 99 ,, Sales .. .. .. .. .. .. 91 ,, Testing Fees . . .. .. .. .. 93> 100 Meter-state Registers .. .. .. 56, 61, SC, 98, 99, loi Metropolitan Rating Procedure . . . . . . • . 42-44 Minutes of Committees, Use of .. .. 14, 15, 17, 5^', 66 Miscellaneous Receipts — Abattoirs .. .. .. .. .. .. nS Baths and Washhouses. . .. .. .. .. 124 Cemeteries .. .. .. .. .. .. 125 Electricity .. .. .. .. .. .. 99 Finance Department . . . . . . . . • • 73i 79 Gas . . . . . . . . . . . . . . 90, 94 Hospitals .. .. .. .. .. .. 115 Library . . . . . . . . . . . . 107 Police .. .. .. .. .. 116, 117 Sanitarj' . . . . . . . . . . • • 85 Scavenging .. .. .. .. .. iij, 114 Surveyor's .. .. .. .. .. . . S3, 84 Town Clerk's .. .. .. .. .. •• 81 Waterworks . . . . . . . . . . . . 102 Mortar Sales .. .. .. .. .. 83, 84, 113 Mortgages, Moneys raised on .. .. .. .. .. 76 IMunicipal Internal Audit, Detail of .. .. .. .. 5 ,, ,, ,, Extent of .. .. .. .. 4, 27 Museum Receipts .. .. .. .. .. .. 107 N Newspapers, Sales of . . .. .. .. .. .. 107 Nightsoil, Sales of .. .. .. .. .. ..113 OHicer, Chief Financial . . . . . . . . • • 9 Officers, Accounting .. .. .. .. •• 8, 9, 31 Old Clothing, Sale of . . .. .. .. •• .. nS Owners' Allowances, Rates .. .. .. .. ■• 46 INDEX. 137 Owners' Ledger, Trivate Street Works Oxide, Sale of Spent . . I'AGE 70 8S Parcels, Carriage of . . Parks Patients, Register of . . Paj-ments to Police, General . . „ „ Rates Pension Fund Account, Police Personality of Auditor Petty Cash Accounts . . Pixley's " Auditors " .. Police Acts, 1890 and 1S93 ,, Department, Audit of. General .. ,, ,, Payment of Rates to ,, Pay and Clothing, Contribution to ,, Pension Fund .. Post Office, Rates on . . Poundage Record Powers of Auditors .. Preferential Payments in Bankruptcy Act, 1S97. . Prepayment (Coin) Meters Collection . . Private Street Improvements, Apportionments . . ,, ., ,, Instalments I^ates „ ,, Works Act, 1S92 ,, ,, ,. Owners' Ledger.. Privileges Professional Auditors. . Properties, Register of Property Owners' Agreements— Private Street Improvements ,, ,, Allowances, Rates .. ,, ,, Instalments, I'rivate Street Improvements Provincial Rating Procedure .. Public Conveniences . . ,, Health Act, 1S75, Rating Provisions of .. 40, 41, ,, Lighting Charges ,. .. -. ••5'^' Pupils' Premiums 103 105 115 116-11S • • 51-54 117 7 31 I 116-11S •■ 51-54 .. G7 117, 121 45 iiS S 51 59-62, 87 .. 69 70 41 69 70 .. 65 4 81 70 4<3 70 •• 39-42 •• 71-73 51. 5-. 53 87. 98. 99 100 138 INDEX. Kates- VAOK Apportionments ., 47-50 Collection • • 39-54 Collectors' Enquiry Forms, Pro forma .. 48, 49 Compounding for 4G Discounts Allowed to Owners 46 Distress for 52 Excusal of . . .. 47, 50 Irrecoverable . . 51.53.54 On unoccupied Property 47 Paid to F^olice . . •• 51-54 Reduced on Appeal 46 Summonses •• 5^,54 Water 55, 56. loi Receipt-Check Books — Audit of 16, 23-25 Binding of . . II Counterfoil . . 10, II Kinds of 10 Manifold Carbon-Copy. . . 10, 23, 24, 25 Register of, Pro forma . . 14 Supply of 12, 13, 14 Triplicate Form of, &c... 10 Use of .. 10, 23 Receipts and Deposits Account, Audit of, General .. 27-29 Pro forma 28 „ „ „ Use of, General 10, 23, 27 Recreation Grounds . . 105 Refreshment Rooms . . .. 124 Refuse Destructors . . 112 Register of— Arrears, Justices' Court.. 121 Bad Debts and Allowances 51. 5'"^. 63 Burials 125 Cattle 114 Contracts 55. 103 Corporation Properties . . Si Court cases 120 Defaulters, Rater, fee. . . 51 INDEX. 139 Register of- »'age Differences .. .. •• .. .. 26,61,103 Fees and Fines, Justices' Court .. .. .. .. 120 Gardening Fees .. .. .. •• ..125 Graves . . . . • • • • • • ..125 Hired Meters . . . . • • • . • • • • 3^. 99 Horses .. .. .. •• S4, 105, 1 12, 1 13 Installations of Services .. .. .. .. 5C> Instalments, Justices' Court .. .. .. ..121 Memorials .. .. •• •• •• ..125 Meter-states .. .. •• 55,61,86,98,99,101 115 81 100 Patients Properties Pupils Receipt-Check Books, Pro forma .. . . . . 14 Remitted Fees, Justices' Court .. .. .. ..121 Services at Fires . . . . • • • • ■ ■ 1 1 r ,, Water .. .. .. ■- •• 55 Summonses .. .. .. •• •• ••52.54 Tickets .. .. •• •• •• ■ • 103 Weights and Measures . . .. •• •• •• hQ Registrar of Cemeteries, Department of .. .. •• 125 Remitted Fees, Justices' Court .. .. •• 121,122 Removals of Ratepayers . . . . - . • • • • 49. 5° Rentals — Gas . . . . . . • • • • • • 54-59. 86 Electricity .. .. •• •• •• 54-59.98.99 Installation .. .. •• •• •• •• 5^ Meters . . . . • • • • • • • • 5'J. 99 Water .. •• •• •• •• 54-59. i^i Rents .. .. 17,33.65-67.93.96.99.106,107.112.116,118 Income Tax, Deductions from . . . . . • • • 66 „ Roll .. .. .. •• •• •• ..66 Weekly and other Short Periods .. . • 67, 93, 96 Report of Royal Commission on Local Taxation, I S99 .. .. 43 Reserve Funds, Interest on Investments of .. .. •• 64 Residual Products, Debtors' Ledger .. .. .. •• 62 Gas 62,63.87-90 Road Returns, Tramways .. .. •• •• ..103 I40 INDEX. S PAGE Sale of Food and Drugs Act . . . . • . • • • • 68 Sales Account, Education .. .. .. •• log, no ., Cash .. .. .. .. .. .. 3, i6, 17, 32 ., Credit .. .. .. •• •• .. 3, 16, 17, 32 „ of Freehold and Leasehold Property .. .. .. Sr Sanatoria .. .. .. •• •• •• •• 115 Sanitary Department.. .. .. •• •• •• 85 Scavenging Department .. •• •• •• •• "2 School Fees Account.. .. .. .. •• ..no Services at Fires .. .. •• •• •• •• ^^^ Electricity .. .. •• •• •• 63,64,99 Gas .. .. .. •• •• 63,64,91 of Police .. .. .. •• •• "6, 118 Water .. .. •• •• •• 63, 64, 101 Sewage Disposal Works .. •• •• •• •• ^^- Sewerage Department . . . . • • • • • • 83 Shops, Rents of . . . • ■ • • • • • • • 65 Sinking Funds, Interest on Investments of .. .. •• 64 Specifications, Deposit Fees on, &c. .. .. .. 126,127 Stiles .. .. .. •■ •• •• 10,11,26 Stipendiary, Court Fees (sec Justices' Court Fees) . . 120-122 Stockholders' Ledger.. .. .. •• •• •• 77 Stock Issues . . • . . • • • • • • • 76, 77 Stocks and Stores Department, Assistance of . . . . 69, 82, 83 Ledgers, Use of .. .. .. 17,82,109 Stoves and Grillers .. .. .. •• •• ..90,91 Students' Fees, Education Department .. .. •• loS Sulphate of Ammonia (s« Residuals) .. .. .. •• S8-90 Summary Jurisdiction Act, 1879, Books prescribed by .. .. 122 „ of Collectors' Cash Accounts . . . . • • 74 ,, ,, Revenues, Tramways .. .. .. •• 103 Summonses for Unpaid Rates, &c. . . .. • . 5-. S^- 50 ,, Register of, General . . . . • • • • 5^ ,, ,, Rates . . .. . • • • 5-' 54 Sundry Debtors, Collection . . . . . • • • • • 69 Sales 73, 79, 81, 83, 84, 85. 90. 93. 94, 99, "3, "4. "5. "7. "S Supply of Receipt-Check Books .. .. .. 12,13,14 Surprise Visits for .-Vudit .. .. •• •• •• '^ Surveyor's Department . . . . • . • • • • S2-S4 INDEX. 141 I'AGE Tar Sales .. .. .. •• •• •• •• S7-90 Tenants' Ledger . . . . . . • • • • • • (^ . . . . . . 3 XII. Solicitors" Accounts (Uk'ksee) 3 XIII.— Pawnbrokers' Accounts (Thornton & May) 3 XIY.— E ngi nee ra' and Ship- builders' Accounts (IUkton) .. 3 XY.— T ramway Accounts (McCoLL) Triple Number . . 10 XYI.— Australian Mining Com- panies' Accounts (Gouden \" Robertson) 3 XYII.— Printers' Accounts (I-akin- Smith) . . . . • • .3 XYIII.— Medical Practitioners' Accounts (Mav) XIX.— Water Companies' Accounts (Key) XX. Fishing Industry Accounts iWlLLlAMSONl 6 6 e 6 6 6 6 6 6 To Subscribers these are published at the special rate of 2S. 6d. per volume (3s. 9d. Pei "Double" volume). Sub- scriptions can still be received at this reduced rate by those desirous of obtaining the whole Series, but the back volumes must be paid for ea bloc. Subscribers who may not wish to acquire the xchole of the back voluvus may, however, commence their Subsa-iptia>i with Vol. XXI. {which has recently been issued). Single copies of any volume may be obtained at the ordinary rates as detailed above. For Suhsa-iption Order Form see next juige. "Cbe Accountants' Cibrarp. (SECOND SERIES) ^y CUBSCRIPTION5 are now invited for a Second Series of volumes which are being issued I, lonthl) in connection with this pubhcation. The first six issues (Vols. XXI. to XXVI. of the whole Series) have now been published as follows :— XXI.— MUNICIPAL ACCOUNTS. (Allcock) Triplf Nuiiilui". lo, G XXII.— UNDERWRITERS' ACCOUNTS. (SiMc i-.K ^: I'M. 1 IK) ; 6 XXIII.-JEWELLERS' ACCOUNTS. (.\ L I. K N E u \v A K I) s ) Double Number, 5/- XXIY.-MULTIPLE - SHOP ACCOUNTS. i11a/i-.i.ii'I 3/6 XXY.-BUILDING SOCIETIES' ACCOUNTS. I< '. HAN 1 -SmI 1 HI ,,'i XXYI.-DEPRECIATION. RESERVES, AND RESERVE FUNDS. (UlCKSKK) 3,'6 It is expected that the two Series will comprise about 50 volumes in all. THE NEXT VOLUMES OF THE SERIES WILL BE : — XXVII. QUARRY ACCOUNTS, by J. G. P. Iuotson, .^.C.A. (Ready January 1904.) XXVIII. FRIENDLY SOCIETIES' ACCOUNTS, by E. Furnival Jones. (Ready I-cbru.iry 1904.) XXIX. ELECTRIC LIGHTING ACCOUNTS, by Geo. Johnson, F.S.S., F.I.C.S. (Ki'.idy M.irch 191)4.) XXX. -WINE MERCHANTS' ACCOUNTS. (Ready April 1904.) ^rraneeiTients have already been made for th,e following subjects to be dealt with (but not necessiirily in the order stated). Applications are, however, invited from competent authors desirous of undertaking further suitable subjects:— Colliery Accounts. Cotton Spinners' Accounts. 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Summary of Contents: Introduction, dealing with the constitution of Gas Companies, etc.— Sale of Gas and Collection of Gas Rates— Fittings Accounts, and Prime Cost Accounts incidental thereto— Sale of Residual Products— General Ledger and Full Set of pro forma Accounts for one year— Statutory Form of Annual Accounts— Shares, Stock, and Debentures— Cost Accounts with pro forma Statement— Capital and Revenue Expenditure— Local Authorities as Owners of Gasworks. WITH A COMPLETE INDEX. GEE S CO.. PUBLISHERS, VoZTtc"''"'' J ©rder Form. .190.. To Messrs. Gee & Co., 34 Moorgate Street, LoQdon. Please supply OAS ACCOUNTS. Enclosed Is remittance for. Name Address cop. of Third Edition. 298 Pages. Demy 8vo. Price 10/6 net BdDdDlkteepnirii For Accountant Students . . . By LA WRENCE R. DICKSEE, At. Com., F.C.A. Recommended in the Official Syllabus for the C.P.A . Examinations (New Yorfi). 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Post free. iDi HB n (S n p a li (2 (S (D) im ini (t By JOHX ALLeoeK. Borough Accountant and Refiistrar of Stock, Eastbourne ; Fellow of the Society of Accountants and Auditors (Incorporated); Fellow of the Institute of Municipal Treasurers and Accountants (Incorporated). ^qT^HIS ^Work is based on the methods adopted by some of the LEADING MUNICIPALITIES IN ENGLAND, and will be of considerable service to the Financial Officers of Municipalities, Urban District Councils, and those members of the Profession engaged in the Audit of Corporation Accounts. Gee & eo., Publishers. 34 Moorgate St., London, E.C (For Contents see over) Price 10 6 net. Mnmmndpsill H(S(S(D)iiiiinitt by John ailcock. The Entire System of Bookkeeping and Checking of Municipal Accounts is dealt with, and facsi miles of all Books and forms recommended are given. CONTENTS: Introduction and General. Chapter 1— Orderint^ Goods, and Pre- liminary Measures relating to Accounts. II.— Checking Accounts. 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Please supply cop of Vade'Mecum. Enclosed is remittance for Name. . . . Address. NOW READY. 800 PAGES. PRICE 21/. NET. b'"" EDITION. o^o lUKniniinini PRACTICAL MANUAL POR flUDITORS . BY LAWRENCE R. DICKSEE, M.Com., F.C.A. (Professor oj Accounting at the University oj Birmingham ; author of " Advanced Accounting," " Bookkeeping for Accountant Students," etc.) IN consequence ot 1-our Kditions (of i,ooo copies each) of this standard work being exhausted, a Fifth Edition has been prepared and is now ready. The work has been thoroughly revised and partly re-written, and is now in everv wav up to date. ^ t. ■ ■ r u The Legal Decisions referred to have been brought up to the beginniriK ol the Lont; Vacation, 1002, and especial attention has also been devoted to the consideration of the Companies Act, 1900, upon which there has been so much discussion of late. The general character of the work is upon the same lines as the last two editions, the subject being dealt with under convenient headings in 12 Chapters, com- prising ^70 pages, and ilealinK with the method of audit In connection with all difTerent Classes of Accounts, and the Duties and Responsibilities of Auditors. Chapters are also appc n.kd dialing with Investigations of Profits tor prospectus purposes and with Income Tax. There are four Appendices. The first, which covers 184 pages, contains extracts from 41 .\cts of Parliament dealing with the duties and responsibilities of Auditors. The second, which extends over 212 pages, contains full reports of all the leading decisions affecting the duties and responsibilities of Auditors, and the principles upon which profits may be ascertained and dividends declaref fifty F"orms, -e of the assist- ;tro-Platers in 200 pages. of Municipal _3ni mended are -'S. 1 'rice _ance has been son Municipal 'examinations. -cperience and Hnd to be able _ 3^- 6rf- net. pal Financial -untancy, and al .Vccounts. 1- Price Act and the -ansactions — -L.\Kli\cE ifi' Business, J in connec- net. By Thi. Volume is d^^Tfn ''^^'''=^-'^1 M^lm^FC^A method of keeping each boc 34 I each bookVe'spf^'^^'^'U^^^^^^actions. illustr;;,' ACCOUNTANCY BOOKS. (Q UbOU4 STAMP DUTIES & RECEIPTS, HA Price2s.6rf.net. 52 pages. By H. LakinSmIi.. 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The system advocated is illustrated by full pro fornia Accounts, and extracts from the Acts of i8.j7 and 1902 are appended. AUTHORS WORKS PRINTED AND PUBLISHED. -.- . ^•^r-^s ■'X>.-.Vnc><\6'y-v-»*:y^:.>'^*«V-«V L13- , , rf i^iJiW . ■-'>»•:■ *«- ■ .-cu .'-:MXfc;4*3k*. ^^Y?**"" vT