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State comptroller appointed by the Governor and directly responsible to him; and that this service be composed of the following bureaus:

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Bureau of central accounting and reporting.-At the head of the proposed bureau of central accounting and reporting should be a chief accountant, a new office that should be created. This bureau will take over the accounting duties now performed by the accounting department of the State board of administration, the settlement and audit of claims now performed in the department of examiners of accounts, and the duties now involved in the settlement of accounts and bookkeeping and accounting work now performed by the division of receipts, the division of disbursements, and the division of general accounts of the present State auditor's office. The personnel now engaged on this work in these several offices should also be transferred to this bureau.

The new system of accounting and reporting recommended for adoption by the State government and the more detailed duties of this bureau are given in the chapter on Accounting and Reporting.

Briefly the functions of this bureau will be: (1) To settle all claims payable by the State; (2) to superintend the recovery of all debts due the State government; (3) to keep the central budget and proprietary accounts of the State government; (4) to prescribe all forms, systems, and procedure for administrative accounting in the several departments and establishments; (5) to certify to the comptroller, for his approval, each and every requisition by a duly accredited disbursing officer for an advance of funds from the treasury; and (6) to establish a pre-audit system of settling claims either for the entire State government or for any bureau or bureaus of departments thereof, under which system vouchers supporting proposed payments would be submitted to the comptroller for audit and payment (vol. 1, p. 123).

State auditor

Ex officio duties of State auditor.-The State auditor should be relieved of all of his ex officio duties in order that he may not be embarrassed by having to audit organization units in which he holds membership or over which he exercises administrative direction.

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Transfer of accounting duties of State auditor to proposed budget of central accounting and reporting.-The State auditor should be relieved of all accounting duties, including the settlement of all claims and the drawing of all State warrants on the State treasurer, in order that he and his auditing staff may devote their entire efforts to making a real audit of all State departments, boards, institutions, and agencies.

The State auditor should have no administrative duties. He should be independent, not a part of the administrative branch, in order that he may feel free to call the legislature's attention to all violations of law and administrative regulations, and to all instances wherein, in his opinion, the administrative staff has failed to conform to law and regulations, has been guilty of extravagances, or has failed to discharge their duties in an economical

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If these recommendations are accepted, the State auditor will be in fact, an arm of the legislature, an independent representative of the people, with the power to review the actions of the administration and to report his findings to the legislature in his regular annual and biennial reports or in special reports, should these be necessary (vol. 3, p. 151-152).

Distinction between the functions of auditor and comptroller.-The function of an auditor is one pertaining to the legislative branch. The auditor should be wholly independent of the executive or administrative officer whose acts it is his function to review. This independence is secured by either his popular election, or, as in some States, by his appointment by the legislature.

Properly, the duties of the auditor should be three. First, he should examine past transactions. The accounts and reports of all persons or agencies having the receipt, custody, or disbursement of public moneys should be examined to insure proper accountability, or fidelity. Second, the transactions of public funds that have been expended, have been received, or that should be examined in respect to the question of legality. Third, the auditor should report the result of such examinations to the legislature, which is the branch of the government acting as a check upon the executive and administrative branches..

The functions of a comptroller, on the other hand, are the ordering of moneys to be covered into the State treasury, the issuance of pay warrants to issue money therefrom, the settlement of all claims, and, as an incident to this, keeping the central accounts of the State, prescribing the branch accounting systems to be maintained by the departments and institutions, the rendering of annual and other financial reports; and as herein recommended, acting for the Governor in the drafting of the budget document to be submitted by the latter to the legislature. These involve purely administrative duties. The comptroller will make an administrative preaudit of all claims for the purpose of determining their expediency, propriety, and classification, as measures of administrative control and record.

Strenghtening the audit.-Heretofore, the mixture of responsibility of the State auditor to perform the dual function of administrative accounting and settlement of claims, and the department of examiners of accounts of examining all State departments and institutions, has prevented the concentration of all audit functions of the State in the State auditor. Relieved of all ministerial duties, the State auditor will be free to devote his time to the important duty of scrutinizing and analyzing expenditures which may have been improperly made, or which may have represented to him an unwise or wasteful use of appropriated public funds. Through the periodic or occasional audit of all government offices, institutions, and agencies, the State auditor will become possessed of an intimate knowledge of their financial transactions. He cannot fail to see evidences of extravagance, waste, questionable practices, or inefficient methods, and, being independent of the administrative branch, he can carry his criticism annually to the Governor and biennially (or quadrennially) to the legislature with a view to effecting executive and legislative action correcting such practices. In extraordinary cases requiring immediate correction the State auditor should make prompt reports to the Governor in order to inform him of his findings.

As indicated, the State auditor's authority and responsibility runs from the legislative body, the fund-granting and lawmaking branch of the government" (vol. 3, p. 339).

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Summary.-The foregoing recital of functions and duties to be vested in the office of State auditor are in accord with the fundamental principles that he is independent of and not part of the executive or administrative branches, and that he may feel free to call the legislature's attention to all violations of law and administrative staff has failed to conform to law and regulations has been guilty of extravagance, or has failed to discharge its duties in an economical manner. If the recommendations herein made are adopted, the State auditor will, in fact, be the arm of the legislature; and independent power to review the actions of the administration and report his findings to the legislature (Institute for Government Research of the Brookings Institution, Organization and Administration of the State Government of Alabama; (Washington, 1932); in five volumes).

MISSISSIPPI REPORT (1932)1

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Governor as head of the administration.-A second fundamental principle that it is sought to put into effect through the specific recommendations that are made is that of making the Governor the real, as well as the nominal, head of the administration. This principle is one that finds universal expression in the organization of complicated private undertakings and the advantages resulting therefrom are no less in the case of a government than in that of a business corporation (p. 448). Service of general administration.* * That the Governor may efficiently perform his duties in respect to the organization, financing, and operation of the government as an institution, we have recommended that the several agencies having to do with the operation of the government as an institution be brought together under a common head in a service to be known as the service of general administration, this service to constitute one of the divisions of the executive department, the head of which is the Governor.

Viewing the Governor as general manager of the State government, the head of this service will be the business manager, to whom the Governor will look for the immediate and routine direction of the administrative branch as an institution. The chief of this service will have as his subordinates the heads of the several bureaus dealing with the purely institutional activities that have been mentioned, the preparation of the budget, the settlement of claims, the keeping of the central or controlling accounts, the recruitment and handling of personnel, and the making of purchases and contracts.

The advantages of this plan are evident. Responsibility for the performance of a distinct class of duties is centralized and definitely located; purely technical duties will be entrusted to technically qualified persons who devote their full time and attention to such duties; the directors of the other service units will, to a large extent, be relieved of the necessity for considering these matters and be put into a position where they can devote their attention more largely to their functional activities; the basis will be laid for a standardization and unification of these institutional activities throughout the government; and means will be provided for the exercise of control over the purely institutional work of the operating units that cannot otherwise be had (p. 457).

Proposed organization.-The defects in the present institutional service organization can be corrected by the adoption of the plan here recommended of bringing together into a single unified service of general administration the Governor's duty to prepare the budget; the present accounting work now performed by the State auditor's office into a division of central accounting and reporting; the centralization of all purchasing, particularly all contracting except for construction work, into a division of purchase and contract.

The bringing of these agencies under a common direction will insure not only that they will be more effectively coordinated, but also that certain clerical work will be eliminated, particularly in the operating services, if a more detailed central-accounting system is put into operation in the proposed division of central accounting and reporting.

We therefore recommend that a service of general administration be established in the executive department; that this service be headed by a comptroller appointed by the Governor and directly responsible to him; and that this service be composed of the following divisions:

1. Office of comptroller.

2. Division of the budget.

3. Division of central accounting and reporting.
4. Division of personnel.

5. Division of purchase and contract (p. 353).

Division of central accounting and reporting.-This division should be headed by the comptroller. This proposed division will take over the accounting duties now performed by the auditor of public accounts, and the duties now performed by the auditor of public accounts, and the duties now involved in the settlement of accounts and bookkeeping and accounting work now performed by the State auditor's office. The personnel there now engaged should

1 Institute for Government Research of the Brookings Institution, Report on a Survey of the Organization and Administration of State and County Government in Missisippi, 1932..

also be transferred to this proposed division of central accounting and reporting, except the field inspectors, who will be transferred to the department or commission of local government.

The new system of accounting recommended for adoption by the State government and the more detailed duties of this division are given in our chapter on "The system of accounting."

Briefly, the functions of this division will be: (1) To settle all claims payable by the State; (2) to superintend the recovery of all debts due the State government; (3) to keep the central budget and proprietary accounts (a) of the State government; (4) to prescribe all forms, systems, and procedures for administrative accounting in the several departments and establishments; (5) to certify to the director of the budget, for his approval, each and every requisition by a duly accredited disbursing officer for an advance of funds from the State treasury; and (6) to establish a preaudit system of settling claims either for the entire State government or for any bureau or bureaus of departments thereof, under which system vouchers supporting proposed payments would be submitted to the comptroller for audit and payment (p. 354).

Distinction between the auditor's and comptroller's functions.-In keeping with the practice of most reorganized State governments, Mississippi reposes in one officer the duties of both an auditor and an administrative comptroller, although the magnitude of work in both functions and the past neglect of auditing amply justify their separation. The general function of a comptroller is to determine what payments should be made to, or by, the government, and recording them; while the duty of an auditor is to examine subsequently such payments to, or by, the government to determine their propriety and the fidelity of accountable officers (p. 347).

Distinction between function of auditor and comptroller.-Another important principle that has been followed in our recommendations is that of distinguishhas been the functions of a comptroller and an auditor. This distinction, which is definitely recognized in all well-organized private undertakings, has been discussed in the section dealing with financial administration (ch. 18), and needs no additional comment at this point (p. 449).

Auditor of public accounts.-Finally, we are recommending that the auditor of public accounts be chosen by the legislature and no longer elected by the people, also that he be relieved of all ministerial accounting work in order that he may devote his full time to examining and auditing the financial operations of the State departments and institutions. We have proposed a service of general administration, in order to coordinate all work having to do with the exercise of administrative control through the determination, or settlement, of claims for and against the State government, the keeping of central control accounts, the preparation of the budget, and supervision over the budget as voted.

Our purpose in making these recommendations with respect to the State auditor's office are (1) to distinguish between the functions of auditing and controlling, (2) to strengthen the State audit, and (3) to give this officer more specific auditing duties (p. 355).

Transfer of all accounting duties of the auditor of public accounts to the proposed division of central accounting and reporting. The auditor of public accounts should be relieved of all accounting duties in order that he and his auditing organization may devote their entire efforts to making a real audit of all State departments, boards, institutions, and agencies, including the central offices of the comptroller and treasurer.

The auditor should have no administrative duties. He should be independent of, and not a part of, the executive branch, in order that he may feel free to call the attention of the legislature to all violations of law and administrative regulations and all instances wherein, in his opinion, the administrative staff has failed to conform to administrative law or regulations, where their expenditures have not come within the purview of appropriations, have been guilty of extravagance, or have failed to discharge their official functions in an efficient and economical manner. He will be, in fact, the eye and arm of the legislature in the exercise of the latter's function of general control (p. 383). Functions of division of central accounting and reporting.-This division is one of the units of the proposed service of general administration headed by the comptroller. The proposed unit will take over the duties of the present auditor of public accounts involved in the settlement of accounts due to and by the State, and in the bookkeeping and accounting work performed (p. 383).

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4. The duties of the State auditor of public accounts should be restricted to that of auditing and examining all departments, boards, commissions, institutions, and agencies of the State government, and of reporting in legislative years to the legislature and in other years to the Governor (p. 384).

IOWA REPORT (1933)2

FINANCIAL PROCEDURE

The processes involved in the exercise of financial control include: The preparation of a budget and its submission to the legislature; (2) the preaudit or examination of claims before their approval for payment; (3) accounting, both fund and proprietary; (4) receipt, custody, and disbursement of public funds; (5) auditing; and (6) reporting. The administrative structure for the carrying out of these processes may properly vary from State to State, according to the amount of the budget, the volume of transactions involved, and the character and complexity of the revenue and expenditure laws. In Iowa these processes, although highly decentralized under the present structúre, logically fall into three divisions, each assignable to a different administrative agency.

The first of these includes the preparation, submission, and execution of the budget, the preaudit of all claims for payment and the issuance of warrants therefor, and the keeping of all central control accounting records. These functions should be allocated to the Comptroller, who will operate under the immediate direction and supervision of the Governor.

The second group of control processes is manifestly the function of the State treasurer, since it relates to the collection, custody, and disbursement of public funds and the maintenance of such accounting records as are necessary to report treasury transactions.

The third group constitutes the proper function of the State auditor, since it involves a postaudit (periodic examination) of the financial transactions of all departments, establishments, and institutions of the State government. In other words, the auditor should not be responsible for the administration of financial procedures; but as an elective official he should, through periodic audits, maintain a check on the financial administration of all State funds and should report to the legislature and to the people whether revenue and expenditure programs have been administered according to law (p. 403).

Execution of the budget.-In order that the Governor might be provided with the proper machinery for the execution of the budget, it was essential that the office of comptroller be created, to be directly attached to the office of the Governor and to be under his general direction, supervision, and control (p. 408). Auditing procedure.-Preauditing contemplates the administrative examination of a claim presented for payment to determine the legality of the expenditure presented, the availability of funds with which to make payment, the authority for making the expenditure, and the mathematical accuracy of the claim. Postauditing, on the other hand, contemplates the examination of the books and records of a department or establishment to determine if its finances have been administered efficiently and economically, in accordance with laws and regulations, if its books are properly kept, and if its reports are correctly stated. Preauditing is an administrative function, while postauditing is a function performed as an outside check on the administration. The agency charged with the duty of postauditing should report to the legislature and to the public (p. 416).

CONCLUSIONS AND RECOMMENDATIONS

1. The Governor as chief executive should be charged with the responsibility of initiating, preparing, and submitting a balanced budget.

2. He should be vested with sufficient financial supervision over all departments and establishments to insure that expenditures do not exceed resources available to meet such expenditures.

2 Institute for Government Research of the Brookings Institution, Report on a Survey of Administration in Iowa, 1933.

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