of the records and plans and to supplement these by tests to determine the quantity of water available in certain districts; of fire engines to determine their condition and capacity; and of fire-alarm boxes and apparatus. The engineering parties usually consist of three men, one of whom is trained and experienced in water-supply construction, operation and design; the second, who is usually a mechanical engineer, reports on the fire department equipment and personnel, also on the firealarm system and certain other mechanical features; the third man is familiar with the structural features of buildings, and the hazards that contribute towards the inception and spread of fire.

After the data are collected and the key parts of the report written up, the field men return to their home office and finish the preparation of the report. It is then forwarded to the home office in New York, where it is revised by some of our most competent and experienced men, to assure uniformity of treatment and a check of the conclusions and recommendations.

The National Board of Fire Underwriters has issued reports on about 400 different cities, including practically all that have a population of more than 25,000. Surveys are made at intervals of five or six years if practicable; the interval depends somewhat on the extent of changes for the better or worse. About fifty of these reports are issued in the course of a year, so that they go through our office at the rate of about one a week. We print an edition of six or seven hundred, sending them to the member companies of the Board and to city officials of the city reported on, as well as to local organizations, like the chamber of commerce, which are interested in public welfare. Importance of Strong and Enthusiastic Local Leadership

It appears not necessary to outline in detail how these reports can be used by fire prevention committees, as it is believed that a complete reading of any of them by the members of the committee will furnish sufficient material on which to work to keep them busy for a considerable time; of course, the particular function of a fire prevention committee will be the awakening of civic interest in regard to the improvements. A simple vote of approval for a recommendation for additional hydrants or water-mains or an increase in man-power in the fire department, or material improvement in the fire-alarm system, will not suffice, but instead a definite campaign must be organized to place the need of these improvements before the citizens and bring them strongly to the attention of the city council or such other

body as has the duty of appropriating funds.

Such action on the part of a fire prevention committee cannot be carried out in a spasmodic manner, but requires a definite, continuous program and the best efforts of its members; in fact, it has been the general experience in the field of fire prevention that little will be accomplished until a strong and enthusiastic man is made chairman of the committee.

Instance of Effective Local Work

I should like to speak of some instances where the work of a fire prevention committee of this nature has been effected. It has been quite noticeable that in almost all of the cities where tangible and definite results have been obtained there has been one man who has headed the movement and kept at it everlastingly. The remarkable results accomplished in Macon, Ga., for example, have been mainly through the efforts of the Chief of the Fire Department. The City of Cincinnati is perhaps the oldest and best-known example of what can be done by one man who keeps at it continuously. Captain Conway is the Superintendent of the Salvage Corps there and has made the work of fire prevention his particular hobby for long years. The city of Indianapolis is another place where, mainly through the efforts of one man in keeping the fire prevention committee busy, such results have been obtained as the passage and strict enforcement of a wooden shingle roof ordinance which has had a very remarkable effect on the fire loss in dwelling-houses. That committee also has worked very effectively in securing the installation of automatic sprinklers in a number of buildings in the downtown district where occupancy and construction were particularly hazardous. In Chelsea, Mass., the Secretary of the local Chamber of Commerce has been active in working with the local fire prevention bureau of the Fire Department in cleaning up the conditions that existed in certain sections.

In

In Knoxville, Tenn., a marked improvement in the water-supply facilities was brought about through the assistance of the local fire prevention committee in putting over a bond issue for financing these improvements. Huntington, W. Va., there has been in the last year, largely through the efforts of the fire prevention committee, a marked improvement in the water-supply, the fire department facilities and also the fire-alarm.

You undoubtedly know where almost equally effective work has been done. I want you to feel that through our contact with the National Fire Waste Council we have an interest in your problems and are always ready to help in any way we can to solve them.

A

LL the processes of bookkeeping fall into two main classes, namely:

First, the process of recording transactions as they occur, in chronological order.

Second, the process of classifying and summarizing the recorded transactions according to their character, so as to reflect their effect upon financial condition and operations.

The first process is simple in character, but exacting in its requirements of accuracy, clearness and completeness. It is essential, however, as a preliminary to the second process. The latter is complex in character, since it involves the main functions of accounting, namely:

Definition of Controlling Account

A controlling account is one which reflects the total value or amount of a given class or kind of asset, liability, expense or revenue. One of its distinguishing features is that it summarizes in one total, or controls, the several items of detail balances which constitute the asset, liability, expense or revenue which it represents. For example, the total cash of a city government is presented in the controlling account of "cash," but this total is composed of a number of balances on deposit in various banks, plus, perhaps, numerous balances of cash on hand.

Each Controlling Account Must Be

Homogeneous

One of the essential requirements of an account is that its balance shall represent a distinct thing or class of things susceptible of exact definition. This means that every account

must be homogeneous; that is, must be composed of like elements truly coordinated, which when totaled and opposed one to the other produce the balance of one class of unmixed items. An account which does not meet this test conveys no information until analyzed and an accounting system in which the accounts require analysis before they can be understood is no system at all. These principles apply particularly to controlling accounts.

The Importance of Nomenclature Effective conveyance of information depends upon the use of understandable language. Every term used must be truly descriptive. In every subject which necessitates the application of a technique, arbitrary terminology cannot be avoided. But in such cases an understanding is made possible by the adoption of a standard terminology accompanied by exact definition. Thus it is essential that a standard nomenclature of controlling accounts be adopted, defined, and consistently used and be subject to change only after due notice and amendment of definition.

Controlling Accounts as a Means of Proving

Accuracy

One of the important functions of a controlling account is to prove the accuracy of the detailed accounts to which it relates. For this purpose a controlling account must be something more than a summary of details, since a summary repeats any errors which may exist in the details which it summarizes. A true controlling account is one in which the entries are derived from sources or by methods independent of those from or by which its related detailed accounts are derived. For example, if the deposits in bank are listed and totaled and the total is posted as one item to the controlling account of "cash" and if, also, each deposit so listed is posted to a bank account, the total of these postings to bank accounts should agree with single amounts posted to the "cash" account. If there is disagreement, an error has been made.

Controlling Accounts as a Means of Preparing

Summary Statements Promptly

The financial administrator must have statements in time to take action when action is needed. When transactions are voluminous, it is therefore essential that some means be adopted for supplying promptly after each reporting period a summary statement of financial condition and of operations. If this were done only when detailed accounts had been posted, balanced and summarized, the resulting statement would reach the administrator long after the period during which action would be worth taking. For this reason controlling accounts are devised to present the totals which reflect a general picture of financial condition and to convey an explanation in general terms of the course which has been followed to reach that condition. Since such accounts are produced as soon as each class of recorded transactions can be totaled, a statement from these accounts can be prepared almost immediately after the transactions have been recorded.

Investments.-The balance of this account represents the aggregate of the book values of investments owned; it controls the detailed accounts of investments, contained in the investment ledger.

Fixed Property.-The balance of this account represents the total book value of fixed property owned, such as land, buildings, equipment, etc. It controls the detailed account of such classes of property, for which there should be a loose-leaf or card record.

Expenditures.-The balance of this account represents the total expenditures during the current period; it controls the detailed classification of expenditures for which an expenditure ledger should be provided.

Funded Debt.-The balance of this account represents the total amount of outstanding longterm debt; it controls the detailed balances of the several issues of such debt.

Revenues.-The balance of this account represents the total amount of revenues accrued during the current period; it controls the detailed classification of revenues for which a revenue ledger should be provided.

THE FUND GROUP

This group of accounts is peculiar to government accounting. The application of certain revenues to certain purposes is required by law in order to make sure that resources will be available to finance activities to which it is desired to give preference. Such provisions create special funds and leave for application to the general fund all revenues not thus set aside. These restrictions make fund accounts necessary, since the administrator must know what resources are available to finance each activity or object. To illustrate the principles of controlling accounts in this group, let,us take those of the general fund, of which the chief ones are as follows: Resources:

Estimated revenues to be accrued or collected
Taxes accrued not collected
Available cash

Obligations:

Unencumbered appropriations Unliquidated encumbrances Reserve for temporary loans

These balances are defined as follows: Estimated Revenues to Be Accrued or Collected. This balance represents the total amount of revenues applicable to the general fund estimated in the budget which has not been accrued or collected. Accounts should be kept of the several revenues thus estimated, which should support this controlling account.

Taxes Accrued Not Collected.-This balance represents the amount of taxes applicable to the general fund which has been accrued but not collected; it controls that portion of the detailed accounts of taxes due which applies to the general fund.

Available Cash.-This balance represents the total cash which has been accumulated from sources of revenue applicable to the general fund against which vouchers have not been approved for payment. This is not a controlling account, since it controls no detailed accounts, but it is included and described here on account of its importance as one of the fun group.

Unencumbered Appropriations.-This balance represents the total amount of appropriations out of the general fund which has not been obligated or committed to the payment of contracts or purchase orders. It controls the detailed accounts of appropriations.

Unliquidated Encumbrances.-This balance represents the total amount of contracts and purchase orders outstanding against the gen

T

eral fund. It controls the file of uncompleted contracts and unfilled orders.

Reserve for Temporary Loans.-This balance represents the total outstanding loans in anticipation of the collection of general fund revenues. It controls the register or bill book in which such loans are recorded in detail.

Controlling Accounts as an Aid in the Execution of the Financial Program

The information needed in connection with the execution of the financial program must be accurate, complete and produced promptly. These requirements can be fulfilled consistently only by means of well-coordinated controlling accounts operated in accordance with a practical accounting procedure.

-Copyright, 1927, Francis Oakey.

HE sale about the middle of October by the state of Illinois of $6,000,000 4 per cent bonds at a premium, which reduces the net interest cost of the loan to 3.393 per cent, indicates clearly the extent to which state and municipal bond prices have advanced in recent weeks. Another excellent illustration is the recent sale by the city of White Plains, N. Y., of about $800,000 4 per cent bonds at a premium.

Despite the unusually strong demand for municipal bonds, cities, counties and other communities do not appear to be increasing their borrowings, a condition which, of course, is conducive to lifting the market to an even higher level.

The following list of representative issues indicates the trend of the municipal market at the present time:

PROTEST that it is hoped will become na

Ation-wide against the recent emphasis on high

speed in automobile advertisements, has been inaugurated by the Better Traffic Committee of Pittsburgh. The Committee bases its protest on its belief that some of the present advertising practices in the automotive field are instilling in the minds of automobile drivers a craze for speed which is being reflected in the nation's mounting traffic-accident toll. The Committee has asked the manufacturers to co-operate in adopting a general policy which will curb the present advertising tendency.

A letter from the Committee elaborating this

point of view has brought promises of cooperation from some of the largest automobile manufacturers and pledges of support from leading automobile clubs. Several of these replies are published in Greater Pittsburgh, the bulletin of the Pittsburgh Chamber of Commerce, for September 24, 1927. The Better Traffic Committee is an organization composed of public-spirited citizens of Pittsburgh, appointed by the Mayor, and serving without pay, who cooperate with the city officials on all traffic matters. The Committee has been conducting a continuous educational campaign designed to help reduce traffic accidents. Burton W. Marsh is Secretary, with office at 908 City County Building.