are expressed in Treasury Circular No. 34 (revised), of which paragraph 5 is as follows: For the purposes of analysis of accounts which reflect cost in terms of expense incurred, fixed charges, capital outlays, contingencies, or losses, the following general classification of objects of expenditure, in so far as the same may apply to the business of the department, bureau, office, or subject of account, shall be adopted: A. Salaries, wages, and other compensation for personal services currently rendered. B. Services other than personal (1) Transportation of persons (service). (2) Transportation of things (service). (3) Subsistence and support of persons (service). (4) Subsistence and care of animals and storage and care of vehicles (service). (5) Communication service. (6) Printing, engraving, lithographing, and binding (service). (7) Advertising and publication of notices (service). (8) Furnishing of heat, light, power, and electricity (service). (9) Special and miscellaneous services other than personal (including repairs by contract or open-market order). C. Materials not specifically adapted for use as supplies, equipment, or structures. D. Supplies (1) Stationery, drafting, scientific, and educational supplies. (2) Fuel (including burning and illuminating gases, oils, and liquids). (3) Mechanic's, engineer's, and electrician's supplies; furnace and foundry supplies. (4) Cleaning and toilet supplies. (5) Wearing apparel and hand-sewing supplies. (6) Forage and other supplies for animals. (7) Provisions. (8) War supplies; explosives and pyrotechnic supplies. (9) Special and miscellaneous supplies. E. Equipment (including live stock), and parts. F. Structures and parts, and nonstructural improvements to land. G. Land. H. Capital outlays for rights and obligations, and payment of debt— (1) Purchase of rights to demand, control, or enforce action, or of rights to act. (2) Payment of debt and payment to sinking funds. (3) Repayment of deposits. (4) Treaty obligations. (5) Refunds, awards, and indemnities. J. Fixed charges and contributions other than pensions and retirement salaries(1) Rents. (2) Royalties. (3) Fees for licenses, permits, and privileges. (4) Interest. (5) Insurance and depreciation funds. (6) Educational and general-welfare grants and contributions. (7) Trade subsidies and bounties. (8) Burial expenses, providence funds, and other gratuities. K. Pensions and retirement salaries. L. Losses and contingencies. To the end that the classification might meet the technical requirements of the service as well as serve as a basis of common analysis of accounts, the definitions to be given to these classes of expenditures were assigned to committees of technical experts from the various departments. The conclusions of these experts are expressed in the definitions and descriptive matter contained in Treasury Circular No. 36. The basis for standardization having been established, the next question of immediate importance relates to methods for carrying on the accounting and reporting processes. In cooperation with the joint committee on accounting and reporting and the joint committee on expenditure documents, certain conclusions were also reached on this subject. A statement of principles governing the character of information which it is thought should be carried on the documents of business may be found in Treasury Circular No. 35. These committees and other representatives of the departments detailed for accounting work are now engaged on the preparation of forms of records, the purpose of which is to provide for prompt and accurate statements of results in summary form and in detail without duplication. It is in this relation that the present circular has special significance. As has been previously pointed out in another circular, the officer who assumes the responsibility for thinking about economy and efficiency of work under his direction and control should have full information concerning the following matters: 1. What goods have been bought or issued for use on work. 2. The price paid for each article. 3. The use to which the goods have been put. As the records of the Government are now kept this character of data is the most difficult and expensive to obtain. It has been optional whether accounts were carried to show the cost of work; even when cost records have been established, usually they have been on the basis of vouchers paid or cash disbursed, instead of being on the basis of goods delivered or issued for use on the work. The only method of analyzing totals developed by accounts has been to examine the vouchers or original papers; and frequently on these papers the descriptions of objects of expenditure have been so general as not to give exact information. The purpose of the symbols contained in this circular is to suggest an economical method of complying with the requirements of Treasury Circular No. 34, i. e., to make available to persons charged with the details of business a "shorthand" method whereby, in the most abbreviated form, entries may be made on requisitions, orders, invoices, and vouchers which, when carried into the accounts, will enable the bookkeeper by use of symbols to pick out data relating to each subject on which a report is desired. When both "class" and "specification" or "stock" numbers are made a part of record entries, the accounting office will be able to state promptly and accu rately the facts relating to each object of expenditure and also to specify exactly the details which go to make up the analysis. The use of a uniform "code" or system of "shorthand" symbols for descriptive purposes not only lessens bookkeeping work, but also very materially reduces the cost of preparing special reports. By way of illustration let us assume that the only information regularly desired by the head of a department pertaining to Army posts is the total expense of "administration," of "operation," and of "maintenance," and that the entries in the expense account "operation" of a particular post on a particular day were as follows; The first two entries would be made from service records or reports; the succeeding entries would be made from invoices. Assuming that the person making or approving the requisitions entered the "class" and "specification" numbers from the price list or catalogue of specifications (or from contracts), these would be carried into the orders and invoices as a matter of routine; and from the invoices to the account. At the end of the month an analysis is called for. Using the entries shown above for the purpose of illustration, the following analysis could be taken off immediately on an adding machine, viz: In the same manner an analysis of supplies might be made: By reference to the general-supply catalogue, it will be found that the forage paid for was as follows: Corn on the cob, 70 pounds to the bushel, according to specification in contract with W. M. Galt & Co., 10,000 pounds, at $0.995 per hundredweight..... $99.50 Corn, shelled and cleaned, 56 pounds to the bushel, according to specification and contract with Hoge & McDowell Co., 10,000 pounds, at $1.17 per hundredweight....... $117.00 Clover hay, prime baled, according to specification 1100 contained in contract Total...... 7.40 407.90 Having obtained whatever detailed information is desired for the purposes of the special inquiry, then by reference to the document numbers shown opposite each item in the account, the supporting evidences may be taken from the files and having checked them to the report the documents may then be transmitted with the analysis to the head of the department or to the person to whom the report is rendered. The symbols may be used to still greater advantage when more minute subclassification of an account or a number of accounts is desired. For example, taking the symbol for flour "D 7312," D 7 would indicate provisions, D 73 would indicate cereal food, D 731 would indicate flour, and D 7312 would indicate flour made from winter wheat. For the purposes of determining the relation of prices paid in different bureaus of the service it may be highly desirable to collect from the accounts in the several branches of the Government the various costs of winter-wheat flour. This would give a very definite basis for judgment as to prices paid at different points of delivery or by different offices at the same point. In order to obtain this information, it would be necessary merely to look in the classification column for the number "D 7312" and then to list the information from the documents and specifications referred to in the column. Aside from the saving made possible in the making of record entries and in the preparation of both regular and special reports, a very considerable advantage is to be attained through uniformity of classification. The use of an abbreviation or numerical symbol in price lists and catalogues and in the preparation of documents is not new to the service, but, as has been noted, even in the same department these symbols differ. By reference to page 527, price list of the Quartermaster's Department, it will be found that B.C. B.O. 1012, S. indicates an airbrake cylinder, 10 inches in diameter, with a 12-inch stroke, listed at $8.25. In some other office or branch of the War Department and in bureaus and divisions of other departments this may have a different designation. The Department of the Navy has 65 classes which are uniform throughout the Navy service, but these classes are so general as not to be satisfactory, and the department is now considering a very considerable increase in order to make these sym bols more useful for analytical purposes. Even here, however, different "specification" or "stock" numbers are used in each yard and store for the purpose of indicating the specific thing ordered or issued. The same is true of arsenals and other manufacturing divisions of the Department of War. Under such practice it is not only an expensive process to get together a report on any particular subject, but the facility developed in accounting and reporting in one branch of the service becomes of little value in another. The officer is handicapped for lack of information, because results may not be coordinated; and the clerical staff becomes immobile, or labors under a handicap when transfers are made. The classification of things purchased by the Government means the classification of practically everything on the market. In the Government service are many men the range of whose training is limited only by the present development of the sciences and the arts. In submitting this classification it is due to the two or three hundred experts who have cooperated in its preparation to say that under less favorable conditions the work would have been impracti cable. While in the outline submitted only classes are given, the more complete data submitted by the technical experts, each in his line, will be of the highest value to those who are engaged on the further work of standardization of specification, classification and codification, price lists, the standardization of contract forms, etc., which is now in progress. The Salaries and wages" classification contained in this circular is not shown in detail, as it is not thought desirable to suggest a method of using such a code until the time and service records, the "pay rolls" and "pay vouchers" have become the subject of detailed consideration by departmental committees. June 22, 1911. F. A. CLEVELAND, Chairman. W. F. WILLOUGHBY, W. W. WARWICK, F. J. GOODNOW, Commissioners. M. O. CHANCE, Secretary. |