tion lays down these rules relative to changes or transfers in the budget: Transfers may be made between instructional pay-roll items; between labor or service pay-roll items; between clerical pay-roll items; between supplies, expense, and equipment budgets and labor and clerical pay-roll items where work, budgeted for contract, is to be done by university employees or vice versa; and from supplies and expense budgets to equipment budgets. No other transfers are allowed except under unusual circumstances and then only on receipt of full information of the necessity. Two universities reported that no changes are permitted. Another college sanctions changes only in case of errors in figures. At one institution the approval of the State comptroller is required to change the budget while the authority of the governor must be obtained to revise certain items in the case of a fourth university. In the others the authority for changes in the budget is vested in the board of trustees at 15 institutions, in a committee of the governing body at 8, and in the president at 9. There are three universities which permit the chief business officer to make adjustments in budget expenditures for equipment and current expenses.

Due to resignations, appointments, changes in titles and salaries of members of the staff occurring during the course of a year, a limited amount of flexibility in the budget is essential. Such changes, however, are of a routine nature and little difficulty should be encountered in handling them without any radical revisions of the budget. The returns show that there were 1,428 resignations, 2,970 appointments, 666 changes in title, and 2,654 salary changes, making a total of 7,718 during the fiscal year of 1928 in 27 of the institutions. The other 13 universities and colleges reported that no changes of this character were recorded. Institutions having the largest number were the University of Minnesota with 2,753, Ohio State with 1,173, and Iowa State College with 621. The large number of changes at Minnesota is explained as due to the fact that it budgets individual positions and budgets supplies closely, and consequently this number of transfers represents not more major changes but a more careful budget administration. The Connecticut Agricultural college and the Montana State College had the smallest number of budget changes, the amount being six each.

Accounting

Cognizance of the type of organization to be served is essential in the development of every system of accounting. The accounting system of the land-grant institution, therefore, must be planned to conform to its particular nature, to its objectives, and to the scope of

its activities. Being publicly supported, the land-grant institution is necessarily a trusteeship. Its funds must be accounted for in accordance with their purposes and limitations. It is not concerned in the accumulation of profits, such as a private business enterprise, but must limit its expenditures to its available resources. To accomplish this result, budgetary accounts must be maintained.

Because of the organization of land-grant institutions into major divisions, different subject-matter departments, and other functional services, an adequate system must also include a wide variety of accounts and funds. Sufficient classification must be provided for the entry of a multitude of separate transactions. Several institutions reported that they have adopted a simple accounting system, but the very nature of the higher educational institution, the wide scope of its activities, and the complicated business procedures make it inevitable that the financial recording shall be more or less involved. Too much simplicity is certain to result in incompleteness and inefficiency. The fundamentals of an adequate accounting system for the land-grant college may be summarized as follows:

A general ledger control of all accounts and transactions.

The general ledger should be subdivided into separately balanced groups of accounts for funds and also of accounts distinct in type, such as "current funds," "endowment funds," and "plant assets and liabilities."

Budgetary accounts for both income and expenditures with general ledger control, the accounts taking the form of "estimated income” and “appropriation accounts."

Entry of all obligations when made, whether in the form of orders or other obligations, these transactions to be entered as encumbrances against appropriations.

Classification of income or receipts by funds and source.

Classification of expenditures by fund, department, activity, character, and

object.

General ledger control accounts of all property values to be supported by detailed perpetual inventories.

Suitable accounting of all trust funds showing at all times their indivudual identity and position.

The institutions were requested to submit a succinct outline of their accounting systems. The returns in most instances were unsatisfactory, making it difficult to ascertain whether all of the essentials just presented are included in their systems. Thirteen of the colleges failed to submit outlines. One university reported that its accounting system is not organized and another that it is a part of the State accounting system. The outlines of 21 institutions showed that a general ledger control of all accounts and transactions is maintained. Twenty of the institutions reported that their general ledger is subdivided into separately balanced groups of accounts of funds and also of accounts distinct in type. There are 22 institutions where the

outline indicates that budgetary accounts for both income and expenditure with general ledger control are kept and 22 where all obligations, whether in the form of orders or contracts, are entered as encumbrances against divisional or departmental appropriations. The accounting systems of only 13 institutions make provisions for accounts covering trust and endowment funds, the remainder apparently having no such funds.

Whether adequate classifications to show income, expenditures, and property values are included in the accounting systems of the universities and colleges could not be learned from the outlines submitted because of their incompleteness. The Carnegie Foundation for the Advancement of Teaching conducted a study for the improvement of accounting methods in higher educational institutions in 1910, however, and compiled forms necessitating the keeping of accounts and books according to specified classifications covering income, expenditures, and property values. Returns on the use of the so-called "Carnegie forms" show that only 11 land-grant colleges have adopted them, either wholly or in part. It is evident, therefore, that uniformity is generally lacking in the practices in use. That a large number of the institutions are able to furnish detailed information regarding income and expenditure notwithstanding the absence of uniformity as between institutions is disclosed by the returns in another part of the report.

The accounts covering the income of land-grant colleges should be segregated under six general headings-Federal, State, student fees, institutional activities, gifts, and earnings of funds. Each of these items should be further subdivided on the basis of specific sources from which the income is derived or specific purposess for which it is available. As a criterion of whether such accounts are kept, actual figures on the income classified according to these general headings were requested from the institutions for a series of specified years. Out of the 44 universities and colleges making returns, 29 were able to report their income for 1910, 34 for 1915, 36 for 1920, 39 for 1925, and 40 for 1928. The institutions unable to supply their income figures under these general items in the various years explained in most instances that the data were not available. Two universities made no report on any of the headings. Further figures on the subdivisions of income were so confused that it was not feasible to make an appraisal of whether detailed classifications are utilized in many of the institutions. In the case of the general item of institutional income from State appropriations subdivided into the items of operating expenses, including salaries, equipment and supplies, and capital outlays, only 32 universities and colleges were able to supply the figures in segregated form.

Similarly, an appraisal was made of the classifications and headings under which the different items of expenditure are kept by the different institutions. As already indicated, an essential to an adequate and complete system is that the expenditures be divided by fund, department, activity, character, and object. Many of the universities and colleges have installed systems covering a part of these items, but in only a limited number of cases are all the classifications included. The classification of expenditures should further provide for a variety of subdivisions. In the survey blanks were presented a series of subdivisions which included administration; departments of instruction; library; research and bureaus; physical plant; agricultural extension; general extension; agricultural experiment station; engineering experiment station; dormitories and dining halls; hospitals, infirmaries, and student health; scholarships, student aid, and prizes; service enterprises; athletics; lands; new buildings; additions to buildings; other major capital outlay items; and miscellaneous expenditures. To obtain a conception of the adequacy of the accounting systems, the institutions were asked to furnish figures under the different headings for five designated years. The figures were supplied for each separate item by 19 institutions for 1910, by 24 for 1915, by 30 for 1920, by 35 for 1925, and by 37 for 1928. The question of whether general ledger control of all property values supported by detailed perpetual inventories is maintained in the accounting systems of the institutions will be discussed under the subject of inventories.

The ability to produce a balance sheet showing the financial condition of a business is the first and foremost requirement of any accounting system. No institution should neglect this important phase of its financial records, which involves the vital question of assets and liabilities. Yet only a total of 27 land-grant colleges were able to fulfill the request made by the survey for the submission of a balance sheet as of June 30, 1928. Of this number, 12 of the balance sheets were in excellent form. The sheets submitted by 15 other institutions indicated that the accounting systems provided for keeping general balanced accounts, but the forms were below standard. Five colleges presented statements which were not recognizable as balance sheets. In 12 institutions that did not comply with the request, the systems apparently did not permit the compilation of statements showing assets and liabilities on a given date.

Another factor in business procedure having a bearing on bookkeeping methods and accounting practices is the question of the time of payment of obligations. In 26 institutions bills may be paid daily. There are 7 institutions where payments are made weekly and 11 where bills are settled monthly. A number of exceptions are

found where the institutions pay certain types of obligations daily, such as emergency invoices, while general accounts are paid either weekly or monthly. The practice of some universities and colleges not to pay their bills daily is due to a variety of causes. Four institutions are subject to State laws which prohibit the payment of bills except upon authority of the governing body, which meets only once every month. In five other institutions the rules of the board of trustees provide for its approval of all bills before payment and the boards in each instance limit meetings to monthly sessions. There are three institutions which pay their obligations weekly or monthly as an outgrowth of custom and two institutions because such a practice facilitates accounting. The invoices of two other colleges are paid by State officers, who permit the submission of bills but once a month from the institutions. One university reported that obligations were settled when it pays to pay and were not paid when it pays to wait, the question of interest on bank deposits evidently governing the time of payment of its bills.

Sound accounting and business practices should provide for taking advantage of discounts on bills. Considering the financial resources of the publicly supported educational institutions, failure to discount bills is inexcusable and can only be interpreted in the light of indifference to the conservation of funds. Thirty-eight of the landgrant colleges make it a regular practice to take advantage of discounts on bills. There are five institutions that do not discount their bills and one institution that discounts them whenever possible. One of the universities regards the discounting of bills of such major importance that a $40,000 revolving fund is set aside for this purpose in its budget. Another college has a standing order that auditors and public accountants inspecting its books must make a special report to the comptroller upon the discovery of any failure to discount a bill. Of the institutions not discounting their bills, the invoices must first be approved by the State board of agriculture before payment in one case, by the State board of examiners in another, by the executive committee of the governing board in a third, and the bills are paid by the State auditor in two other instances. It is evident that the failure to discount bills, thus depriving the institutions of muchneeded funds in all these instances is due to long-distance control of financial procedure in centralized State offices. The governing board should take the necessary action in the case of the institution that does not discount its bills because of delays in authorization of their payment by the executive committee.

The accounting records for the entire institution should be kept in the central business office. Where branch stations or services, such as the agricultural experiment station or similar activities,