will be published. Needless to say, the importance of the undertaking will be given due consideration.

The manual will contain instructions and suggestions relative to the preparation of vouchers, accounts, and other documents that must be submitted to the auditor. It will also deal with the practices pursued by the auditor in the allowance of salary, traveling expenses, and claims of all conceivable descriptions with references to laws and decisions.

In order to permit amendments to portions of the manual without confusion or republication of the book, the auditor will endeavor to procure an inexpensive method of binding the manual in loose leaves. Any sheet affected by changes would consequently be removable, and a new sheet could be inserted.

MANUAL OF ACCOUNTING.

The auditor will commence the compilation of a manual of accounting without delay. The manual is intended to guide employees or anyone interested in the system of asset and liability accounting now employed to a better understanding of its composition. The importance of this manual can not be overestimated.

The form of the manual will be modeled on the manual of instructions already mentioned.

ENCOURAGEMENT OF EFFICIENCY.

The auditor will encourage his employees to study accounting, particularly the modern classifications, so that they may comprehend the reasons for the distinctions that it is necessary to enforce in his office. In harmony with this idea, the auditor has purchased recent treatises on such subjects as auditing, efficiency, cost accounting, municipal financial systems. the valuation of public utilities, and kindred topics. These books will be loaned to ambitious employees, so that they may familiarize themselves with the theory of auditing and accounting as applied elsewhere to the variegated problems of the auditor. Assistance will, at the same time, be extended employees to aid them in their study.

Diligence, originality, and efficiency will be impressed upon the employees as essential to promotion. The mere performance of routine duties faithfully will not be sufficient in itself to justify promotion, although that is appreciated. The men should develop and prepare themselves for the duties that may be required of them, and not rely on obtaining promotion before acquiring a knowledge of the duties corresponding to the new positions.

The preceding remarks are not intended to convey the idea that the employees of the auditor are deficient in ability and knowledge. That is very far from the truth. However, it is the opinion of the auditor that the movement on foot in the interest of economy and efficiency can best be furthered through the activities of men familiar with local governmental conditions. The auditor has already demonstrated the ability of his personnel to offer valuable suggestions for the improvement of the government service. Consequently, by the policy outlined above he is preparing the way to make his office an important factor in the reorganization that is bound to occur.

ELIMINATION OF USELESS WORK.

A great deal has been done during the past year to economize effort in the office of the auditor withcut injury to the worth of the records. This activity has resulted in a saving of time in other departments as well as the auditor's. The number of separate vouchers to be prepared by other offices and passed upon by the auditor has been decreased by several thousand. What this means in labor and time it is impossible to appreciate unless one knows how long it takes to fill in the details on a voucher and secure the six signatures necessary in the originating department and the office of the auditcr. The titles of the yearly departmental appropriations, other than salaries, have been shortened by the suppression of the superfluous words "Contingent expenses.' These words were formerly repeated several hundred thousand times each year unnecessarily.

A new voucher check, which was designed, will reduce the expense of this special form one-half, in addition to simplifying the blank. The new form will substitute the two forms heretofore used and be easier to handle. It is simpler and more compact than the old form, and one signature of the payee serves the purpose of both receipt and indorsement, whereas two signatures were formerly essential.

A trial balance book, prepared for the appropriation and trust fund ledgers, was arranged to also allow its use as a journal for the classification of the monthly totals of expenditures as expenses, capital outlays, etc. The details would be of no general

interest, and for that reason comment is limited to the statement that about 35,000 entries per annum were economized, together with the checking and balancing that the supplanted voucher register entailed.

Several thousand copies of auditor's certificates of settlement of accounts were sent to the governor yearly, until his excellency was requested to permit the use of the copies to be dispensed with. It had been the custom to send to the governor each year more than a hundred letters requesting authority to make transfers, until the auditor suggested the possibility of preventing the annoyance to the governor and the loss of time to everyone concerned by submitting the transfer warrants themselves, with the supporting documents, for the governor's refusal or sanction.

These seem small things in themselves, but collectively they make an appreciable difference in the administration of the office of the auditor.

ESTIMATED CASH INCOME, APPROPRIATION, ASSETS, and approPRIATIONS FOR 1915-16.

[Exhibit No. 32, Consolidated financial exhibits.]

A similar exhibit was published last year under No. 30 of the report of the auditor. The exhibit has been compiled for the present report in a form that is more readily grasped, instead of relying on footnotes only to explain that although the appropriation balances appearing in the exhibit are according to the books, allowance must be made for the automatic cancellations of a large portion, owing to the expiration of the two-year limit in the case of the fiscal year appropriations and the lack of necessity for some no-fiscal-year appropriations.

Experience has also inclined the auditor to regard the loans to municipalities and school boards as appropriation assets only, and not to offset them by an item among the appropriation balances, as was done last year when the exhibit appeared for the first time.

Footnote No. 3 of Exhibit No. 32 of the consolidated financial exhibits makes the reason for this change clear. It should be understood that the auditor does not intend to imply that an actual deficit of the amount shown by the exhibit will accrue at June 30, 1916. The exhibit is meant to demonstrate that if all appropriations for which there is authority during the fiscal year 1915-16 are exhausted, the cash income and other appropriation assets now known will be insufficient to cover the appropriations to the extent of $284,162.88. However, it is likely that half of the no-fiscal-year appropriations will not be used during the year and that $300,000 of the appropriations for 1915-16 and 1914-15 will remain unexpended on June 30, 1916, to be disbursed later. Nevertheless, realization of this prophecy would not change the final results, and the estimated deficit would remain the same although the cash would be on hand the unexpended appropriation balances would still more than offset it. The legislature should take into account at its next session the excess of outstanding appropriations over available cash and other assets, as made plain by the estimated deficit of Exhibit No. 32, and curtail no-fiscal-year appropriations to that extent, in order to restore the balance between estimated receipts (including those realized from the assets mentioned in Exhibit No. 32) and appropriations that are in force and are likely to be expended.

Comments on increases and decreases in expenses of the Government, as shown by Exhibit No. 5, consolidated financial exhibits.

All departments show a decrease in salaries due to the reductions made in the appropriations for the year 1914-15. Consequently, the following comments will make no mention of the increases and decreases composing the net decrease in salaries, which amounted to about $500,000.

Executive council: "Legislative printing" shows a reduction of $713.97 for the reason that part of the cost of printing for 1914-15 not reported in time will be paid in the fiscal year 1915-16, and charged to the previous year. "Franchise investigations" cost $4,189.56 less in 1914-15, because of the elimination of several positions and the corresponding traveling expenses. "Other expenses" show an increase, as the expenses of secondary railroads are included in the year 1914-15.only.

House of delegates: The "Mileage of members" was decreased $705.10, due to no extra session of the house being held in 1914-15. The increase in "Legislative printing" is caused by the inclusion of "Publications of the house of delegates" in 1914–15. The increase in "Other expenses" is negligible.

Miscellaneous legislative: "Printing and publication of laws" was only apparently reduced $225.82, as payments of this amount not reported in time will be made in the year 1915-16. The "Commission for the study of employer's liability law" shows a decrease of $274.09, because no appropriation was made for the year 1914–15.

Governor: The decrease of $3,043.84 in "Expenses, executive mansion,” to a decrease in the appropriation from $14,000 to $10,000.

was due

Secretary: The "Publication of an official gazette" was discontinued, causing a reduction of $3,847.29. The work of "Establishing and regulating a standard system of weights and measures" was extended, producing an increase of $8,140.71. "Other expenses" were reduced $2,913.03, due in a measure to the fact that the "Compilation of laws and codes of Porto Rico" was discontinued. Also there was no "Miscellaneous transportation furnished by the bureau of supplies, printing, and transportation." Attorney general: "Special litigation" did not require as much in 1914-15 by $237.42. The decrease in other expenses is not readily explainable briefly. "Traveling expenses" were only apparently decreased $1,593.43. (See "Other expenses" below.) "Rent of collectors' offices" was reduced $240 by removal of the Ponce office. "Postage and freight" was reduced $1,247.64, due no doubt to the repeal of the "patente" law. "Purchase of plates and printing of revenue stamps" was reduced $1,704.72, as no appropriation was made for the year 1914-15. "Establishing a new system of commercial and industrial license taxes" was reduced $12,025.91, due to the fact that the law was repealed in 1913-14. "Other expenses" covered a different classification in 1914-15. As the appropriation "Incidentals" for the year 1913-14 (covered in Exhibit No. 5 by "Other expenses") included that heading only, and in the year 1914-15 an appropriation was made to cover "Incidentals and traveling expenses" the increase is more than offset by the decrease in "Traveling expenses above.

Auditor: More examinations were made in the field and "Traveling expenses" were increased $261.11. The account for "Other expenses' was reduced $1,733.03, caused by a reduction in appropriations from $5,300 to $2,150.

Civil service: The decrease in “Other expenses" was caused by a reduction in the appropriation for the year 1914-15.

Education: All appropriations were reduced for the year 1914-15, thus causing a corresponding reduction in expenses. About $300,000 of the total decrease represents cuts in salaries. Although the remainder of the decrease in expenses was only about $47,000, according to Exhibit No. 5, the decrease in cash expenditures for other items than salaries was about $150,000. The difference between these figures is accounted for by the fact that expenditures for books and equipment are not treated as expenses. Exhibit No. 5 shows an increase in expenses of "Textbooks and school supplies," but less unexpendable property was purchased during the year 1914-15 than in 1913-14. Exhibit No. 25 of last year's report shows cash disbursements of $129,681.99, while this year's expenditure, Exhibit No. 26, was only $90,296.33. In addition to this decrease, a few of the appropriations of similar nature were discontinued.

Insular police: "Rent of quarters" was reduced $3,060.61. The appropriation for 1913-14 was $14,000, with $560.59 transferred to this account, while the appropriation for the year 1914-15 was $12,500 and was not all used. Evidently more care was used in renting quarters. "Care of animals" was reduced $14,360.90. No provision was made for the care of horses in 1914-15, and many horses were sold. Outside parties and members of the force undertook the care of the remainder. A deficiency appropriation was approved in March, 1915, for $5,000 under the name of "Stabling, keeping, etc," but only $2,304.92, the amount shown in Exhibit No. 5, was spent. "Traveling expenses" or "Transportation" was reduced $2,965.34. Part of this difference was caused by the fact that about $1,600 worth of unexpendable property was purchased during the year out of this appropriation and not charged to expenses. "Other expenses" increased $12,345.15. The greater part of this increase was $11,774.53 for "Election expenses." The other items can not be briefly explained.

Department of the interior: There were no separate appropriations for the following expenses which showed an apparent decrease: "Traveling expenses,' $7,890.31. "Postage," $1,838.69. The item "Other expenses" shows an increase of $2,320.31, but the above appropriations were eliminated and the expenses were paid out of an appropriation included by the heading "Other expenses. It is difficult to analyze the lump-sum appropriation. All the fiscal year appropriations were cut in the year 1914-15, thus reducing the expenses for same period. The projects affected by the no fiscal year appropriations were nearly completed in 1913-14, or very little work was done during the year. Some of the appropriations have been closed out by surplus-fund warrants by action of the legislature and work stopped.

Bureau of insular telegraph: "Other expenses" show an increase of $10,586.76. In 1914-15 the only appropriation was "Contingent expenses, ," while in 1913-14 this item covered 10 subheads which show a greater decrease. The increase of $950.38 was paid from a no-fiscal-year appropriation.

Labor, charities, and correction: The increase of $2,132.98 in the bureau of labor seems to be due largely to bills of 1913-14, paid in the following year but not reported in time to charge the amount in the report for 1914. The other items of the office of

9489°-WAR 1915-VOL 3----14

the director of labor, charities, and correction show both increases and decreases. These charges are due to an increase or decrease in the appropriations to meet the needs of the service and not to any radical changes in the organization. Accounts of large amount are frequently delayed, so that a comparison for the institutions is not very valuable. The department as a whole shows a decrease of $26,861.27.

The sanitation service: This department shows a decrease of $258,364.45, a reduction of about $100,000 in "Salaries" and the remainder in "Other expenses" of the general office and the field force.

Insular library, government of the island of Culebra, and commercial and agricultural development: The increases and decreases can not be briefly explained.

General miscellaneous, executive: "Miscellaneous expenditures, subject to the approval of the governor" decreased $4,234.09. No explanation need be offered, as the appropriation is for the purpose of covering any expenses unforeseen by the legislative assembly. The "Insular fair" was dormant, and the expenses in connection with the care of property, etc., cost $4,496.13 less in 1914-15 than in 1913-14. The expenses of the medical, pharmaceutical, and dental boards varied so little that an explanation is useless. There were no expenses incurred on account of "Commission to investigate the inundation of certain districts," the "Inauguration of governor," the "Committee to Washington in defense of Porto Rican products," and the "Board of commissioners for promotion of uniformity of legislation in the States and Territories." The "Committee to investigate appropriations and expenditures of insular government" was more active in 1914-15, and the cost increased $1,597.61, an insignificant amount compared to the results. There were no "Expenses for entertaining distinguished visitors to Porto Rico" other than the small amount not previously reported, the saving being $5,843.50. The "Representation at Panama-Pacific Exposition at San Francisco" was not active until 1914-15, which fact accounts for the increase of $3,596.66 in 1914-15. The item of "Sundry pensions and reliefs" shows an increase of $14,218.21, consisting of “Judgment of Bonocio Ramos, $11,315.77," "Franciscan Friars, $1,000," etc. The "Expenses of election in Porto Rico" incurred amounted to $62,194.52, as an election was held in the year 1914-15 and not in 1913–14. The other items did not exist in 1913-14 or require no special explanation.

Judicial: The main items of decrease are salaries and the "Publication of the decisions of the supreme court." The fluctuations of the other items would require so much explanation that it is thought best to rely on Exhibit No. 5 to give the information. The total decrease in the department, or $31,696.74, was caused by the curtailment of nearly all appropriations and not by any marked change in policy or organization.

On account of the especially efficient services rendered by the several divisions during the past year the auditor deems it not improper to give some account thereof.

DIVISION OF GENERAL ACCOUNTS.

The usual high record of efficiency for this division has been maintained the past year and this in the face of many difficulties. Owing to the illness of the chief and promotions the division was under the management of three different chiefs during the past year. The legislature of 1915 consolidated, under the name of "division of general accounts," the three divisions of "receipts," "internal revenue," and "bookkeeping and warrants." Five positions eliminated and five reductions in salaries made a total loss of $6,240. The percentage of eliminations was 27.8 and of salaries 28.9. The personnel of the division of bookkeeping and warrants had been constantly reduced as the new system of accounting was established more firmly, and the unfortunate action of the legislature seriously embarrassed the consolidated division. The auditor will make every effort to remedy the situation at the next session of the legislature. The last legislature acted upon the suggestion of the auditor that some long-standing appropriations for no particular fiscal year should be canceled. As a result of legislative action and also the provisions of section 109 about closing such appropriations on the payment of all known obligations, about 50 of the appropriations mentioned were closed, relieving the accounts of unexpended balances that amounted to $240,053.55. Many of the changes discussed under the heading "Elimination of useless work" were brought about by this division or affect it.

DIVISION OF DISBURSEMENTS AND CLAIMS.

The work of this important division has been disposed of with its usual accuracy and dispatch. There have been no special changes in methods except those already noted with regard to the division of general accounts, which notably affected the work of the division of disbursements and claims, as was necessarily the case. These changes need not be repeated here.

DIVISION OF AUDITS AND EXAMINATIONS.

The work of this important division has been prosecuted with more than its usual degree of activity and efficiency. All the offices of the district (7) and municipal (34) courts have been audited and examined twice during the fiscal year. This was accomplished notwithstanding the fact that one of the examiners was employed a great part of the year in special work for the economy commission. All the other government offices usually examined by this division have also been given careful examination. These examinations resulted, in several instances, in the discovery of such official misconduct as necessitated the filing of formal charges with the proper authorities. As a consequence, several officials were required to resign. On July 1, 1915, with the consent of the treasurer of Porto Rico, this division took charge of the audit and examination of the offices of collectors of internal revenue (52), internal-revenue stamp agents (15), and municipalities (74). Of the latter 15 were examined last in the year 1913, 33 in 1914, 22 in 1915, and 4 have not been examined at all, having been created by an act of the legislature in 1915. With the centralization of this work in this office, it is believed that it can be done more efficiently with an economy of at least $5,000 a year. The examination of the municipalities and of the offices of collectors of internal revenue began in July and the work thereon has been steadily kept up. It is hoped that it will be brought up to date during the fiscal year and that all the other regular work of the division will be dispatched in due course; but if it should be obvious (and this is not impossible) that the immense amount of work devolved upon this division can not be dispatched by its present small force, then the auditor will apply to the next legislative assembly for the necessary increase of its personnel.

DIVISION OF PROPERTY ACCOUNTS.

At the beginning of the fiscal year there were 27 offices accounting directly to the auditor for the unexpendable property in their charge. There are now 81, the additional accounts being those of the different branches and courts of the department of justice, following a policy of centralization of property accounts in the office of the auditor for the purpose of indicating more closely the whereabouts of articles. This policy will be followed in other departments as soon as practicable. A monthly balance sheet for each account is carried, which shows total cost of unexpendable property acquired during the month and also the appropriation from which purchased. A synopsis of this sheet is furnished the division of general accounts showing amounts expended from the various appropriations. The system of property accounts has been changed to the extent that this office examines and classifies all subvouchers covering purchases of property before same are submitted to the auditor for payment, and in this manner property clerks are informed beforehand as to what they must take up upon the property records, eliminating the former element of uncertainty as regards classification. Due to lax methods in some of the departments in the past it has been found that many offices have been remitting incorrect reports, due, it would seem, to their regarding the rendering of property accounts as a perfunctory act. This division has not been and is not in a position to personally inspect the property of the different offices, although such inspections would be a means of promoting greater efficiency in property accounting. Personal assistance has been given, however, to a number of offices with marked beneficial results and there are now but two offices that are not reasonably certain as to the whereabouts of property carried in their accounts. It is believed that the employees of the Insular Government have begun to acquire a sense of responsibility for Government property, the possession of which sense makes the direct account possible. Otherwise the system in vogue is practically the same as formerly. During the last fiscal year, 1914-15, a set of regulations covering Government property was compiled and published in both English and Spanish. Property accounts, as formerly, will be balanced semiannually with data on file in this office. Of the 29 original offices 18 have been checked up and their accounts started with a clear sheet on the new system. The remainder are undergoing revision. Beginning July 1, 1915, all property clerks (other than those officials already bonded) have been placed under bond in an amount deemed sufficient to protect the Government from loss on account of possible shortage. No employee is allowed to receive final payment of salary until he has accounted satisfactorily for the property in his charge.

It is respectfully recommended that if the finances of Porto Rico so permit an inspector be added to the division of property accounts, whose duty will be to promote efficiency among accountable property clerks by inspection of their accounts and advise them as to the manner of keeping their accounts in good and useful order.