Audit reports: then, now, and always.

• Author: Herrmann, Keith R.
• Position: Management & Careers

A comparison of the earliest reports with those of today not only offers insight into Durham and the United States, but also provides perspective on the evolving nature of municipal accounting.

We can learn many lessons by examining old audit reports. The earliest audit reports for the City of Durham, North Carolina, that still exist are for fiscal year 1922. A comparison of the earliest reports with those of today not only offers insight into Durham and the United States, but also provides perspective on the evolving nature of municipal accounting.

HISTORICAL CONTEXT

To fully understand the Durham audit reports from 1922, it is first necessary to understand some of the issues and challenges back then. The Great War drew to a close in 1918 and prospects were good for peace in Europe. In the United States, the passage of the Eighteenth Amendment in 1919 ushered in the Prohibition era, which ran from 1920 to 1933. Women got the right to vote when the Nineteenth Amendment became law in 1920, after ratification by a sufficient number of states; North Carolina was not among them.

In the world of municipal accounting, urban reformers had begun to stress the lessons that could be learned from the private sector. There was a growing awareness of the need for more business-like methods in a city's affairs. The history of municipal accounting reform in Durham mirrors the efforts of accountants across the United States as they created systems and organizations that were designed to place increasing weight on technical and non-partisan competence.

During the decades prior to 1922, the growth of government in Durham, like the growth of all institutions, had been a gradual transition from the simple to the complex. Forty years earlier, under the direction of the Board of Aldermen, departments did not yet exist, but there were four committees, addressing by-laws, streets, assessments of property, and the danger from a burning heap of sawdust in Mangum's Lumber Yard. Some of these committees were temporary.

By 1883, there was a policy of standing committees that were the precursors of departments. But certain details, and even broader questions of administration, could not be attended to by the Board of Aldermen, who served without remuneration and had no technical qualifications. Growth in Durham generated complicated problems of governmental management, and these problems were often beyond the capabilities of part-time, amateur councilmen. Clearly, there was a need for departments staffed with professionals who had technical expertise.

The first two standing committees in Durham were for streets and finance, and the direction of financial policy was in the hands of the finance committee. It audited the accounts of the treasurer and the tax collector and made recommendations to the board. It was followed by a Board of Estimate and Apportionment, the duties of which were to estimate the revenue and to apportion expenditures. Not until 1899, when a city treasurer was elected, was the...