Previous chapters have indicated that, during the first stages of the development of fiscal systems, the question of revenue was of greatest concern. Gradually, consideration has been directed to the use to which the funds were put, until fiscal students have become much concerned about public expenditures. A third important phase of public funds - their administration - has been recognized only recently as being of any particular consequence. It is true that in the very early development of fiscal systems much attention was given to methods for handling revenues and expenditures. As the pressure for funds became more pronounced, however, attention became concentrated on sources of revenue, while little was thought or said concerning the management of the public funds. It is only recently that the importance of this aspect has again begun to receive due consideration.
Various factors have caused modern fiscal students to emphasize the importance of the proper administration of public funds. Expenditures, in numerous political divisions, have become so large that the burden of the revenue charge is felt keenly. Many political units have reached the limit of indebtedness, as well as the maximum tax rate, while a scarcity of funds still exists. Under such conditions the question naturally arises whether the revenues and expenditures have been properly handled. The increased emphasis which has been placed recently upon proper methods of accounting in private business enterprises, has no doubt stimulated interest in the handling of public funds. A modern business firm keeps in close touch with revenues and expenditures through its skilled accountants, and because of this demand the importance of the accounting profession has increased many times. Since this close management has proved so beneficial to private enterprise, many have seen the need for a similar policy in handling public funds. The continual increase in the number of charges of graft and misappropriation of funds on the part of fiscal officials has no doubt been an important factor in leading citizens to demand a stricter account of the services which these officials render. It is the purpose of this chapter to indicate some of the deficiencies in methods that have been used in handling public funds, and to suggest some improvements.