332 MISC. PUBLICATION 218, U. 8. DEPT. OF AGRICULTURE 
bureau of municipal accounts has been created in the State comp- 
troller’s office, which bureau not only receives and compiles reports 
of all local units in the State, but, as far as its staff permits, aids the 
local accountants with their bookkeeping problems. It may make 
an audit of the finances of any unit whenever it is deemed necessary. 
In 1930 audits were completed in 12 counties, 20 cities, 35 villages, and 
62 towns. In Michigan, by constitutional provision, the legislature 
must provide for the supervision and audit of county accounts by 
competent State authority.*’ In Tennessee the commissioner of 
finance and taxation, with the approval of the Governor, appoints 
three auditors whose duty it is to make an annual audit of the several 
counties of the State. In Alabama, Virginia, New York, and several 
other States the State may make a special examination of local ac- 
counts from time to time. In Missouri local accounts may be au- 
dited by the State only upon local invitation (119, pp. 410-414). 
This enumeration is not presumed to be complete, but only to 
illustrate the various types and degrees of State supervision over 
local accounts which have developed. It is known that performance 
in some of the States mentioned does not attain the scope indicated 
by the statutes. 
EXPENDITURES 
State supervision of local accounts serves no other purpose than to 
disclose the facts. It imposes no restraint on local expenditures, 
except in so far as intelligible and reliable reports disclose fraud or 
extravagance and thereby invite closer local scrutiny. The frequent 
failure of many local units to adhere to sound financial practices, 
even with all the facts before them, has caused several States to go 
beyond supervision and to assume a considerable degree of control 
over local expenditures; that is, in addition to or in lieu of constitu- 
tional and statutory restrictions, several States have set up adminis- 
trative agencies with power to regulate local budgets and bond issues. 
State administrative participation in local budget making has 
taken two forms: (1) the mere checking of the form of the budget 
to insure its compliance with State law, and (2) the exercise of discre- 
tionary power over the content of the budget. 
Massachusetts, New Jersey, North Carolina, and Oklahoma offer 
examples of the first type of control. In Massachusetts, for example, 
the commissioner of corporations and taxation checks local budgets 
to insure their conformity with State laws establishing standards of 
local financial practice. As a result, sound budgetary practices have 
been pretty generally adopted in that State. In New Jersey, North 
Carolina, and Oklahoma, the State may intervene if a local unit fails 
to make provision in its budget for its debt obligations. 
The States in which a State administrative agency may exercise 
discretionary power over local budgets are Indiana, Iowa, Oregon, 
and New Mexico. The best known of these plans is the Indiana plan. 
In 1921 the Indiana legislature vested the State board of tax com- 
missioners with the power to review a proposed budget or bond issue 
of any local unit upon petition of 10 taxpayers of the district affected. 
On the receipt of such petition the board fixes a date for a hearing at 
some point within the district from which the remonstrance was 
received. After hearing the evidence, the State board has the power 
‘7 Michigan Constitution, 1908, Act X, sec. 18. Compiled laws, 1929, v.1, ch. 14, 15 ,20, as amended, 193L 
