THE GENERAL BOOKKEEPER'S DEPARTMENT Importance of Bank Bookkeeping In no other line of business is exact and comprehensive book keeping so absolutely indispensable as in banking. Accuracy is enforced by business necessity and by government or voluntary regulation, and the necessity is intensified as the size and scope and number of banking operations increase. Banking is such a sensitive business and so intimately bound up with commercial, industrial, agricultural, social, and political life, and one bank with another, that credit extensions based on remote, false, loose, or misleading accounting are a positive menace to public welfare. Good accounting is essential to efficient administration; the de partmentalization of routine operations means the delegation of duties and responsibilities, and interdepartment accounting serves as an efficient check on losses which may arise from for getfulness, carelessness, or dishonesty in any department. More over the president, executive manager, or cashier can manage the bank as a unit and carry out his approved policies when he has inclusive, full, and up-to-the-minute information as to the conditions of his institution.
Accounting serves several ends: It keeps a chronological record of the banking transactions which affect the rise or fall of values; at any given instant it presents a correct exhibit of the financial status of the concern as to its resources and liabili ties; and it shows the results obtained during a given period of time as to profits or losses. The chronological record is kept in order that the statement of condition at any instant and the statement of gains and losses over a period may be accu rately determined. The keeping of this record and the prep aration of these statements are the functions of the general bookkeeper.
Development of Accounting Methods Since the fundamental operations arc alike in all banks regardless of size, the bookkeeping methods in all have a certain similarity; the differences arise in the degree and ways in which the bank is departmentalized and the books split into co-ordinate parts and certain accounts handled in specialized books ancillary to controlling books. The larger the bank and the larger the department and the more diversified its operations, the greater the subdivision of the books among specialized clerks. In every
case the bookkeeping is adapted to the particular bank, and a description of the scheme used in a large bank does not in detail fit a small bank, nor that of a country bank fit a metropolitan bank; only to a certain degree are they standardized.
One powerful factor forcing somewhat uniform accounting systems among banks is government supervision; this super vision can be efficient only as the accounting is detailed, care ful, intelligible to the examiners, and comparable as between banks and as between different periods. When the govern ment, central bank, or clearing house requires frequent reports of condition, the banks find it financially profitable to keep their records in such a way as will allow the easy preparation of these reports.
Another factor that is bringing about uniform accounting methods is the use of machines and other labor-saving devices. The manufacturers of such articles can find a wide market only when uniform methods obtain among the banks. They have therefore devised bookkeeping systems which are as simple and perfect as they can be made, and have striven to have them adopted as widely as possible. Of course, such systems include the use of particular machines and other devices. The combina tions of typewriters and computation machines are indeed most ingenious. The machine method of bookkeeping also promotes the use of the loose-leaf book.
To a considerable degree each bank has worked out a system of records adapted to its peculiar needs. The system is an his torical growth; it has evolved by the process of trial and improve ment. Sometimes an expert accountant is employed to overhaul completely the accounting system, but even his perfected scheme does not annihilate the individuality of the bank's system. A detailed description, therefore, of the bookkeeping system of any one bank is not of much help in understanding the system of any other bank; but it seems best to give somewhat roughly the scheme of a large metropolitan bank rather than of a small and possibly one-line bank. Given a general description of the more comprehensive system, adjustments and adaptations to simpler conditions can be readily made.