A metropolitan county government in the Eastern US ran up a illegal $1.8 million deficit one year because of accounting and clerical errors. County officials discovered the shortfall after installing a fledgling computer accounting system designed specifically for governments. The next year the county was back in the black.
The system is called "Total Accounting for Government," or TAG. And while computerized accounting systems are nothing new to the business world, TAG and a handful of similar "software" systems are just getting off the ground.
Essentially a computerized accounting ledger, TAG is designed to meet the bookkeeping needs of an overworked controller's office. It's suitable for "medium-sized" governments with annual budgets of $5 million or more.
After a few years of successful tests in counties and towns, TAG is drawing interest nationwide from governments who are looking for ways to fill the chinks -- smudged accounting ledgers, arithmetic mistakes, and lost receipts -- through which increasingly precious revenues are slipping.
"Smaller governments especially are going to become increasingly resource-short," says Jim Marling, of the Municipal Finance Officers' Association. "We're going to have to know what we're doing with our finances. And that's going to come out of these software packages."
"Government is slower to react to new technology, says William J. Raftery, of the accounting firm of Main Hurdman & Cranstoun, designers of TAG. "But new demands are being made on municipalities because of increased state and local aid packages, federal subsidies, and growing expenditures."
TAG records all municipal expenditures, revenues, and debts. When a purchase request is entered into the system, TAG executes a series of checks to prevent overspending and avoid clerical mistakes. It immediately rejects erroneous entries by the spendthrift or the careless clerk.
Only through a special "override" procedure can an official deliberately overspend the given budget.
TAG also warns of discrepancies between the balanced budget and the actual budget, and shows where changes are required in future spending levels. In addition, it computes projected tax revenues.
Matthew J. Hayes, budget director for Delaware County, Pa., handles transactions totaling $100 million a year using TAG. "For someone handling the funds we are, notm to have some kind of data-processing system puts you in the position of operating by the seat of your pants and waiting to see how the year will turn out," he says.
Developed in 1977, TAG has been in use primarily in county governments in Pennsylvania. But now paired with the Sperry Univac System 80 computer hardware , the package is available nationwide. Similar systems have been developed by National Cash Register, American Management System, and accounting firms including Arthur Young & Co.
The price: about $50,000 installed. No small fee, but users say it's worth the expense. When Delaware County installed TAG in 1977, "we were able to free up staff people to do higher level auditing work," says Mr. Hayes. The system compiles time-consuming monthly reports on various subjects.
Another tedious chore performed by TAG is "cash disbursement." The system issues checks to pay bills on the proper dates. It also reserves funds to pay future contracts.
Cumberland County, Pa., is a much smaller operation than that of Delaware County. It has an annual budget of about $19 million and 1,000 employees. But Ralph Wire, county controller and a certified public accountant, is no less pleased with computerized accounting.
"Before we installed the system in 1979 we had nothing in the way of good accounting records," he says. "It was a 300 percent improvement."
Still undeveloped in the field of computerized accounting procedures is their potential for curbing white-collar crimes such as embezzlement. TAG's internal controls make it impossible for funds to disappear in a quagmire of disorganized paperwork. The system permits only authorized users to gain access to the cash disbursement procedure.
Large nonprofit organizations also may benefit from computerization. "Like local governments, some groups process large sums of grant money," says Mr. Raftery. "And TAG can process the complex reports which those groups are required to submit to the federal government."
Jim Marling says most accounting software is still fairly primitive and "not flexible enough." But he says systems more responsive to a growing governm ent's special needs aren't far from completion.