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that we certainly do not intend that. Speaking for myself alone, the time that I spent in the General Accounting Office following the war, while a rather difficult period, was one of the happiest associations of my life. I enjoyed it. I came to have a degree of respect for the gentleman who heads that office that is not exceeded by my respect for any other public officer I have ever known. I think he is one of the most conscientious, one of the most patriotic public officials that I have ever worked with, and I believe that he wants the Government's accounting and auditing to be all that they should be. But I disagree-I have to disagree--with the method by which he seeks to make them so.

Our committee worked for 14 months on this problem. We had the assistance of a very able research director, and we had one other special assistant for a short period on one phase of our work, for whom I also have high regard and who, I think, did a good job for us. Our committee sat from time to time to consider the findings of our research director. Personally, I spent a very large part of that 14 months, as chairman of the committee, reviewing what came before us, planning our meetings and considering what we should do. We thought we came up with a reasonable compromise of what most of us felt was the ideal solution. That compromise can be very simply stated. We said: Here is the Federal Government, the greatest business organization in the world, the biggest, the most complex. We felt that if the Government was to have any hope of attaining anything like proper satisfaction of its accounting methods, it must emulate the organization and managenient of the accounting of large business enterprises.

There are differences between the Government and private enterprise, and obviously the exact pattern of the latter could not be followed. But we as accountants know that accounting is one of the important responsibilities of management. We also know that that responsibility has to be assumed and discharged by management, not by somebody else. We know that from our experience and from our observations. I do not know exactly how many years of experience was represented on our committee, but I would say roughly well over 150 years all told. I have been in the business myself for 34 years, and I have seen all kinds of Government problems from the national to the lowest level. I have dealt with a great many of them not only as consultant but also as one with the responsibility for solving them.

We feel that first of all the Government should clearly separate its accounting and independent auditing functions. Everyone outside the Government, and a great many people in the Government, agree with this, including the House Committee on Expenditures in the Executive Departments. In the RFC case the Government declared that accounting is a responsibility of management, and that management must assume that responsibility, without dividing it with auditors who independently review management's stewardship. There are good reasons why this is so.

One reason is that the minute responsibility for any managerial function is shifted to or divided with an organization's independent auditors, the auditors become reviewers of their own work and lose their independence. When independent auditors become involved in management decisions, they then become the auditors of them

selves as well as of the other people involved in that management. It is highly improper, therefore, and utterly destructive of external audit control, to allow an independent auditor to become in any way responsible for any part of management's responsibilities.

So we think that there should be a clear demarcation between accounting and independent auditing. That is why we recommended, first of alị, that in order to establish the proper responsibility and authority for the accounting function of the Government, the Congress must set accounting up as a separate and distinct function, even if this means the creation of another establishment, as some said at the time. We don't agree that that would be the case because it would mean, rather, merely the supplying of a need that has been existing and never satisfied in our Government in all the one-hundred and sixty-odd years of its existence. We felt that it should be established. We also felt that it should be established in the Executive Office of the President, since, after all, the President is the general manager of the Government's business. It is his responsibility, as I see it and as all of us saw it, to accept the responsibility for, and fully discharge, the accounting function.

We compromised on that unwillingly because of objections that we encountered to the idea that our plan would mean the creation of a new establishment. We did not want to put the accounting function in the Treasury Department. We objected to it on the general grounds that I have just stated. We objected to it on the specific grounds that one of the great troubles with the Government's accounting up to this time has been the fact that the over-all accounting of the Government has been confused with the accounting of the Treasury Department.

The Treasury Department seems unable to visualize the necessity for any accounting but its own, let alone the need for separating its accounting from that of the Government as a whole. In support of that statement I refer you to a letter dated October 4, 1949, from Hon. E. H. Foley, Jr., Acting Secretary of the Treasury, to you, Senator McClellan, as chairman of this committee. (See p. 99.) In the fourth paragraph of that letter Mr. Foley opposed creation of the Office of Accountant General, as proposed in S. 2054, "for the reason that a statutory organization already exists to perform the accounting seryices for the Treasury.” Mind you, this came many months after the General Accounting Office-Treasury-Budget Bureau joint effort to improve the Government's accounting generally had been organized and gotten under way. S. 2054 isn't a bill to appoint an accounting officer for the Treasury Department. It is a bill to appoint a chief accounting officer for the whole United States Government.

We thought that to put the responsibility for accounting back in the Treasury Department was merely to continue what we regarded as an extremely unsatisfactory situation. Inevitably the over-all accounting of the Government, if placed in the Treasury Department, would become involved with that of the Treasury Department. Experience has proven this. The Treasury's own accounting problem is a tremendous one. So we didn't like the idea of putting the Accountant General in the Treasury Department. But we said reluctantly: "All right, put the accounting in the Treasury Department, if you want to; but give the head of it the status of an Assistant Secretary,

reporting to the President only through the Secretary.” Frankly, we can't figure what S. 2054 would make of the Accountant General other than merely a collector, assembler, and distributor of financial reports. I do not see that this bill gives him any status beyond that of a highclass clerk.

Therefore, we regard this bill from its accounting aspects as highly unsatisfactory and probably making a bad situation worse. I think it is extremely unfortunate that we are throwing away this one opportunity to satisfy a need that is so pressing, with the expenditures of our Government now having jumped to more than 11 times more than they were only 20 years ago, and the accounting need having been multiplied at least that many fold, to come now to a final consideration of this important question and find ourselves considering a bill that does not begin to satisfy that need. To us, therefore, ladies and gentlemen, S. 2054 does not in our opinion represent anything that we regard as either satisfactory or worthy of the complex organization and management and dignity of the Government of the United States of America.

The CHAIRMAN. Mr. Andrews, do I understand that your position is that it would be inadvisable to enact this bill as it now is drafted and before the committee, that it would simply further confuse and make the situation worse rather than improve it? Did I understand that to be the implication of your testimony?

Mr. ANDREWS. That is precisely the implication of what I have said. I don't know that I would put it in just those words, but in plain simple language we regard the bill as accomplishing nothing other than perhaps complicating an already bad situation. In our judgment, it doesn't meet the accounting needs of the Government. It isn't even a moderate compromise, in our opinion. To put it in plain language, I think it is an abortion.

The CHAIRMAN. I may be in error about this. Senator McCarthy is not present, and I cannot ask him at this moment. I may be wholly in error, but I was under the impression, however, that the Citizens Committee approved this bill.

Mr. ANDREWS. I do not know about that.
The CHAIRMAN. I may be mistaken.

Mr. ANDREWS. I don't know about that, Senator, whether they have approved it or not.

The CHAIRMAN. You said you thought they shared your views.

Mr. ANDREWS. When I speak of people sharing my views I am referring to the members of my committee. I can tell you that I am informed that the Citizens Committee is not at all satisfied with this bill. At least that is the impression I have gotten.

The CHAIRMAN. I understood you to say that you thought they shared your views. I am not saying they do not. I do not know, but I was just under the imprssion that the Citizens Committee had approved this bill. I may be in error about that. You may proceed. I was just trying to clarify the point.

Mr. ANDREWS. My understanding is that the Citizens Committee for the Hoover Report accepted this as the best compromise that could be worked out, not as a bill with which it was entirely satisfied. I cannot speak for them, and I am not attempting to speak for them You will have to get somebody else to tell you what they think.

The CHAIRMAN. Then you do not regard it as a satisfactory compromise, as I understand you, and you personally think it is worse than no bill at all?

Mr. ANDREWS. I am somewhat inclined to feel that way, sir, because it simply creates another bureau with no authority, no power, and with very little responsibility beyond that of a purely clerical set up. That in my opinion does not become the dignity of the United States of America as far as the establishment of an accounting de-. partment is concerned.

The CHAIRMAN. In other words, you would set up an accounting department with an accountant general-I do not know whether that is the proper term. I believe that is what the task force called it.

Mr. ANDREWS. That is what we suggested.

The CHAIRMAN. Wholly independent of any other agency, simply to represent the President and to place all the responsibility on the President for proper accounting through the medium of an accountant general.

Mr. ANDREWS. That is right.
The Chairman. That is the recommendation of your task force?

Mr. ANDREWS. That is right; and that is the way experience has. shown it must work in large undertakings of all kinds, whether they be business enterprises or what. The comptroller, as the accounting officer of a business is usually referred to, is a pretty responsible fellow. He has a lot of responsibility on his shoulders. His position in the organization usually is in proportion to that responsibility. Last night, for instance, I talked to the vice president and controller of a large corporation. He stands right up at the top in his organization. It isn't that I am pleading for a high position for accountants, ladies and gentlemen. Please don't misunderstand that. I am pleading merely for the proper position of the accounting function in this Government of ours in order that the Government may do its business in the proper manner and under people with proper qualifications. This bill goes on to put this accountant general in the position where everything he does would be subject to the approval of the independent auditor of Congress. What man of any pride and self-respect would want the job, gentlemen, whether he be accountant or otherwise? A high sounding title with a clerical status and subject to the domination of someone outside the executive branch of the Government is no plum.

Senator O'CONOR. Might I ask a question, Mr. Andrews? You certainly have displayed a very commendable grasp of this situation. Appreciating the benefit of your advice, coming as it does from an unselfish source, because you have nothing except, of course, your desire to promote the interest of the Government and to have installed the very best system,

Mr. ANDREWS. I am glad you recognize that, sir. That is what I hoped.

Senator O’CONOR. I certainly have and it is on that premise that I am asking just advice and guidance. You very correctly have emphasized the need for the very best Government accounting and auditing practices and procedures, and you point out the cardinal principle that you cannot shift the managerial functions. I was wondering, Mr. Andrews, whether you can, in all respects, compare our situation here in Washington with the general or the average, or with one of

the largest business corporations throughout the country. In other words, is there a peculiar situation existing here in that the one branch of the Government, the legislative, for example, must needs have access to information and have independent advice, which may or may not be directly under the jurisdiction of the executive.

Mr. ANDREWS. I am glad you asked that question.

Senator O'CONOR. In asking it I am merely looking for enlightenment and guidance. I might say I agree entirely with the statement you made before as to the very fortunate situation in which we are placed now in having, for instance, such a man as Mr. Lindsay Warren, for whom we have the very highest regard, and great respect for his abilities. I was wondering whether you would give us the benefit of your advice on that.

Mr. ANDREWS. Let me say this, since you mention Mr. Warren by name, and then I will proceed to answer your question because there is a good answer to it, I think.

We share the admiration of everyone for Mr. Warren, but ladie and gentlemen, let's look at this thing as a cold-blooded proposition right smack in the face. The average family in this country today is spending $1,300 a year to maintain the several levels of government under which it lives, and it is entitled to the best and most efficient administration that can be had. We all love Mr. Warren as an individual. We admire him for the way he has conducted his office. But are we going to organize the Government of the United States on the basis of our admiration for individuals or on the basis of fundamental principles? I submit that we must organize and manage it on the basis of fundamental principles of organization and management and not upon the basis of how much we think of any individual, no matter how much that might be, because we do not know who the Comptroller General of the United States is going to be when Mr. Warren's term expires 5 years from now. Human frailties being what they are, and considering how events sometime turn out, I think we must all concede that the next selection might not be quite as fortunate as this one or anywhere near so.

That is possible, I think you will all agree.

So we must in these matters, I think, deal with principles and not with personalities.

Going back to your question as to how we compare with business. We don't compare strictly with business, gentlemen. As a matter of fact, if you will examine the organization of the average State government in the United States, and of the average city government of the United States, you will find precisely what we are recommending here. In other words, it has been found to work not only in business but also in public administration. Bear in mind, if you will, that there are some pretty large State governments in this country and some pretty large city governments. The city of New York alone is spending over a billion dollars a year, which is as much as the Federal Government spent not too many years ago. So the type of organization that we propose is not just what business has. It is what has been proven to be effective in government as well as in business. It brings you right back again to the fundamental question of principle. Management is management, and I don't care whether it is government or whether it is private business, the same principles that apply in one apply in the other. People try to tell me that I am idealistic about this, that you

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