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that you have testified are needed. Does this bill accomplish those results?

Mr. McCORMICK. We think it does, sir. We also wish to state that we had hoped this bill would be just a skeleton and that we would sit down then with the Comptroller General's office, with the Budget Bureau and the Treasury and make it into a better bill. In every case our bills have been skeletal in nature. They have to be, the field is so vast. We think that this bill is a very good start because it represents a compromise, being halfway between the position of the professional men in private life and the Comptroller General's position.

The CHAIRMAN. Is that not one of the objections to this bill that is a compromise?

Mr. McCORMICK. Yes, sir; certainly.

The CHAIRMAN. In other words, it seems to me that the position is either right or it is wrong to set up an Accountant General and give him the authority that you say is necessary to establish, install, and maintain an adequate and a proper accounting system in the Government. In this bill we undertake to set up such an office.

Mr. McCORMICK. Yes, sir.

The CHAIRMAN. But then we require approval of the Comptroller General.

Mr. McCORMICK. Yes, sir.

The CHAIRMAN. Under this bill, if the Accountant General devised and submitted a system as he would be required to do, and the Comptroller General disapproved it, then you would not be able to get the system into effect if the law is carried out as this bill is written. It seems to me it should be one way or the other. In this bill, it seems to me, you have given quite divided authority. I am not saying whether that authority should all be in the Comptroller General or whether we should set up a new office of Accountant General in the executive branch and give the authority to him, but as I see this bill it is quite a bit of a compromise.

Mr. McCORMICK. It is.

The CHAIRMAN. If the bill was passed in its present form, I think the Comptroller General would still have control of it. What do you think?

Mr. McCORMICK. Our thought, sir, is that although in private business the accounts are maintained completely independently of the auditors, although the auditors have the power to criticize, we do not feel that that system is necessarily adaptable to Government, for two reasons. First, because of the responsibilities of the public purse and second, because of the historical background.

The CHAIRMAN. You do not think the Comptroller General, then, should have authority or the right to criticize the way accounts are maintained in the Government?

Mr. McCORMICK. Oh, yes, sir; he would have that but we think he should also have a veto power over the systems.

The CHAIRMAN. Then you agree with the terms of the bill that the Comptroller General should have veto power over the accounting systems?

Mr. McCORMICK. Yes, sir; we do.

The CHAIRMAN. If he should have that power, why should he not be capable, then, of devising the systems himself? It seems to me, if you are going to give him the veto power, he ought to be fairly competent to devise and establish an accounting system and require that it be installed.

Mr. McCORMICK. Our feeling on that, sir, is that, from the point of view of Congress, having him install the system is not the right way to do it; first of all, because he should be kept off at the side to criticize. Once he is devising the system himself, he is in a position where he is responsible for it, and the agent of Congress himself, is committed to the system. Thus, Congress would lose the power to criticize.

The CHAIRMAN. Would he not lose that here if he has the power to veto and he did not veto the plan or the system? Would he not lose his power to criticize if he let it get by and if he approved of it?

Mr. McCORMICK. We don't think so, sir.

The CHAIRMAN. You do not think so. It would be pretty hard, it seems to me, for an official to criticize himself the very thing that he approved of.

Mr. McCORMICK. He would not be responsible, under our proposals, for the maintenance of the accounts. He would be responsible for the systems. If the systems were maintained improperly, he would still be in a position where he could criticize, we think.

The CHAIRMAN. Senator Hoey?
Senator Howy. Could he do anything about it other than criticize?

Mr. McCORMICK. Primarily criticize, sir. I think the bill under consideration perhaps should be strengthened with respect to enforcement.

Senator Hory. His power would stop with his ability to criticize.
Mr. McCORMICK. Yes, sir.
Senator HOEY. That is all.
The CHAIRMAN. Senator Smith?
Senator SMITH. I have no questions.
The CHAIRMAN. Senator Schoeppel?

Senator SCHOEPPEL. Mr. McCormick, I am a little confused here. Maybe it is on my part. Do you maintain that each of the departments of the Government should maintain and keep up currently a record of all transactions, accounting or otherwise, in their respective departments?

Mr. McCORMICK. Yes, sir.

Senator SCHOEPPEL. Do you believe that, that ought to be supervised by some other agency in Government, either by this bill or some other bill that Congress might have before it to change or modify or better that condition?

Mr. McCORMICK. Yes, sir. We think that in each department and agency there should be a financial officer or comptroller who is charged with the responsibility for the books. He should have a technical chain of command, to use the Army expression, to an over-all Accountant General. What we propose is exactly what title IV of the National Security Act amendments do for the Military Establishment. We think that, if it is a good measure for the Military Establishment, it is good for the rest of the Government.

Senator SCHOEPPEL. You think that is a somewhat comparablepattern that should be followed, then, I take it?

Mr. McCORMICK. The very same, sir; yes.

Senator SCHOEPPEL. I think you made the statement that you could save $10,000,000 or $15,000,000 each year in the Comptroller General's office.

Mr. McCORMICK. Yes, sir.

Senator SCHOEPPEL. Are you conversant with what Mr. Warren testified to here the other day and the facts with reference to his department, namely, that at one time I think I am quoting it correctly, if not I will stand corrected—somewhere between fourteen and sixteen thousand employees were in his department, during the war.

Mr. McCORMICK. Yes, sir. That was of course at a time when we had a budget, not a budget exactly because the money came partly from national-debt transactions, when the Government's expenditures were well over twice what they are today.

Senator SCHOEPPEL. Then he cut that to between eight and nine thousand employees.

Mr. McCORMICK. Yes, sir.

Senator SCHOEPPEL. Do you not think that is a pretty sizable cut on the part of the manager of that department, who is amenable and answerable to Congress?

Mr. McCORMICK. I think it is more or less proportionate to the reduction in the amount of the Federal expenditures, so my thought would be that the ratio of personnel in his office to the total budget is approximately the same as it was during the war. Senator SCHOEPPEL. I wonder if you

are familiar with his further statement to the effect that he could still cut that pay roll and the personnel in his department and still do a good or better job consistent with what the Congress would require or with good business practices?

Mr. McCORMICK. Yes, sir. We agree with him on that. Senator SCHOEPPEL. In doing that, don't you feel that Mr. Lindsay Warren certainly has been watchful of the accounting practices and watchful of the Government's business in the expenditure of all these funds?

Mr. McCORMICK. Yes, sir; he has been very watchful.

Senator SCHOEPPEL. Would you then be in favor of clipping his authority further in that regard?

Mr. McCORMICK. We are not trying to clip his authority. What we are trying to do is to change the orientation of his office from an office, as he gave you a recountal the other day, which individually audits tens of millions of vouchers and reconciles hundreds of millions of checks, and yet his office only now is working on setting up the detailed accounting system that it was required to set up under the Act of 1921. He did put out general regulation No. 100, but due to the defects in the present law it was impossible for him to enforce

We feel that the orientation of his office should be toward working on the problem of an accounting system rather than checking these tens of millions of pieces of paper.

Senator SCHOEPPEL. In working toward that end, do you not think it a pretty good idea to have this cooperative effect and analysis from the departments that are concerned to see what they can bring in by way of some cooperative study toward this over-all question first?

Mr. McCORMICK. Sir, we think that the problem has been studied on and off for 29 years. At the end of the first 27 years this cooperative effort was set up. We think it is time for Congress to step in and place the responsibility very clearly in the law for an Accountant General in the executive branch to come up with adequate accounting systems.

Senator SCHOEPPEL. I think you stated a while ago, if I understood you correctly, this is a sort of experimental bill. Your idea would be to sit down and try to work it out after we have some kind of measure on the statute books. If that could be done first by this cooperative effort that is being put forth here, do you not think that might prove to expedite this thing?

Mr. McCORMICK. No, sir; we do not believe that the cooperative effort will succeed because three people are responsible for it.

Senator SCHOEPPEL. You would not object to at least taking a look at it, though, would you, Mr. McCormick?

Mr. McCORMICK. They have been taking a look at it for 2 years, Senator.

Senator SCHOEPPEL. My understanding is that they have not looked at it in view of the present accomplishments and in view of the wholesome attitude that has been developing under these cooperative efforts. I will confess that it probably has come about through the type of legislation that is now before us. Do you mean to indicate to us that you think that we ought to discard the present cooperative effort completely?

Mr. McCORMICK. No, sir. You cannot discard any cooperative effort, but we think there should be one person in the executive branch who is charged with seeing that the accounts are set up properly, and the authority should be clearly stated just as to what everybody's responsibility is. If a good accounting system is not set up, Congress ought to be able to call on him as the person responsible. Our feeling now is that, say this effort is a failure, first, Congress has no way to judge whether it is a failure. Second, if it is a failure, Congress has no one to call to account.

Senator SCHOEPPEL. Congress generally through its arm in this type of business looks to the Office of the Comptroller General, does it not?

Mr. McCORMICK. Yes, sir.

Senator SCHOEPPEL. You feel that the Comptroller General, I take it, should have greater authority either by directional legislation or by legislation authorizing that department to impress upon the other departments the type of books that it should prepare and maintain?

Mr. McCORMICK. Yes, sir; we think that his authority should be changed very greatly. He should be taken out of the paper work business and put in the business of seeing that systems are adequate.

Senator SCHOEPPEL. He would have to have something more than just a critical analysis, then?

Mr. McCORMICK. Í think, sir, undoubtedly this measure should have something in it which, first, places the responsibility in the executive branch for seeing that the accounts are good.

Second, it should give to the Comptroller General a veto in case anything flagrantly wrong is going on.

Third, it should have some powers of enforcement placed in the Comptroller General in case the Accountant General is doing his job badly. I think the bill perhaps is deficient the in latter respect.

The CHAIRMAN. Do I understand, Mr. McCormick, that the Citizens Committee or you have in mind to submit some amendments to the pending bill?

Mr. McCORMICK. Yes, sir. We have prepared a few perfecting amendments.

The CHAIRMAN. Have they been submitted to the staff?
Mr. McCORMICK. No, sir; they have not yet.

The CHAIRMAN. Do you care to file them with the committee or are you still working on them?

Mr. McCORMICK. We are still working on one of them. They are of two main types. One is clarifying just what the Accountant General would be. The second is certain changes in the budgetary provisions which we found were not strictly in accord with the Hoover Commission report.

The CHAIRMAN. As I understand, the committee simply endorses completely, without any change whatsoever, all the Hoover Commission recommendations. Do you know of any instance where they disagree or suggest an improvement over those recommendations?

Mr. McCORMICK. Yes, sir. The reason people joined the committee was because they were generally in favor of the reports. However, we have found in every instance where legislation has been drafted that it has been necessary to put perfecting amendments in. For example, a good bit of title IV of the National Security Act amendments were not in the report. They are perfecting amendments which are generally along the lines of the report. That has been the case in all other legislative matters.

The CHAIRMAN. Will you submit those amendments when you have them drafted to the staff here for our consideration?

Mr. McCORMICK. Yes, sir.
(The letter requested follows:)


Washington, D. C., March 16, 1950.
United States Senate,

Washington, D. C.
DEAR SENATOR MCCLELLAN: Pursuant to your request, we are forwarding
herewith suggested amendments to S. 2054.

It is my view that the Comptroller General should have complete authority to audit transactions of the Federal Government. At the present time this authority is not clearly stated. It is very questionable whether his authority extends to certain types of accounts, such as cost accounts and fiscal accounts. I feel, how. ever, that this new authority should not be instituted until fundamental changes have been made in the Budget and Accounting Act of 1921. The latter act imposes certain unnecessary requirements on the Comptroller which require him to keep duplicate—and in some cases triplicate-sets of accounts; and also several places in it require certain activities to be conducted in Washington. Major extravagances in the field of accounting result.

We further feel that, when the Comptroller General's authority has been clarified by a fundamental revision of the 1921 act, he should be given further enforcement authorities to see to it that unsound accounting practices are discontinued. The purpose of this would be to insure adequate accounting throughout the executive branch. Faithfully yours,


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