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Senators thought it should be adopted out of an abundance of precaution.

I didn't ask Senator Taft to offer that amendment. I knew nothing about it until I read it in the Congressional Record the next day. But it is just another example that Congress looks with jealousy upon this agency that it created, and it does not wish it to be interfered with by the executive branch.

Six years ago President Truman's first reorganization act became a law. That was handled in the Senate by the Judiciary Committee, and that committee wrote into the act the following:

Sec. 7. When used in this act, the term "agency" means any executive department, commission, independent establishment, corporation wholly or partly owned by the United States which is an instrumentality of the United States, board, bureau, division, service, office, officer, authority, administration, or other establishment, in the executive branch of the Government. Such term does not include the Comptroller General of the United States or the General Accounting Office, which are a part of the legislative branch of the Government.

Then last year, before this committee, the Reorganization Act again giving the President the power to put certain reorganizations into effect, contained verbatim the language that I have just read to you, showing, gentlemen, that Congress has always been alert to these assaults.

But this time for the first time the General Accounting Office comes in here with the backing of the Government itself. I have told you that the joint program has received in writing the enthusiastic support of the agencies of the Government.

It has been stated that this bill before you was drafted after the Commission was dissolved, but it has gone out all over the country, put out by the Citizens Committee, that it is the bill of the Commission and is the bill to carry out this program. I know that the introducer of the bill is a very able and conscientious legislator, and I know that he is extremely busy, but I regret that he has not been able to attend all of the hearings for I believe he is of the opinion that this is the Commission's bill. But he has been badly imposed upon, Mr. Chairman, by being told the things that he submitted here in his statement on the opening day.

It was said that the bill would not give less control to the Congress, but would give more, and at the same time it would give the Chief Executive more flexibility than he has today. Speaking only concerning the accounting provisions, gentlemen, can you conceive any possible means by which the Congress would gain more control under the provisions of this bill?. As has been explained to you, it would place the duty of prescribing accounting systems in the executive branch of the Government and would leave the General Accounting Office, your agent, with no effective voice in this very important function.

I said last week, and I repeat it now, this bill strikes at the very vitals of the integrity and independence of the General Accounting Office.

I don't know the source of the figures that have been bandied about here concerning the reduction this bill would accomplish in the force of the General Accounting Office. I tell you, and I say it advisedly, that if there would be any reduction, it would not be of any appreciable number. On the other hand, the establishment of an Accountant General, and I challenge anyone to deny this, would allow the executive branch to cover this Government like the locusts of Egypt in building up a bureaucracy to "supervise” accounting if they were so disposed.

Of course, the Senator said that what he is after is an accounting system which is a tool of management, and so forth. That is exactly what we are not only trying to do, but are doing under the joint accounting program. "I am sure that this committee does not take any stock in the suggestions that have been put out that by a wave of some magic wand there will spring up overnight or in a short space of time a great accounting system for the Government. Repeating what I said the other day, we are going to give the Government a system based on one of the cardinal principles of accounting and we are doirg that right now. This principle is full disclosure to the Congress, full disclosure to the Executive, and full disclosure, if you please, which is just as important, to the American taxpayer.

A former employee of the General Accounting Office, Mr. T. Coleman Andrews, testified before this committee last week. Mr. Andrews came into the General Accounting Office upon my invitation to set up the Corporation Audits Division. He did an excellent job. Several times I have expressed to him my appreciation of his work, both in writing and personally. I might say in passing that the General Accounting Office led the fight for the Byrd-Butler-Whittington bill resulting in the passage of the Corporation Control Act.

Mr. Andrews, Mr. Chairman, endorsed the joint accounting program. I sat here and heard his testimony the other day and it seems he now takes a quite different position. I was glad to hear Mr. Hoover say that of course the Government cannot be treated as a great corporation. Mr. Andrews says it can be. Mr. Andrews has lost sight of the fact that the Constitution of this country of ours has an important bearing on this question and that among the three coordinate branches of the Government the Congress has some inescapable responsibility for the control of expenditures. He said this whole accounting problem is a great undertaking. Of course I agree that it is a great undertaking. I say, though, that its prosecution should not be stopped or retarded merely to sooth or calm the ruffled feelings of some task force member.

Gentlemen, you cannot legislate cooperation, and as Bill Nye used to say, “You can't argy agin a proven success. We are building up in the General Accounting Office today—and I am glad to have a chance to say this to this committee--as we are about the only agency in the entire Government that has no press agent and we do not give out statements—but we are building up in the General Accounting Office today divisions that are second to none. Our Corporation Audits Division will compare favorably with any accounting house today in the United States, and they are doing a fine job. Under the splendid leadership of an able man, Mr. Walter Frese, who appeared before you yesterday, we are bringing into the Government top-flight accountants to put into the Government good accounting systems.

Much that has been said I could answer. Something has been said here about our going over millions of pieces of paper, and so forth and so on. We have just started on what is known as a comprehensive audit in two or three of the agencies of the Government. But does this committee wish the General Accounting Office to give up completely, as has been inferred by some, the auditing and checking of vouchers? Under our comprehensive audit there will be a selective check according to the controls that an agency has and the way they operate. I would not put this paper I have in my hand in the record. I am not going to call any names. Here is one of the better agencies of the Government. They all make mistakes. The General Accounting Office makes mistakes. This paper covers a payment of several million dollars to a concern. The General Accounting Office in its audit a few months later found that in computing that payment there was an error against the Government of $228,000. Except for the audit performed by the General Accounting Office, that never would have been found. The company was billed for it, and the Government received a refund.

I hold here in my hand House Document 1441, Eighty-first Congress, first session. This is a study of the General Accounting Office by the House Committee on Expenditures. I hope sometime the members of this committee will have an opportunity to read it. I didn't ask them to get out this report. They decided to make a study to see what we were doing, and they made their report. It goes into some detail concerning the joint accounting program as well as other activities of the Office.

Last year two separate subcommittees of the House Appropriations Committee strongly endorsed the joint program in their reports, and the Senate Appropriations Committee recognized its great importance.

Now let's see who is out of step. The trouble is the proponents of this bill are talking back in the days of 1932 and 1937. 'I should like to give some examples of what some other people think about an approach to the accounting problem. Some of the people who have taken the trouble to find out what we are doing. Here is a letter that is dated September 2, 1949:

DEAR MR. WARREN: The passage of the independent offices appropriation bill, 1950, containing the appropriation to the Atomic Energy Commission and the approval of our cost-type budget in effect completes our activities for the fiscal year 1949. It is thus appropriate that I express to you at this time the thanks of my staff and myself for the great cooperation and assistance that we have enjoyed from the staff of the General Accounting Office. We have taken many problems to your office and in each case have received much help. The industrial nature of the Commission's activities has made it necessary for us to follow industrial financing, accounting, and auditing methods. Your understanding of our problems and the sincere efforts of your office to help us solve them have been major factors in making our progress possible.

The work of the Commission is such that my staff and I must work with several of the leading public accounting firms and with many industrial accountants. Also from time to time we work with accounting representatives of other Government agencies. It is my opinion that the supervisory staff of the General Accounting Office presents the most progressive thinking and the best balanced judgment of accounting and accounting problems that we have found. Because of this we have been able to accomplish advances that would not have been possible otherwise. I hope they will meet your standards for the improvement of accounting in the Government.

That is signed by Mr. Paul M. Green, one of the most eminent accountants in the United States.

Mr. Green has made a reputation not only in the teaching of accounting, at the University of Illinois, but for his outstanding achievements in Government; at the Office of Price Administration, where his work as Deputy Administrator in Charge of Industrial Accounting was commended by the Journal of Accounting; as Controller of the Atomic Energy Commission; and now as Controller of the Economic Cooperation Administration.

Here is another, Mr. Chairman, from Mr. Paul G. Hoffman, Administrator of the Economic Cooperation Administration, praising the efforts of the joint accounting program:


Washington, D. C., October 13, 1949. Hon. LINDSAY C. WARREN, Comptroller General of the United States,

Washington, D. C. DEAR MR. WARREN: From the inception of the Economic Cooperation Administration, we have had the benefit of constructive help and support of representatives of your office in establishing our accounting policies and procedures. We have endeavored, wherever possible, to fit our practices in with those being developed as part of the joint program for improving Government accounting now being carried on by your Office and by the interdepartmental accounting committee.

It is my hope that the experience under methods we have developed in ECA will contribute to the efforts you are putting forth to simplify and improve accounting methods. Of particular importance, in my opinion, is the emphasis which we have placed on the use of the accrual basis of accounting, universally followed in business, in measuring performance in connection with administrative expenses. To this has been added the fixing of decentralized organizational responsibility for the incurrence of expenditures at the point where they originate. The net ; result is, I believe, a simple and effective plan of control in which accounting plays a predominant part.

Our accounting system has reached a stage of development where it may be appropriate for you to review the basic principles of our system under what I understand your responsibilities to be under the Budget and Accounting Act of 1921. The attached memorandum summarizes the basic accounting principles we have applied to both our program and administrative expenditures. Sincerely,

Paul G. HOFFMAN, Administrator. The second day that I was in office a gentleman, then comptroller of the Tennesse Valley Authority, came to my office and brought me a book written about the General Accounting Office. It criticized everything about it. I think --and I have found out something about the Office since that time—some of the things were very true. That person is one of the most outstanding accountants in America. Every accountant who goes through college today studies his textbooks. He is known far and wide among the accounting profession, and he is known far and wide in the Government, where his latest assignment was as the comptroller of the Economic Cooperation Administration. His letter follows:

FEBRUARY 24, 1950. DEAR MR. WARREN: I have noted that S. 2054, now pending before the Congress, provides for the establishment under the Secretary of the Treasury of an Accountant General who would take over system and certain other functions now being performed by the General Accounting Office in accordance with the provisions of section 309 of the Budget and Accounting Act of 1921. The proposed action appears to be an outgrowth of, and substantially in agreement with, the recommendations of the Hoover Commission.

In view of the major administrative developments in your Office and in a . number of the spending agencies, to which I have been witness during the past 2 years, the enactment of this bill would be, in my opinion, a serious mistake. It would interrupt the orderly process, now going on, of conforming the Government's accounting machinery to principles and practices that over the years have come to be recognizea as essential so the best governmental accounting and reporting. It would inject into that process a new organization with all of the

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disabilities attendant on a new organization: delays in appointments, staffing, and housing; a reconsulting of the authorities; a carefully worked-out plan of coordination with the Government's other fiscal agencies—a process that would conceivably set the program back a year or more; a substitution of a new program for the present program with possibly equal but certainly no greater chances of success.

Since the benefits sought under S. 2054 are already being achieved through exercise of powers now in the possession of the Comptroller General, I feel certain that a new organization would bring about not only an unnecessary confusion in existing authority but also the possible crippling of the wholly laudable program now in progress; a program with which I am intimately familiar and in enthusiastic agreement.

His name, Mr. Chairman, this eminent accountant, is Mr. Eric L. Kohler. May I say I did not ask Mr. Kohler to write that letter. I did not ask Mr. Paul Green to write his letter, and I did not ask Mr. Paul Hoffman to write his.

Here is one from the chairman of the President's Committee on Management Employment. Who is that chairman? That chairman is Mr. Thomas A. Morgan, great head of the Sperry Corp., one of the leading businessmen in America.

His committee asked us to appear before them and discuss this program which we were happy to do. His letter is as follows:

I want to thank you for your courtesy in meeting with the President's Advisory Committee on Management Improvement and to congratulate you not only on your own statement but on the statement of all of those connected with the joint accounting program. It was not only a good presentation but also showed that substantial progress was being made in this vital area of Government management.

The committee had recognized before its meeting with you that improvements in the financial management of the Government constituted a necessary and practical base for lasting improvements in other areas of governmental administration. The emphasis which is being placed on the development of costs and the relation of costs to performance is essential if management is to know where its problems exist and to establish priorities in its management improvement work.

Our committee does not follow the practice of taking votes or passing resolutions as we are constituted as an advisory group to the President. Speaking for myself, I want to say that I am encouraged to know that an aggressive program of improvement in the accounting activities of Government is under way: Because of the responsibilities of this committee, I am particularly encouraged to see the stress placed on making accounting contribute to the needs of management. I think also that improved accounting machinery which would provide more reliable information to the President, the Congress, and the people on the Government's activities will be of great value.

Again let me thank you for your appearance before the committee and express the hope at this time that we may at a later date meet with you and discuss other phases of the work of this accounting project. Sincerely yours,

THOMAS A. MORGAN, Chairman. I wish to emphasize, Mr. Chairman, that if any legislation is necessary, and we are seriously considering that, it should be as a result of the experience gained through the cooperative effort but I will tell you now I will not come here proposing any legislation that will take from Congress one whit or one iota of the control that it now has.

The General Accounting Office in the last 9 years since I have been in office has paid back to the Treasury in the neighborhood of $650,000,000 that had been either illegally or erroneously paid out. I can assure this committee, and I say it knowing whereof I speak, that the General Accounting Office stands today as the last great bulwark for the protection of the American taxpayer against the illegal and erroneous expenditure of the public substance.

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