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The CHAIRMAN. Mr. Warren, would you mind stating the amount of recovery? I believe you said $650,000,000 in a period of 9 years; is that correct?

Mr. WARREN. Yes, sir, approximately.

The CHAIRMAN. How does that compare with the costs of operating this department for the same period?

Mr. WARREN. It is nearly three times. The collections have been more than two and one-half times what it has cost to operate our office.

Mr. Chairman, I hope that this committee will unanimously reject this ill-advised and ill-conceived legislation. What the General Accounting Office needs and what the joint accounting program needs is a ringing endorsement from this committee of the work that we are doing. Every now and then, as you see, this assault from the outside springs up.

We always stand ready to make any accounting to the Congress. I invite, as I have said time and time again for the past 9 years, the most complete scrutiny of the General Accounting Office by the Congress, but I resent these attacks coming as they do from the outside, particularly when for the first time the three fiscal agencies of the Government are united. We have cast aside all the old suspicions, back-bitings, and, in some cases, hatreds that existed between the Treasury, the Budget Bureau, and the General Accounting Office. Today we are united in a fixed purpose and we have embarked upon a program that has already brought results.

One of the cases being testified to here yesterday quoted the Interior Department on what we had already accomplished for the Bureau of Reclamation. Yet we heard today that the Bureau of Reclamation has no system. We have gone into that Bureau under this program and are giving them one of the finest accounting systems obtainable. The Commissioner of Reclamation went before the House Appropriations Committee a few weeks ago and praised it. I didn't ask him to do it. I didn't know anything about it until I read about it.

Mr. Chairman and ladies and gentlemen, I thank you for your patience. I know that in my two appearances without any prepared statement I have rambled, but I have tried to express to you the depth of my feeling about this matter because, as I said the other day, I believe intensely in the legislative process.

The CHAIRMAN. Thank you very much, Mr. Warren.

My recollection is that when you appeared before the committee a few days ago you agreed to prepare a brief statement or summary of the progress made to date on this.

Mr. WARREN. Mr. Frese did, yes. That information appears at the conclusion of his testimony of March 6.

The CHAIRMAN. Senator Hoey? Senator Smith?
Senator Smith. I should like to ask one question, Mr. Chairman.

Mr. Warren, we all agree I am sure it is very important that Congress keep a constant and dependable check on expenditures in the executive departments, and that we do it through your office. As I see it, the question here is, Do you have authority to go into the executive departments and set up an accounting system? I understood Mr. Hoover to say that he thought you did not have, while the section that the chairman referred to would seem to me gives him complete authority. Is that true, Mr. Chairman?

Mr. WARREN. The law gives us authority, Senator, to prescribe systems. I stated in my first appearance that in the past some of the

agencies would accept them, and again there were occasions when agencies would not. But they are all accepting the systems under this cooperative effort.

Senator Smith. Do you feel that any legislation or any further legal authority making the accounting system mandatory would help it at this time?

Mr. WARREN. Senator, we had it mandatory, applying to the independent offices. At first I was strongly of the opinion that there should be mandatory legislation, but I am so impressed and so enthusiastic over the cooperation we are now getting that I should like to think further on that. I will say when we go into an agency now, if we find the old attitude existing, I will report it to Congress in 2 minutes and I will predict that that agency will come in line.

We are getting fine cooperation from the agencies. We want to help them, and they know that.

Senator Smith. As I understand it, Mr. Chairman, the Comptroller General has not been able to comply wholly with section 206 of the Reorganization Act. Would it help your organization if you could make those reports regularly, and help us in knowing what you are doing?

Mr. WARREN. As soon as the Legislative Reorganization Act became law I appeared before the House Appropriations Committee and suggested an initial appropriation of a million dollars to start that work. Congress decided that for the time being they would try to do it through the staffs of the Appropriations Committees, but it was stated on the floor of the House by Mr. Wigglesworth of Massachusetts that while they were going to try that for a while, if it should ever be done by any agency, it should be done only by the General Accounting Office.

Senator SMITH. Thank you, Mr. Chairman.
The CHAIRMAN. Senator Schoeppel?

Senator SCHOEPPEL. Mr. Warren, I share with you and some of the other members of the committee the feeling that probably we should not lessen the degree of responsibility that you owe to the legislative branch of the Government. I rather gathered from President Hoover's testimony that this would not eliminate the proper safeguards that the Congress has through your agency. I take it very definitely and positively you do not agree with that view.

Mr. WARREN. Oh, no; Senator. I say it strikes at the very vitals of the General Accounting Office, at its very integrity and independence.

Mr. Hoover very frankly indicated that he has always felt it was a mistake for Congress to give any accounting functions to the General Accounting Office. But the giants on both sides of the aisle and at both ends of the Capitol—such men as William B. Bankhead, Garner, Byrnes, Wadsworth, Good, and McCormick—who steered the Budget and Accounting Act through Congress knew what they were doing and why. They couldn't all have been wrong.

Senator SCHOEPPEL. I for one share with you some apprehension about this measure, and I am grateful to you, sir, for being bluntly frank about your position and the responsibilities that you are trying to discharge.

The CHAIRMAN. Mr. Warren, speaking of the mandatory aspects of the legislation that is needed, as I gather from your testimony,


since the three audit agencies or their representatives, the Comptroller's office, the Budget Bureau, and the Treasury, have all gotten together and agreed on a working arrangement and have put it into effect, apparently all the executive agencies of the Government have caught the spirit of the thing. Is that correct? Where in the past you may have found resistance, now you are sort of embraced with a welcome and enthusiasm. Is that true?

Mr. WARREN. That is absolutely correct, Senator. We are receiving nothing but cooperation.

The CHAIRMAN. So continuation of the present program you think will get

the results that everyone desires and get them much quicker? Mr. WARREN. Senator, I am absolutely convinced that it is the only possible way that we can do it.

In closing, Mr. Chairman, I should like to say that the staff of this committee has played an important part in the development of the joint accounting program and I wish to commend them for their fine efforts. We regard the committee as one of the real partners in this program.

The CHAIRMAN. Thank you very much.

The committee will stand in recess. This concludes the hearings unless something unforseen should develop. In the meantime, anyone wishing to file a statement for the information of the committee may do so.

(Whereupon, at 12 o'clock noon, the committee recessed, to reconvene at the call of the Chair.)

(Subsequently, the following statement regarding S. 2054 was received from Mr. Frank L. Yates, Assistant Comptroller General of the United States:)



During the hearings on the bill S. 2054 which began on February 27th, this committee has been concerned directly with the provisions of the bill and, with some exceptions, testimony has been limited to the bill. A notable exception was a witness who testified on the third day of the hearings and made very clear his dissatisfaction with the recommendations of the Hoover Commission and with part II of the pending bill because neither goes far enough to embrace all of his personal views or those of the Commission's task force of which he was a member. It seems to me he also made it abundantly clear, despite his professions to the contrary, that adoption of his theories, which he asserted were shared by many others, would seriously reduce the effectiveness of the General Accounting Office in the fields of both accounting and auditing and practically end all legislative control in these fields.

The incident of this particular testimony is mentioned only because it is indicative and strangely familiar. In this statement, I want to sound a grave warning that there is more behind the contents of part II of the bill than meets the eye. Though bad even in its present form, it would be only an entering wedge and a forerunner for still further theoretical and impractical proposals.

In the course of my service in the General Accounting Office in various capacities, dating from the beginning of that Office in 1921, I have watched the preparation and the launching of periodic assaults against the authority and the independence of the General Accounting Office and have at times participated in the furnishing of facts for use in repulsing these assaults. Some of these attacks have reached the Congress in the form of official proposals for legislative changes. But at other times in between, and with little cessation, they have taken the form of constant advocacy in certain forums and periodicals. There always have been some individuals and groups who believe the control of Congress over moneys of the Government should cease after it has exercised its appropriating authority and that the Congress should exercise no control, direct or indirect, over the accounting for or the audit of funds of the executive branch.

These critics of legislative control do not directly and openly attack the Congress or the principle of the control it retains. They attack, instead, the agency Congress has established to effectuate such control, the General Accounting Office. Their plan has varied slightly through the years but it still follows a familiar pattern. They would first remove from the Comptroller General authority to prescribe the forms, systems, and procedures for administrative accounting in the departments and agencies of the Government and transfer that authority to some place in the executive branch. They would remove from the General Accounting Office its authority for disallowing credit for illegal expenditures detected in the audit and for recovering the money. They would thus reduce the Office to a mere spotchecking and reporting office. They would also transfer the settlement of doubtful claims to the executive branch. And from time to time they have urged other things which would weaken legislative control of the uses of appropriated funds. For example, attempts have been made to convince the Comptroller General and me that we should join in recommending to Congress that it abandon entirely its long-followed policy of limiting the uses of appropriated funds by placing limitations in appropriation acts. They overlook or disregard certain important considerations:

1. How can the General Accounting Office be certain that administrative accounts will disclose the information necessary to an accurate audit unless it has an effective control in the shaping and maintenance of such accounts? How can it determine the legality of the uses of public funds unless it can have an effective voice in establishing the forms, procedures, and supporting data necessary to evidence such uses?

2. If the audit made by the General Accounting Office were reduced to a mere checking and reporting of findings to the Congress without any authority to make disallowances of credit in the accounts or to collect by offset or otherwise, how would money erroneously expended be recovered? During recent years the annual collections by the Office have averaged more than $100,000,000 per year, and these annual totals have included many thousands of exceptions and of collection items. Certainly, the departments would agree with some of the findings and make some of the collections, but they would disagree in many cases. How could the Congress consider the thousands of disallowed items and how could the Congress move to make collections? As far back as the administration of Thomas Jefferson it was determined that committees of the Congress were entirely too busy with legislative duties to concern themselves with accounting items, and that it was wholly impractical to attempt to maintain a staff large enough for such purpose.

3. If the function of settling claims were removed from the General Accounting Office, what recourse would agencies and their certifying and disbursing officers have, in doubtful cases, for their protection and to what experienced and impartial tribunal could citizens take their disputed claims after rejection by administrative agencies, except to the courts or to the committees of the Congress? During the fiscal year 1949, the Office settled 563,794 claims, a large part of which would fall in the class of doubtful cases.

4. And what would be the ultimate result after a few years if the Congress should entirely abandon its practice of placing limitations in appropriation acts? To be sure, some money would be saved in accounting costs if no such limitations had to be observed and enforced, as it is frequently arguedbut at what other costs? Few, if any, Members of the Congress will be with

out an answer to this question. The perennial critics have assigned various reasons for the changes they have advocated. The reasons have varied with the backgrounds, experience, theories, and ingenuity of the critics. But they can be accurately summarized, generally, under two headings:

1. They say that when the Congress retains and exercises a share in the control of accounting and audit processes in the executive branch of the Government it is invading the field of the duties and prerogatives of that branch of the Government. We think the Congress may properly, and must, exercise such control.

2. They say control by an agency of the Congress, independent of the executive branch, conflicts with management of the executive branch; it is not done that way in business; in business, management controls accounting and employs its own auditors; and the pattern of Government should follow the pattern of business.

There is a great difference between the situations and the requirements in Government and those in business and marked differences in the purposes to be served by accounting and audit.

The existence of these differences was readily and honestly recognized by former President Herbert Hoover when he responded to a question during

the course of his testimony before this committee on March 7. The plans of the Hoover Commission and the proposals of part II of the pending bill, S. 2054, do not appear to go quite as far as some proposals of the past. Mr. Hoover himself explained that they represent the results of compromise. But there is little basic difference, and the pending bill only reiterates in a different form what has been sought before. The familiar pattern of the past is still there.

It is a pattern that has been time and again rejected by the Congress. Critical persons and groups have even converted to their views several Presidents who have chafed at the independence of the Comptroller General, but various Congresses, in their turn, have roundly rejected all proposals to change the relationship established by the Budget and Accounting Act.

Let's draw together the occasions of congressional rejection and take a look at them. Beginning with the Budget and Accounting Act itself, they are as follows:

(1) The original Budget and Accounting bill (H. R. 9783, 66th Cong.) was vetoed by President Wilson in 1920 because, his message argues, the provision with respect to the removal of the Comptroller General and Assistant Comptroller General was unconstitutional. This section, while calling for appointment of those officers by the President, limited their removal to either a concurrent resolution of Congress or impeachment (H. Doc. 805, 66th Cong.). In effect, the section made those offices independent of the Executive by transferring the power of their removal from the Executive to the Congress. In the actual enactment of the Budget and Accounting Act of June 10, 1921, this section was changed only slightly by calling for a joint resolution (or impeachment) instead of a concurrent resolution. As so changed, the bill was approved by President Harding and became law, but the change was relatively small. While the President could participate in a joint resolution by approving or vetoing the measure, it could of course be passed over his veto. At the same time, the essential feature which President Wilson complained of remains; that is, that the President through his executive powers alone cannot effect the removal of the Comptroller General or the Assistant Comptroller General. In the light of the Rathbun case (295 U. S. 602) no doubt need be entertained as to the validity of that provision.

(2) In 1923 President Harding presented a sweeping reorganization plan recommended by him and his Cabinet, which called for the transfer to the Treasury Department of the General Accounting Office (S. Doc. 302, 67th Cong.). In the hearings on the resulting legislation (H. R. 9629, 68th Cong.) the then Secretary of the Treasury, Andrew W. Mellon, was outspoken in his opposition to the transfer of the General Accounting Office to the Treasury Department, saying (hearings on S. J. Res. 282, 67th Cong., pp. 200–203):

The Comptroller's office is essentially an independent office, and has no relation to the Treasury or to any of the other departments

"I have not observed in any way where there would be any advantage, or where there is an advantage in having it connected with the Treasury. “There is no reason why it should be inside of the Treasury at all

That is one bureau, you may say, that is logically an independent bureau.'

The resulting bills, H. R. 9629 and S. 3445, Sixty-eighth Congress, omitted entirely the matter of the transfer of the General Accounting Office to the Treasury Department. (See H. Rept. No. 937, 68th Cong., p. 26.)

(3) In 1932, acting under the authority of the reorganization sections contained in the Economy Act of June 30, 1932, President Hoover, by Executive Order No. 5959, undertook to transfer to the Bureau of the Budget certain functions of the General Accounting Office, including those relating to designing, prescribing, and installing accounting forms, systems, and procedures. The act under which that action was taken conditioned the effectiveness of the reorganizations upon the failure of Congress within 60 days to overrule the President's action by vote of either House of Congress. Promptly upon the submission of that plan, House Resolution 334 was introduced to the effect that the Executive order referred to, and certain others, "are hereby disapproved.” The committee handling the resolution reported (H. Rept. 1833, 72d Cong.) "what is proposed in this regard. would defeat the very purpose of existing law, as it would break down the means of obtaining a uniform accounting system.” The resolution overruling the President's plan was adopted by the House of Representatives on January 19. 1933.

(4) In 1937 President Roosevelt proposed to the Congress a sweeping reorganization of executive agencies based, according to his letter, in great part on the




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