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rogatives of the Congress, I would not hold this job 5 minutes. I feel very deeply about it. I feel very deeply about the encroachments that are made from time to time on the legislative branch and I am glad to say now that, without feeling on the part of the executive branch, we can unite and come in here and present a program which has the blessing of this committee and which was understood by this committee at the time we inaugurated the program and before any task force report was ever though of because we know it is the right program. I am glad that we can go ahead and achieve our objectives and at the same time maintain the integrity and independence of the office that you gentlemen have set up as your agency in the Government.

I should like, Mr. Chairman, to insert my statement, and I should also like to insert my report on this particular bill which was sent to the committee on September 23, 1949.

The CHAIRMAN. They may both be inserted at the conclusion of your testimony.

Mr. WARREN. May I say one thing more?
The CHAIRMAN. Proceed.

Mr. WARREN. I cannot go too far or be too extravagant, if it could be called that, in my praise and thanks to the Secretary of the Treasury, to Assistant Secretary Bartelt, and to Mr. Cake, all of the Treasury, to Mr. James E. Webb, former Director of the Budget when this program was initiated, and the present Director of the Budget, Mr. Frank Pace, Jr., to Mr. Lawton, Mr. Stauffacher and Mr. Armstrong. There hasn't been a difference between any of us yet in giving these agencies, so far as we have gone, these accounting systems. A cardinal principle of sound accounting is full disclosure, full disclosure to the Congress, full disclosure to the Executive, and full disclosure, if you please, Mr. Chairman, to the American taxpayer, which I feel is just as vital and important as are the first two. That is the type of accounting system that is being developed today under the joint program.

Senator MUNDT. May I ask, do you have all the authority you now need, Mr. Warren, so that your recommendation cannot be put back of the bookcase as it was prior to the war?

Mr. WARREN. Senator, I am so impressed with the cooperation we are receiving that if we would ever run across another agency that would do that, I would promptly report it to the Congress, and I do not believe that they would be allowed to get by with it for 2 minutes. We are getting full support from all of the agencies in doing this job. They have all appointed representatives to work with the three top fiscal agencies. Of course, it is going to take time. Of course it is, because you cannot establish an accounting system just on a theoretical basis and put the entire Government in a strait-jacket. It has to be gaged upon the needs of that particular agency, but it is done with the over-all supervision and encouragement of the General Accounting Office.

Agencies are urged to take the initiative in molding their systems in meeting their own management needs. These systems will be geared into the Treasury's system of central accounting and reporting to enable the Treasury Department to produce composite financial reports on a consistent basis for the Government as a whole. Meanwhile the General Accounting Office is extending its site audits

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wherever feasible, economically sound, and in the interest of the Government, and has set up a program for a comprehensive type of audit which recognizes that the accounting and internal control procedures of each agency are the basic points for effective control of the Government's financial operations.

Senator Hory. Mr. Chairman, I should like to say that I endorse fully what Mr. Warren said with reference to our committee and the minority report which you submitted. I think it is a very splendid document. I find myself in thorough accord with the views which you presented.

If I may be permitted to add also, I have taken a very great personal pride in the record that Lindsay Warren has accomplished. As has been intimated in his own statement, he was Representative in Congress from my State for eight consecutive terms. He very frequently had no opposition in the primary. He had, as most everybody in the House knew, a very fine opportunity to become Speaker of the House within a very short time. He hesitated about leaving it to accept

a this very important position in this very important agency of the Government. After President Roosevelt repeatedly offered it to him, as he suggested, and pressure from other sources was very great on him to accept the position, he did accept it and I think he has made a very magnificent record. When the vacancy occurred in the eastern district judgeship in North Carolina, Senator Bailey and I discussed the matter of the most efficient as well as the most popular man we could get to fill that position, and we unanimously agreed on Mr. Warren. We discussed it with the Attorney General and the President, and there was no difficulty about the appointment. We asked Mr. Warren to accept it. I happened to know he was very much interested in that position because it is rather a distinction and honor in our State, as it is in most States. But after considering it and after the urgent concern of other people interested in this agency of the Comptroller's Office being properly conducted, he was urged not to accept it and to remain here to fill out his term. It is under those conditions that he continued to serve.

I want to say as a special tribute to him that I know of no man in public service who is more conscientious and more fair-minded and impartial in the administration of his office. As far as I am concerned, I am not in favor of doing anything that interferes in any way with the proper conduct of this office as an independent agency of the Congress.

Senator MUNDT. I should like to associate myself with that statement, if I may, Mr. Chairman, and to say as one who served in the House of Representatives with Lindsay Warren, I know from my personal experience of his interest in maintaining the authority and prerogatives of Congress. It did not stem from the date he accepted this position as Comptroller General, but he took that position in the well of the House from time to time as stated by the distinguished Senator from the State of North Carolina.

My purpose in raising the question with the gentleman earlier was that it seemed that in this bill either by design or by inadvertence there was an encroachment upon his independent office, which I certainly would resist. I am in complete accord, Senator Hoey, and I would not support legislation of this kind which did not have the recommendation of Mr. Lindsay Warren.

Mr. WARREN. I assure you this bill so far as the General Accounting Office is concerned, strikes at its very vitals and at its independence.

The CHAIRMAN. I may say, having served as a member of the Reorganization Commission, I think you will find it is not by inadvertence. There is a very definite intent to encroach upon the legislative prerogative in this field. I certainly associate myself with the sentiments expressed by Senator Hoey. I, too, served in the House, and I was there in 1938 when the first reorganization bill was defeated because it contained some of these very objectionable provisions.

There is one thing you might wish to comment on. I wonder about the accuracy of one statement. I notice that Senator McCarthy says on page 5 of his statement that if such measures are enacted there are indications that we can cut the personnel of the GAO by 50 to 75 percent without proportionate increase in the rest of the Government.

Of course, if we could find some ways to cut personnel of Government agencies by 50 to 75 percent and not increase the cost of Government somewhere else, that would be a very attractive persuasion. I just wonder whether the Comptroller General would care to comment on that statement. I do not know about those figures, whether they are Senator McCarthy's or whether they were suggested to him by some who are interested in this legislation.

Mr. WARREN. I have no idea where the Senator got such a figure, Mr. Chairman. I do not think there is any one-perhaps if I can say it modestly—who has been more interested in cutting down the size of the Government than I have. I say today the Government is too big and it ought to be cut. No one has advocated that more strongly than I have before this and other committees. The General Accounting Office went up to 15,000 during the war, but that was not our fault. It was the appropriations necessarily passed by Congress that caused that. Today of my own accord, without any directive from the Congress, I have reduced the personnel to 8,600, and I am going to further reduce it.

The proposal made by the Hoover Commission would set up a new office of Accountant General in the Treasury Department, which the Treasury Department itself, incidentally, has been very much opposed to and has gone on record against, and there is no telling how many people would be necessary to carry out such a program.

I may tell you that the division that I have set up in the General Accounting Office to carry out this program has only 40 people in it today, and we have said that it would probably require tentatively 75 people. I am reducing the General Accounting Office day by day. We are doing it by an improvement of our methods, and we are doing it because, except in two instances, we are current in our work, something that has been unheard of heretofore. I will never permit, so far as I can help it, one person to stay on the rolls there who is not necessary to the proper conduct of that Office.

The CHAIRMAN. Thank you very much, Mr. Warren.
Are there any other questions?

SENATOR MUNDT. Is it a fair question to ask which are the two agencies in which you are not current in their work?

Mr. WARREN. We are considerably behind in transportation. The Senator will recall, because he and I were members of the House then

in fact, it was the last debate that I participated in—that in the summer of 1940 the Transportation Act was passed. It threw all the audit of transportation payments into the General Accounting Office. Of course, wartime transportation was something terrific. We are considerable behind in that, and we are behind in some instances in our corporation audits, notably the Commodity Credit Corporation.

I might add, though, that it is our purpose and hope, and I am sure I am correct in saying it, that by the first of June we will be current in all of our corporation audit reports.

The CHAIRMAN. Thank you very much.

With reference to the bills that may be introduced to substitute for certain titles and provisions in this pending bill, of course I cannot foretell or foresee just what changes will be made and in what way they will differ from the provisions in this bill, but I understood Senator McCarthy to say that there would be no fundamental changes. So I assume we can continue to hold hearings on $. 2054 with amendments. This is the bill which is before us and on which we have scheduled hearings. I shall proceed with hearings on this bill until something is introduced, and some change is necessary.

We may have to ask you to come back and help us some more, Mr. Warren. We certainly appreciate your presence this morning.

Mr. WARREN. Senator, I should be very delighted to, and I should like it to be understood that, while it is rather unusual for the opponents of the bill to come on first as we have today, I hope that when representatives of the Hoover Commission testify Thursday we may have the opportunity to rebut some of the things that may be presented.

The CHAIRMAN. You will be given that opportunity. You can appreciate that, in trying to arrange hearings on a bill, you generally call in the agencies and representatives of Government that are affected by the terms of the bill. I think more often we find them in support of bills than we do against. This just happened to be probably an unusual situation. We did feel that the testimony of the representatives of the budget, and of your office, and of the Treasury should be heard first.

Thank you very much, Mr. Warren.

(The prepared statement and report of Mr. Warren follow:) STATEMENT OF LINDSAY C. WARREN, COMPTROLLER GENERAL OF THE UNITED

STATES, BEFORE THE SENATE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS, ON S. 2054

Mr. Chairman and members of the committee, I appreciate your invitation to appear before you and to give my views on S. 2054. It is always a pleasure for me to be here. As you know, the Expenditures Committee is one of those which by law the Comptroller General and the General Accounting Office are required to service. Also, under the Legislative Reorganization Act of 1946, this committee receives our reports and takes such action as may be necessary. Your committee is our friendly guide and our proper critic.

S. 2054 is a far-reaching bill insofar as the functions of the General Accounting Office are concerned. It strikes at one of the vital controls exercised by the Office for Congress over expenditures of public funds. Before going into the details of the bill, I should like, especially for the benefit of the new members of the committee, to tell you something of the background of the Office and what it does.

The General Accounting Office is an agency of the Congress to check on the financial transactions of the Government. It is an important part of our system of checks and balances. It was set up by the Budget and Accounting Act of 1921 as an arm of the Congress and has always been a part of the legislative branch of the Government. Its broad function is to audit and settle public claims and accounts, investigate the Government's financial transactions, and to advise and assist the Congress in matters relating to public moneys.

Although the title “General. Accounting Office” is of comparatively recent origin, there is nothing new or startling in its basic purpose. Its creation was the result of continued effort on the part of the Congress to implement its constitutional power to control the public purse.

Commencing with the Treasury Act of 1789, which provided for an auditor and a comptroller in the Treasury Department, Congress has relied upon the accounting officers to enforce legislative provisions relating to the expenditure of public funds. From time to time from 1789 to 1921, the status and functions of the accounting officers were reconsidered by the Congress, and on each occasion action was taken to strengthen their hand. In 1868, Congress declared that balances certified by the Comptroller of the Treasury should be final and conclusive upon the executive branch. In 1894, the Dockery Act effected further reforms. Then, as the final step in the evolution of an accounting agency independent of the executive departments and responsibile directly to the Congress, the Budget and Accounting Act of 1921

created the General Accounting Office. As a result of the Budget and Accounting Act, congressional control over financial matters was greatly strengthened. For the first time the Congress had its own completely nonpartisan and nonpolitical agent to assure the furnishing of necessary information concerning the financial transactions of the Government and to enforce the congressional intent as to expenditures.

I believe that the General Accounting Office as it stands today is rendering to the Congress, to the taxpayers, and to the executive branch a greater service than ever before in the history of our Government. It is not the same office it was a few years ago. Many new duties have been added, and, more important, new approaches have been taken in performing our work. We are not hidebound and wedded to antiquated methods, but are striving to be alert and alive to modern procedures. Within the framework of the requirements of Congress, every effort is being made to be cooperative and helpful to the executive branch with legal and accounting problems connected with public funds and property.

Cold statistics will give you some idea of our work. During the last fiscal.year, we examined some 61,000 money warrants; audited 23,000,000 vouchers; examined 1,200,000 contracts; settled 563,000 claims; settled 389,000 fiscal officers' accounts; reconciled 459,000,000 checks; rendered 13,000. decisions to the departments and agencies, claimants, and others; visited 1,400 different offices on inspections; submitted 22 comprehensive audit reports to the Congress on 28 corporations and 3 agencies; submitted 540 reports to Congress and its committees; and made some 3,800 replies to individual Members of Congress. Our collections for the fiscal year 1949 were $86,669,776, and collections from 1941 to date total $660,199,422. These amounts were either erroneously or illegally paid out, and if it had not been for the General Accounting Office they would never have seen the inside of the Treasury again. In 1946 our personnel reached an all-time peak of 14,904. As a result of vigorous and still continuing efforts to reduce the size of the Office consistent with doing our job, the number now is approximately 8,600.

Now, with reference to the bill before your committee, under part I the President would be given complete authority over the form and contents of the budget. The amendments proposed August 1, 1949, would specifically require the budget to be submitted on a cost-of-performance basis, thus considerably limiting the President's authority to determine the form of the regular budget, but would authorize him to submit alternate estimates and alternate budgets. Also, the budget would no longer be required to be transmitted to the Congress on the first day of each regular session but could be transmitted at any time during the first 3 months of each regular session. While the form and contents of the budget have a close connection with accounting, these matters are of more direct concern to the President and to the Bureau of the Budget. I have no recommendations to make with respect to these provisions except to point out that considerable progress is being made by the Bureau of the Budget toward a performance budget under existing law. I understand the Bureau questions whether any new legislation is necessary at this time. Part III provides in general for transfers and adjustments of appropriations and personnel ceilings. Part IV would specifically repeal numerous provisions of existing law requiring estimates for certain activities or in certain forms or reports for certain expenditures so as not to conflict with the provisions of part I with respect to the form and contents of the budget.

Part II contains the accounting provisions which concern the GAO so deeply. It deals with the recommendations of the majority report of the Commission on

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