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The committee may wish to consider the insertion of a copy of that letter in the record of these proceedings.

The CHAIRMAN. May I suggest to the reporter at the conclusion of your remarks I should like to have inserted in the record the letter to which you referred, the letter of October 4.

Mr. BARTELT. Thank you, sir.

The comments of the Treasury Department were addressed mainly to part II of the bill, dealing with accounting. I will not undertako to repeat those comments unless the committee desires to have them discussed here today. I might point out, however, that in commenting on section 20 of the bill, which would create a new position of Accountant General in the Treasury Department, the Department's letter of October 4 reaffirmed the position stated earlier by Secretary of the Treasury Snyder in his general report on the Hoover Commission's recommendations affecting the Treasury Department.

If it meets with the committee's approval, I should like to incorporate also as a part of these hearings the statement of Secretary Snyder in his letter of August 2, 1949, with respect to the proposed reorganization of accounting in the Government.

The CHAIRMAN. That may be done.

Mr. BARTELT. The accounting and reporting system of the Government is a matter in which the Treasury Department is vitally interested. Not only because of its basic statutory responsibilities with respect to accounting and financial reporting, but by the very nature of its responsibilities as the center of the Federal finances, no agency of the Government is more concerned with good accounting, or has a more direct interest in accounting, than the United States Treasury Department.

Every dollar of taxes levied by the Congress must eventually be paid into the Federal Treasury and there must be a good accounting for every dollar received. Only the Treasury can properly account for the taxes levied by Congress, because it is the Treasury that must collect them. Every dollar expended by any department of the Government from appropriations made by the Congress must be paid out by the Treasury. The Treasury is the logical department to account for the money it


out. When taxes are not sufficient to finance expenditures, it is the Treasury which must raise the money within the limitations fixed by the Congress. The Treasury is the only agency that logically can account for the money it borrows.

The same is true with respect to the production and issue of coins and currency. So, I repeat, no agency of the Government has a more vital interest in the accounting system of the Government than the United States Treasury.

The Treasury's interest in good accounting stems from a number of sources, the more important of which are these:

(1) It must keep a faithful record of every dollar it receives and disburses.

(2) It must see that there is money in the Treasury to pay its current bills, and it must manage its cash position in a manner which is not disruptive to the banking and monetary system of the country.

(3) It must render efficient financial services, not only to the public, but also to the other Government agencies.

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(4) It must safeguard the funds of the Government. (5) It must render banking services, expeditiously and economically.

(6) It must make a proper accounting to the American people, as well as to the Congress.

The Treasury already has an organization which can perform these services. It is the Bureau of Accounts, the head of which is a certified public accountant with many years of experience.

This Bureau has three important statutory functions:

(1) It issues the warrants for the covering of money into the Public Treasury and the subsequent withdrawal of such money under appropriations made by the Congress. This responsibility will be found in title 31, section 147 of the United States Code.

(2) It maintains the central accounts of the Government relating to receipts, appropriations, and expenditures. This responsibility is in title 5, section 255 of the United States Code.

(3) It prepares an annual report to the Congress under title 5, section 264 of the United States Code, designating the receipts, where practicable, by districts, States, and ports of collections, and the expenditures under each separate head of appropriations.

Many of the financial statements included in the annual Budget are made up from the figures furnished by the central accounts and reports of the Treasury Department.

Mr. Chairman, in spite of the public criticisms of the Government's accounting system, in fairness it should be said that no other Government in the world makes such a full and complete accounting to its people as does the Government of the United States. And no government makes such a meticulous accounting for appropriations made by the legislative branch as does the executive branch of the United States Government.

This is not to imply that the accounting system of the Treasury is all that it should be, but this is a condition which is now being corrected under the joint program of the Comptroller General of the United States, the Secretary of the Treasury, and the Director of the Bureau of the Budget. Secretary Snyder made reference to this program in his report to Senator McClellan on August 2, 1949, and it is an important reason for the Department's position regarding the proposals of the Hoover Commission as well as the provisions of Senate bill 2054. (See excerpt from Secretary Snyder's letter inserted at conclusion of Mr. Bartelt's statement.)

In a moment I would like to point out to the committee a few of the more important things which ought to be done from the viewpoint of the Treasury. But first

let me say that the important thing to the Treasury is this: The Treasury is not so much concerned as to who prescribes the accounting systems in the various agencies as it is to see that these systems rest on sound accounting principles, that they are coordinated with the central financial records of the Treasury, and that the work is carried on in full cooperation with all agencies with which, and through which, the Treasury carries on its daily business.

We think that the conditions which previously have impeded the development of improved accounting within the executive branch of the Government are being corrected under the very wise and able leadership of the present Comptroller General, Mr. Lindsay C. War

If I may make a purely personal observation, Mr. Warren, in my opinion, has the proper concept of the relationship which ought to exist between the General Accounting Office and the agencies that must carry on the daily work for which the Government exists.


The CHAIRMAN. May I ask at this point, is it your personal opinion that title II of this bill, if enacted into law, would simply further confuse and complicate the situation rather than help it? Would it interrupt the present program that seemingly we all agree is working effectively?

Mr. BARTELT. I think, Mr. Chairman, it would be a great mistake to enact that provision and I think it would retard the program considerably. I might say in passing that I have been interested in improving the Government's accounting system for 25 years and this is the first ray of hope I have seen during all that time.

As was pointed out in the hearings yesterday, Mr. Warren took over the administration of the General Accounting Office in November of 1940. I had the pleasure of talking to him on several occasions in the early days of his administration, and I received the impression that he intended almost at the outset to improve the Government's accounting system, which had been a bone of contention in every administration since the budget and accounting law was enacted in 1921. Then the war came.

The Government's fiscal machinery was put into high gear. It could not be overhauled or remodeled while the wheels were moving at the rate of $100,000,000,000 a year; $7,500,000,000 a month; $5,000,000 an hour, or $3,000 a second, day and night, including Sundays and holidays.

Under the Budget and Accounting Act, authority and responsibility for prescribing accounting systems in the executive departments and establishments of the Government is in the Comptroller General of the United States. However, the responsibility for the day-to-day maintenance of the accounting systems is and must be a responsibility of the various administrative agencies where the work and operations are performed. Moreover, the Treasury Department and Bureau of the Budget have important legal responsibilities of their own from the standpoint of fiscal administration of the Government, which have a definite relationship to the prescribing of accounting requirements and the operation of accounting systems. In order to coordinate all these responsibilities and to make accounting, reporting, and budgeting more effective as instruments of fiscal control and management, on January 6, 1949, the Comptroller General of the United States, the Director of the Bureau of the Budget, and the Secretary of the Treasury approved the joint program containing the following as fundamental principles:

(1) Current accounting and financial reporting are proper functions of the executive branch and accounting systems prescribed by the Comptroller General should be in recognition of this as a fundamental principle.

(2) Audit, independent of the executive branch, is an essential and proper function of the General Accounting Office, and properly designed accounting systems are a vital factor to the effectiveness of such independent audit.

(3) Accounting systems should be developed as a cooperative undertaking, as an essential to meeting the needs and responsibilities of both the executive and legislative branches of the Government.

At the same time, they announced the following as major objectives of the program. I might say that these are the more important things to be done from the Treasury's point of view.

(1) To provide a body of sound accounting and reporting principles and standards for general observance.

(2) To improve the accounting organizations and the systems of accounting in the various departments and agencies.

(3) To strengthen the facilities and accounting of the Treasury Department as the operating center for current accounting and overall financial reports of the Government.

(4) To produce more informative financial reports, at less accounting costs.

(5) To improve, simplify, and strengthen the Government's system of audit and control in line with the increased effectiveness of accounting systems.

(6) To coordinate and integrate budget, accounting, and reporting processes.

Since then, in spite of limited accounting staffs, there has been steady progress. This progress was reported by Secretary Snyder at his hearings on January 5, 1950, before the House Appropriations Subcommittee. If it should be the desire of the committee, I should be glad to make a copy of this report available for the convenience of the committee.

As the Treasury has previously indicated, it is in agreement with the general objectives of the Hoover Commission to improve Government accounting. We believe, however, that the cooperative approach along the lines adopted by the Comptroller General, the Secretary of the Treasury, and the Director of the Budget, is the more realistic approach, and the one which is most likely to bring about the results which the Commission seeks.

Mr. Chairman, in view of the fact that I will not have an opportunity within the limited time available to present my views adequately on this important subject, I would like to make available to the members of the committee, if it should meet with your approval, a copy of an address which I delivered in Detroit, Mich., on May 25, 1949, before the Municipal Finance Officers Association of the United States and Canada. The subject of this talk was "The New Era in Federal Accounting." The reason that I ask that it be made available to the members of the committee is because it discusses rather fully not only the problem before the committee but also the method of attack which is now known as the joint accounting program. It sets forth fully the respective roles which the various agencies will play.

The CHAIRMAN. Mr. Bartelt, if you will, please file with the clerk copies of your speech, one for each member of the committee. It may be advisable to place that speech in the record of the hearings and have it printed. If you will file it, we will have the benefit of it and possibly do that.

Mr. BARTELT. I hope, Mr. Chairman, that the members of the committee will take the time to read it because I think it is rather important, and I believe that they will get some very valuable information.

The CHAIRMAN. It is to the same effect that you have testified to this morning, but it goes into a little more detail, is that correct?

Mr. BARTELT. It goes into considerably more detail.

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The CHAIRMAN. All right, we shall be very glad to have it. (The address of Mr. Bartelt referred to is on file with the committee.)

(The letter of October 4, 1949, from the Treasury Department, referred to, and the excerpt from Secretary Synder's letter of August 2, 1949, follow:)


Washington, D. C., October 4, 1949. Hon. John L. McCLELLAN, Chairman, Committee on Expenditures in the Executive Departments

United States Senate, Washington, D. C. My DEAR Mr. CHAIRMAN: This is in reference to your letter of June 20, 1949, requesting the views of the Treasury Department concerning S. 2054, a bill "To authorize the President to determine the form of the national budget and of departmental estimates, to modernize and simplify Government accounting and auditing methods and procedures, and for other purposes.'

Part I of the bill involves the President's budget, the preparation of the departmental estimates, and related matters which are the concern of the President and the Bureau of the Budget.

Part II of the bill contains a number of matters which are the concern of the Treasury Department.

Section 20 would authorize the Secretary of the Treasury to create a new service in the Treasury Department to be known as the Accounting Service, with an Accountant General at its head. The Treasury Department does not believe there is any need for creating a new position in the Treasury to be known as the Accountant General for the reason that a statutory organization already exists to perform the accounting services for the Treasury. For your convenient reference I am enclosing herewith a copy of reorganization plan III, which was made effective by the Congress on June 30, 1940, under Public Resolution No. 75, Fifty-fourth Statute 231, United States Code title 5, section 133u.

The functions brought together in the Fiscal Service of the Treasury Department under reorganization plan III are all closely related and are essential parts of the general functions of fiscal control. The internal organization of the Fiscal Service, consisting of the Office of Fiscal Assistant Secretary, the Bureau of Accounts, the Bureau of the Public Debt, and the Office of the Treasurer of the United States, conforms to accepted principles of financial management and provides the framework for adequate internal controls. As an important element of financial control there was consolidated in the Fiscal Service, to be exercised by the Fiscal Assistant Secretary under the direction of the Secretary of the Treasury, supervision of the administration of the accounting functions and activities in the Treasury Department and all its bureaus and offices, these functions to be exercised through the Commissioner of Accounts (see 54 Stat. 1232).

Under title 5, section 255, of the United States Code, the central accounts relating to the receipts and expenditures of the Government are maintained in the Bureau of Accounts of the Fiscal Service. The head of the Bureau of Accounts is the Commissioner of Accounts. He is a certified public accountant and has had 20 years of practical experience in Federal accounting.

Section 21 of Š. 2054 would vest in the Secretary of the Treasury authority to prescribe the general accounting methods, practices, and procedures to be followed by all agencies in the executive branch of the Government. It is to be noted, however, that the exercise of such function would be subject to the authority of the Comptroller General of the United States. It is not believed that such a division of authority would be in the interest of efficient administration, and therefore the Treasury does not recommend its enactment.

Because of the many different purposes which accounting serves in the administration of the affairs of the United States Government, the Comptroller General of the United States, the Director of the Budget, and the Secretary of the Treasury have established a joint working relationship for the purpose of revising the accounting and auditing procedures in keeping with the needs and interest of all officers and agencies concerned, includnig the Congress of the United States, the President, and the heads of the several departments and agencies.

This program has been under way for about a year and undoubtedly will bring about the main objectives sought to be accomplished under S. 2054. Under this joint cooperative program the following have been adopted as basic principles:

1 Message of the President, April 2, 1940 (H. Doc. 681, 76th Cong., 3d sess.)

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