Mr. MATCHETT. That and a number of other adjustments which are in small amounts. Representative WOLVERTON. So that when the T. V. A. report to Congress was made in 1934, it did not apprise Congress that they had cash available of $37,000,000 plus? Mr. MATCHETT. I do not see any reference to it on page 56 or 57 of the T. V. A. report. Representative WOLVERTON. Now, will you turn to the item "deferred charges" in the General Accounting Office report of 1934, page 39, and give me the amount that there appears? Mr. MATCHETT. $1,329,653.15. Representative WOLVERTON. Will you turn to the T. V. A. report to Congress of 1934 at page 56 and inform me of the amount set forth in that report to Congress as deferred charges? Mr. MATCHETT. $579,410.20. Representative WOLVERTON. That would seem to be a difference. of $600,000 plus or $700,000 plus between the figures that appear in your report of 1934, and the amount reported to Congress by the T. V. A. Can you give any explanation of that? Mr. MATCHETT. Yes; the first item on our report is $901,000 plus of incompleted transfers. That was the amount shown on the books as of June 30; some time in October or November, the Tennessee Valley Authority distributed a good bit of that. That is after our departure from Knoxville. Representative WOLVERTON. Let me understand what the practice was in the closing of these accounts. Do I understand that the item as you charged it would be a proper bookkeeping item to make? Mr. MATCHETT. It was on their books. Representative WOLVERTON. Then how could it be a proper bookkeeping item for the T. V. A. to have reported to Congress as only $579,000 plus, instead of $1,329,000? Mr. MATCHETT. Because the General Accounting Office accepted the balances as of June 30 with certain adjustments and used those figures, and the Tennessee Valley Authority accepted those figures and adjusted them in October or November or December of the same year. Representative WOLVERTON. Well, then, may I ask this question: Are the books for 1934 closed yet? Mr. MATCHETT. No. Representative WOLVERTON. You mean the T. V. A. still has its books open for 1934? Mr. MATCHETT. That is my understanding. They are going back and making changes affecting that period. Mr. BIDDLE. As a result of the allocation? Mr. MATCHETT. I think that that is true. Representative WOLVERTON. Allocation is one thing and totals is another. Mr. MATCHETT. It will affect the books in that items that have not been recorded, properties acquired, will be set up and depreciation will also be set up on them. Representative WOLVERTON. When they set these items down, in 1934, are the items permanently in the books, written in ink, or are they put in temporary ledgers, and written in with lead pencil. Mr. MATCHETT. They are put in permanent books, and the books are usually changed each year, so that there is space to make additional entries, but in this case the entries will be made, probably made at this time, and dated back as of then to become effective as of that time. Representative WOLVERTON. Now, on that same item of deferred charges, look at the T. V. A.'s report to Congress of 1935, page 63, and see for this same item, which they reported as $579,000 plus, what they reported in 1935 for 1934. Mr. MATCHETT. I don't see any deferred items offhand. Representative WOLVERTON. I had it figured out as about $21,000 and some. Mr. MATCHETT. Undistributed to administration and service expense, $21,000 plus, that may be the item. Representative WOLVERTON. That is it. Mr. MATCHETT. What is the question, sir? Representative WOLVERTON. What did the T. V. A. report to Congress? Mr. MATCHETT. In 1935, on page 63 of their report, is that the item? Representative WOLVERTON. What was the amount of the deferred charges? Mr. MATCHETT. There is no total here for the amount of deferred charges, but there is one item of undistributed administration and service expense of $21,315.62. Representative WOLVERTON. The previous year, under deferred charges, they reported to Congress that there was $579,000 plus. What has become of that, or what explanation is there about that amount in 1934, when they reported to Congress in 1935 for comparative purposes the 1934 figures, why didn't they use those figures, instead of using none? Mr. MATCHETT. Well, I can't tell you the exact answer to that, but it is more than probable that these deferred items as shown on the 1934 balance sheet have been distributed and dated back to the fiscal year, and the difference is shown. TOTAL INVESTMENTS Representative WOLVERTON. Now, let us turn to the subject of investments. What did you find according to the General Accounting Office report of 1934, on page 39, with respect to the total amount of the investments? Mr. MATCHETT. $114,632.60. Representative WOLVERTON. Now, turn to the report of the T. V. A. to Congress for 1934, page 56, and what did you find? Mr. MATCHETT. $114,632.60, the same amount. Representative WOLVERTON. Now, what did you find, or what does the report of 1935 of the T. V. A. show, at page 63, with respect to the total amount of the investment? Mr. MATCHETT. I don't find it. Representative WOLVERTON. So that on the question of investments, we have your report showing $114,632.60, and we have the report of the T. V. A. to Congress in 1934, at page 56, agreeing with you that there is $114,000 plus, but in 1935 they report none. What explanation is there of that? Mr. MATCHETT. During the fiscal year 1934 the Authority changed. its method of recording or reporting, and it is my belief that that item is included in electricity program up here, the second item. Mr. BIDDLE. Could you give the item? Mr. MATCHETT. Electricity, $1,301,813.26, and that would have to stand verification. CURRENT LIABILITIES Representative WOLVERTON. I may come to that at a little later point, and maybe that fits in there. Now, take your current liabilities, what does the General Accounting Office report of 1934, at page 39, show as to the total amount of the current liabilities? Mr. MATCHETT. $1,086,893.50. Representative WOLVERTON. And what would be the amount if you added to that the checks in escrow? Mr. MATCHETT. What would be the total amount? Representative WOLVERTON. What would be the additional amount? Mr. MATCHETT. $141,728.91. Representative WOLVERTON. Making a total of how much? Mr. MATCHETT. $1,228,000 plus. Representative WOLVERTON. Now, look at the T. V. A. report to Congress of 1934, at page 57, and tell me what is reported to Congress as current liabilities? Mr. MATCHETT. $1,088,339.16. Representative WOLVERTON. Well, that would approximate your figure of $1,086,000, without considering the checks in escrow? Mr. MATCHETT. That is true. Representative WOLVERTON. Now, what did the T. V. A. report to Congress in 1934, at page 63? Mr. MATCHETT. $1,172,220.79. Representative WOLVERTON. Now, that is current liabilities for the year 1934, is it not? Mr. MATCHETT. That is what it is shown here as. Representative WOLVERTON. What explanation can there be from the fact, or to the fact, that in making the report to Congress in 1934, they reported it at $1,088,000 plus, and in 1935, in reporting the same item for 1934, they reported it at $1,172,000 plus, a difference of $80,000? Mr. MATCHETT. The Tennessee Valley Authority probably would have to answer that one. REVENUE FROM SALE OF POWER Representative WOLVERTON. All right. Now, let us take up the question of the sale of power. That is the revenues, or the income from the sale of power. What does your report of 1935, at page 13, show as the total revenue for the sale of power? Mr. MATCHETT. What was that page? Mr. MATCHETT. Total revenue from the sale of power, $823,000. The net is $823,241.38. Representative WOLVERTON. Now, turn to the T. V. A. report to Congress for 1934, at page 57, and see what was reported. Mr. MATCHETT. $824,557.76. Representative WOLVERTON. Turn to the report of the T. V. A. to Congress in 1935, at page 66, and what was the total amount given as of 1934? Mr. MATCHETT. The total operating revenues $651,235.30. Representative WOLVERTON. Are you sure that there shouldn't be some deduction there which would make it $825,559.74? Mr. MATCHETT. That figure would be net. Representative WOLVERTON. What I have just given to you? EXPLANATION OF DIFFERENCE IN TOTAL OPERATING EXPENSES Representative WOLVERTON. Now, the differences there are not considerable, but it is some thousands or so; but now take the total ¦ operating expenses, and what does the General Accounting Office report, at page 13, show them to be? Mr. MATCHETT. $798,667.08. Representative WOLVERTON. Now look at the T. V. A. report to Congress of 1934, at page 57, and see what it was reported to Congress, and tell me what was reported to Congress. Mr. MATCHETT. $276,234.53. Representative WOLVERTON. Can you give me any explanation as to why your account shows the total operating expenses to have been $798,000 plus, and the T. V. A. report to Congress only showed $276,000 plus, or a difference of about $520,000? Mr. MATCHETT. Yes, sir; in the operating statement submitted by the General Accounting Office is an item, under maintaining and operating Muscle Shoals, of $447,594.65, which was put in here as an operating expense pending future determination, and at the same time, until a little more was known of it. We had to rely Representative WOLVERTON (interrupting). I am not going into a detailed questioning of that. That would account, if all of that was allowed, at $557,000, and what about the balance? Mr. MATCHETT. Would you repeat that last question please? Representative WOLVERTON. Assuming without question-and I am not going to take the time of the committee now to go into the question as to whether you were right or wrong in doing that-but assuming that the $447,000 was out, what other items, if any, would explain a difference of nearly $300,000 still remaining? Mr. MATCHETT. The difference between the figures shown in the General Accounting Office report and that in the Tennessee Valley Authority report is $422,000, accounted for by the $447,000 just mentioned, and an item of $25,000 representing cost of power delivered to United States Government departments and establishments, which is a contra item shown on the General Accounting Office balance sheet, thereby accounting for, in round figures, the difference of $422,000. Representative WOLVERTON. Now, we will take up the balance of that $720,000 difference, which would be approximately $280,000. How would you account for that difference? Mr. MATCHETT. Are you referring to the difference between the operating revenues and the operating expenses? Representative WOLVERTON. No; I am referring to the figures that were reported by you as total operating expenses of $798,000 plus, and a similar item in the report to Congress by T. V. A. of $276,000 plus. I pointed out that that is a difference of $720,000, and you have explained where $440,000 is, and now where is the difference? Mr. MATCHETT. The difference is $422,000. Mr. MARQUIS. You have neglected to subtract. Representative WOLVERTON. Then there is something that doesn't work out along another line, because I was under the impression that in your charge of operating expenses you had included $82,618.74 for depreciation. Mr. MATCHETT. That item is in there. Representative WOLVERTON. Is that in the T. V. A. figures? In other words, has the T. V. A. set up an operating expense of depreciation of $82,618.74? Mr. MATCHETT. The Tennessee Valley Authority statement does not include that item, but it was on the books in approximately that amount as of June 30, 1934, and subsequently removed. Representative WOLVERTON. Yes; we have had previous testimony that the depreciation for that year was $82,000, based on 10 percent of the revenues received, and we have some question whether that was a proper way to fix depreciation; but you say that in figuring these operating expenses, that $276,000 plus, that the T. V. A. in its report to Congress did not give or make any charge for depreciation of the $82,000 plus? Mr. MATCHETT. I do not see that in their statement, which is on page 58 of the 1934 report. Representative WOLVERTON. Now, did they make any allowance for taxes? Mr. MATCHETT. They did. Representative WOLVERTON. How much? Mr. MATCHETT. $40,950.05. Representative WOLVERTON. And you claim that it should be $41,573.07-not that that makes any difference. Mr. MATCHETT. That is what is shown in our statement. Representative WOLVERTON. So that the operating expenses of the T. V. A. are less than what you had thought from your study of the books that they should have been? Mr. MATCHETT. That is right. Representative WOLVERTON. And the item of $82,000 plus for depreciation, although it was on the books, did not appear in the figures as submitted to Congress by the T. V. A. in 1934? Mr. MATCHETT. It does not appear on their statement. Representative WOLVERTON. Now, will you look at the T. V. A. report to Congress for 1935, at page 66, and tell me what was represented to Congress in that report, as having been the operating expenses for 1934? Mr. MATCHETT. $248,157.62. Representative WOLVERTON. Can you give me any explanation as to why the operating expenses for 1934 are approximately $30,000 less as reported to Congress in 1935 than when they were reported to Congress in 1934? Mr. MATCHETT. It is difficult for us to explain that; that is no doubt due to the continuing policy of making adjustments. |