(92) The last sentence of section 35 of the Act of September 7, 1916, as amended (39 Stat. 749; U. S. C., title 5, sec. 785).

(93) So much of section 1 of the Act of October 1, 1890 (26 Stat. 653; U. S. C., title 10, sec. 214), as reads: "and the Signal Corps of the Army shall remain a part of the Military Establishment under the direction of the Secretary of War, and all estimates for its support shall be included with other estimates for the support of the Military Establishment."

(94) The last proviso of section 4 of the Act of March 12, 1926 (44 Stat. 206; U. S. C., title 10, sec. 1597).

(95) So much of section 1 of the Act of June 12, 1917, as amended (40 Stat. 153; U. S. C., title 16, sec. 452), as reads: "and the Secretary of the Interior is directed to submit, for the fiscal year nineteen hundred and nineteen and annually thereafter, estimates of the amounts required for the care, maintenance, and development of the said parks."

(96) So much of section 1 of the Act of July 24, 1876, as amended (19 Stat. 99; U. S. C., title 24, sec. 278), as requires estimates for the care and maintenance of the national military cemeteries to be submitted annually by the Director of the National Park Service.

(97) So much of section 1 of the Act of January 24, 1923 (42 Stat. 1208; U. S. C., title 31, sec. 12), as reads: "The aggregate of all estimates of appropriations from the 'reclamation fund' contained in the Budget for any fiscal year shall be included in the totals of the Budget for that year."

(98) The second paragraph under the heading "Pay, Miscellaneous" of the Act of March 3, 1909 (35 Stat. 754; U. S. C., title 31, sec. 609a).

(99) The third paragraph under the heading "Office of the Fourth Assistant Postmaster General" of the Act of June 9, 1896 (29 Stat. 316; U. S. C., title 31, sec. 610a).

(100) The last proviso under the heading "National Home for Disabled Volunteer Soldiers" of the Act of October 2, 1888, as amended (25 Stat. 543; U. S. C., title 31, sec. 719).

(101) Section 119 of the Act of June 3, 1916 (39 Stat. 213; U. S. C., title 32, sec. 25).

(102) So much of the fourth full paragraph on page 558 of volume 39 of the Statutes at Large in the Act of August 29, 1916 (U. S. C., title 34, sec. 504), as reads: "and the Secretary of the Navy shall each year, in the annual estimates, report to Congress the number of persons so employed, their duties, and the amount paid to each."

(103) The last proviso in the third paragraph on page 377 of volume 37 of the Statutes at Large in the Act of August 23, 1912 (U. S. C., title 39, sec. 769). (104) Section 27 of the Act of January 12, 1895, as amended (28 Stat. 604; U. S. C., title 44, sec. 37).

(105) The eighth full paragraph on page 382 of volume 35 of the Statutes at Large in the Act of May 27, 1908 (U. S. C., title 44, sec. 37).

(106) The last paragraph under the heading "Government in the Territories" in the Act of June 20, 1874 (18 Stat. 99; U. S. C., title 48, sec. 1456).

SAVING PROVISIONS

SEC. 302. (a) The omission of any provision of law from the provisions of law repealed under section 301 shall not be construed as limiting the application of section 201 or 216 of the Budget and Accounting Act, 1921, as amended, or the powers of the President thereunder, or as evidencing an intent that such provision was not to be superseded by such sections.

(b) Whenever any law authorizes expenditures for a particular object or purpose to be made from an appropriation item referred to in such law by the specific title theretofore used for that appropriation item in the appropriation Act concerned, and thereafter such title is changed or is eliminated from such appropriation Act, expenditures for such object or purpose thereafter may be made from any corresponding appropriation item.

(c) Except where authority for performance of a function is specifically repealed in section 301, none of the provisions of such section shall be construed as affecting the jurisdiction or responsibility of any agency or officer of the Government over any function or organizational unit referred to in such section. (d) Existing laws, policies, procedures, and directives pertaining to functions covered by this Act, and not inconsistent herewith or repealed hereby, shall remain in full force and effect unless and until superseded, or except as they may be amended, under the authority of this Act or under other appropriate authority.

The CHAIRMAN. The author of the bill, Mr. Karsten, is with us. He is a member of this committee. He has given this matter great study and consideration, and at this time I am going to call upon Mr. Karsten.

STATEMENT OF HON. FRANK M. KARSTEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSOURI

Mr. KARSTEN. Mr. Chairman, I would like to present to the committee for consideration H. R. 9038, which I introduced on Wednesday of last week.

In requesting that the committee give consideration to this bill, I have in mind the Hoover Commission report on budgeting and accounting, wherein it is pointed out to the Congress that the present governmental accounting and auditing methods controlled by the Budget and Accounting Act of 1921 are cumbersome, uninformative, and outmoded. There is great need for simplification and modernization.

The provisions of this measure call for the same philosophy enunciated in the Hoover Commission report on budgeting and accounting. The bill is designed to accomplish practically all of the major objectives and recommendations made by the Hoover Commission, with the exception of establishing the post of an accountant general under the jurisdiction of the Secretary of the Treasury. This would call for a complete deviation from established congressional policy, because its implication and ultimate effect would require a transfer of certain specified jurisdiction from the legislative branch to the executive branch of the Government.

Consequently, because established legislative authority and policy would be disturbed by virtue of creating an Accountant General in the Treasury Department, this recommendation of the Hoover Commission is not included in the legislation.

As urged by the Hoover Commission, the bill provides a complete framework for bringing the budgeting, accounting, and auditing procedures of the Government up to date. It will set up an accounting system patterned after sound commercial practices and will provide better controls over all Federal funds.

Title I on budgeting and accounting contains two parts. The first, on budgeting, clarifies the Budget and Accounting Act to emphasize authority for the preparation of a performance budget with financial information in terms of functions and activities of the Government, and a segregation of operating and of capital and investment programs. Technical amendments to the provisions of the Budget and Accouning Act are made in aid of the objective to develop budgetary information in the manner best suited to present the financial program of the Government.

Increased emphasis is placed on the development by the President through the Bureau of the Budget of plans for the organization, coordination, and management of the executive branch, with a view to efficient and economical service, and improvements in the gathering, compiling, analysis, and publication of statistical information. The authority thus granted would supplement existing authority relating to these matters.

Part II of title I comprises a complete Accounting and Auditing Act of 1950. This legislation embodies the principles and objectives of the cooperative program which is being conducted under the leadership of the Comptroller General of the United States, the Secretary of the Treasury, and the Director of the Bureau of the Budget to improve the Government's accounting, financial reporting, and auditing system. The provisions of this part will also facilitate the attainment of the budgetary improvements provided for elsewhere in the bill. This part spells out clear-cut responsibilities and duties, while at the same time providing for their exercise in proper relationship and cooperation toward the common goal of making accounting, financial reporting, budgeting, and auditing of the greatest value. The careful allocation of responsibilities is designed to produce an integrated accounting system for the Government as a whole. Emphasis is placed on the development and use of agency accounting systems as the foundation for financial control and the production of necessary financial information. Provision is made for progressive improvement and simplification of the present accounting of the Government and a specific basis is laid for more comprehensive and selective performance of the independent audit by the General Accounting Office to the fullest extent practicable at the site of operations.

The legislation will provide flexibility that is urgently needed for putting into effect more economical and efficient accounting and auditing procedures in order to obtain maximum benefits from work now being carried on under the joint accounting program. It lays a solid foundation for carrying out the policies and objectives of this program.

Title II provides for certain transfers between appropriations within a 5-percent limit in departments in order to promote economy and efficiency, and requires prior approval of department heads before the submission to the Bureau of the Budget, the President, or the Congress, by departments, of requests for legislation authorizing subsequent appropriations.

It also includes provisions authorizing the President to set up reserves from appropriations for the executive branch when he determines the purposes intended by the Congress will be accomplished by lesser expenditures. Further, authority is provided for transfer of balances of appropriations incident to reorganizations in the executive branch.

Title III repeals over a hundred acts or parts of acts relating mainly to the compilation of the estimates and the furnishing of certain financial data, most of which have been superseded or rendered outmoded by other existing provisions of law, particularly the Budget and Accounting Act of 1921.

In general, the bill gives expression to the complete and unifor understanding between our three fiscal agencies. This is the first time a bill has been proposed which demonstrates a willingness of voluntary cooperation between the Bureau of the Budget, the Treasury Department, and the General Accounting Office, to improve the act counting and fiscal operations of our Government.

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I commend this legislation to the attention of every member of the committee, and wish to express the hope that early action will be taken on the measure in order that the budgeting, accounting, and auditing of the Government can be simplified, modernized, and made effective to the maximum extent possible.

It will provide the Congress and the President the information and the means of control they need for the management of our gigantic Federal fiscal structure, as well as give the taxpayers the information they are entitled to as to where their money goes.

There are officials of the General Accounting Office, the Treasury Department, and the Bureau of the Budget, present this morning who wish to be heard on the bill. I am sure they will be pleased to answer any questions which the members of the committee wish to ask. The CHAIRMAN. Thank you, Mr. Karsten.

Do you have any questions, Mr. Hoffman?

Mr. HOFFMAN. Just one.

I understood you to say that under title II funds would be transferred.

Mr. KARSTEN. That title authorizes a 5-percent transfer of funds between appropriations within the Department.

Mr. HOFFMAN. Which section of title II?

Mr. KARSTEN. I might say to the gentleman that there is some controversy about this particular section being contrary to existing procedures, and I understand some amendments may be suggested along the line to eliminate that proposed section and make the responsibility in the Congress rather than in the Department, where it properly belongs.

Mr. HOFFMAN. Where is the language which authorizes the transfer?

Mr. KARSTEN. Page 18, section 201.

Mr. HOFFMAN. Just what does that mean, say, the first nine lines? Mr. KARSTEN. It provides the authority for the transfers of funds within the Department, within that 5-percent limit.

Mr. HOFFMAN. For example, should we make an appropriation of a certain sum for the Department of Justice, can the head of that Department, with the approval of the President, under this language, transfer that to, say, the Department of Commerce?

Mr. KARSTEN. No; only transfers can be made within the Department. Not between departments.

Mr. HOFFMAN. Yes; but what I do not understand is why any department head should be given authority to transfer an appropriation made by the Congress to some other department. What is the reason for that?

Mr. KARSTEN. The bill does not contemplate transfers of funds between departments.

Mr. HOFFMAN. I know, but the Congress is supposed to appropriate the money. We appropriate a certain sum for a certain department. Under this language, if I understand you correctly, the head of that department, with the approval of the President, can take that money, at least within the limit here, 5 percent, and put it over to some other department.

Mr. KARSTEN. He may transfer within his own department only. Mr. HOFFMAN. He might use it for an entirely different purpose, might he not?

Mr. KARSTEN. Yes. But it is within his department, and for a related purpose.

Mr. HOFFMAN. Suppose you take the Interior Department and the appropriation has to do with, say, the national parks, and they transfer the money which we appropriate for parks to something else.

Mr. BONNER. It says: "In order to promote economy and efficiency." I do not know just what it means.

Mr. HOFFMAN. Somebody else spends it if they want to. That is to say, if the Department of the Interior finds that we gave them more money than they may need, they will take that money, whatever it may be, and spend it for some other purpose, but limit it.

Mr. KARSTEN. You have the same thing existing today in the State Department and the Department of Agriculture. I understand they have a 10-percent limitation rather than the 5-percent limitation mentioned in the bill.

Mr. HOFFMAN. Of course, I am familiar with that argument that we have been doing it for a long, long time. But it does not appeal

to me.

The CHAIRMAN. Mr. Bonner, do you have any questions?

Mr. BONNER. No.

The CHAIRMAN. Mr. Bolling?

Mr. BOLLING. No.

The CHAIRMAN. Mr. Lovre?

Mr. LOVRE. Yes, Mr. Chairman.

That transfer is within the Department itself; is that correct?
Mr. KARSTEN. Within the Department itself.

As I understand, some amendments may be suggested that will eliminate the transfer authority and put it in the appropriation bill rather than in this bill.

Mr. DAWSON. Mr. Riehlman?

Mr. RIEHLMAN. I want to get this straight.

Do I understand they have been transferring up to 10 percent, and this provides only 5 percent?

Mr. KARSTEN. The State Department and the Agriculture Department have been operating on a 10-percent basis. The proposed section will limit all departments to 5 percent.

Mr. HOFFMAN. It is this conflict in the general theory that the Congress should appropriate money for a specific purpose rather than for a department or individual, or the head of an agency, to use as they would see fit.

Mr. KARSTEN. You are appropriating for a specific purpose in the Department of Agriculture; also in the State Department.

Mr. HOFFMAN. Yes, in a broad way. But, for instance say, in the Department of Agriculture, we may have an appropriation for footand-mouth disease, as we have had several times; and if they did not use that money they could switch it over to send out garden seeds or any purpose that came within their jurisdiction.

Mr. KARSTEN. Of course I do not think we have sent out any garden seeds.

Mr. HOFFMAN. Yes, that is true. But, you understand, they might do it for any purpose.

Mr. BONNER. Mr. Chairman?

The CHAIRMAN. Yes, Mr. Bonner?

Mr. BONNER. Let me ask you: What is the idea, what is the reason?