Senator SCHOEPPEL. I think you made the statement that you could save $10,000,000 or $15,000,000 each year in the Comptroller General's office. Mr. MCCORMICK. Yes, sir. Senator SCHOEPPEL. Are you conversant with what Mr. Warren testified to here the other day and the facts with reference to his department, namely, that at one time-I think I am quoting it correctly, if not I will stand corrected-somewhere between fourteen and sixteen thousand employees were in his department, during the war. Mr. MCCORMICK. Yes, sir. That was of course at a time when we had a budget, not a budget exactly because the money came partly from national-debt transactions, when the Government's expenditures were well over twice what they are today. Senator SCHOEPPEL. Then he cut that to between eight and nine thousand employees. Mr. MCCORMICK. Yes, sir. Senator SCHOEPPEL. Do you not think that is a pretty sizable cut on the part of the manager of that department, who is amenable and answerable to Congress? Mr. McCORMICK. I think it is more or less proportionate to the reduction in the amount of the Federal expenditures, so my thought would be that the ratio of personnel in his office to the total budget is approximately the same as it was during the war. Senator SCHOEPPEL. I wonder if you are familiar with his further statement to the effect that he could still cut that pay roll and the personnel in his department and still do a good or better job consistent with what the Congress would require or with good business practices? · Mr. MCCORMICK. Yes, sir. We agree with him on that. Senator SCHOEPPEL. In doing that, don't you feel that Mr. Lindsay Warren certainly has been watchful of the accounting practices and watchful of the Government's business in the expenditure of all these funds? Mr. MCCORMICK. Yes, sir; he has been very watchful. Senator SCHOEPPEL. Would you then be in favor of clipping his authority further in that regard? Mr. MCCORMICK. We are not trying to clip his authority. What we are trying to do is to change the orientation of his office from an office, as he gave you a recountal the other day, which individually audits tens of millions of vouchers and reconciles hundreds of millions of checks, and yet his office only now is working on setting up the detailed accounting system that it was required to set up under the Act of 1921. He did put out general regulation No. 100, but due to the defects in the present law it was impossible for him to enforce it. We feel that the orientation of his office should be toward working on the problem of an accounting system rather than checking these tens of millions of pieces of paper. Senator SCHOEPPEL. In working toward that end, do you not think it a pretty good idea to have this cooperative effect and analysis from the departments that are concerned to see what they can bring in by way of some cooperative study toward this over-all question first? Mr. MCCORMICK. Sir, we think that the problem has been studied on and off for 29 years. At the end of the first 27 years this cooperative effort was set up. We think it is time for Congress to step in and place the responsibility very clearly in the law for an Accountant General in the executive branch to come up with adequate accounting systems. Senator SCHOEPPEL. I think you stated a while ago, if I understood you correctly, this is a sort of experimental bill. Your idea would be to sit down and try to work it out after we have some kind of measure on the statute books. If that could be done first by this cooperative effort that is being put forth here, do you not think that might prove to expedite this thing? Mr. McCORMICK. No, sir; we do not believe that the cooperative effort will succeed because three people are responsible for it. Senator SCHOEPPEL. You would not object to at least taking a look at it, though, would you, Mr. McCormick? Mr. MCCORMICK. They have been taking a look at it for 2 years, Senator. Senator SCHOEPPEL. My understanding is that they have not looked at it in view of the present accomplishments and in view of the wholesome attitude that has been developing under these cooperative efforts. I will confess that it probably has come about through the type of legislation that is now before us. Do you mean to indicate to us that you think that we ought to discard the present cooperative effort completely? Mr. MCCORMICK. No, sir. You cannot discard any cooperative effort, but we think there should be one person in the executive branch who is charged with seeing that the accounts are set up properly, and the authority should be clearly stated just as to what everybody's responsibility is. If a good accounting system is not set up, Congress ought to be able to call on him as the person responsible. Our feeling now is that, say this effort is a failure, first, Congress has no way to judge whether it is a failure. Second, if it is a failure, Congress has no one to call to account. Senator SCHOEPPEL. Congress generally through its arm in this type of business looks to the Office of the Comptroller General, does it not? Mr. MCCORMICK. Yes, sir. Senator SCHOEPPEL. You feel that the Comptroller General, I take it, should have greater authority either by directional legislation or by legislation authorizing that department to impress upon the other departments the type of books that it should prepare and maintain? Mr. MCCORMICK. Yes, sir; we think that his authority should be changed very greatly. He should be taken out of the paper work business and put in the business of seeing that systems are adequate. Senator SCHOEPPEL. He would have to have something more than just a critical analysis, then? Mr. MCCORMICK. Í think, sir, undoubtedly this measure should have something in it which, first, places the responsibility in the executive branch for seeing that the accounts are good. Second, it should give to the Comptroller General a veto in case anything flagrantly wrong is going on. Third, it should have some powers of enforcement placed in the Comptroller General in case the Accountant General is doing his job badly. I think the bill perhaps is deficient the in latter respect. The CHAIRMAN. Do I understand, Mr. McCormick, that the Citizens Committee or you have in mind to submit some amendments to the pending bill? Mr. MCCORMICK. Yes, sir. We have prepared a few perfecting amendments. The CHAIRMAN. Have they been submitted to the staff? Mr. MCCORMICK. No, sir; they have not yet. The CHAIRMAN. Do you care to file them with the committee or are you still working on them? Mr. MCCORMICK. We are still working on one of them. They are of two main types. One is clarifying just what the Accountant General would be. The second is certain changes in the budgetary provisions which we found were not strictly in accord with the Hoover Commission report. The CHAIRMAN. As I understand, the committee simply endorses completely, without any change whatsoever, all the Hoover Commission recommendations. Do you know of any instance where they disagree or suggest an improvement over those recommendations? Mr. MCCORMICK. Yes, sir. The reason people joined the committee was because they were generally in favor of the reports. However, we have found in every instance where legislation has been drafted that it has been necessary to put perfecting amendments in. For example, a good bit of title IV of the National Security Act amendments were not in the report. They are perfecting amendments which are generally along the lines of the report. That has been the case in all other legislative matters. The CHAIRMAN. Will you submit those amendments when you have them drafted to the staff here for our consideration? Mr. MCCORMICK. Yes, sir. (The letter requested follows:) CITIZENS COMMITTEE FOR THE HOOVER REPORT CITIZENS COMMITTEE FOR REORGANIZATION OF THE Hon. JOHN L. MCCLELLAN, Washington, D. C. DEAR SENATOR MCCLELLAN: Pursuant to your request, we are forwarding herewith suggested amendments to S. 2054. It is my view that the Comptroller General should have complete authority to audit transactions of the Federal Government. At the present time this authority is not clearly stated. It is very questionable whether his authority extends to certain types of accounts, such as cost accounts and fiscal accounts. I feel, however, that this new authority should not be instituted until fundamental changes have been made in the Budget and Accounting Act of 1921. The latter act imposes certain unnecessary requirements on the Comptroller which require him to keep duplicate-and in some cases triplicate-sets of accounts; and also several places in it require certain activities to be conducted in Washington. Major extravagances in the field of accounting result. We further feel that, when the Comptroller General's authority has been clarified by a fundamental revision of the 1921 act, he should be given further enforcement authorities to see to it that unsound accounting practices are discontinued. The purpose of this would be to insure adequate accounting throughout the executive branch. Faithfully yours, ROBERT L. L. MCCORMICK. SUGGESTED AMENDMENTS ON S. 2054 (Committee print of February 23, 1950) Page 2, lines 8-10: Strike the words "The President * * * the Budget" and insert the words: "The President shall, on the first day of each regular session of Congress, transmit to Congress the Budget. So far". Page 3, lines 3-11: Strike the words "The President budget." * * * such alternative Page 3, line 12: Strike "(c)" and insert "(b)". Make similar corrections in "(d)" and "(e)”. Senator SMITH. I should like to ask, Mr. Chairman, if the clerk would prepare for the record something on the authority that the General Services Administration has concerning inventory, and how far that law goes on keeping inventories.' The CHAIRMAN. I do not recall just what those provisions are, but I do know that we undertook to deal with it in that legislation. Mr. Reynolds, will you have the staff prepare a memorandum on that? (The memorandum follows:) Section 202 (b) of the Federal Property and Administrative Services Act of 1949 provides as follows: "Each executive agency shall (1) maintain adequate inventory controls and accountability systems for the property under its control * * It further provides in section 205 (b) that— "The Comptroller General after considering the needs and requirements of the executive agencies shall prescribe principles and standards of accounting for property, cooperate with the agencies in the development of property accounting systems, and approve such systems when deemed to be adequate and in conformity with prescribed principles and standards. From time to time the General Accounting Office shall examine such property accounting systems as are established by the executive agencies to determine the extent of compliance with prescribed principles and standards and approved systems, and the Comptroller General shall report to the Congress any failure to comply with such principles and standards or to adequately account for peoprty." From the foregoing it can be seen that each executive agency must maintain adequate inventory records and property accounting systems to account for all property under each agency's control. The type of accounts, and method of maintaining such accounts and inventory controls, are required to be developed from the standpoint of management or need of the agency, in cooperation with the Administrator of General Services, within such principles and standards established by the General Accounting Office. In effect, the law requires the General Accounting Office to prescribe the principles and standards for property accounting and inventory control, and further requires it to cooperate with the Administrator of General Services and the executive agencies in developing and installing such systems. This is a cooperative approach to the problem of designing, installing, and maintaining a system of property accounts that will fulfill the needs of management and at the same time conform with basic principles, standards, and guides promulgated by the General Accounting Office. Senator SMITH. I should like to make another observation, if I may, Mr. Chairman. I rather gather, Mr. McCormick, you feel the united effort we are hearing about is more of a gesture than actual; is that true? Mr. MCCORMICK. No; I would not say that, Senator. My feeling is that these people are really pitching in and trying to do it, but we feel that the structural defects in the law will eventually prevent them from achieving success. Senator SMITH. Would you not think that perhaps something added to the law that would make mandatory a united effort, perhaps setting up a coordinator who would have the complete authority and responsibility of checking the activities of the three agencies, would 1 See also statement of Mr. Frank H. Weitzel, pp. 197-198. serve a better purpose than setting up an additional agency that might come from the compromise, and rather giving us the efficiency and economy we are looking for, more personnel and more expense? Mr. MCCORMICK. No; Senator. We feel that there would not. be any more personnel or any more expense involved in tagging one fellow in the executive branch with that side of the job. Many of the same people would still be working on it. He would be definitely placed in a position where you could haul him on the carpet if the job were not done well. Senator SMITH. I probably do not understand or follow you, but it seems to me it would bring about more duplication unless the bill were changed considerably than less. Thank you, Mr. Chairman. The CHAIRMAN. Senator Hoey. Senator HOEY. I am always interested in Senator Smith's observations, and when she mentioned coordination there occurred to me a story I heard about defining the real function of a coordinator. It was to take unorganized confusion and transpose it into organized chaos The CHAIRMAN. If I had any responsibility in connection with Government accounts, that would be the result, I am sure. Thank you very much, Mr. McCormick. Mr. MCCORMICK. Thank you, sir. The CHAIRMAN. Tell Mr. Johnson we are very sorry he could not appear personally and at any time he wishes to appear before the hearing closes we would be very glad to hear him. Mr. McCORMICK. Thank you. The CHAIRMAN. Mr. Frese and Mr. Weitzel, do you propose to testify together? I assume you gentlemen have your testimony organized now and know what you wish to say. So I will let you proceed according to your own pleasure. The committee will be glad to hear you. STATEMENT OF FRANK H. WEITZEL, ASSISTANT TO THE COMPTROLLER GENERAL, GENERAL ACCOUNTING OFFICE Mr. WEITZEL. We appreciate the opportunity to be heard further for the General Accounting Office on the bill S. 2054. I have some notes from which I should like to take the liberty, if the Chair will so permit, to depart from time to time and answer one or two points which have come up during the hearing this morning. The CHAIRMAN. Do you have a prepared statement to file here? Mr. WEITZEL. I have a statement which I should like to file, Mr. Chairman. I should like to say at the outset, Mr. Chairman, that the General Accounting Office does not have the tremendous facilities for education and information that the citizens committee on the Hoover Commission recommendations has. We do not have the funds and we do not have the outlets and the means of influencing public opinion in the way that the Hoover Commission Citizens Committee has gone about it. I do feel, however, there is some obligation upon an independent committee of that sort in attempting to mold public opinion to inform itself of the facts. As Mr. Warren made plain and as I want to make plain, we have no quarrel with the Hoover Commission. |