this committee wish the General Accounting Office to give up completely, as has been inferred by some, the auditing and checking of vouchers? Under our comprehensive audit there will be a selective check according to the controls that an agency has and the way they operate. I would not put this paper I have in my hand in the record. I am not going to call any names. Here is one of the better agencies of the Government. They all make mistakes. The General Accounting Office makes mistakes. This paper covers a payment of several million dollars to a concern. The General Accounting Office in its audit a few months later found that in computing that payment there was an error against the Government of $228,000. Except for the audit performed by the General Accounting Office, that never would have been found. The company was billed for it, and the Government received a refund.

I hold here in my hand House Document 1441, Eighty-first Congress, first session. This is a study of the General Accounting Office by the House Committee on Expenditures. I hope sometime the members of this committee will have an opportunity to read it. I didn't ask them to get out this report. They decided to make a study to see what we were doing, and they made their report. It goes into some detail concerning the joint accounting program as well as other

activities of the Office.

Last year two separate subcommittees of the House Appropriations Committee strongly endorsed the joint program in their reports, and the Senate Appropriations Committee recognized its great importance.

Now let's see who is out of step. The trouble is the proponents of this bill are talking back in the days of 1932 and 1937. I should like to give some examples of what some other people think about an approach to the accounting problem. Some of the people who have taken the trouble to find out what we are doing. Here is a letter that is dated September 2, 1949:

DEAR MR. WARREN: The passage of the independent offices appropriation bill, 1950, containing the appropriation to the Atomic Energy Commission and the approval of our cost-type budget in effect completes our activities for the fiscal year 1949. It is thus appropriate that I express to you at this time the thanks of my staff and myself for the great cooperation and assistance that we have enjoyed from the staff of the General Accounting Office. We have taken many problems to your office and in each case have received much help. The industrial nature of the Commission's activities has made it necessary for us to follow industrial financing, accounting, and auditing methods. Your understanding of our problems and the sincere efforts of your office to help us solve them have been major factors in making our progress possible.

The work of the Commission is such that my staff and I must work with several of the leading public accounting firms and with many industrial accountants. Also from time to time we work with accounting representatives of other Government agencies. It is my opinion that the supervisory staff of the General Accounting Office presents the most progressive thinking and the best balanced judgment of accounting and accounting problems that we have found. Because of this we have been able to accomplish advances that would not have been possible otherwise. I hope they will meet your standards for the improvement of accounting in the Government.

That is signed by Mr. Paul M. Green, one of the most eminent accountants in the United States.

Mr. Green has made a reputation not only in the teaching of accounting, at the University of Illinois, but for his outstanding achievements in Government; at the Office of Price Administration,

where his work as Deputy Administrator in Charge of Industrial Accounting was commended by the Journal of Accounting; as Controller of the Atomic Energy Commission; and now as Controller of the Economic Cooperation Administration.

Here is another, Mr. Chairman, from Mr. Paul G. Hoffman, Administrator of the Economic Cooperation Administration, praising the efforts of the joint accounting program:

Hon. LINDSAY C. WARREN,

ECONOMIC COOPERATION ADMINISTRATION,
Washington, D. C., October 13, 1949.

Comptroller General of the United States,

Washington, D. C.

DEAR MR. WARREN: From the inception of the Economic Cooperation Administration, we have had the benefit of constructive help and support of representatives of your office in establishing our accounting policies and procedures. We have endeavored, wherever possible, to fit our practices in with those being developed as part of the joint program for improving Government accounting now being carried on by your Office and by the interdepartmental accounting committee.

It is my hope that the experience under methods we have developed in ECA will contribute to the efforts you are putting forth to simplify and improve accounting methods. Of particular importance, in my opinion, is the emphasis which we have placed on the use of the accrual basis of accounting, universally followed in business, in measuring performance in connection with administrative expenses. To this has been added the fixing of decentralized organizational responsibility for the incurrence of expenditures at the point where they originate. The net result is, I believe, a simple and effective plan of control in which accounting plays a predominant part.

Our accounting system has reached a stage of development where it may be appropriate for you to review the basic principles of our system under what I understand your responsibilities to be under the Budget and Accounting Act of 1921. The attached memorandum summarizes the basic accounting principles we have applied to both our program and administrative expenditures.

Sincerely,

PAUL G. HOFFMAN, Administrator.

The second day that I was in office a gentleman, then comptroller of the Tennesse Valley Authority, came to my office and brought me a book written about the General Accounting Office. It criticized everything about it. I think-and I have found out something about the Office since that time-some of the things were very true. That person is one of the most outstanding accountants in America. Every accountant who goes through college today studies his textbooks. He is known far and wide among the accounting profession, and he is known far and wide in the Government, where his latest assignment was as the comptroller of the Economic Cooperation Administration. His letter follows:

FEBRUARY 24, 1950.

DEAR MR. WARREN: I have noted that S. 2054, now pending before the Congress, provides for the establishment under the Secretary of the Treasury of an Accountant General who would take over system and certain other functions now being performed by the General Accounting Office in accordance with the provisions of section 309 of the Budget and Accounting Act of 1921. The proposed action appears to be an outgrowth of, and substantially in agreement with, the recommendations of the Hoover Commission.

In view of the major administrative developments in your Office and in a number of the spending agencies, to which I have been witness during the past 2 years, the enactment of this bill would be, in my opinion, a serious mistake. It would interrupt the orderly process, now going on, of conforming the Government's accounting machinery to principles and practices that over the years have come to be recognized as essential so the best governmental accounting and reporting. It would inject into that process a new organization with all of the

disabilities attendant on a new organization: delays in appointments, staffing, and housing; a reconsulting of the authorities; a carefully worked-out plan of coordination with the Government's other fiscal agencies-a process that would conceivably set the program back a year or more; a substitution of a new program for the present program with possibly equal but certainly no greater chances of

success.

Since the benefits sought under S. 2054 are already being achieved through the exercise of powers now in the possession of the Comptroller General, I feel certain that a new organization would bring about not only an unnecessary confusion in existing authority but also the possible crippling of the wholly laudable program now in progress; a program with which I am intimately familiar and in enthusiastic agreement.

His name, Mr. Chairman, this eminent accountant, is Mr. Eric L. Kohler. May I say I did not ask Mr. Kohler to write that letter. I did not ask Mr. Paul Green to write his letter, and I did not ask Mr. Paul Hoffman to write his.

Here is one from the chairman of the President's Committee on Management Employment. Who is that chairman? That chairman is Mr. Thomas A. Morgan, great head of the Sperry Corp., one of the leading businessmen in America.

His committee asked us to appear before them and discuss this program which we were happy to do. His letter is as follows:

I want to thank you for your courtesy in meeting with the President's Advisory Committee on Management Improvement and to congratulate you not only on your own statement but on the statement of all of those connected with the joint accounting program. It was not only a good presentation but also showed that substantial progress was being made in this vital area of Government management.

The committee had recognized before its meeting with you that improvements in the financial management of the Government constituted a necessary and practical base for lasting improvements in other areas of governmental administration. The emphasis which is being placed on the development of costs and the relation of costs to performance is essential if management is to know where its problems exist and to establish priorities in its management improvement work. Our committee does not follow the practice of taking votes or passing resolutions as we are constituted as an advisory group to the President. Speaking for myself, I want to say that I am encouraged to know that an aggressive program of improvement in the accounting activities of Government is under way. Because of the responsibilities of this committee, I am particularly encouraged to see the stress placed on making accounting contribute to the needs of management. I think also that improved accounting machinery which would provide more reliable information to the President, the Congress, and the people on the Government's activities will be of great value.

Again let me thank you for your appearance before the committee and express the hope at this time that we may at a later date meet with you and discuss other phases of the work of this accounting project.

Sincerely yours,

THOMAS A. MORGAN, Chairman.

I wish to emphasize, Mr. Chairman, that if any legislation is necessary, and we are seriously considering that, it should be as a result of the experience gained through the cooperative effort but I will tell you now I will not come here proposing any legislation that will take from Congress one whit or one iota of the control that it now has. The General Accounting Office in the last 9 years since I have been in office has paid back to the Treasury in the neighborhood of $650,000,000 that had been either illegally or erroneously paid out. I can assure this committee, and I say it knowing whereof I speak, that the General Accounting Office stands today as the last great bulwark for the protection of the American taxpayer against the illegal and erroneous expenditure of the public substance.

The CHAIRMAN. Mr. Warren, would you mind stating the amount of recovery? I believe you said $650,000,000 in a period of 9 years; is that correct?

Mr. WARREN. Yes, sir, approximately.

The CHAIRMAN. How does that compare with the costs of operating this department for the same period?

Mr. WARREN. It is nearly three times. The collections have been more than two and one-half times what it has cost to operate our office. Mr. Chairman, I hope that this committee will unanimously reject this ill-advised and ill-conceived legislation. What the General Accounting Office needs and what the joint accounting program needs is a ringing endorsement from this committee of the work that we are doing. Every now and then, as you see, this assault from the outside springs up. We always stand ready to make any accounting to the Congress. I invite, as I have said time and time again for the past 9 years, the most complete scrutiny of the General Accounting Office by the Congress, but I resent these attacks coming as they do from the outside, particularly when for the first time the three fiscal agencies of the Government are united. We have cast aside all the old suspicions, back-bitings, and, in some cases, hatreds that existed between the Treasury, the Budget Bureau, and the General Accounting Office. Today we are united in a fixed purpose and we have embarked upon a program that has already brought results.

One of the cases being testified to here yesterday quoted the Interior Department on what we had already accomplished for the Bureau of Reclamation. Yet we heard today that the Bureau of Reclamation has no system. We have gone into that Bureau under this program and are giving them one of the finest accounting systems obtainable. The Commissioner of Reclamation went before the House Appropriations Committee a few weeks ago and praised it. I didn't ask him to do it. I didn't know anything about it until I read about it.

Mr. Chairman and ladies and gentlemen, I thank you for your patience. I know that in my two appearances without any prepared statement I have rambled, but I have tried to express to you the depth of my feeling about this matter because, as I said the other day, I believe intensely in the legislative process.

The CHAIRMAN. Thank you very much, Mr. Warren.

My recollection is that when you appeared before the committee a few days ago you agreed to prepare a brief statement or summary of the progress made to date on this.

Mr. WARREN. Mr. Frese did, yes. That information appears at the conclusion of his testimony of March 6.

The CHAIRMAN. Senator Hoey? Senator Smith?

Senator SMITH. I should like to ask one question, Mr. Chairman. Mr. Warren, we all agree I am sure it is very important that Congress keep a constant and dependable check on expenditures in the executive departments, and that we do it through your office. As I see it, the question here is, Do you have authority to go into the executive departments and set up an accounting system? I understood Mr. Hoover to say that he thought you did not have, while the section that the chairman referred to would seem to me gives him complete authority. Is that true, Mr. Chairman?

Mr. WARREN. The law gives us authority, Senator, to prescribe systems. I stated in my first appearance that in the past some of the

agencies would accept them, and again there were occasions when agencies would not. But they are all accepting the systems under this cooperative effort.

Senator SMITH. Do you feel that any legislation or any further legal authority making the accounting system mandatory would help it at this time?

Mr. WARREN. Senator, we had it mandatory, applying to the independent offices. At first I was strongly of the opinion that there should be mandatory legislation, but I am so impressed and so enthusiastic over the cooperation we are now getting that I should like to think further on that. I will say when we go into an agency now, if we find the old attitude existing, I will report it to Congress in 2 minutes and I will predict that that agency will come in line.

We are getting fine cooperation from the agencies. We want to help them, and they know that.

Senator SMITH. As I understand it, Mr. Chairman, the Comptroller General has not been able to comply wholly with section 206 of the Reorganization Act. Would it help your organization if you could make those reports regularly, and help us in knowing what you are doing?

Mr. WARREN. As soon as the Legislative Reorganization Act became law I appeared before the House Appropriations Committee and suggested an initial appropriation of a million dollars to start that work. Congress decided that for the time being they would try to do it through the staffs of the Appropriations Committees, but it was stated on the floor of the House by Mr. Wigglesworth of Massachusetts that while they were going to try that for a while, if it should ever be done by any agency, it should be done only by the General Accounting Office.

Senator SMITH. Thank you, Mr. Chairman.

The CHAIRMAN. Senator Schoeppel?

Senator SCHOEPPEL. Mr. Warren, I share with you and some of the other members of the committee the feeling that probably we should not lessen the degree of responsibility that you owe to the legislative branch of the Government. I rather gathered from President Hoover's testimony that this would not eliminate the proper safeguards that the Congress has through your agency. I take it very definitely and positively you do not agree with that view.

Mr. WARREN. Oh, no; Senator. I say it strikes at the very vitals of the General Accounting Office, at its very integrity and independence.

Mr. Hoover very frankly indicated that he has always felt it was a mistake for Congress to give any accounting functions to the General Accounting Office. But the giants on both sides of the aisle and at both ends of the Capitol-such men as William B. Bankhead, Garner, Byrnes, Wadsworth, Good, and McCormick-who steered the Budget and Accounting Act through Congress knew what they were doing and why. They couldn't all have been wrong.

Senator SCHOEPPEL. I for one share with you some apprehension about this measure, and I am grateful to you, sir, for being bluntly frank about your position and the responsibilities that you are trying to discharge.

The CHAIRMAN. Mr. Warren, speaking of the mandatory aspects of the legislation that is needed, as I gather from your testimony,

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