bility and authority within a framework of broad accounting policy. This is a good statement, as far as it goes, of the objectives of the present joint accounting program.

Mr. Hoover quoted from his Commission's report on the Post Office. The General Accounting Office last year recommended legislation, subsequently introduced as S. 2509 and H. R. 6395, to modernize and improve the financial operation and control of the Post Office Department and to give the Postmaster General the flexibility he needs to do an effective job without abdicating essential control by the Congress. Under that legislation responsibility for all administrative accounting functions now being performed for the Department by the General Accounting Office, as required by existing law, would be transferred to the Department. Without waiting for action on that legislation or other proposed legislation intended to implement the Hoover Commission recommendations on the Post Office, the General Accounting Office is working with the Postmaster General under the joint accounting program on important phases of mutual accounting and auditing problems.

Mr. Hoover quoted from his Task Force on the Veterans' Administration on the need for simplification of accounting. Your committee has heard the steps already taken under the joint accounting program to adopt on an experimental basis, with a view to later Government-wide application if deemed appropriate, many simplified procedures, not only for disbursements but for collections as well. Mr. Hoover quotes his Task Force on Government Business Enterprises on deficiencies in the accounts of the Maritime Commission and the Bureau of Reclamation. Intensive work has been done in both of these agencies under the joint accounting program.

In the case of the Maritime Commission, I am confident that no more could have been done by anyone outside the Commission itself than has been done through the present cooperative effort. Definite accomplishments were reported to the Congress by the Comptroller General in his audit report of February 6, 1950, on the Maritime Commission for the fiscal years 1948 and 1949. As stated in that report, full benefits cannot reasonably be expected from the revisions adopted and those now in progress before fiscal year 1951, and much of the success of the new program will depend on the establishment and effective utilization by the Commission of a procedures and planning staff and an internal auditing staff. The Commission concurred in its need for such a staff in its presentation last month to the House Appropriations Committee.

In the case of the Bureau of Reclamation, the committee heard read into the record the statement of the Commissioner of Reclamation concerning the completion of installation of a new accounting system under the joint accounting program.

I have gone into some detail in commenting upon Mr. Hoover's illustrations in order to show the committee that the General Accounting Office, the Treasury Department, and the Bureau of the Budget are not just talking when they say they recognize the need for reforms in Government accounting. They have vigorously and unitedly attacked the problem and they have already, in cooperation with the operating agencies themselves, brought about needed changes which will give the agencies, the executive branch, the Congress, and the taxpayers better information as to how the public funds are being expended and as to the financial position of the agencies. A solid foundation is being laid for solution of the problem on a Government-wide basis.

There is no difference between the objectives of the joint program and those of the Hoover Commission. Those who are administering the joint program simply happen to believe that accounting improvements can best be brought about by a combination of the talents and experience of those most concerned with the problem, including those who must operate the agencies' systems, rather than by scrapping the cooperative effort and starting over again with a new philosophy, a new organization, and a new period of doubt and dissension. In the long run, the job would have to be accomplished the way it is being done now, by marshaling the forces of the General Accounting Office, Treasury Department, Bureau of the Budget, and all other Government agencies. The important thing, we in the General Accounting Office believe, is that it is being accomplished now without sacrificing any essential control by the Congress over public expenditures.

(The following letters were received by the chairman from various individuals or organizations, expressing their viewpoints on S. 2054:) CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, DEPARTMENT OF GOVERNMENTAL AFFAIRS, Washington 6, D. C., March 6, 1950.

Hon. JOHN L. MCCLELLAN,
Chairman, Senate Expenditures Committee,

Senate Office Building, Washington, D. C.

DEAR SENATOR MCCLELLAN: The Chamber of Commerce of the United States believes that improvement in budgeting and accounting methods is fundamental in the movement toward greater efficiency and economy in government. Adoption of a performance budget, as recommended by the Hoover Commission, should be an important step toward simplification and clarification. of present law to fix responsibility for accounting practices and to assure adoption of a uniform system throughout the Government also is needed.

Revision

The chamber supported the provisions in the arms unification act which provided for a performance budget in the Department of Defense. Already, the new system has had beneficial effects with respect to both efficiency and economy. The outlook appears bright for further accomplishments in that large segment of governmental activity.

The chamber also has viewed with approval the progress toward a performance budget which was made by the Bureau of the Budget in the preparation of the budget for the fiscal year 1951. The changes thus made should be helpful in centering attention upon the general character and relative importance of particular activities. It should be less difficult both for members of Congress and for the public to grasp the details of the complicated structure of government.

The chamber favors the general principle of the proposed legislation to give full power to the President to establish the performance budget throughout the various departments and agencies and to repeal numerous statutes which now stand in the way of complete adoption of the new system.

Without undertaking to pass upon the details of the legislation, the chamber believes that the parts of S. 2054 relating to the budget, with such amendments as are deemed to be desirable, should be enacted by the Congress at the present session. Accounting provisions, after being perfected, also should be approved. The Hoover Commission has focused attention on unsatisfactory conditions which long have prevailed with respect to accounting. It is desirable that Congress should give careful consideration to this situation with a view to enactment of legislation in addition to or amendment of the present budget act, which will fix responsibility and lead to adoption of a uniform accounting. system. Sufficient expert opinion is available for the guidance of the Congress in reaching a wise solution of a difficult problem.

Cordially yours,

Hon. JOHN L. MCCLELLAN,

Chairman, Committee on Expenditures in the Executive Departments,

Senate Office Building, Washington, D. C.

DEAR SENATOR MCCLELLAN: Thank you for sending us the copies of S. 2054 relating to Federal budgeting and accounting. Due to the press of work here we have been unable to accept your kind invitation to appear at the hearing on the bill, but would like to make the following comments.

The Pennsylvania Economy League confines its research and survey activities to the State and local levels of government. We have, however, studied and worked for improvement of budgetary and accounting procedures in our State executive department and in many of our city and county governments during the 18 years of our existence.

We believe that sound, workable budgeting procedures are beneficial to citizens and public officials alike. We are also cognizant of the careful study made by the Hoover Commission task force assigned to this subject.

Because of our confidence in the Hoover Commission recommendations and our interest in good budgetary and accounting systems for government, we would give our general endorsement to the principles underlying S.2054.

Thank you again for your courtesy in inviting us to appear at the hearings. Sincerely yours,

WELLES A. GRAY, Director, State Division.

URBANA, ILL., March 17, 1950.

Senator JOHN L. MCCLELLAND,

United States Senate, Washington, D. C.

DEAR SENATOR MCCLELLAND: I urge the favorable consideration of the Senate Committee on Expenditures of S. 2054, a bill to reorganize the accounting and auditing functions of the Government.

I enclose a copy of a review on this subject which I made in 1940 on behalf of the Committee on Governmental Accounting of the American Institute of Accountants.

A thorough reorganization of this phase of the Government's activities is long overdue. The proposed reorganization would not only aid the administrative divisions of Government in carrying out their responsibilities and keeping vital records, but would strengthen the Office of the Comptroller General, by making it possible for it to devote its efforts and time to an adequate program of independent audit. Responsibility for accounting is now in a divided state, and responsibilities of a diverse character placed on the General Accounting Office make it impossible for that Office to do an adequate and expeditious job of independent auditing and analysis. S. 2054 would pave the way for resolving these difficulties and weaknesses.

Respectfully yours,

LLOYD MOREY, Certified Public Accountant.

(The copy of the review referred to, entitled "Federal Accounting and Reporting," is on file with the committee.)

(The text of the Budget and Accounting Act, 1921, is inserted for convenient reference:)

[PUBLIC NO. 13-67TH CONGRESS]

[S. 1084]

AN ACT To provide a national budget system and an independent audit of Government accounts, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assumbled,

TITLE I.-DEFINITIONS

SECTION 1. This Act may be cited as the "Budget and Accounting Act, 1921.' SEC. 2. When used in this Act

The terms "department and establishmen" and "department or establishment" mean any executive department, independent commission, board, bureau, office, agency, or other establishment of the Government, including the municipal government of the District of Columbia, but do not include the Legislative Branch of the Government or the Supreme Court of the United States;

The term "the Budget" means the Budget required by section 201 to be transmitted to Congress;

The term "Bureau" means the Bureau of the Budget;

The term "Director" means the Director of the Bureau of the Budget; and The term "Assistant Director" means the Assistant Director of the Bureau of the Budget.

TITLE II.-THE BUDGET

SEC. 201. The President shall transmit to Congress on the first day of each regular session, the Budget, which shall set forth in summary and in detail: (a) Estimates of the expenditures and appropriations necessary in his judgment for the support of the Government for the ensuing fiscal year; except that the estimates for such year for the Legislative Branch of the Government and the Supreme Court of the United States shall be transmitted to the President on or

before October 15th of each year, and shall be included by him in the Budget without revision;

(b) His estimates of the receipts of the Government during the ensuing fiscal year, under (1) laws existing at the time the Budget is transmitted and also (2) under the revenue proposals, if any, contained in the Budget;

(c) The expenditures and receipts of the Government during the last completed fiscal year;

(d) Estimates of the expenditures and receipts of the Government during the fiscal year in progress;

(e) The amount of annual, permanent, or other appropriations, including balances of appropriations for prior fiscal years, available for expenditure during the fiscal year in progress, as of November 1 of such year;

(f) Balanced statements of (1) the condition of the Treasury at the end of the last completed fiscal year, (2) the estimated condition of the Treasury at the end of the fiscal year in progress, and (3) the estimated condition of the Treasury at the end of the ensuing fiscal year if the financial proposals contained in the Budget are adopted;

(g) All essential facts regarding the bonded and other indebtedness of the Government; and

(h) Such other financial statements and data as in his opinion are necessary or desirable in order to make known in all practicable detail the financial condition of the Government.

SEC. 202. (a) If the estimated receipts for the ensuing fiscal year contained in the Budget, on the basis of laws existing at the time the Budget is transmitted, plus the estimated amounts in the Treasury at the close of the fiscal year in progress, available for expenditure in the ensuing fiscal year, are less than the estimated expenditures for the ensuing fiscal year contained in the Budget, the President in the Budget shall make recommendations to Congress for new taxes, loans, or other appropriate action to meet the estimated deficiency.

(b) If the aggregate of such estimated receipts and such estimated amounts in the Treasury is greater than such estimated expenditures for the ensuing fiscal year, he shall make such recommendations as in his opinion the public interests require.

SEC. 203. (a) The President from time to time may transmit to Congress supplemental or deficiency estimates for such appropriations or expenditures as in his judgment (1) are necessary on account of laws enacted after the transmission of the Budget, or (2) are otherwise in the public interest. He shall accompany such estimates with a statement of the reasons therefor, including the reasons for their omission from the Budget.

(b) Whenever such supplemental or deficiency estimates reach an aggregate which, if they had been contained in the Budget, would have required the President to make a recommendation under subdivision (a) of section 202, he shall thereupon make such recommendation.

SEC. 204. (a) Except as otherwise provided in this Act, the contents, order, and arrangement of the estimates of appropriations and the statements of expenditures and estimated expenditures contained in the Budget or transmitted under section 203, and the notes and other data submitted therewith, shall confrom to the requirements of existing law.

(b) Estimates for lump-sum appropriations contained in the Budget or transmitted under section 203 shall be accompanied by statements showing, in such detail and form as may be necessary to inform Congress, the manner of expenditure of such appropriations and of the corresponding appropriations for the fiscal year in progress and the last completed fiscal year. Such statements shall be in

lieu of statements of like character now required by law.

SEC. 205. The President, in addition to the Budget, shall transmit to Congress on the first Monday in December, 1921, for the service of the fiscal year ending June 30, 1923, only, an alternative budget, which shall be prepared in such form and amounts and according to such system of classification and itemization as is, in his opinion, most appropriate, with such explanatory notes and tables as may be necessary to show where the various items embraced in the Budget are contained in such alternative budget.

SEC. 206. No estimate or request for an appropriation and no request for an increase in an item of any such estimate or request, and no recommendation as to how the revenue needs of the Government should be met, shall be submitted to Congress or any committee thereof by any officer or employee of any department or establishment, unless at the request of either House of Congress.

SEC. 207. There is hereby created in the Treasury Department a Bureau to be known as the Bureau of the Budget. There shall be in the Bureau a Director and an Assistant Director, who shall be appointed by the President and receive salaries of $10,000 and $7,500 a year, respectively. The Assistant Director shall perform such duties as the Director may designate, and during the absence or incapacity of the Director or during a vacancy in the office of Director he shall act as Director. The Bureau, under such rules and regulations as the President may prescribe, shall prepare for him the Budget, the alternative Budget, and any supplemental or deficiency estimates, and to this end shall have authority to assemble, correlate, revise, reduce, or increase the estimates of the several departments or establishments.

SEC. 208. (a) The Director, under such rules and regulations as the President may prescribe, shall appoint and fix the compensation of attorneys and other employees and make expenditures for rent in the District of Columbia, printing, binding, telegrams, telephone service, law books, books of reference, periodicals, stationery, furniture, office equipment, other supplies, and necessary expenses of the office, within the appropriations made therefor.

(b) No person appointed by the Director shall be paid a salary at a rate in excess of $6,000 a year, and not more than four persons so appointed shall be paid a salary at a rate in excess of $5,000 a year.

(c) All employees in the Bureau whose compensation is at a rate of $5,000 a year or less shall be appointed in accordance with the civil-service laws and regulations.

(d) The provisions of law prohibiting the transfer of employees of executive departments and independent establishments until after service of three years shall not apply during the fiscal years ending June 30, 1921, and June 30, 1922, to the transfer of employees to the Bureau.

(e) The Bureau shall not be construed to be a bureau or office created since January 1, 1916, so as to deprive employees therein of the additional compensation allowed civilian employees under the provisions of section 6 of the Legislative, Executive, and Judicial Appropriation Act for the fiscal years ending June 30, 1921, and June 30, 1922, if otherwise entitled thereto.

SEC. 209. The Bureau, when directed by the President, shall make a detailed study of the departments and establishments for the purpose of enabling the President to determine what changes (with a view of securing greater economy and efficiency in the conduct of the public service) should be made in (1) the existing organization, activities, and methods of business of such departments or establishments, (2) the appropriations therefor, (3) the assignment of particular activities to particular services, or (4) the regrouping of services. The results of such study shall be embodied in a report or reports to the President, who may transmit to Congress such report or reports or any part thereof with his recommendations on the matters covered thereby.

SEC. 210. The Bureau shall prepare for the President a codification of all laws or parts of laws relating to the preparation and transmission to Congress of statements of receipts and expenditures of the Government and of estimates of appropriations. The President shall transmit the same to Congress on or before the first Monday in December, 1921, with a recommendation as to the changes which, in his opinion, should be made in such laws or parts of laws.

SEC. 211. The powers and duties relating to the compiling of estimates now conferred and imposed upon the Division of Bookkeeping and Warrants of the office of the Secretary of the Treasury are transferred to the Bureau.

SEC. 212. The Bureau shall, at the request of any committee of either House of Congress having jurisdiction over revenue or appropriations, furnish the committee such aid and information as it may request.

SEC. 213. Under such regulations as the President may prescribe, (1) every department and establishment shall furnish to the Bureau such information as the Bureau may from time to time require, and (2) the Director and the Assistant Director, or any employee of the Bureau when duly authorized, shall, for the purpose of securing such information, have access to, and the right to examine, any books, documents, papers, or records of any such department or establishment. SEC. 214. (a) The head of each department and establishment shall designate an official thereof as budget officer therefor, who, in each year under his direction and on or before a date fixed by him, shall prepare the departmental estimates. (b) Such budget officer shall also prepare, under the direction of the head of the department or establishment, such supplemental and deficiency estimates as may be required for its work.