4. The General Services Administration recognizes that policy decisions relating to property management and operational phases normally have accounting and auditing implications and, in arriving at such policy determination, will give full consideration to these implications and accounting and audit requirements under Public Law 152 as well as previously existing laws.

It will be the joint policy of the General Services Administration and the General Accounting Office to have their representatives keep each other fully advised with regard to all action taken, or to be taken, within the respective jurisdictions under Public Law 152 not only in those areas in which cooperative development is prescribed by the act, but in all cases where the matter affects or may affect management and operational interests on the one hand, or accounting and audit responsibilities on the other.

ACCOUNTING RESPONSIBILITIES

Under the broad program to improve governmental accounting, the individual executive agencies are primarily responsible for the development and maintenance of over-all agency accounting systems to fit their needs, and this primary responsibility includes the development and integration of property accounting phases with such over-all agency accounting systems, consistent with the principles, standards, and basic requirements which are evolved under the joint accounting improvement program.

The General Accounting Office will assist and cooperate with the individual executive agencies in the development of property accounting as an integral part of their over-all accounting systems, under the general accounting improvement program, and in accordance with Public Law 152 and its primary responsibility for accounting matters generally under previously existing laws.

The General Services Administration will participate, in cooperation with the General Accounting Office, in the development of individual agency accounting systems with reference to the property accounting phases of such systems, as a basic requisite to the effective discharge of the over-all property management responsibilities of the administration.

The responsibility of executive agencies to develop and maintain property accounting as an integral part of their over-all accounting systems includes the requirement that appropriate accounting control be exercised over all property transactions and inventories. Underlying property records constitute subsidiary and supporting accounting records and the adequacy and integrity of the over-all accounting systems is largely dependent upon the accuracy and efficiency with which such underlying records are maintained and their integration with the general accounting system. Maximum consideration will be given to the over-all property-management responsibilities and the primary purpose of underlying property records as an efficient and economical management tool in integrating these records with the general accounting systems. Management policies in respect to all property transactions such as receipt, issue, use, transfer, and disposal require an effective control of property and, therefore, accounting and management policies must be developed hand in hand.

Property accounting systems will be submitted to the Comptroller General for approval upon completion of development or at various appropriate developmental stages, and recommendations of the Administrator, General Services Administration, will be ascertained by the Comptroller General prior to approval.

SYSTEMS EXAMINATIONS, INTERNAL CONTROL, AND AUDITS

Reports upon examinations by the General Accounting Office of accounting systems as they relate to property will be furnished the General Services Administration and necessary corrective action will be coordinated as in the case of the development of such systems. Systems examinations will be made to the fullest extent practicable as part of the audits of property accounts and transactions by the General Accounting Office. The scope and extent of property audits will be correlated with the degree of internal controls exercised and the adequacy and effectiveness of internal audits performed by the respective agencies, and copies of any audit reports will be furnished the General Services Administration. Where property audits are made as a part of comprehensive audits of executive agencies, property-audit data relevant to the responsibilities imposed on the General Services Administration under the act will be furnished the General Services Administration.

The establishment and maintenance of internal controls and performance of internal-property audits in General Services Administration which will be satis

factory from an accounting standpoint, as well as from the operational standpoint, will be stressed, and the General Accounting Office will furnish all possible assistance in the development of such internal controls and audits.

FORMS RELATING TO PROPERTY

Forms relating to property procurement, utilization, and disposal, insofar as concerns the mutual interests of the General Services Administration and the General Accounting Office under Public Law 152, fall into the following general categories:

(a) Forms designed solely for operational purposes and serving no accounting purpose, or being so remotely related thereto as to have no accounting significance. (6) Forms serving a primary operational purpose which likewise serve or can be made to serve essential accounting purposes.

(c) Forms designed solely for essential accounting purposes and serving no operational purpose, or being so remotely related thereto as to have no operational significance.

Forms falling within the first and last categories set out above will be standardized to the extent found desirable and when so standardized will be prescribed by the Administrator and the Comptroller General, respectively. However, in order to assure complete coordination, representatives of the General Services Administration or the General Accounting Office, as the case may be, will be kept currently advised of all developments and furnished copies of all such forms when prescribed. Representatives of the two agencies will cooperate with the executive agencies in the development of forms which serve, or can be made to serve, both operational and accounting purposes. Such forms will be standardized to the extent found desirable, and where so standardized will be prescribed with the joint approval of the Administrator and the Comptroller General.

EXCHANGE OF REGULATIONS AND DIRECTIVES

As a specific means of keeping the General Accounting Office informed of developments under the act, copies of all Presidential orders, General Services Administration regulations and directives, and changes in existing procedures, regulations, and orders relating to any of the agencies, bureaus, or functions which have been or are later transferred to or vested in the General Services Administration will be furnished the General Accounting Office. Likewise, and in accordance with existing procedures, the General Accounting Office will furnish the General Services Administration with copies of all General Regulations, Accounting Systems Memoranda, and other procedural releases affecting their operations which will assist the General Services Administration in the effective discharge of its duties.

REVISIONS

Periodically, the provisions of this memorandum will be reviewed by the General Services Administration and the General Accounting Office and modified, if necessary, in order to improve working relationships in the light of experience and thus further the objectives of Public Law 152 and achievements thereunder. LINDSAY WARREN, Comptroller General of the United States. JESS LARSON,

JANUARY 17, 1950.

Administrator, General Services Administration.

Mr. WEITZEL. Mr. Chairman, section 23 (a) of S. 2054 deals with the administrative examination of accounts after payment and the conduct of the Comptroller General's examination and audit. It authorizes agency heads to conduct such examinations, and authorizes and directs the Comptroller General so far as practicable to conduct his examination and audit, at the places where the accounts, vouchers, and supporting documents are kept. It provides specifically that such papers shall not be required to be transmitted to the General Accounting Office in Washington or, except upon the direction of the agency head, to such head.

The problem of administrative examination of accounts has been thoroughly examined under the joint accounting program. Legislative recommendations are now under consideration. The desirability of on-the-spot audits has been recognized by GAO. The prompt and effective audit of the tremendous expenditures of World War II could not have been accomplished otherwise. The Office is making decentralized and site audits today to an extent not generally recognized. During the past year, we performed audits at agency offices and installations or project sites in 281 locations outside Washington.

It is the announced policy of the Comptroller General to extend site audits whenever it is to the best interests of the Government. The whole philosophy of the comprehensive audit to which I referred a few moments ago is based upon auditing the accounts and records in the agencies themselves. But no new legislation has been found necessary yet to accomplish this result. Should this be the case it will be recommended as a part of the joint accounting program. We wish particularly to invite the committee's attention to the policy of this subsection that the department head may direct accounts and vouchers to be transmitted to Washington, but the General Accounting Office shall not do so. This is an unconscionable interference with the performance of the duties of the General Accounting Office as the independent auditor for the Congress.

Section 23 (b) would authorize the Comptroller General to audit and settle accounts on the basis merely of spot checks, sampling, and other checking processes. The wording of this subsection is not calculated to induce confidence in the results of the audit. Aside from that, the desirability of a selective audit is recognized by GAO. I personally am aware of no provision of existing law which requires the Office to make a 100 percent detailed audit. Every auditor audits as little or as much as necessary to satisfy himself of the validity of the account under audit. However, the extent to which GAO must examine the accounts of the administrative agencies depends to a considerable degree upon the adequacy of administrative accounting and other administrative controls and practices. As the joint accounting program continues it may be possible more and more for the GAO to rely safely upon selective audit. If any clarification or congressional sanction of this phase of the problem proves desirable or necessary, it will be developed as part of the joint accounting program and presented to the Congress.

Section 24 contemplates the issuance of regulations prepared jointly by the Secretary of the Treasury and the Comptroller General covering the receipt and withdrawal of public money. We fully expect that the objective sought will be achieved through the steps now in progress under the joint accounting program, including recommendations for any new legislation necessary to improve and simplify the existing system. However, the procedure proposed by S. 2054 which would require action not only by the Secretary of the Treasury and the Comptroller General but by the President seems cumbersome and unwieldy.

We have particular concern with section 22 (a) of S. 2054 which authorizes the Secretary of the Treasury, in consultation with the Comptroller General, to issue for the guidance of disbursing and certifying officers regulations and opinions as to the application, scope, and availability of appropriations made by Congress.

This section, in our opinion, is one of the most dangerous in the whole bill. It would result in a wholly impractical division of responsibility and a watering down to the point of futility of the present control exercised by the General Accounting Office for the Congress over Government expenditures. This proposal is not even based upon a recommendation of the Hoover Commission, but apparently upon one of the task force recommendations which were repudiated even by the majority of the Commission. Its utter lack of feasibility suggests that those conceiving the proposal may have been unaware of its effect.

Under existing law, disbursing officers, certain certifying officers, and heads of agencies may apply for a decision of the Comptroller General upon any question involving a payment to be made by or under them. The questions raised and the decisions rendered by the Comptroller General in many instances involve availability of appropriations. Presumably, it is the purpose of this proposal in section 22 (a) to divest the Comptroller General of his authority to render binding decisions on at least this class of questions-if not all classesand to supplant it with authority to consult on such matters with the Secretary of the Treasury, who is to issue regulations and opinions. Aside from the utter impracticability of such an arrangement, one thing is certain. In actual operation, it would result in giving the executive branch full authority to determine according to its own ideas the objects for which appropriations may be expended. This authority is presently vested in the Comptroller General. If Congress is to retain any effective control over expenditures beyond the date when it appropriates money, the power of the Comptroller General to make legal determinations binding on the executive branch as to the availability of appropriations for expenditures should never be relaxed. It has been stated to you that adoption of S. 2054 would result in a 50 to 75 percent reduction in the personnel of the General Accounting Office. As Mr. Warren indicated we have no idea where any such figure could have come from. As far as we are concerned, it must have come out of thin air. Mr. Warren has reduced the personnel of the General Accounting Office from 14,904 to 8,600, since 1946, a reduction of 42 percent. And it is his policy to continue to reduce it insofar as possible while still accomplishing the task of the Office.

If I might say it, Mr. Chairman, there is not a day goes by that Mr. Warren doesn't put us all down there in a sweat with that firm objective of his. He makes his budget and executive officer and all his advisers wonder what he is going to come up with next and whether he is going to reduce the office faster than we can devise procedures to get the work done better, because that is his firm resolve. I am sure I do not have to tell any of this committee that he is going to see that it is done with or without any outside action.

Having in mind that one-third of the personnel of the Office, and one-half of the personnel of the Audit Division-which numbers only 2,350 in all-is now outside Washington; that we are decentralizing our audit and adopting the site audit and the comprehensive audit approach, taking advantage of auditing records on the spot and of internal checks and controls in the agencies under audit, it is difficult for us to see how this could be brought about.

On the other hand, the proposal to set up an Office of Accountant General in the Treasury with authority to supervise operations under

the methods, practices, and procedures prescribed by the Secretary of the Treasury in all of the Government agencies, could result in the development of another large organization.

Furthermore, the provisions of section 22 (a) of S. 2054, authorizing the Secretary of the Treasury to issue regulations and opinions to disbursing and certifying officers, would inevitably result in the setting up of a large and duplicating staff of attorneys in the Treasury Department without any corresponding reduction in the staff of the General Accounting Office, since the Secretary of the Treasury would be required to consult with the Comptroller General concerning the regulations and opinions specified.

The CHAIRMAN. Does not that provision directing the Secretary of the Treasury to consult with the Comptroller General fail to require that he follow the latter's directions?

Mr. WEITZEL. That is the case, Mr. Chairman, and frankly we are not sure just how he is going to do that in view of the thousands of such decisions that have to be issued.

The CHAIRMAN. In other words, his opinion in effect would succeed those of Comptroller General with reference to the validity of the claims and accounts, would it not?

Mr. WEITZEL. I believe they could, but I believe also that the Secretary would make a conscientious effort at that consultation and since it obviously could not be done personally between the Secretary and the Comptroller General, it would require a staff of attorneys in the Treasury Department to do the work that is now being done in GAO and also practically the same staff in GAO to make sure that the Treasury attorneys were on the right track. We feel, and I am sure the Treasury feels, too, that that would be an absolutely unworkable division of authority.

The greatest hope for reduction in accounting effort and increasing the effectiveness of that effort throughout the Government lies in the joint approach under the present accounting program, which is providing funds and personnel for useful accounting activities through streamlining and simplifying accounting procedures and elimination of reports and paper work that become unnecessary in the process.

In closing, I would commend again to this committee the joint accounting program which is being vigorously carried forward by the three top fiscal agencies of the Government in cooperation with all other agencies, along the lines approved by this committee at the time the program was set up more than 2 years ago.

I wish to make it clear that the General Accounting Office is not opposed to any and all legislation on the subject of accounting in Government. As a part of the joint accounting program, we, the Treasury, and the Budget Bureau participated in the drafting of the accounting, budget, and auditing provisions of Public Law 216 for the Department of Defense, and we think that those provisions represented a great advance. However, I think we should make the point that that represents one department in the Government and, for reasons I have already indicated, I would not necessarily draw the analogy which the Citizens Committee does that what is good for one department, or for each separate department, has to be applied in toto to the Government taken as a whole. We participated as well, as I mentioned, along with the Budget and Treasury in the drafting and development of the property accounting and auditing provi