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“At present there are approximately 100 attorneys in the Office of the General Counsel of the General Accounting Office. One of their functions is to prepare, for consideration by the Comptroller General or the Assistant Comptroller General, drafts of decisions in response to all questions submitted by heads of departments, disbursing officers, and certifying officers. These questions are of every nature and type conceivable. They may involve the particular appropriation language of every agency in the Government. They may involve, also, the statutes and regulations applicable to every kind of an expenditure made by the Government. During the fiscal year 1948 the Office of the General Counsel prepared over 2,100 drafts of decisions for rendition to heads of departments, disbursing and certifying officers alone, as well as more than 10,000 other drafts of decisions and reports to claimants, to the Attorney General, to the Congress, etc.

"I refer to these practical metters to show how impractical the proposal here made would be. Is the Comptroller General to 'consult' personally with the Secretary? If not-and certainly no one would sanely suggest that each time a question involving the application, scope, or availability of an appropriation arose a consultation would be required-how would the system contemplated by the proposal operate? Without attempting to speak for the Secretary, the proposal seems to me to be just as unfair to him as to the Comptroller General-and just as unworkable.

“One thing is sure. The actual operation of any such system would inevitably result ultimately in giving the executive branch full authority to determine, according to its own ideas, the objects for which an appropriation legally may be expended. The present law vests in an agent of the Congress, the Comptroller General, authority to construe appropriation language. If the Congress is to retain any effective control over expenditures beyond the date when it appropriates the money, the power of the Comptroller General to make legal determinations binding on the executive branch as to the objects for which appropriations. have or have not been made available by the Congress should never be relaxed.

" Section 309 of the Budget and Accounting Act, 1921, provides that the Comptroller General shall prescribe the forms, systems, and procedure for administrative appropriation and fund accounting in the several departments and establishments, and for the administrative examination of fiscal officers' accounts and claims against the United States. Section 22 (b) of the present bill would amend said section 309 so as to subject the Comptroller General's authority to prescribe such forms, systems, and procedure to the specific requirements set out in section 23 of said present bill relative to administrative examination of accounts in the field.

“Section 22 (b) also would direct the Comptroller General to examine the regulations issued by the Secretary of the Treasury under section 21 covering general accounting methods, practices, and procedures, and would confer upon the Comptroller General power to approve, or withhold approval of, the issuance of such regulations insofar as they prescribe forms, systems, or procedures for administrative appropriation and fund accounting. To the extent such regulations were not approved they would not be effective. This latter provision seems particularly impracticable since a disagreement of the Comptroller General with particular regulations could result in operations being conducted without regulatory guidance of any kind. The same situation would result as to phases of accounting control where no draft of regulations were initiated and presented to the Comptroller General because he would have no opportunity either to approve or disapprove, and the section gives him no authority to initiate a regulation. While this power to approve or disapprove regulations ostensibly might indicate control in the Comptroller General, any failure of the parties to agree could result in complete lack of control and a chaotic situation. If the Comptroller General is to have control in this matter, as he should, then that control can best be realized by letting him retain the authority he now has under said section 309—the independent authority to prescribe.

“Moreover, subsection 22 (b) is closely allied with section 21 of the bill and the comments made with respect to that section apply here. For the reasons previously outlined, the General Accounting Office is opposed to enactment of the subsection.

“Subsection 23 (a) would authorize the head of each agency to conduct his administrative examination of the accounts in the field where the accounts, the vouchers, and supporting documents, regularly are kept. It also would authorize and direct the Comptroller General to conduct his examination, so far as practicable, in the field.

“With respect to the administrative examination of accounts after payment, this problem has been examined under the joint accounting program and legislative recommendations are now under consideration.

“The desirability of making on-the-spot audits to the extent practicable and feasible has been recognized by the General Accounting Office. The prompt and effective audit of the tremendous expenditures incident to World War II could not have been accomplished otherwise. The office is making decentralized and site audits today to an extent which is not generally realized. During the past year audits were performed at agency offices and installations or at project sites in 281 locations outside of Washington. Field or decentralized audits presently being performed include audits of payments under cost-reimbursable contracts having an estimated dollar value of $7,476,000,000; examinations at Veterans' Administration offices and training institutions concerning financial transactions under the Servicemen's Readjustment Act; audits of books of contractors engaged in operating concessions under agreements providing revenues to the Government; audit of revenues and expenses incident to the operation of Government-owned or chartered vessels operated by agents of the United States Maritime Commission; audits of the financial transactions of the Atomic Energy Commission, Farmers Home Administration (Department of Agriculture), Bureau of Land Management (Department of the Interior), and phases of the Economic Cooperation Administration; audits of payments of salaries to civilian employees of the Government in Washington and in 27 area centers outside of Washington; audits of payments under the Soil Conservation and Domestic Allotment Act, the Sugar Act of 1948, and other programs of the Agricultural Conservation Program Branch, Production and Marketing Administration of the Department of Agriculture; and the audit of substantially the entire accounts of the Army, Navy, and Air Force disbursing officers.

“I am convinced that much can be gained by the further adoption of site audits in certain types of the Government's operations. It is my announced policy to extend site audits whenever it is to the best interests of the Government. 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. I object particularly 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, notwithstanding any other provision of law, to audit and settle accounts on the basis merely of spot checks, sampling, and other checking processes and to settle accounts and certify balances of accounts pursuant to audits made on such basis. Aside from the unfortunate wording of this subsection, which stresses mere spot checks, and is not calculated to induce confidence in the results of the audit, the desirability of a selective audit has been recognized here, and steps have been taken to determine the types of accounts in which, and the extent to which, such an audit process will afford a satisfactory result. However, it should be pointed out that the extent to which the General Accounting Office as auditor 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 toward its goal of establishing sound and efficient systems within the agencies in the executive branch, it may be possible, more and more, for the General Accounting Office to rely safely upon a selective type of audit. If any clarification or legislation on this phase of the problem proves desirable, it will be developed as part of the joint accounting program.

“Section 24 contemplates the issuance of regulations, prepared jointly by the Secretary of the Treasury and the Comptroller General, prescribing procedures for the drawing of moneys from the Treasury and the making of disbursements, as well as for the receipt, custody, and deposit of public money. The essential feature of this proposal' is its recognition of the need for elasticity in these matters; that is, a freedom obtainable under a regulatory authority that is difficult to prescribe by statute. Unless all the hopes and expectations which the sponsors and others have for the joint accounting program are misplaced, the objective sought to be attained by section 24 necessarily will be achieved through the steps that now are and for some time have been in progress, including recommendations for any new legislation necessary to improve and simplify the existing system.

“In sum, I do not regard the bill S. 2054 as the proper approach to worth-while improvements in the accounting systems or sound economies in the audit processes. The joint accounting program has already demonstrated that deficiencies in the Government's present accounting systems can best be worked out by the gradual and cooperative approach which has been undertaken. And, as has already been pointed out, there are no legislative obstacles to the adoption of many changes in the accounting and audit procedures which have been found to be practicable and economical, and at the same time have been designed to accomplish a satisfactory result in protecting the interests of the United States and enforcing the control of the Congress over expenditures.

“I strongly recommend that any legislation enacted with respect to Federal accounting be an outgrowth of the work now being done by the General Accounting Office, the Treasury Department, and the Bureau of the Budget on a cooperative basis with all Government agencies to effect basic improvements in accounting from the standpoints of individual agency management, the executive branch as a whole, and the needs of the Congress and the public for adequate and accurate disclosure of financial results.

“New legislation would, of course, be necessary to accomplish the aims of those who would divest the Congress of all effective check upon the expenditure of public funds. Under existing law, the General Accounting Office acts as the right arm of Congress and stands as the last bulwark for the protection of the taxpayer against illegal and extravagant spending. Any weakening of that arm is a weakening of the Congress itself. And the first step toward relinquishing financial control over the accounting and expenditure of funds is one that will be difficult to retrace. Once the opening wedge is driven, the attack upon the remaining vestiges of control will be intensified.”

The Comptroller General recently announced that the GAO will make a new type of comprehensive field audit of selected departments and agencies starting with the Coast Guard. This audit will combine (1) an analysis of the agency's fiscal affairs; (2) the property audit called for by a recent act of Congress; and (3) the transaction audit under the Budget and Accounting Act. The first two of these three objectives are in accord with the audit provisions of the Federal Property and Administrative Services Act of 1949 (Public Law 152), covered in Report No. 3, Office of General Services.

The Treasury Department letter approves various features of S. 2054. On the two following grounds, however, it disapproves the provisions for a new Accouncing General in the Treasury Department to prescribe accounting procedures, subject to approval of the Comptroller General: (1) There is no need for a new Accounting General in the Treasury in view of the fiscal staff and organization already available; and (2) the proposed division of authority would not "be in the interest of efficient administration." The complete letter of the Treasury Department follows:

“Part I of the bill involves the President's budget, the preparation of the departmental estimates, and related matters which are the concern of the President and the Bureau of the Budget.

Part II of the bill contains a number of matters which are the concern of the Treasury Department.

“Section 20_would authorize the Secretary of the Treasury to create a new service in the Treasury Department to be known as the Accounting Service, with an Accountant General at its head. The Treasury Department does not believe there is any need for creating a new position in the Treasury to be known as the Accountant General for the reason that a statutory organization already exists to perform the accounting services for the Treasury, on the basis of Reorganization Plan III, which was made effective by the Congress on June 30, 1940, under Public Resolution No. 75, 54 Stat. 231, U. S. C., title 5, section 133u.

"The functions brought together in the Fiscal Service of the Treasury Department under Reorganization Plan III are all closely related and are essential parts of the general functions of fiscal control. The internal organization of the Fiscal Service, consisting of the Office of Fiscal Assistant Secretary, the Bureau of Accounts, the Bureau of the Public Debt, and the Office of the Treasurer of the United States, conforms to accepted principles of financial management and provides the framework for adequate internal controls (Message of the President, April 2, 1940). As an important element of financial control there was consolidated in the Fiscal Service, to be exercised by the Fiscal Assistant Secretary under the direction of the Secretary of the Treasury, supervision of the administration of the accounting functions and activities in the Treasury Department and all its bureaus and offices, these functions to be exercised through the Commissioner of Accounts (see 54 Stat. 1232).

"Under title 5, section 255, of the United States Code, the central accounts relating to the receipts and expenditures of the Government are maintained in the Bureau of Accounts of the Fiscal Service. The head of the Bureau of Accounts is the Commissioner of Accounts. He is a certified public accountant and has had 20 years of practical experience in Federal accounting.

“Section 21 of S. 2054 would vest in the Secretary of the Treasury authority to prescribe the general accounting methods, practices, and procedures to be followed by all agencies in the executive branch of the Government. It is to be noted, however, that the exercise of such function would be subject to the authority of the Comptroller General of the United States. It is not believed that such a division of authority would be in the interest of efficient administration, and therefore the Treasury does not recommend its enactment.

"Because of the many different purposes which accounting serves in the administration of the affairs of the United States Government, the Comptroller General of the United States, the Director of the Budget, and the Secretary of the Treasury have established a joint working relationship for the purpose of revising the accounting and auditing procedures in keeping with the needs and interests of all officers and agencies concerned, including the Congress of the United States, the President, and the heads of the several departments and agencies. This program has been under way for about a year and undoubtedly will bring about the main objectives sought to be accomplished under S. 2054. Under this joint cooperative program the following have been adopted as basic principles:

“\1. The maintenance of accounting systems and the producing of financial reports are and must continue to be functions of the executive branch.

" '2. There must be an audit independent of the executive branch which will give appropriate recognition to necessary features of internal audit and control. Properly designed accounting systems are a vital factor to the effectiveness of such independent audit.

'3. Full opportunity is to be afforded to the executive branch for participation in the development of accounting systems as an essential to meeting the needs and responsibilities of both the legislative and executive branches in the establishment of accounting and reporting requirements.'” 1

Due consideration will be given to the development of a system of central accounts in the Treasury Department on the basis of sound principles and standards, and for establishing a system of comprehensive financial reports covering the operations of all departments and agencies of the Government for the information of the President, the Congress, and others concerned, as contemplated in section 21 of S. 2054, page 7, lines 20-24.

“Section 22 (a) would authorize the Secretary of the Treasury to issue from time to time for the guidance of disbursing and certifying officers, regulations and opinions as to the application, scope, and availability of appropriations made by Congress. It is to be noted, however, that such regulations and opinions would be issued only in consultation with the Comptroller General of the United States. Furthermore, under other provisions of law, notably sections 304 and 305 of the Budget and Accounting Act, all accounts and claims by the United States or against it are settled in the General Accounting Office, and the decisions of the Comptroller General with respect to the settlement of such accounts and claims are final and conclusive on the executive branch of the Government. Here again the bill contemplates a division of authority which, as I have already indicated, would not be in the interest of efficient and economical Government administration.

“Section 22 (b) would amend section 309 of the Budget and Accounting Act. This relates primarily to a responsibility of the Comptroller General of the United States and, therefore, is the primary concern of that officer. The last two sentences of the section which refer to the Treasury Department, beginning on line 16, page 8, should be deleted, for the reasons mentioned in my comments on section 21.

“Section 23 (a) deals with the administrative examination of accounts. The Treasury is highly in favor of an amendment to existing law which would not require disbursing officers' accounts to be sent to the seat of government for administrative examination in the various departments prior to their transmission to the General Accounting Office for audit and settlement.

“In 1947, at the suggestion of the Treasury, a study of this subject was made by a joint committee of the Treasury Department, Bureau of the Budget, and General Accounting Office, in which the conclusion was reached by the committee that legislation should be requested whereby this requirement could be dispensed with by the head of the department or agency concerned upon concurrence of the Comptroller General of the United States.

1 Joint announcement of the Comptroller General of the United States, Secretary of the Treasury, and Director of the Bureau of the Budget, dated January 6, 1949 (copy enclosed).

“Ij is this Department's view that in many cases the administrative examination of disbursing officers' accounts in Washington serves no useful purpose and involves an unnecessary expenditure of public money. It is believed that there should be no legal requirement for an administrative examination of accounts or vouchers in the administrative agencies after payments have been made. Such examinations of accounts and vouchers as need to be made in the administrative agencies should be made prior to payment, and the audits, verifications, and examinations by the General Accounting Office should be made after payment. In other words, the executive branch of the Government should be responsible for preaudit of disbursement vouchers and pay rolls, and the General Accounting Office, as the independent agency of the Congress, should be responsible for the postaudit of accounts and vouchers. These are sound principles of financial management and are also in keeping with the principle of independent audit.

“Section 23 (b) authorizes the Comptroller General of the United States to audit and settle accounts on the basis of spot checks, sampling, and other checking processes and to settle accounts and certify balances of accounts pursuant to audits made on such basis. The Treasury Department is in favor of the principle of auditing the accounts and records at the places where the accounting records are maintained. The Treasury would be very much in favor of a policy whereby the General Accounting Office would make a comprehensive audit of accounts and records in the various administrative agencies and, to the fullest extent practicable, in the disbursing offices, rather than requiring the transmittal of all accounts and detailed supporting vouchers to Washington for audit.

“The Treasury is also in favor of the establishment of internal controls within the various agencies, including the disbursing offices, so as to make unnecessary a detailed checking of each and every voucher paid by Government disbursing officers. For several years the General Accounting Office has made site audits of pay rolls in the Treasury Department with a great deal of success. This procedure has not only simplified the work but has brought the audit of the Treasury's pay rolls up to a more current status. The Treasury is therefore in agreement with the objective of section 23 (b), although some changes in wording may upon further study appear to be desirable.

"Section 24 (a) would authorize the Secretary of the Treasury and the Comptroller General of the United States, with the approval of the Presdent, to issue regulations prescribing procedures governing the drawing of moneys from the Treasury and of making disbursements of the public funds. It would also authorize these officers to prescribe procedures governing the receiving and holding of moneys in behalf of the United States, the covering of moneys into the Treasury, and prescribing liabilities, in respect of the foregoing, of officers made accountable under such regulations.

“Section 24 (b) provides that these regulations would supersede existing laws, regulations, orders, and directives in respect of the matters described in subsection (a).

“It is believed that the Congress should not completely surrender its authority over there important matters. There are certain statutes governing the requisitioning and accounting for appropriations which should be amended in the interest of economy and efficiency, but the Treasury would prefer to have these particular statutes specified rather than give the Secretary of the Treasury and Comptroller General blanket authority relating to the covering of moneys into the Treasury and the drawing of moneys therefrom. The Treasury believes that some desirable changes could be made under authority of existing law. It is also intended that under the joint program of the General Accounting Office, Treasury Department, and Budget Bureau to improve the accounting procedures, previously referred to, recommendations will be made to the Congress where legislation may appear to be appropriate and necessary.

“Part III would repeal a number of existing laws relating principally to the submission of budget estimates. The Treasury has no objection to the repeal of these laws but calls attention to the fact that items 62 and 63 on page 20, lines 14-18, would discontinue reports to the Congress on moneys received by public officers which were not deposited in the Treasury.

“The Treasury appreciates this opportunity to express its views on S. 2054. The Department is vitally concerned with proper accounting and reporting of the financial operations and condition of the Government and, therefore, would

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