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Supplementary devices for controlling appropriations, like the personnel ceilings, establishment of reserves, and the application of recissions, have been instituted in recent years. But these have not greatly affected the end results. Indeed, the personnel ceilings have for all practical purposes been abandoned. And the legality of the Budget Bureau's authority for setting up appropriation reserves is questionable. It would seem that additional legislation is needed to sustain the Bureau's powers with regard both to apportionments and reserves. Furthermore, if the apportionment system is to be at all effective, it must be properly geared into the administrative and budgetary accounts of the Government. The experience of several State governments has already demonstrated that apportionments, or allotments as they are called in local parlance, are quite effective when properly applied in maintaining budgetary control on the part of the governor.

The General Accounting Office Should Serve Congress as an Inde

pendent Auditing Agency To carry Executive accountability for the execution of the budget one step further, the Executive Branch of the Government should have the authority through the proper agencies to prescribe administrative accounting systems, and to settle and adjust all claims. These are now functions of the General Accounting Office, an agency over which the President has practically no control. It is widely understood at present that in drafting the Budget and Accounting Act of 1921, it was a mistake to have given these functions to that Office. This improper distribution of fiscal authority has hampered the President and the administrative agencies through 27 years and, even worse, has prevented the General Accounting Office from becoming, as it should have, a powerful congressional aid in ferreting out extravagance and misuse of funds and in bringing the Executive to account for the execution of the budget. Instead of that, the Office has spent its time over these years in auditing and settling millions of vouchers and claims, which had already been administratively audited and paid, and in legal hairsplitting over what was fitting and proper down to the minutest detail. Congress should be quite critical of the paucity of substantial reports and audits, which its committees could actually get their teeth into, that have come from the General Accounting Office since its establishment.

It is interesting to note briefly two official proposals for changing the functions of the General Accounting Office. The first one of these was made by President Hoover in a message to Congress on December 9, 1932, when he asked approval of a plan to transfer from the General Accounting Office to the Budget Bureau the accounting supervision and administrative preauditing work of that Office. He said that the Budget and Accounting Act had “conferred upon the General Accounting Office duties of an administrative or executive character," and that the act had been so interpreted as to permit that Office “to extend its powers and duties into the field of administration in the several departments and establishments of the Government to an extent that is far beyond its primary function.” He also maintained that since “accounting is an essential element of effective administration” and “forms the basis of the whole estimating system of the Government,” it should be developed under the direction of the Executive. But after some discussion, this proposal was voted down by Congress.

The second of these proposals was made in 1937 by the President's Committee on Administrative Management. This committee recommended that the authority to propose administrative accounting systems and to settle and adjust all claims should be transferred from the General Accounting Office to the Treasury Department. To avoid conflicts and disputes between the Treasury and the administrative departments, it proposed that the Attorney General should rule upon questions of jurisdiction on the request of either Treasury or of the department concerned.

The committee recommended further that the name of the General Accounting Office should be changed to General Auditing Office, and that the titles of the Comptroller General and the Assistant Comptroller General should be changed to Auditor General and Assistant Auditor General, respectively. It proposed that the General Auditing Office, as reconstituted should concern itself with auditing the accounts kept by administrative officers and the statements and reports made by them, and that this auditing work should be decentralized by being carried on at the points where the accounts and records were normally kept. If, in the course of this audit, the Auditor General should discover any irregularities which the administrative accounting officers could not explain, the committee suggested that he should report them to Congress “through such committees or joint committees as the Congress may choose to designate.” This proposal was likewise turned down by Congress.

By 1945, however, Congress came to look upon the powers and duties of the Comptroller General in a somewhat different light. In the Government Corporation Control Act, enacted at that time, Congress provided that the General Accounting Office must audit the financial transactions of the Government's corporations "in accordance with the principles and procedures applicable to commercial corporate transactions,” and that this audit must be conducted at the place or places where the accounts of each corporation are normally kept. It was further provided that the Comptroller General must report an

nually to Congress on each such corporate audit. There were no stipulations as to what was to be done with these audit reports after they reached Congress.

It would appear that the general ideas embodied in the corporate audit might be extended to the regular departments and agencies of the Government. On-the-spot audits might be made of the accounts and records of these departments and agencies, and the practice of transmitting accounting documents and records to the General Accounting Office to be retained in its custody might be discontinued. To make the General Accounting Office into a real auditing office, however, its powers to prescribe administrative accounts and to settle and adjust all claims should be transferred to the Executive and vested in an appropriate fiscal office of the administration. One additional step would be necessary to complete the auditing procedure and to make the audit an effective instrument in establishing the accountability of the President for the execution of the budget. This would be a provision for congressional review of the audit findings.

Congressional Review of Audit Findings by a Joint Committee

Such a review, it seems, may be most properly conducted by a joint committee of Congress. Such a committee should be kept rather small, say, 12 or 15 members. It should represent the collective interests of the financial committees of both houses. For this reason, it might well be a subcommittee of the large committee set up under the Legislative Reorganization Act to formulate the so-called legislative budget. Or again, it might be a subcommittee of the Senate and House committees on expenditures and accounts. In any event, it should have an independent status and should be able to sit not only when Congress is in session but at least quarterly during the intervening periods. The committee should thus be able to keep current with all matters coming before it.

A responsible representative of the General Accounting Office (or of the General Auditing Office, if its name is changed) should sit with the joint committee when in session to present and explain the audit findings and to answer questions. Responsible representatives of the Budget Bureau and of the central accounting office of the administration should also be present to explain and defend the financial actions of the President and the administration when attacked or criticized. The budget and accounting officers of the departments and agencies, whose audits are being reported upon, should also be present to speak in their behalf. By this procedure the President would be kept constantly in touch with the decisions and criticisms of the committee and would be in a position to take immediate action in all cases not requiring legislation. If a procedure of this kind UWE ALL

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Part Four

THE ACCOUNTING NEEDS OF
THE FEDERAL GOVERNMENT

Report of
The Accounting Policy Committee

of

The Fiscal, Budgeting and Accounting Project

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