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Mr. GRAHAM. In summarizing the accounting features of the plan, we wish to emphasize: (1) Customs will continue to have an internal audit program, but it will be more flexible and useful, as well as less costly; (2) the Comptroller General will continue to provide the external audit program, including a check upon the effectiveness of our accounting system and internal audit and control.
The Comptroller General has been very helpful in giving us advice and counsel with respect to that portion of the plan which covers the accounting provisions.
At that point, Mr. Chairman, if I may interpolate, we have received a letter from the Comptroller General and with your permission we would like to have photostat copies of the letter made part of the record.
The CHAIRMAX. That is the letter of May 9 ?
The CHAIRMAX. We have a copy of it here. It will be made a part of the record. Mr. GRAHAM. Thank you, sir.
The CHAIRMAX. You have there also comments of the General Accounting Office on this plan?
Mr. GRAHAM. That is the letter of May 9, sir.
The CHAIRMAN. We have another memorandum here. This memorandum which I have is attached to that letter of May 9 from the Comptroller General to the Secretary of the Treasury. That will be made a part of the record at this point. (The letter referred to is as follows:)
GENERAL ACCOUNTING OFFICE,
Washington, May 9, 1952 The honorable the SECRETARY OF THE TREASURY,
MY DEAR MR. SNYDER: I have your letter of May 5, 1952, with reference to Reorganization Plan No. 3 of 1952 for the Bureau of Customs, particularly to the provisions of section 3 of the plan dealing with the proposed abolition of certain statutory accounting functions.
Your letter requests my comments regarding the plan as finally presented to the Congress in the President's message of April 10, 1952.
I am glad to give you my comments on the reorganization plan which relate only to section 3 of the plan, since the remaining sections involve questions of policy for the consideration of the Congress.
As indicated in the President's message and in your letter, the accounting and auditing procedures of the Bureau of Customs have been reviewed by the Bureau of the Budget, the General Accounting Office, and the Treasury Department under the joint program for improving Government accounting,
Staff of the General Accounting Office in cooperation with the Bureau of Accounts and the Bureau of Customs of the Treasury Department conducted an extensive survey of the fiscal operations of the latter Bureau in 1949 and early 1950. As a result of this survey, it became evident that certain processes required by statute are archaic and obsolete. Statutory requirements that certain functions be performed by specific officials have resulted in restrictive and rigid procedures and practically precluded adoption of the more efficient modern accounting and fiscal practices envisioned by the Budget and Accounting Procedures Act of 1950.
In addition, the existence of statutory requirements for repetitive performance of some detailed functions by two officials necessarily results in duplication. Other provisions which define the scope and extent of checks and reviews prevent the exercise of sound judgment and application of more economical and efficient anditing practices based on effective accounting procedures. Much of the resulting detailed work now done by the Bureau can be eliminated through the development of an appropriate accounting system incorporating adequate internal control and an effective internal-audit staff.
The abolition of the statutory functions as proposed in section 3 of Reorganization Plan No. 3 of 1952 would clear the way for the modernization of customs accounting and auditing procedures under the authority contained in the Budget and Accounting Procedures Act of 1950 and in accordance with the intent of Congress as stated in that act. I have been assured that the complete accounting improvement program for the Bureau of Customs contemplates, in lieu of the procedures and functions abolished, the development and installation of more economical and efficient procedures by the Secretary of the Treasury in close cooperation with the General Accounting Office and in accordance with principles and standards established by the Comptroller General. It is believed that this will result in improved control of customs revenue and the elimination of much unnecessary or ineffective documentation and dual record-keeping now required. In addition, a more adequate system of accounting and internal control will permit the General Accounting Office to discharge its audit responsibility to the Congress with a minimum of cost and effort.
I appreciate your reference to the cooperation of members of my Accounting Systems Division and other officials of the General Accounting Office with the Bureau of Customs and other Treasury officials in assisting in the formulation of plans for improving customs accounting and auditing. It has been a pleasure for our staff to work with yours in this area. The work which has been done and is continuing is another example of what can be accomplished for better government through the cooperative approach.
Please feel free to submit this reply for the record of congressional hearings on Reorganization Plan No. 3 if you so desire. Sincerely yours,
LINDSAY C. WARREN, Comptroller General of the United States.
COMMENTS OF THE GENERAL ACCOUNTING OFFICE ON REORGANIZATION PLAN No. 3
Comments herein on Reorganization Plan No. 3 relate only to section 3 of the plan since the remaining sections of the plan involve questions of policy for the consideration of the Congress.
Staff of the General Accounting Office in cooperation with the Bureau of ACcounts and the Bureau of Customs of the Treasury Department conducted an extensive survey of the fiscal operations of the latter Bureau in 1949 and early 1950. As a result of this survey, it became evident that certain processes required by statue are achaic and obsolete. Satutory requirements that certain functions be performed by specific officials have resulted in restrictive and rigid procedures and practically precluded adoption of the more efficient modern accounting and fiscal practices envisioned by the Budget and Accounting Procedures Act of 1950.
In addition, the existence of statutory requirements for repetitive performance of some detailed functions by two officials necessarily results in duplication. Other provisions which define the scope and extent of checks and reviews prevent the exercise of sound judgment and application of more economical and efficient auditing practices based on effective accounting procedures. Much of the resulting detailed work now done by the Bureau can be eliminated through the development of an appropriate accounting system incorporating adequate internal control and an effective internal audit staff.
The abolition of the statutory functions as proposed in section 3 of Reorganization Plan No. 3 of 1952 would clear the way for the modernization of customs accounting and auditing procedures under the authority contained in the Budget and Accounting Procedures Act of 1950 and in accordance with the intent of Congress as stated in that act. I have been assured that the complete accounting improvement program for the Bureau of Customs contemplates in lieu of the procedures and functions abolished the development and installation of more economical and efficient procedures by the Secretary of the Treasury in close cooperation with the General Accounting Office and in accordance with principles and standards established by the Comptroller General. It is believed that this will result in improved control of customs revenue and the elimination of much unnecessary or ineffective documentation and dual record keeping now required. In addition, a more adequate system of accounting and internal control will permit the General Accounting Office to discharge its audit responsibility to the · Congress with a minimum of cost and effort.
Mr. GRAHAM. Thank you, Mr. Chairman.
The third important feature of the plan provides for the establishment of new offices in the Bureau of Customs. The effect of the language is simply to authorize the compensation of certain key departmental and field officials at the so-called super-grade rates of pay if they are found by the Civil Service Commission to qualify therefor in accordance with the standards of the Classification Act of 1949.
The CHAIRMAN. Do I understand that some of these salaries are now fixed by law, that is, for some of these offices that you are abolishing?
Mr. GRAHAM. I understand, sir, that up until 1949 there was the collector of customs in New York whose salary had been established by law but that was changed,
The CHAIRMAN. Do I understand that under this plan, if the Civil Service Commission certifies that the duties are of a high-grade nature or such as to entitle them to higher rating, they will be rated higher and therefore their salaries would be increased accordingly?
Mr. GRAHAM. That is correct.
The CHAIRMAN. In other words, some now may have such duties in line with the pay they are receiving but if they consolidate or transfer other functions to them, their responsibilities may increase and of course whoever is found competent under civil-service standards to fill that position would be entitled to have a higher civil-service rating? Mr. GRAHAM. That is correct, sir.
The plan provides for 20 additional positions in these grades. These would be warranted in view of the nature and responsibility of the work to be assigned. Of course, the allocation of grades will be made hy the Civil Service Commission.
The CHAIRMAN. That does not necessarily mean that the 20 new positions being created would be an additional personnel expense?
Mr. GRAHAM. As I understand it, Mr. Chairman, the Classification Act of 1949 created 400 supergrade positions throughout the Government.
The CHAIRMAN. Some have been allocated to this Bureau? Mr. GRAHAM. And five have been allocated to customs, and this would give them 20 more if, as you point out, the civil service found that the consolidated positions and the responsibilities warranted that.
The CHAIRMAN. I am not complaining about it particularly, but Congress set a limit on those high positions to be distributed throughout the executive branch of the Government. Yet in every one of these reorganization plans coming in to reorganize a department, we give them some extra and keep therefore increasing that limitation which Congress has previously set. If Congress was right to begin with, I do not think that can be justified unless you can show that actually you are making consolidations which eliminate other personnel expenses and justify the establishment of these higher-classified positions.
Mr. GRAHAM. That is the general concept in here, Mr. Chairman. The CHAIRMAN. That is the theory of this?
Mr. GRAHAM. That is the theory upon which we were suggesting that this be done.
The CHAIRMAN. The staff director here suggests that there are now more than 800 of these positions instead of 475 or whatever it was in the beginning. So we are practically doubling those positions; and will obviously do so by the time we get through with these different reorganizations. I am hoping, but I do not know, that in these consolidations other savings will result that will justify this additional expense in these higher-classified offices.
Mr. GRAHAM. We think that will be true in our case, Mr. Chairman,
Senator SCHOEPPEL. Who would have the final say as to where and when these positions are to be filled ? Is it strictly the civil service on a recommendation from the Department ? Mr. STRUBINGER. Could you repeat your question, please, sir?
Senator SCHOEPPEL. Who will determine the actual need of this position to be filled ? Now, if this plan goes through, the structure is here for the formation of 20 additional positions. I am concerned about never filling them unless you actually need them. I know that must be your intention, but who will determine whether they are to be filled? Who has the final say? Is it strictly the civil service?
Mr. STRUBINGER. Here is the way this would work. We would select certain jobs throughout the Customs Service which we think should be included in these 20 jobs. In other words, they would be present jobs, not new jobs, not additional positions. They are present jobs which at the present time we think are undergraded simply because we have the ceiling of grade 15 to put these top jobs into.
Senator SCHOEPPEL. This statement says 20 additional positions in these grades. To me that means 20 new positions.
Mr. STRUBINGER. It is 20 new positions in the super grades. In other words, above grade 15. We have authority now to create as. many positions up to grade 15 as we can justify.
The CHAIRMAN. In other words, you are simply taking grades below 15 and raising them?
Mr. STRUBINGER. We are taking grade 15 and below and raising them.
The CHAIRMAN. And raising them up to higher classifications, together with positions that may result from consolidations of positions that now exist?
Mr. STRUBINGER. That is correct. So at the end we will not have any more positions than we have today. As a matter of fact, we will have fewer, because we intend to consolidate some of these collector and assistant collector positions into one position.
Senator SCHOEPPEL. I wanted that clarified for my own thinking because not to many days ago over on the Senate floor the Senator from Kansas was confronted by this kind of proposition. He noted on the executive calendar there were many, many, many generals to be added and some other high-ranking military officials. The question was asked, “Do you need them?” The chairman of one of the subcommittees said, “Frankly, no, but the framework is here to fill them and it is strictly within the law to have them placed there." I was wondering if that sort of condition might ensue under this. Mr. STRUBINGER. No, sir.
The CHAIRMAN. Just because we have the creative proposition here by this Reorganization Act if it passes, I am sure you will agree that
it should only be filled if the need and necessity exists and after proper screening and after proper determination by your Department and the civil service to really gear to an efficiency ratio of some kind.
Mr. STRUBINGER. Yes, sir.
Senator SCHOEPPEL. I agree with the chairman. I am afraid in all these reorganization plans we are not saving money but for a long while will be adding to the expenditures, and despite this, the great, elaborate claims that have been made that we will save $2 or $3 billion a year on this thing.
The CHAIRMAN. All right, Mr. Graham. Mr. GRAHAM. We come now to a question about the estimate of savings. The adjustments in customs operations which would result from the principal changes noted above and as provided in the plan, are estimated to produce, within a few years, annual savings of approximately $300,000, based upon present enforcement levels, business volume, and salary scales. It is difficult to forecast accurately the savings in each fiscal year. However, we believe that significant savings can be accomplished by fiscal year 1954 and that the estimate total annual savings of $300,000 can be reached by fiscal year 1957. We also believe that approximately one-half of the savings will be effected through the change in method of appointment of 44 collectors, 6 comptrollers, the surveyor of customs at New York and the appraiser of merchandise at New York. We believe that the remaining portion of the savings will be made through the changes in accounting procedures.
The President's message emphasizes that abolition by Reorganization Plan No. 3 of 1952 of the offices of collector of cutoms, comptroller of customs, surveyor of customs and the appraiser of merchandise will in no way prejudice any right or potential right of any person paying duties or imposts. The abolition of offices will not abolish any rights, privileges, powers, duties, immunities, liabilities, obligations, or other attributes of those offices except as they relate to matters of appointment, tenure, and compensation inconsistent with the plan. All of these attributes of office will attach, as may be appropriate, to personnel of the Treasury to whom the Secretary delegates the functions formerly vested in the abolished offices.
The changes which would be authorized by the President's Reorganization Plan No. 3 wil limprove not only the internal lines of administration and authority with respect to field offices, but also the internal audit and control programs of the Bureau. This will enable customs to increase its efficiency and will result in better service to the importing and traveling public.
That, Mr. Chairman, concludes the formal statement.
The CHAIRMAN. I might say that I am not too familiar with the way customs operates. My State is not a border State and we do not have these problems. I am therefore not as familiar with the operation of this agency as I am with some others. Of course we do have offices in my State.
Senator Schoeppel, do you have any questions?
Senator SCHOEPPEL. Mr. Chairman, I am sorry I was late. I had to be on the floor on other matters. I shall read the remaining part of the statement.
The CHAIRMAN. Senator Dworshak?