procedure has been established so that the revenues accruing to the United States from such joint operation may be more readily determined and a proper accounting control maintained.

In order to furnish adequate telegraph and telephone service to the officials of the various parks and visitors it was necessary to make connections with the commercial lines of telegraph companies and the long-distance lines of telephone companies and local switchboards under agreements of sharing the revenues therefrom. Similar arrangements were made with power companies for the distribution of electric power to the parks and the various concessionaires, permittees, contractors, and other consumers.

In some instances it was ascertained that the electric power purchased by the National Park Service was furnished at a much lower rate than that furnished from the power plants of that service. In billing for the purchased power no charge had been made for National Park Service distribution facilities and for expense of billing and collecting. Exceptions to the regular schedule of rates, or special rates, had been given to certain activities. It has been represented to the Interior Department that at an early date consideration be given to the desirability of revising the schedule of charges for electric power, with a view to having a uniform rate on the all-the-yearround basis that will adequately cover the cost of service provided. ALIEN PROPERTY CUSTODIAN TRANSFER OF BANK DEPOSITS TO TREASURER OF THE UNITED STATES

The Alien Property Custodian maintains with a Washington bank an official account for paying operating expenses, consisting of moneys deducted as administrative expenses in connection with the operation of various trusts and used to pay the operating expenses of the office of the Alien Property Custodian. The account should be transferred to the Treasurer of the United States. In the handling by the Alien Property Custodian of funds obtained from the operation of the trading with the enemy act during and immediately after the World War a large number of bank accounts were established throughout the United States. In 1925 all of the funds in these bank accountswith the exception of the one in Washington-were transferred to the Treasurer of the United States.

All moneys deposited with the Treasurer of the United States are either covered into the Treasury as moneys for the exclusive use of the United States or are credited to the official checking accounts of the various depositors concerned for further disposition in accordance with the lawful status of the receipts involved. For the latter class of deposits the Treasury Department furnishes a general banking procedure for all official funds.

There appears in the trading with the enemy act a provision as follows:

That all moneys (including checks and drafts payable on demand) paid to or received by the Alien Property Custodian pursuant to this act shall be deposited forthwith in the Treasury of the United States, and may be invested and reinvested by the Secretary of the Treasury in United States bonds or United States certificates of indebtedness, under such rules and regulations as the President shall prescribe for such deposit, investment, and sale of securities; and as soon after the end of the year as the President shall deem practicable, such securities shall be sold and the proceeds deposited in the Treasury. (Act

of October 6, 1917, sec. 12, 40 Stat. 423. See also secs. 3617, 3618, Revised Statutes.)

There is also a provision in the act of March 4, 1909, section 96 (35 Stat. 1106), United States Code, title 18, section 182, that— Every banker, broker, or other person not an authorized depositary of public moneys, who shall knowingly receive from any disbursing officer, or collector of internal revenue, or other agent of the United States, any public money on deposit, or by way of loan or accommodation, with or without interest, or otherwise than in payment of a debt against the United States, or shall use, transfer, convert, appropriate or apply any portion of the public money for any purpose not prescribed by law; and every president, cashier, teller, director, or other officer of any bank or banking association who shall violate any provision of this section is guilty of embezzlement of the public money so deposited, loaned, transferred, used, converted, appropriated, or applied, and shall be fined not more than the amount embezzled, or imprisoned not more than ten years, or both.

The office of the Alien Property Custodian is a war-time activity and appears to have about completed its functions, most of its remaining cases being involved in litigation. It is believed that such funds should now be deposited with the Treasurer of the United States, but the repeated bringing of it to the attention of the Alien Property Custodian has been without result.

STATE DEPARTMENT-ACCOUNTING SYSTEM

A survey was made of the administrative accounting records and procedures of the Department of State and the system of accounts approved by this office under date of October 2, 1928, was changed to conform to improved accounting practices which had been adopted. The revised system embraces all appropriations and funds under the control of the department and provides a full accounting under each. A Statement of General Ledger Balances and a Statement of Balances Under Appropriations as of June 30, 1932, will be found on pages 108, 109. District fiscal offices; establishment and operation.-See page 25.

BUREAU OF INTERNAL REVENUE PROCEDURE

With the cooperation of the Commissioner of Internal Revenue there is being installed in the offices of collectors of internal revenue a uniform accounting procedure for all disbursing accounts. The use of ledger accounts, to which by double-entry process all transactions relating to disbursing accounts will be posted currently, will enable better control of all appropriated funds.

UNITED STATES BOARD OF TAX APPEALS STENOGRAPHIC REPORTING SERVICE

On June 26, 1926, the United States Board of Tax Appeals entered into a renewal contract with a reporting company for stenographic reports of all procedings on appeals before the board at Washington and elsewhere in the United States as ordered.

The contract made for the term ending June 30, 1927, contained provisions under which it was continued in force from year to year until June 30, 1932. The contractor presented to the board vouchered claims in which were set forth the docket numbers of the proceedings, the names of the petitioners, and the number of pages of transcripts and/or hours of service alleged to have been furnished in each pro

ceeding at the contract price. Such claims, after being administratively approved, were certified to the disbursing clerk of the board, who paid them and claimed credit therefor in monthly accounts which were transmitted to the General Accounting Office for settlement.

In September, 1931, a selected few of such vouchered claims were compared with the record of proceedings to which they pertained kept in the public files of the board. By this comparison it was discovered that in many instances the allegations made in the vouchered claims were at variance with the public records, both as to quantity and nature of the services rendered. The chairman of the board was advised on December 7, 1931, that such vouchered claims of the reporting company as might then be on hand unpaid and such as might thereafter be received should be transmitted to the General Accounting Office for direct settlement. On December 12, 1931, this office undertook an investigation of all vouchered claims of the contractor that had been paid by the disbursing clerk for the board. This led to the discovery that a very inadequate administrative examination had been made of such claims before they were administratively approved and certified for payment; and that the statement of the contractor as to services performed had almost invariably been accepted without question, and by reason of that fact he had in many instances claimed and had been paid for services that the official records of the board clearly show he did not render. On June 30, 1932, the total overpayment disclosed by the investigation was more than $12,000.

By written notice given by the board the contract was terminated as of June 30, 1932, and it is expected the entire amount overpaid will be recovered from earnings on account of services performed under the contract during the period from December 7, 1931, to June 30, 1932, payment for the greater part of which has been withheld; otherwise it will be necessary to effect recovery from contractor and his surety.

DISTRICT OF COLUMBIA

In the annual report for the fiscal year 1930 (p. 51) the attention of the Congress was invited to efforts which the General Accounting Office had made to have installed in the government of the District of Columbia modern and adequate accounting systems and procedures. During the fiscal year 1931 the system proposed was accepted in principle and the installation in the office of the auditor begun. During the fiscal year 1932 objections of the auditor for several essential components of the system prescribed were adjusted, and it is hoped the installation will be completed within a reasonable time.

The system prescribed for the auditor provides the essential controls into which such records as are necessary in the several departments of the government of the District of Columbia will be coordinated.

One of the outstanding features of the accounting procedure now being established is the provision of a systematic check and control over revenues the need for which has been made manifest by discovered shortages during the past year.

Because of the provisions of the act of February 27, 1931 (46 Stat. 1424), a modified accounting procedure for the department of vehicles and traffic has been made necessary. A complete procedure for handling and recording the financial transactions of that department-including adequate controls, properly coordinated with the

system in the office of the auditor-has been developed and accepted and will be installed effective July 1, 1932.

Work has also been begun on a more satisfactory accounting procedure for the storehouse and shop activities of the District of Columbia, and during the fiscal year 1933 it is expected that many-if not all of the subsidiary installations in other departments will be completed.

Columbia Institution for the Deaf; procedure. See page 49.

Penal and correctional institutions; funds of inmates and commissary and welfare activity funds. See page IV.

COLUMBIA INSTITUTION FOR THE DEAF-PROCEDURE

A survey was made of the accounting and fiscal procedures of the Columbia Institution for the Deaf with a view to expanding the system of accounts approved by this office on June 13, 1929, for use by the institution. As a result of the survey a modification of the accounts, forms, and procedures in use appeared desirable to meet the growing administrative needs and to establish proper accounting records for all assets, liabilities, expenses, and income of the institution. Accordingly, a more comprehensive and wider system was submitted to the authorities of the institution and will be put into operation in 1933.

The funds to pay the operating and other expenses of the institution are derived from two general sources

Appropriated moneys ($128,000 for 1933).

Institution revenues, consisting of

Gallaudet College tuition.

Kendall School tuition.

Sale of farm products.

Interest and dividends from endowment funds.
Miscellaneous sources.

The amount received from the municipal government of the District of Columbia for the maintenance and instruction of persons admitted to the institution from the District ($29,500 for 1932) was deposited in the Treasury of the United States as a repayment to the appropriation. All other revenues, including "Students' funds," consisting of moneys placed with the disbursing officer for safekeeping and deposits as security for property damage, have been deposited in local banks.

Under the new system all revenues will be deposited in the Treasury of the United States, subject to the check of the disbursing officer, and the amount received from the District of Columbia will be recorded and handled as other revenues. The depositing of revenues received from the District of Columbia as other revenues will keep distinct all revenues from appropriated moneys and enable the Congress to readily ascertain the exact revenue of the institution.

CONTRACTS

Volume of Federal contracts.-Existing law requires that all Federal contracts made "by virtue of any law, and requiring the advance of money, or in any manner connected with the settlement of public accounts," be deposited in the General Accounting Office, where

essential for audit purposes and for the determination of their legality. (Sec. 3743, Rev. Stat., as amended by the Acts of February 27, 1877, sec. 1, 19 Stat. 249, July 31, 1894, sec. 18, 28 Stat. 210; and secs. 304, 310, act of June 10, 1921, 42 Stat. 24, 25; U. S. C., title 41, sec. 20.) During 1932 the General Accounting Office received and filed 227,093 Federal contracts—a monthly average of over 18,924. said 227,093 contracts 26,189 were postal contracts. This office promptly examines the contracts upon receipt for errors, omissions, or other defects. (See pp. 75, 91, 123.)

Of

Collections of indebtedness due to United States in connection with Federal contracts.-There was collected during 1932 indebtedness to United States growing out of Federal contracts aggregating $87,712.35. (See pp. 105, 106.)

COLLECTIONS OF INDEBTEDNESS DUE TO THE UNITED

STATES

It is important that the Government insist upon payment of amounts due it-not alone because of Treasury requirements, but to discourage the frequently reoccurring tendency to regard public moneys as nobody's proper concern and to consider such obligations as quite legitimate to ignore or to defeat by any means.

The General Accounting Office has been constituted the Government's agency for the collection of debts due. It is charged by law with the settlement of claims and demands not only against the Government but those in favor of the Government, and is required to superintend the recovery of all debts certified by it as due the United States. (See sec. 236, Rev. Stat., as amended by sec. 5, Budget and Accounting Act, 1921, 42 Stat. 24, U. S. C., title 31, sec. 71; act of July 1, 1894, sec. 4, 28 Stat. 206, as amended by sec. 304 of said Budget and Accounting Act, 1921, 42 Stat. 24, U. S. C., title 31, sec. 93; and sec. 292, Rev. Stat., as amended by act of June 10, 1921, sec. 304, 42 Stat. 24, U. S. C., title 31, sec. 109.)

Moneys may become due the Government in many ways, but, in a majority of instances, aside from taxes, indebtednesses to the Government arise in connection with contracts or from unlawful or excessive payments made by disbursing officers.

Taxes are for collection by the administrative agencies organized for the specific purpose, but when found uncollectible by such agencies they nevertheless remain for collection by the accounting officers as debts due the United States, and the accounting officers frequently are effective through exercise of their authority and facilities to apply to such indebtednesses amounts due or becoming due to the debtors. from other administrative agencies of the Government.

Indebtednesses due the Government and damage or loss arising in connection with contracts are as varied in character as are the activities of the Government. Many are practically unavoidable, but some may be avoided. Defaults of contractors which generally cause damage or loss to the Government may not always be avoided by public agents, but faulty administration and unlawful or erroneous payments by disbursing officers frequently operate to create such difficult conditions as often to cause serious loss to the Government by preventing the accounting officers from making collection of amounts actually due the United States.