Open-market purchases and procurements, standardization of; legislative recommendation.-See page III. Audit by General Accounting Office; restraining influence of. on improper disbursements. See page 96; also 1931 report, page 87; 1930 id., pages 82, 86; 1928 id., pages 37, 38, 45; 1927 id., pages XI, XII, 24, 45, 55; 1926 id., pages 26, 28; 1925 id., pages 14, 17. United States Shipping Board Merchant Fleet Corporation; audit of financial transactions of, and lack of adequate audit provision for purpose. See pages IV, 64, 116. Reconstruction Finance Corporation; lack of any audit provision for financial transactions of.-See pages 13 to 18. Disbursing office system, independent; need for. See page III: also 1931 report, page III; 1929 id., page 16; 1928 id., pages IV, V; 1927 id., pages IV, XII, 9, 42; 1926 id., page 3. PREAUDIT The Congress has been advised, in previous reports, of the "preaudit" plan of audit-the auditing and certifying of vouchers before payment, of the nature of preaudit, its advantages, its essentialness in the absence of an independent disbursing officers' system—the urgent need for which has been brought to attention in previous reports, and other detail. (See 1926 report, pp. 3, 29; 1927 id., pp. 43 to 47; 1928 id., pp. 36 to 39; 1929 id., pp. 75 to 77; 1930 id., pp. 82 to 85; 1931 id., pp. 88 to 91.) Briefly outlined, the preaudit procedure is for disbursing officers to schedule and forward to the General Accounting Office before payment vouchers which have been presented to them for payment upon administrative approval. The General Accounting Office examines the vouchers, certifying for payment as lawful claims those so shown by the facts or noting exceptions when objections to making payment are found, the vouchers being returned to the disbursing officer for action accordingly. The vouchers on which payments are made are submitted with the accounts to the General Accounting Office, where they are checked, and, if no further objection appears, are filed, thus completing the procedure. Erroneous payments are prevented, no need for collection of such payments arises, no expense incident to collections of indebtedness is incurred, and no loss of uncollected indebtedness results. Under the "postaudit" plan-audit after payment-disbursing officers pay administratively approved vouchers received by them before submitting them to the General Accounting Office for audit, the vouchers thus paid are examined in the administrative offices and scheduled and sent to the General Accounting Office for audit, the General Accounting Office on examination withholds credit to the disbursing officers to the extent it finds the vouchers paid were erroneously paid, prepares notices of exceptions as to the items for which it has withheld credit, and forwards such notices to the disbursing officers, and the disbursing officers and or administrative officials correspond with the parties to whom the disbursing officers have made the erroneous payments in the effort to collect the amounts improperly paid. Payees are reluctant to pay back money received in the belief, generally, that it was rightfully due them. Many and varied reasons are advanced for not refunding the money These reasons are considered by the administrative office and usually are referred to the General Accounting Office for its consideration. Much correspondence is necessary, and, in many instances, legal action must be resorted to in order to recover moneys erroneously paid from appropriations made by the Congress. During 1932 the General Accounting Office referred to the Department of Justice for collection through suit 43 cases of indebtedness due to the United States, aggregating $128,379.35. The names of the debtors and the amounts due to the United States are found on page 107. In some cases, due to various causesdeaths, bankruptcy, "relief" legislation, or otherwise the moneys are never recovered. It will therefore be seen that under the postaudit plan the expense to the Government is greater than that of the preaudit plan-aside from collection expense-in the added administrative and accounting action necessitated, the total of the expense of the collection of the improperly paid-out amounts, administrative, accounting, and judicial-and the total of the losses to the Government of uncollectible improper payments. The preaudit plan has been heartily indorsed by administrative officials, particularly those directly concerned with the disbursement of public funds, and has steadily increased in favor since its inauguration in the audit division of this office, March 1, 1927. I view its fundamental soundness, practicability, and efficiency to have been demonstrated. On June 30, 1932, the General Accounting Office, through its audit division, preaudited, in whole or in part, the vouchers of the following departments and establishments: Interior, Department of the Education, Bureau of. Indian Affairs, Bureau of. Secretary, Office of the. Territory of Alaska, Office of Governor of. Justice, Department of General Agent, Office of the. Prohibition, Bureau of. Superintendent of Prisons, Office of. Labor, Department of Children's Bureau. Conciliation Service. Immigration, Bureau of. Labor Statistics, Bureau of. Naturalization, Bureau of. Publications and Supplies, Division of. United States Employment Service. United States Housing Corporation. Navy Department Marine Corps. Supplies and Accounts, Bureau of. State, Department of— Miscellaneous. Treasury Department Comptroller of the Currency. Customs, Bureau of. Federal Farm Loan Bureau. General Supply Committee. Industrial Alcohol, Bureau of. Internal Revenue, Bureau of - Miscellaneous vouchers. Narcotics, Bureau of. Supervising Architect, Office of. United States Coast Guard. War Department Finance Office. Militia Bureau. National Guard (vouchers of representatives of deceased members of). Independent establishments— Volume of vouchers preaudited through audit division, percentages correct, and number certified for less than administratively approved or disallowed in full as invalid claims.-There were preaudited during 1932 through the audit division 350,697 vouchers. Of the 350,697 vouchers preaudited 323,528, or 92+ per cent, were found correct and 21,169 were certified for less than administratively due or disallowed in full as invalid claims. The percentages found correct for the respective departments and establishments ranged from 66+ to 98+. (See pp. 119 to 121.) Transportation claims preaudited, value, volume, and percentage correct. The preauditing of transportation claims and demands through the claims division was continued during 1932. The total number of transportation bills preaudited was 217,930, an increase over 1931 of 12,417 bills. Of said preaudited bills, 96,970 were for freight and 120,960 for passenger service. The total amount thereof as claimed was $17,310,363.25, an increase over 1931 of $1,461,880.18. Of said $17,310,363.25 claimed value, $7,893,980.43 was for freight and $9,416,382.82 for passenger service. The total of the claimed amount disallowed was $125,954.98, of which $107,736.76 was for freight and $18,218.22 for passenger service. The percentage of the claimed amount allowed was 99+. (See p. 119.) All transportation claims and demands by common carriers to which the transportation preaudit plan of this office of February 1, 1927, is applicable were preaudited, except those of the Department of Justice (other than prison freight, Bureau of Pro- National Training School for Boys (appropriated for under United States Employees' Compensation Commission. The General Accounting Office can not preaudit transportation claims and demands unless they are administratively submitted to it before payment is made. The six activities above have not (except to the extent indicated) submitted their transportation claims and demands to this office for preaudit-differing in this respect from Federal activities generally-and, in consequence, a preaudit thereof has not been made. (See 1931 report, pp. 90, 135; 1930 id., pp. 84, 85; 1929 id., pp. 76, 116, 122, 123; 1928 id., p. 37; 1927 id., pp. 44, 45.) Postal accounts and claims preaudited; volume and value. The General Accounting Office preaudited during 1932 through its Post Office Department division 260,712 accounts and claims, of the value of $185,707,297.64. (See p. 122.) These preaudited postal expenditure accounts and claims are exclusive of payments by postmasters or disbursing clerks or officers. (See 1928 report, p. 38; 1927 id., p. 46.) The classes of postal accounts and claims preaudited and sections of the Post Office Department division in which preaudited appear in 1928 report, pages 38 and 39. Field preaudit. Except for postal claims and accounts and certain prison and prohibition vouchers preaudit has not as yet been applied to the field to any appreciable extent. Certain vouchers scattered throughout the field were forwarded to Washington offices for submission for preaudit-primarily as vouchers of a class. Civil service retirement and disability fund; annuities, preaudit procedure. See page 43. POSTAL MATTERS Post Office Department division; functions, organization, duties, and location. An outline of the functions, organization, and duties of the Post Office Department division of the General Accounting Office is found in 1928 report, pages 60, 61. See also 1929 report, pages 92, 93. Due to the lack of space in the General Accounting Office Building this division is still located at Eleventh Street and Pennsylvania Avenue NW., in the Post Office Department Building. Contract examining unit.-Effective November 19, 1931, there was established in the administrative section of the division a "Contract examining unit." Contracts with respect to postal activities are to a large extent governed by special statutes. This unit serves as a clearing house for the examination as to legality, checking, and filing, of the vast number of postal contracts entered into, and, in this respect, corresponds to the contract service of the audit division, where other classes of Federal contracts are examined and checked as to legality and filed. (See pp. 75,123.) All questions arising out of such examination of postal and other contracts of a character necessitating their being brought to the attention of the Comptroller General are referred by these respective divisions to the office of the general counsel for the formulating of a decision or of other proper disposition for the consideration and use of the Comptroller General in final action thereon. (See p. 59.) The postal contracts thus examined, checked, and filed by this new unit are classified, as follows: Contract stations. Gasoline (coordinator). Hire of vehicles. Mail messenger. Ocean mail. Pneumatic-tube service. Post office garages. Post office quarters. Purchase of automobile parts and accessories, discount on. Purchase of supplies, equipment, and miscellaneous services, where amount involved in excess of $500. Railway post office terminals. Screen wagon. Telephones. Tolls and ferriage, Rural Delivery Service. Transportation of letter carriers and other post office employees. (As to other classes of postal contracts, see pp. 90 to 92.) The unit also examines for legality (with the exception of certain claims examined elsewhere) all questions arising in the division in connection with payments to executors, administrators, guardians, receivers, or persons acting in similar capacities. Due to difficulties experienced in the audit of vouchers for rent for post office quarters paid to executors or administrators of estates of deceased lessors on account of the variableness of State statutes as to their right to collect |