The CHAIRMAN. I understand that. You do not mean, then, to recommend that the existing provision of law forbidding the reappointment of a Comptroller General should be applied to the Auditor General?

Mr. BROWNLOW. Yes, sir; we do.

The CHAIRMAN. You do? Well, why?

Mr. BROWNLOW. Largely because our whole theory on which we wrote the report was that we would leave that agent of Congress, so far as his tenure of office, and so forth, was concerned, just as the Congress had already set it up, but we would endeavor to straighten out the confusion between the function of control and of audit and restore one to an executive branch of the Government and leave the other in an Auditor General and provide a plan whereby he would report to the Congress in order to sharpen up the accountability of the Executive to Congress, in order that Congress might get reports with respect to the fiscal affairs of the country which it has not had and which under the present machinery, in our opinion, it cannot get.

The CHAIRMAN. You are proceeding on the theory, then, that Congress has defined a policy with respect to the reappointment of an officer of this character?

Mr. BROWNLOW. Yes, sir.

The CHAIRMAN. You do not state that you gave consideration the question of the merits underlying the policy?

Mr. BROWNLOW. We did not, sir. Our reference was the executive branch and within the executive branch the administrative management, and, as I said in my opening statement here the other day, we got over into another preserve only once when we suggested that in order to make the usefulness of this agent better that the Congress set up a joint committee on accounts. But we accepted the congressional policy as laid down as far as tenure, and so forth, was concerned, and did not examine it on its merits.

Representative GIFFORD. Mr. Brownlow, where did you get the idea that he ought to be retired when he is 70 years old? Mr. BROWNLOW. That is in the present law, an act of 1921. Senator BARKLEY. That answers where you got it.

Representative GIFFORD. If that is the present law I cannot add the other suggestion, but I was going to say you ought to grant a pension and let him retire voluntarily or not as he prefers.

Mr. BROWNLOW. In section 308 a new subsection (c) has been added providing for an annual report to Congress by March 1 of the audit for the preceding fiscal year in accordance with accepted principles of auditing followed in auditing the fiscal transactions of large private corporations. He shall also furnish an appropriate certificate of audit.

The CHAIRMAN. How does that differ from the existing law, Mr. Brownlow?

Mr. BROWNLOW. There is no particular date, and this sharpens up an audit and it also requires him to furnish an appropriate certificate of the audit. It would appear to a layman, as I am, that the bill of 1921 required him to do that. The office has been in existence for 15 years and no such report has ever been made from the General Accounting Office to the Congress, and we think it should be made.

The CHAIRMAN. I have heard that statement contradicted by others who apparently have some information on the subject. Are you sure you are true that no report was ever made by the Comptroller General to the Congress?

Mr. BROWNLOW. Oh, he has made an annual report, but not a report of his audit, which is a very different thing, not the kind of a certificate that a c. p. a. that you hire in your private business would make, who would come in and examine your books and say he had verified them with certain exceptions.

Representative TABER. Why didn't you make it January 1 so that when Congress comes in they will have a chance to check it up a little bit before they adjourn?

Mr. BROWNLOW. I hope that can be advanced and I believe under the scheme of current audit which we propose they will catch up.

Of course, most of the activities of the Comptroller General are post-audit, and the Comptroller General is anywhere from 2 weeks to 2 years or 3 years behind, the way the office is at present worked on the post-audit, and therefore he could not make a report. And I do not believe, centralized as it is, anybody could do it.

The criticisms I am making here do not apply to the particular individual or any individual. They apply to and arise primarily out of the form of the structure of that office which we think is deficient. I make this recommendation: We believe that the structure should be so improved so that if identically the same persons were in charge they could be current with their audit, that they could within 9 months, as we suggested, after the close of the fiscal year make a complete report and verification. That is not now done and, in our opinion, is not now possible, because of the combination of the functions of control and audit. Remember that most of the work of the Comptroller General at the present time, as far as the number of vouchers is concerned, would be just exactly the same as we would leave with the Auditor General. But we think the confusion of the functions of control and of audit is a structural defect and that, if it were straightened out, then Congress could receive an annual audit report at least within 9 months after the close of the fiscal year. It does not have it all now and some of the work is very much further behind than that, so we have suggested March 1. Representative COCHRAN. Mr. Brownlow, section 308 ties in with section 314 (b) in that you say the General Auditing Office shall examine all copies of the certificates of settlement which the Secretary of the Treasury is required by section 314 (b) to furnish it, and so forth. Now, let us get over here on page 35, where you refer to section 314 (b). You in no way refer to section 317 or to the sections which provide for the transfer of the settling of any public accounts by the Secretary of the Treasury. In section 317 you provide that the term "public account" shall include all claims. You do not provide, so far as I see here, that the General Accounting Office shall examine all copies of the certificates of settlement in reference to the public accounts which you classify as claims. Why do you leave that out?

Mr. BROWNLOW. That is a question I would like to refer to Mr. Hester.

The CHAIRMAN. Very well, Mr. Hester may answer it.

Mr. HESTER. The certificates of settlement cover all public accounts including claims.

Representative COCHRAN. Well, if that be true, do you provide anywhere where the new set-up shall pass on the settlement of these public accounts, including all claims?

Mr. HESTER. Yes; section 308 (a).

Representative COCHRAN. Before they are paid?

Mr. HESTER. Oh, no.

Mr. BROWNLOW. Oh, no.

Representative COCHRAN. Then you are going to let the Secretary of the Treasury, the spending agency

Mr. BROWNLOW. Just as it is now in most cases.

Representative COCHRAN. Oh, no. You are going to let the Secretary of the Treasury settle all claims against the Government, taking all that work that is now in the General Accounting Office out and there will be no review of the settlement? Is that correct? Mr. BROWNLOW. There will be a review of the settlement. Representative COCHRAN. By whom?

Mr. BROWNLOW. By the Auditor General.

Representative COCHRAN. That is what I mean.

Mr. BROWNLOW. Who reviews the Comptroller General now when he makes a settlement?

Representative COCHRAN. The Comptroller General is not reviewed now, as I understand.

Mr. BROWNLOW. Certainly, and we think everything ought to be reviewed.

Representative COCHRAN. Just a minute, let me finish. Except by the courts; there is an appeal to the courts from the Comptroller General in certain cases. There is the review, if one is justified. Mr. BROWNLOW. Yes; in certain cases.

Senator BARKLEY. Very uncertain cases.

Representative COCHRAN. Let me recite this: Here is a contract on a public building, the contractor is performing under a contract; Congress enacts a law which requires him to spend additional money that he did not anticipate at the time he made the bid; he goes to the Comptroller General and he files a claim for additional money; the Comptroller General considers that claim, when it is an appeal from the executive branch of the Government which did not allow the claim. You are putting that now into the hands of the Secretary of the Treasury?

Mr. BROWNLOW. If this bureau

Senator BARKLEY. With no review by the Comptroller General? Mr. BROWNLOW. No.

Representative VINSON. Take the three sections together-that is, sections 308, 314 (b) and 317-which refer to the certificates issued by the Secretary of the Treasury in settlement of public accounts and require the certificates to be certified to the Auditor General, does that include all claims and demands down here in section 317. Public accounts is a specific term which includes all claims and demands.

Mr. BROWNLOw. But he certifies the settlement only.

Representative VINSON. I see.

Mr. BROWNLOW. And he must make a daily report of that transaction,

Representative COCHRAN. And he certifies

Mr. BROWNLOW. He is checked right there at the time, not 3 years later.

Representative COCHRAN. In other words, he certifies his decision? Mr. BROWNLOW. He certifies the decision that has been made. Representative COCHRAN. Has been made?

Mr. BROWNLOW. Yes.

Representative COCHRAN. But only for record purposes?

Mr. BROWNLOW. No. If he takes an exception he makes an immediate report to the Secretary of the Treasury.

Representative COCHRAN. Before the money is paid?

Mr. BROWNLOW. No.

Representative COCHRAN. After the money is paid?

Mr. BROWNLOW. After the money is paid. That is now the case with most of the claims against the United States with the exception of transportation and a relatively few that are now preaudited.

Representative COCHRAN. You are misinformed. The Comptroller General receives thousands and thousands of claims other than traveling claims, and I will get a statement for the record that will show that is correct.

Mr. BROWNLOW. Not nearly all of them. It is not passed on until after the disbursing officer has paid the money.

Senator O'MAHONEY. Mr. Brownlow, you do not mean to have the committee understand that under the system you are recommending here the Auditor General in no event would make an exception to a spending transaction until after it had been completed? My understanding is that under this set-up the Auditor General would have a representative in each of the spending agencies auditing the expenditures as they are being made.

Mr. BROWNLOW. Yes.

Senator O'MAHONEY. And if he should find, for example, that in any particular department an expenditure was being made which he thought was not in accordance with law, he would take exception to it immediately, would he not?

Mr. BROWNLOW. Immediately.

Senator O'MAHONEY. And make report to the head of the department and to the Congress?

Mr. BROWNLOW. Yes; but he would not have the power to stop the expenditure.

Senator O'MAHONEY. But he would make an exception?

Mr. BROWNLOW. He would make an exception at once, but he could not substitute his judgment for the administrator's judgment because once he did his subsequent criticism would be no good. He would be auditing his own books.

Senator O'MAHONEY. You are stepping aside from the criticism which is being made here. The criticism which you must meet, as I take it, is the impression which has been gathered from what has been said that the Auditor General would have no power in the premises until after the complete expenditure had been made. Now, that is not at all your purpose?

Mr. BROWNLOW. No.

Senator O'MAHONEY. Your purpose is to segregate the control of spending from the auditing of the spending, but you want to provide that auditing shall keep pace day by day with the spending?

Mr. BROWNLOW. Day by day with the spending.

Representative COCHRAN. Let me give you some information which you evidently do not have: The Procurement Division makes a contract for the construction of a public building, which must be completed within a given time; it is not completed within that time limit, and they assess the penalty provided in the contract; the contractor takes exception for one reason or another, and the Procurement Division refuses to pay the contractor immediately or only pay him in part; he appeals from the decision to the Comptroller General, who decides that case; and if the Comptroller General, as in many, many instances, refuses to pay the contractor, he takes the case to the Court of Claims.

Mr. BROWNLOW. This would go from the Treasury unit in the same way as it did before 1921. I may say in connection with that that we would like to submit later a precise path of the vouchers as they go through now and as they would go under this system.

Senator O'MAHONEY. Are there any other changes or alterations in the path?

Mr. BROWNLOW. Yes, sir.

Senator BYRD. Mr. Brownlow, could I ask one question?

Mr. BROWNLOW. Yes.

Senator BYRD. In connection with what Senator O'Mahoney said, your draft of the bill says that it would so show the data that the accountants could make a report on accounts that had been improperly settled?

Mr. BROWNLOW. Certainly.

Senator BYRD. Does that mean they have to be first paid? It says "improperly settled."

Mr. BROWNLOW. Yes; we are removing the settlement over into the executive branch.

Senator BYRD. Yes; but you just said that the audit could be coincident with the spending. Exactly how can you audit all accounts of the Government where they are spending money in all the 48 States?

Mr. BROWNLOW. By decentralization.

Senator BYRD. We do not have to change the law after it is improperly settled? He can only make a report after it has been improperly settled.

Mr. BROWNLOW. We make an exception to that.

Senator BYRD. Before you leave that, Mr. Brownlow

Mr. BROWNLOW. That means deemed by the Auditor General to be improper—that is, in his opinion it is improper.

Senator BYRD. For instance, if they got a $10,000 contract, your idea would be that there would be a special audit of that as you spend it, $,1000 at a time?

Mr. BROWNLOW. The agent of the Auditor General would be right there with the disbursing department.

Senator BYRD. How many auditors would it take?

Mr. BROWNLOW. I think it would take a great many fewer than we have in this system in Washington now.

Representative GIFFORD. In section 309 you state that the Auditor General should have authority to look over the books of the Treasury or any other agency. I want to ask you if the duties of the auditor