Mr. BUCK. Not under this diagram. He is on a straight line from the Executive, you see, there (indicating).

Senator ToWNSEND. The President would direct the Director of the Budget, and the Director of the Budget would apportion it to the administrative officers, is that the idea?

Mr. BUCK. That is right, going down to (5), then on to (6), when you meet the administrative officers.

Representative TABER. The administrative officers according to this, would deal through the Secretary of the Treasury with the Budget, is that the scheme?

Mr. BUCK. No; that is not exactly correct. They would make their applications directly to the Director of the Budget for their apportionments, but once those apportionments have been made and approved by the Director of the Budget they then go from (4) to (5), as you see, in order to be placed upon the books of the Treasury. We propose controls over these apportionments, general controls to be set up on the accounts of the proposed fiscal control bureau.

Senator BYRNES. Does it not do that now? The Director of the Budget makes the apportionment and it goes then to the accounting books of the Treasury.

Mr. BUCK. Yes; that is practically what happens now, except that the controls on the apportionments in the Treasury books are not very good at the present time.

Senator TOWNSEND. Will the Secretary of the Treasury have any control when it goes up to him? Can he refuse or accept the administrative officers' apportionments?

Mr. Buck. No, the Director of the Budget does that. That is his job.

Senator TOWNSEND. All that the Secretary of the Treasury does then is accept it when it comes back to him and put it on his books?

Mr. Buck. That is right. That having been done the apportionments then go to the chief administrative officers at (6). Now, those chief administrative officers are located here, as you see in the District of Columbia. They may have numerous field services to which they will wish to allot those apportionments, and they proceed to do so. Having done that, they notify the control section of the Treasury as to their allotments. That is (7). From there a notification goes to (8), which is the Regional Treasury Accounts Office. Senator TOWNSEND. Is that new?

Mr. BUCK. That is new. That is new in this sense that we do not have it connected at the present time with the general accounting system.

Senator TOWNSEND. Have you outlined how many regional treasury offices would be required?

Mr. BUCK. Approximately 20. Perhaps not so many.

Representative TABER. Would this include the Post Office, the War, and the Navy?

Mr. Buck. You mean the regional accounting system?
Representative TABER. Yes.

Mr. BUCK. Yes.

Representative TABER. Their accounting and disbursing would all be handled through the Treasury?

Mr. BUCK. Well, the gathering of the information would be in this regional accounting office, which is an arm of the Treasury, and

more particularly an arm of this fiscal control unit or bureau of the Treasury.

Senator TOWNSEND. Well, is that an information bureau?

Mr. Buck. No; it is a field accounting organization where most of the detailed accounting will be done.

Representative TABER. Well, now, have you given consideration to the effort that has been made in the Treasury to handle the disbursing situation?

Mr. Buck. Yes; I am somewhat familiar with it.

Representative TABER. Now, it has been my job to go into it quite considerably on the Treasury appropriations. Frankly, those gentlemen have more than they can absorb right now, and do it efficiently. Mr. BUCK. Well, that is a problem, may I say, that is apart from this regional Treasury accounts office. You will see to the right there the regional disbursing office, which is, of course, fashioned upon the structure which you have now.

Representative TABER. Now, a pretty careful study by even those gentlemen who are attempting to handle the disbursing in the Treasury indicate to them that the War and the Navy Departments and the Post Office Department have quite efficient set-ups at the present time. Have you made a study that indicates anything different?

Mr. Buck. Well, I would not say that I have made a study of it. I have gotten certain information that leads me to believe that perhaps the system of the Post Office is overrated at the present time, quite considerably, I should say.

Representative TABER. Well, some of the folks who have studied it have been led to believe that the Treasury Disbursing Office had been very much overrated.

Mr. BUCK. May we follow this, please, until we come to that point? Senator TOWNSEND. May I ask another question there? How many regional Treasury disbursing offices do you figure there will be in the country?

Mr. Buck. About the same number as the regional accounting offices. They would be side by side so as to expedite the business, you see.

Senator TOWNSEND. About 20 of each?

Senator BYRD. Would that increase the cost, having 20 additional Treasury or regional offices?

Mr. BUCK. That is a bit difficult to say. At the present time, under the Emergency Appropriations Act of 1935 and 1936, you have these regional Treasury accounts offices, and you have a great many more of them than you will need when you get the system fully centralized. Now there is one in each State, as you know. Of course, I do not think that that many would be at all necessary. Perhaps 20 would be the limit that would be needed, and the number might be even smaller than that. Perhaps you could get along with one in each Federal Reserve district, which would be 12.

Of course, Senator, it is difficult to say as to what the cost of those services would be once they had been set up. I should think the Treasury could give you some idea from its experience with the emergency appropriation expenditures, in connection with which it has already set up these regional accounting offices.

Senator BYRD. Well, now, you are transferring some duties from the present Comptroller General to the Treasury Department, and it

will necessitate having two organizations in many instances located throughout the country. Could you furnish the committee with a memorandum as to what extent the present cost of the Comptroller General's office will be reduced and to what extent the cost of doing this additional work by the Treasury Department will increase the appropriations, so as to determine whether the net cost will be greater or less?

Mr. Buck. It is very difficult to determine until you have your structure set up. This is just a provisional scheme in order to give you a general picture of what is proposed.

Senator BYRD. You made a definite recommendation that certain specific duties that are now performed by the Comptroller General's office should be transferred to the Treasury Department. It seems, following that specific recommendation, there ought to be some way of telling whether the cost of the present Comptroller General's office will be reduced by reason of transferring these duties from him; and if so, to what extent, and then the increased costs that will be placed on the Treasury Department for performing these new duties.

Mr. BUCK. It might be possible once you had determined upon the general organization to work out the approximate cost.

Senator BYRD. But you have made the recommendation in your general scheme that the duties of the Comptroller General be transferred?

Mr. BUCK. Not on the score that it is going to work great economy for the Government but on the score it will give for the first time in the history of this country a good accounting system, which we do not now have.

Senator BYRD. I am not discussing that. The question of the cost is one matter to be considered, and if it is going to reduce costs the committee should know it, and if it is not going to reduce costs the committee should know it.

Mr. BUCK. Yes; but in establishing any new procedure, or any new structure, it is very difficult for one to reduce it right at once to a dollars-and-cents basis. That I haven't attempted to do. I simply attempted to get the procedure on a diagram and set it before you. I honestly think that the cost, if you include the field service that the Treasury is now operating, would not be any greater than at the present time, and the accounting service would be infinitely better.

Senator BYRD. Well, there certainly would be considerable additional cost at the Treasury Department in Washington. How many claims, Mr. Cochran, do they have a year?

Representative COCHRAN. Nearly a million-nine-hundred-and-someodd thousand.

Senator BYRD. They have got nearly a million claims to begin with. Mr. BUCK. Senator, you must bear in mind that this proposed division of duties here puts most of that work in the field, so you will avoid the necessity of having another staff of the division in Washington and the delays entailed by it.

Senator BYRD. You think the present organization of the Treasury Department in the field can audit a million claims without additional cost?

Mr. BUCK. I am not saying that they can or cannot. I think once they get organized with an efficient personnel that is handling the work with capable auditors, that they can do it.

Senator BYRD. They must be greatly underworked now if they can undertake to audit a million claims at no increased cost over what they are now doing; they must have many people in these different regional offices that they do not need if they can do this additional work and not have any additional cost.

The CHAIRMAN. I think it would be helpful to let Mr. Buck go ahead and explain the system that he has worked out here, and then to cross-examine him on it, if that is satisfactory.

Senator BYRD. Yes; that is satisfactory.

Mr. BUCK. Well, I think we ran down to the figure (9) on the chart, where the allotments reached the operating units of the large executive departments.

Then these operating units, through their pay rolls and other services, produce certain obligations which become encumbrances on the allotments at the regional Treasury accounts office at (10). That enables this office to know what obligations are outstanding against the allotments, against the apportionment, and consequently against the appropriations. The regional office will report the encumbrances to the Treasury Department. That will enable the Treasury Department, as is now the case with the emergency appropriations, to report the encumbrances as often as it seems necessary. At the present time they are being reported every 10 days, as you know, under the emergency appropriations.

Having approved the obligations, you go to (11) where the work is completed and the pay roll and vouchers prepared when those documents have been checked by a certifying officer at (11), they are sent over to the regional Treasury accounts office at (12). There they are carefully preaudited, and if found correct in all details they are then sent to the regional Treasury disbursing office at (13), and there the checks are drawn and released to the payees, as you see, down at the bottom of the chart under (13). Of course, following the dotted line, those checks then clear around through the commercial banks, the Federal Reserve, and finally go back to the United States Treasurer, who is in the Treasury Department.

Now, from that point the paid vouchers go to (14), which is the regional auditing office, directly under the proposed Auditor General's office. That regional office is in the field. If possible it should be next door to the regional Treasury accounts office, and the regional disbursing office, so that the postaudit may be performed very rapidly. It is hoped that the postaudit work will be kept up to the point where it could be cleared within 48 hours. If so, it would then be possible to send the checks out after the regional auditing office had performed its postaudit.

Senator TOWNSEND. Haven't the checks already been paid by the Treasury?

Mr. BUCK. No; if this regional auditing office operated fast enough, they will still be in the regional disbursing office at (13).

Representative TABER. How could they go there and go direct from (13) to the payee?

Mr. Buck. They haven't gone to the payee yet. I just anticipated myself that much. I said it is quite possible, if the postaudit can be done within 24 or 48 hours, that it may be done prior to the checks being released. No checks would then be released that were improper.

Representative TABER. Then you would have two preaudits in that event, would you?

Mr. Buck. Yes; but the second one would be the independent audit; that is, the postaudit under the Auditor General.

Representative TABER. Do they have an audit of any kind now which is similar to what is proposed in the Treasury Accounts Office? Mr. Buck. No; only in the emergency organization that I spoke of, that controls the emergency appropriations for 1935 and 1936. In the control of the regular appropriations, there is no regional accounts office.

Representative TABER. The auditing is all done in the individual departments? Mr. BUCK. Yes.

Representative TABER. In separate departments?

Mr. BUCK. Yes. Under the present system, the vouchers and the pay rolls you see there is no (12)-go from the certifying officer in the operating departments to (13), and the disbursing officer makes a mathematical check, you might say, of the vouchers and pay rolls before he issues the checks.

Representative TABER. There isn't anything else proposed for the disbursing officer under this?

Mr. Buck. Except that the regional disbursing officers will be closer tied up with the regional accounts offices, and that the disbursing functions will be carried on more rapidly than they are now. Senator BYRNES. Today you have got practically $7,000,000,000 going through this regional Treasury accounts office, have you not? Mr. BUCK. That is on the emergency?

Senator BYRNES. Yes.

Mr. BUCK. Yes; that is all told. At any one time, of course, it is very much less.

Senator BYRNES. I meant that.

Mr. BUCK. Yes.

Senator HARRISON. After you leave (13) the vouchers are paid, they are returned then to the regional Treasury disbursing office? Mr. BUCK. Yes.

Senator HARRISON. Then you get to (14), that is where the independent auditing takes place?

Mr. Buck. That is right. It is a postaudit, which is a thorough check of the vouchers and all the documents relating to them. The regional auditor will keep no accounts, but he will have access constantly to the regional accounting office and to any documents that may be useful in performing the postaudit.

Senator HARRISON. Then in (14), as he looks over the vouchers he finds certain questionable vouchers that have been paid. Is that right?

Mr. BUCK. That is right.

Senator HARRISON. And he makes exceptions?

Mr. Buck. He makes exceptions and those exceptions go to (15), which is the regional Treasury accounts office. The purpose of that is to let this regional accounts office know what the exceptions are, so that it may prepare explanations which will then go to the Treasury. At the same time those exceptions go from the regional office to the central office of the Auditor General, here in Washington following that line on the right.