Representative BEAM. Mr. Chairman, I would like to ask the gentleman if this skeleton plan which he has set up here is based upon the current conditions of the Government, as far as paying all these checks is concerned, following the present set-up of the emergencyrelief projects, or has consideration been given to the fact that this plan will continue after these various agencies have been eliminated? Mr. Buck. It will continue as a permanent plan after those have been eliminated.

Representative BEAM. Will there be any curtailment in your plan after these projects have been eliminated?"

Mr. Buck. Not in this general plan that you see here before you, but of course the volume of work should be somewhat reduced, at least we would hope so.

Senator BYRNES. Haven't you said today that you have one of these offices in every State?

Mr. BUCK. Yes.

Senator BYRNES. And you propose under your plan to have them in every State?

Mr. BUCK. No; only to have one in each Federal Reserve district at most in each large city, which would be not more than 20.

Senator BYRNES. I am asking you whether you propose to continue all that are in existence today?

Mr. Buck. Yes; but those offices under the emergency act would be merged with these, they would be fewer in number under the permanent set-up.

Representative BEAM. They would be changed around?

Mr. BUCK. That is right.

Representative BEAM. In that way, as Senator Byrd mentioned would there be a decrease in expenses or would it be augmented? Mr. Buck. I should think they would be decreased quite considerably.

Representative TABER. You would have this set-up in your regional offices, as the result of this operation, which would be first with your regular routine layout, and your set-up would be on an enlarged scale, from what the normal requirements of the Government would suggest, and it would be a tremendously difficult job ever to break anything down. Is that not a fact? If you make your set-up the way you indicate would that not be the result?

Mr. BUCK. You mean would it be a difficult job to bring these 48 State officers now in existence under the emergency acts and combine them with the 12 or 20 regional offices that would be permanent offices?

Representative TABER. It would not be such a difficult job to do it, but when you get through with your emergency proposition, combined with the regular routine job, you would have a tremendously large set-up, and when you get rid of your emergency activities you would have a tremendous job breaking it down; an almost impossible job, from the governmental standpoint.

Mr. Buck. That is an administrative job whenever the time comes. Representative TABER. You are placing an almost insuperable job on your administrator.

Mr. Buck. With a little encouragement from Congress I should think it would not be insuperable.

Representative TABER. It is awfully hard to go through those bills and find the holes in them.

Senator BARKLEY. Of course, you are dealing here with emergency agencies. If there were no emergency agencies, assuming we would come back to what the old doctor called "normalcy", then would you recommend a different system from what you have outlined here? Mr. BUCK. No; this is the permanent system that I am talking about now. I am simply referring to this emergency organization as being a good illustration of how the proposed plan would work from the standpoint of accounting and reporting, not from the standpoint of numerous offices scattered over the country-48, I think there are, or 53 perhaps.

Representative GIFFORD. Mr. Buck, why not put (14) where (13) is, and transfer (13) to where (14) is?

Mr. Buck. You mean to have the bills pass through the regional auditing office before they are paid?

Representative GIFFORD. Yes.

Mr. Buck. Well, that interferes to a certain extent with expeditious handling, assuming your regional auditing office does not keep up its work. Now, it can do this postaudit any time within several weeks or months.

Representative GIFFORD. But the check has gone out.

Mr. Buck. It can also do the postaudit preliminary to the checks going out, if it wishes to. But it cannot hold the checks up, it can only file exceptions.

Representative GIFFORD. Well, the vouchers go to (12) and to (13), and (13) pays the vouchers, then go back again to (15) and then they go back across to (13)?

Mr. BUCK. No, no; the disbursing officer is through with it.

Representative GIFFORD. But it had all been paid. It is simply a question of fixing up the mistakes afterward, after the checks have been paid and the money has been used; is that it?

Mr. Buck. Of course, that is what happens under the present system.

Representative WARREN. That is what I wanted to ask you. After the exceptions reach the Secretary of the Treasury, what happens then?

Mr. Buck. The Secretary of the Treasury by that time will have had the explanations of those exceptions from his local accounting office. They would have reached there about the same time. He can then take up the exceptions, and he may decide that the auditor's office is correct.

Representative WARREN. Then what happens?

Mr. Buck. Then he proceeds to make the necessary recoveries. Representative TABER. How can he make recovery after the money is paid without the right to surcharge?

Mr. BUCK. You are doing it under the present system.
Representative TABER. Not very much.

Mr. Buck. It is 90 percent, as I understand it.

Representative TABER. Ninety percent of the expenditures are recovered now?

Mr. BUCK. Ninety percent of the expenditures go out before there is any audit by the Comptroller General.

Representative TABER. But not on questions where the invalidity of the expenditure has been discovered.

Mr. BUCK. There is no way of knowing that until the Comptroller General, under the present system, has before him the expenditure. Senator BYRD. The Comptroller General countersigns all checks now, does he not?

Mr. BUCK. Checks are issued only with one signature, and that is the disbursing officer, as I understand it.

Representative GIFFORD. I want to bring up simply the question of the early C. W. A. That is where there were so many checks given out for labor that was never performed because of the difficulty of showing that the men were on the work. Of course, there were a tremendous number of those. There could not have been possible any recovery from those poor persons who received that money, could there?

Mr. BUCK. Well, I should say it would be rather difficult.

Representative GIFFORD. Do you recall or do you not that they tried to hold the paymasters in those offices responsible for those checks? Mr. BUCK. So I understand.

Representative GIFFORD. They asked Congress if we would forgive them for those mistakes.

Mr. BUCK. That is right; they sought relief at your hands.

Representative GIFFORD. Congress, I do not think, did that. I wonder how it ever came out.

Mr. Buck. I suppose those exceptions are still undischarged. Representative GIFFORD. In that instance, then, they would ask for forgiveness of Congress, would they not?

Mr. BUCK. Pardon me. I did not understand your question. Representative GIFFORD. In all such claims, under a postaudit, if there was an attempt to recover after the act had been performed, it would be very difficult to hold an employee in the Government responsible, after the Treasury had handed it on? I cannot imagine how you would recover after you audited it.

Mr. Buck. Of course, you would have very much the same situation as at the present moment.

Senator BYRNES. What percentage is postaudited now?

Mr. Buck. I understand the Comptroller General now audits. mainly travel vouchers and perhaps a few other claims that he is asked by the departments to audit, and those amount to perhaps 10 percent.

Senator BYRNES. I understood you to say that 90 percent of the amount of money is now postaudited.

Mr. BUCK. Yes; under the present system, that is true. The checks have gone out and transactions are completed except that the vouchers or claims do not carry the stamp of the auditing officer of the General Accounting Office. For all practical purposes the transactions are fully completed.

Senator BARKLEY. If you exchange places with (13) and (14) all checks, all payments, regardless of whether there is any dispute about them or not, would have to be held up until they had gone through (14)?

Mr. Buck. That is what we would like to avoid. We believe too, that that is not within the province of a correct postaudit.

152419-37-14

Senator BARKLEY. But if you require that all checks, all payments, be audited in advance of payment, would not that result in an indefinite postponement of payment of practically 90 percent of the obligations of the Government about which there is no dispute?

Mr. BUCK. Of course, I have no way of judging how the Comptroller General could speed up his procedure. But according to the present rate at which he is working, it would be from 3 months to 3 years before he would be able to perform that audit so the bills could be paid.

Representative GIFFORD. Mr. Chairman, I will address this question to Mr. Gulick. He said he organized my State. He has talked so much about Massachusetts. Did they put (14) before (13) or after (13) there?

Mr. GULICK. They put the postaudit after the payment. The auditor of the State is an elected officer who makes exclusively a postaudit. There is, in addition, a control officer who is in the department of finance and is responsible to the chief executive who makes an audit before the payment. In other words, the plan suggested here is the same as the plan, essentially, that you have in Massachusetts, except that in Massachusetts there is no regional disbursing officer, there is no regional accounts office, because those are all centered in the State capitol at Boston.

Representative GIFFORD. But there is a preaudit before the bills are

paid?

Mr. GULICK. There is a preaudit by the comptroller.

Representative GIFFORD. Under the control of the Governor?

Mr. GULICK. Under the control of the Governor, and the postaudit by an auditor who is independently elected.

Senator BYRD. Mr. Buck, I asked you a few moments ago as to whether the Comptroller General countersigns checks.

Mr. BUCK. Yes.

Senator BYRD. He now countersigns warrants. You propose to take that authority away from him now and give it to the Director of the Budget?

Mr. Buck. That is right.

Senator BYRD. Countersigning the warrants gives him the control, as an independent officer, over the expenditures. That, of course, would be taken away from him under this plan?

Mr. BUCK. That control, Senator, is greatly exaggerated. You know there are various warrants that issue from the Secretary of the Treasury such as the warrants releasing the appropriations and authorizing the expenditures to be made by the disbursing officers. There are quite a number of them. The signing of these warrants by the Comptroller General is largely a formality.

Senator BYRD. You said a while ago the Comptroller General would take 2 or 3 years to audit these claims.

Mr. BUCK. I said that he does now, with his present forces. Senator BYRD. If he used the same forces, if he had the same clerical system as the Secretary of the Treasury, it could be done by the Comptroller General just as well; it is a question. of giving him the necessary auditors to do it, is it not?

Mr. Buck. I do not think the present procedure could ever be speeded up to the point where claims would be paid promptly with the existing organization of the General Accounting Office.

Senator BYRD. Are you speeding it up to the point now whereby the postaudit (14) would be effected after the check had been delivered to those that will receive them and the money spent?

Mr. BUCK. I say it is possible to do that if it is done immediately, but in most cases it would probably be afterwards, and would simply be a postaudit.

Senator BYRD. Under your plan of expediting the payment of the postaudit would be effected after the money has been paid to the recipient?

Mr. Buck. I think I can clear that up when we get back to the top of the chart, at (21).

Representative GIFFORD. Mr. Buck, I am interested in the topic we are on now. Supposing the Post Office Department, because of the growth of a small community, found that the quarters for a post office were inadequate, and the Post Office Department saw fit to cancel a lease which had been signed, and the Government actually owned and had the right for 10 years or so, if the Post Office Department, granting that it was perfectly moral to cancel a lease and get a new one, in that matter heretofore the Comptroller General would not allow them to do it, would he?

Mr. BUCK. So I understand.

Representative GIFFORD. Under this new plan they could do it, could they not?

Mr. Buck. Yes.

Representative GIFFORD. If they could do that without any legitimate excuse, then favoritism might possibly be exercised?

Mr. BUCK. Yes; but there is a check here. Let me finish this and I will show you what the check is.

Representative GIFFORD. I am greatly interested in that.

Mr. BUCK. A check that you do not have at the present time. We have a very imperfect auditing system; in fact, one that I would say does not rank with the approved auditing systems of other countries at all.

I think we reached (16). We were talking about the exceptions. A series of conferences can then be held between the fiscal control officer of the Treasury and the Auditor General or his representative, at which an attempt will be made to clear up those disputed items; and, I dare say, that a great many of them would be so cleared up. That is the present practice. As you know, the number of items finally disallowed is rather infinitesimal compared to the aggregate amounts to which exceptions have been taken.

Now, we are at (18). We have had the conferences involving (16), (17), and (18), and we have cleared up a lot of these exceptions; but there are some of them that cannot be cleared up. Therefore, going from (18) to (19), the Auditor General will make a report on the basis of the findings of his audit, plus the explanations made by the Secretary of the Treasury or by the chief fiscal officer. The Auditor General will submit that report frequently to the Joint Committee on Public Accounts, going up to (20) and (21). The Joint Committee on Public Accounts of the Congress, as I visualize it, will sit around a table much as we are here today; and there would be present the Auditor General or his representative and the Secretary of the Treasury or the head of the fiscal control bureau of the Treasury.