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Mr. Buck. On condition that the Treasury will be thoroughly reorganized, and a real genuine accounting system established. I think that even those who work in the Treasury appreciate that that is necessary at this stage in our fiscal development. I think this is the opportunity to pull those loose ends together and get a centralized system that will provide adequate controls and will produce information.

Senator HARRISON. Who is the accounting system under in the Treasury Department now?

Mr. Buck. Who is it under? The appropriations part of it is under the Commissioner of Accounts and Deposits in the Bookkeeping and Warrants Division.

Senator LA FOLLETTE. Mr. Buck, in order to reorganize that there would have to be some action either by Congress or delegation of power in order to permit it, would there not?

Mr. BUCK. There would. You would either have to have statutory provisions or delegation of power.

Senator La FOLLETTE. In other words, I mean is there something the Treasury can do at this time just because it happens that its system is not perfect?

Mr. BUCK. It could make some improvement in it, but it could not make as thorough a change as we are proposing. You see the Bookkeeping and Warrant is a statutory establishment set up in the Dockery Act of 1894.

The CHAIRMAN. You think the plan you have proposed here would accomplish that reform or correction?

Mr. BUCK. I would think, Senator, it is an important step in that direction. With a few legal provisions and some qualified direction, I would think it could be done.

The CHAIRMAN. You think then there is not only necessity for an amendment of the law, but there is also a necessity for a change in the personnel in charge of it, is that the inference to be drawn from your last answer?

Mr. Buck. No. I think, if the personnel were carefully selected, there is very good material over there for a reorganization.

The CHAIRMAN. In your opinion is the existing personnel, insofar as its supervisory authorities are concerned, adequate, or do you mean to say there ought to be a change in personnel?

Mr. Buck. I would say that the personnel, if it were carefully handpicked, would be far superior to the system. In fact, the system is mostly at fault right now.

Senator BARKLEY. Would it be easy for men who have become habituated to that system to change their habits of thought and action so as to synchronize with a new and more modern set-up?

Mr. BUCK. It might be advisable to have some new blood. It is always a good thing. You might bring in some departmental accountant. There are some very good departmental accountants.

Senator LA FOLLETTE. Mr. Buck, is it not a fact that this system, or the lack of a system, has grown up with the Government without very much restudy or resurvey until you find these complicated devices have become incrustated into the system of accounting, and that what is needed here now is a resurvey of the whole situation, and an attempt to reform it in the light of the enormous increase in the business which the Government of necessity has to transact? Is not that the situation we are confronted with?

Mr. Buck. I would say that is very close.

Senator La FOLLETTE. You are not criticizing anybody in control or anything of that kind ? It is just a situation that is here?

Mr. Buck. No. That is correct. I would say there are some men in the Treasury Department who have a very good grasp of the situation and are fully aware of the need for a new system of accounts. There are others, off in the eddies perhaps, who do not appreciate this need. They might appreciate it if they were put in a somewhat different position. But I should think the Treasury has some very good timber, from the point of view of personnel, to use in devising a new accounting system.

Senator HARRISON. If the committee should want to look into that further, who is the party up there that we might ask to come here and give us the information?

Mr. Buck. I should say Mr. Bartelt and Mr. Bell are as familiar as anyone with the accounting procedure. Certainly, I think Mr. Bartelt is quite familiar with all phases of it, and he has quite a liberal point of view on what ought to be done about it.

Representative COCHRAN. Mr. Buck, recently the Congress created what we call a Statistical Board, one of the duties of which was to cooperate with the various Government agencies and stop duplication and overlapping in statistics and to improve our system of gathering statistics. Would you suggest that it might be advisable for the Congress to set up by legislation a special committee for just a given period to improve the general accounting system of the Government, get a system that would be perfect to take the place of this system that you say is now imperfect? Would that be a good idea ?

Mr. Buck. A committee might be helpful. I had not thought so much about the approach to the development of such a system as I had thought about the requisites of the system itself.

Representative COCHRAN. I do not mean a permanent board, but let them go to work on it and work out a new method that will bring the accounting up to date, taking advantage of all the new systems that have been worked out by private industry.

Mr. Buck. Oh, those things are always helpful, you know.

Representative COCHRAN. Now, for instance, you have a bill pending in the House and a bill in the Senate, and you have had it in there for about 6 years, to provide a cost accounting system for the Government. It happens that we held hearings on that bill, and in the final analysis I would say that it was going to cost the Government millions of dollars with thousands of additional accountants if we put the system in force.

Mr. Buck. Of course, there are different types of accounting systems,

Representative COCHRAN. Please explain.

Mr. BUCK. There are different types of accounting systems. I do not think that the Government needs any cost-accounting system that is nearly so elaborate as that of private industries. It is not ascertaining manufacturing costs, or anything of that kind.

Representative COCHRAN. That is what they wanted us to do. The accountants came before the committee and insisted we provide a cost-accounting system for the Government whereby we would include the money that the Government would never expend, such as insurance, taxes, local, State and Federal, and all such things as that.

Mr. Buck. I should say they are beginning at the wrong end of the thing. Cost accounts, as you know, are very detailed accounts. We have not yet a central accounting system, by which we can establish control and by which we can get full information on the operations of the Government. I should say we ought to begin up at the top and develop a central system first before we branch out into these detailed cost systems. I should think cost accounts would be advisable only in certain departments and certain corporations.

Representative COCHRAN. If we have an impractical system certainly it should be up to Congress to improve that system, if it is possible for us to do so.

Mr. Buck. I should say you could give great assistance.

Representative COCHRAN. If it is possible for us to do it we should go ahead and do it, or should require the officials in charge to change the system so it would be up to date, and the more efficient it becomes the less it should cost.

Mr. Buck. Of course, the way it operates now, the system has been creaking along almost on the point of breaking down of its own weight under the pressure of added expenditures and added work.

Representative CoCHRAN. You do not know where we might be able to get a paper that would set out in detail where these improvements can be made ?

Mr. Buck. I think such a paper could be worked up for you.

Representative CoCHRAN. I think it would be very valuable to the committee.

Mr. Buck. Which would give you the details.
Representative COCHRAN. Yes.

Representative TABER. Now, Mr. Buck, I have got in front of me this table on “Control of expenditures” that you brought in here a week ago. Under that set-up in the Treasury just what units would you have to handle this situation, whether or not they would be independent of each other, and just exactly how would they function; that is, would all these different units that you would have in the Treasury be independent of everything, and report direct to the Secretary of the Treasury, or would they be intertwined amongst themselves?

Mr. BUCK. When you delegate functions such as we mentioned here this morning, that is, the revenue gathering to one unit of the Treasury, control to another, custody and disbursement to another, procurement perhaps to another, you have the functions pretty well separated. Perhaps there would be assistant secretaries in charge of each group of functions who would be permanent officers. Necessarily those different functions, although lined up under separate units, must be interrelated in procedure in order to pass the information along that is needed for financial control.

Representative TABER. How are you ging to have any kind of independent audit and have the head of the Treasury Department himself, who is over your so-called auditing outfit, also be in charge of the disbursing outfit and the allotment outfit? Now, do you not think you are just giving the Secretary of the Treasury two contradictory functions that ought not to be under the same head at all!

Mr. Buck. We are only giving him control functions, aside from these other things that we mentioned.

Representative TABER. Now, a man who is Secretary of the Treasury is ex offcio the head of the accounting system, he is ex officio the head of the disbursing system, he is ex officio the head of the Procurement Division, he is ex officio the head of the apportionment and allotments, and he is the man who, under that system, is ex officio the head of the Claim Settlement Division.

Mr. Buck. Surely, because those are all control functions.

Representative TABER. Now, do you not think you are putting contradictory functions into the hands of one man?

Mr. BUCK. I think the only contradictory functions are those which we have discussed from time to time, namely, the control and the postaudit. We have taken out the postaudit and simply given him control functions along with some other functions which are clearly fiscal in character.

Representative TABER. You are giving him a preaudit of all accounts and all payments.

Mr. BUCK. That is right.

Representative TABER. That is the only executive audit you are providing in the scheme you are setting up. The postaudit is of no value whatever, except as you have the matter drift into the Appropriations Committee later on.

Mr. Buck. Would you say that the present audit is of no value because there is a postaudit in 90 percent of the cases?

Representative TABER. Oh, no; no.

Mr. BUCK. The other one will be just as effective as this one is at the present moment.

Representative TABER. Oh, no.
Mr. BUCK. Why not?

Representative TABER. Because your present Comptroller General has the authority to fix the balances of the departments under the statute.

Senator BYRD. He signs the warrants.
Representative TABER. And signs the warrants; yes.
Mr. BUCK. We decided the other day that was incidental.

Representative TABER. Your proposed Auditor General has absolutely no power whatever except to report to Congress.

Mr. Buck. After all, everything comes back to Congress.
Representative TABER. Oh, yes.

Mr. BUCK. Let us look at the powers of Congress. The power of the purse is vested in Congress, first, to make appropriations for the executive and the administrative departments, and, second, to review what they spend. And this Auditor General would be the agent that would provide the information for that review. It is by the process of review of the expenditures that Congress finds out, not only what the departments did with the funds it gave them but what they will probably do with the next money they get from Congress.

Representative TABER. Yes; but you find that out

Mr. BUCK (interposing). By asking them before the Appropriations Committee?

Representative TABER. Why, certainly.
Mr. BUCK. Is that it?

case.

Representative TABER. That is it.
Mr. BUCK. Then you do not have any disinterested facts in the

You simply take the administrative heads' and the bureau chiefs' word for it.

Representative TABER. You have no report on them except what you get from the Budget, and what you develop in some other way?

Mr. Buck. I would like to see a system by which you will have a report. Let me put into the record here, Mr. Chairman

Representative TABER (interposing). I, frankly, think I know how we could get a report, but I do not think your way is the way to

get it.

Mr. BUCK. Will you let me put into the record, Mr. Chairman, what I consider to be the principal functions of the Auditor General |

The CHAIRMAN. Go ahead.

Mr. Buck. Number 1. Postaudit of the expenditure document, that is, the vouchers, pay rolls, contracts, and so forth, in whatever detail may be necessary to determine the legality and propriety of the expenditures.

2. Examine and audit all accounts and bookkeeping entries of expenditures in the various stages, that is, as appropriations, apportionments, allotments, obligations, balances of appropriations, bonds, disbursements, and any cost analyses.

This, of course, would apply to all departments, the operating departments as well as the Treasury Department.

3. Examine and audit the revenues and receipts of the Government from the point of assessment until the moneys are placed in the custody of the United States Treasurer.

That is very imperfectly done at the present time.

4. Ascertain if adequate checks are maintained by the revenueproducing agencies over the receipts of moneys belonging to the Government.

5. Ascertain if adequate checks and controls are maintained by the Treasury Department and by the spending departments and establishments over the expenditure of funds.

6. Examine the financial statements issued by the Treasury officers and other accounting officers to ascertain if the fiscal information is accurate and in the best form.

7. Report to the special committee of Congress on the foregoing audits and examinations, with suggestions for improvements in fiscal procedure.

8. Act as the investigational agency of Congress, or any one of its committees, in examining and reporting on financial practices and procedures in any department or establishment of the Government.

Representative VINSON. Mr. Chairman, may I ask some questions? The CHAIRMAN. Certainly.

Representative VINSON. When did you arrive at that last thought, Mr. Buck?

Mr. BUCK. What is that?
Representative VINSON. No. 8.
Mr. Buck. No. 8! When did I personally!
Representative Vinson. Yes.

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