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propose to allow them, as at present, to make requests for advance decisions and preaudits.

We do feel that if we bond the certifying officers, in order that they may share the responsibility for the legality and regularity of the expenditures that they make, that they will ask for advance decisions and preaudits, and we might as well be prepared to supply that service. But we do not expect that service to go into the preaudit of every expenditure. It would be unnecessary for an administrative officer to ask for an advance decision on a question on which an advance decision or a post decision had already been made.

Representative COCHRAN. Now, when you say you are going to bond the administrative officer, do you mean you are going to start at the top and go all the way down?

Mr. SELKO. I think it would be up to Congress to decide as to which administrative officers are to be bonded. The administrative officers, under the present law, have the authority to designate certain of their subordinates as certifying officers. If we stop with bonding the certifying officers alone, then they would be more or less in the position that the disbursing officers were under the old law, in that if the administrative officer told them to make a payment, or certify a payment, they would be the ones responsible under the bond for the payment, if it were subsequently disallowed.

Representative COCHRAN. Would the certifying officer then complain, “I

am acting under the orders of my superior. Why not bond him?" Then the superior will say, “Why don't you hold the Secretary responsible?”

Mr. SELKO. I think that is an argument which might be raised. I think it might be well to start bonding at the top.

Representative COCHRAN. Starting at the top and come all the way down?

Mr. SELKO. Yes. Representative COCHRAN. We will be busy, then, collecting these illegal expenditures all the way from the Secretary down until we find who is the one that is really responsible.

Senator BARKLEY. You may be busy, but you will not be busy collecting.

Representative GIFFORD. May I inject something along that line, along the line of what you said, that you do not recommend giving the Comptroller General power to forgive or to set aside liability.

I want to remind the committee that I am informed that we have a small army now in the Comptroller General's Office auditing and settling with disbursing officers on the C. W. A. troubles of 4 years ago, and the papers are so voluminous now that those of more than a year ago are in offices even in Alexandria, to find some place where they can put them. Now, as the report comes to me these auditors from the Comptroller General's Office are settling accounts. That is the

way it was presented to me. Now, from what I have read of your statement, you do not give any such authority, they do not have any opportunity of settling the accounts, do they

Mr. SELKO. Not on the preaudit; no, sir.
Representative COCHRAN. Now, we have a postaudit?

Mr. SELKO. This statement that I read was to explain the development of the preaudit.

Representative TABER. Mr. Selko, I do not think you understood Mr. Gifford's question. I think there isn't any question but what the Comptroller General, in a postaudit, at the present time has the power to settle accounts.

Mr. SELKO. Yes.
Mr. MERIAM. He always has had it.
Mr. SELKO. Yes.

Representative ÇOCHRAN. I can clarify your question. The recommendation came to our committee, and, if I am not in error, Mr. Gifford, you joined with me in reporting the bill to relieve them of $750,000 overpayment.

Representative GIFFORD. I told you I would give you backhanded support. Don't you remember?

Representative Cochran. I remember. You were very kind as far as you agreed to go.

Senator BYRNES. May I ask a question along the line that the Congressman asked? As I understand your position, you do not require a compulsory preaudit?

Mr. SELKO. No, sir.

Senator BYRNES. You hope to accomplish a general preaudit by reason of the bonding of officials that you have described as administrative officials?

Mr. SELKO. I think it might be more accurate to state that we would provide for a system of a more general preaudit so that administrative officers, when bonded, might avail themselves of a more extensive system than exists at present.

Senator BYRNES. But you still leave it to the administrative official to determine whether or not he desired a preaudit?

Mr. SELKO. Yes, sir.

Senator BYRNES. And the Auditor General then, when requested, would make the preaudit!

Mr. SELKO. Yes, sir.

Senator BYRNES. The Auditor General, under your plan, would be the agent of the legislative body?

Mr. SELKO. He would be an agent independent of the Executive in any case.

Senator BYRNES. Well, he would be appointed by whom? Mr. SELKO. He would be appointed by the President, with the advice and consent of the Senate. We prepose no change in that method of selection.

Senator BYRNES. As I recall, you emphasize in your report, though, that he should be the agent of the Congress, “so it shall be definitely understood that the Auditor General would be the agent of the Congress vested with the power of financial control through the auditing and settlement of accounts", is that correct?

Mr. SELKO. Yes, sir; that is our position.

Senator BYRNES. Is it your belief that by doing that you would effect economies?

Mr. SELKO. Yes, sir.

Senator BYRNES. And you would not interfere with the efficient administration by causing delays!

Mr. SELKO. No, sir.

Mr. MERIAM. Mr. Chairman, I have a memorandum on that particular subject.

Senator BYRNES. I would like to ask a few questions, and then you may submit the memorandum.

Mr. MERIAM. All right.

Senator BYRNES. Ordinarily would you consider the exercise of control the function of the executive or the legislative branch of the Government ?

Mr. SELKO. I should say our position, from the statement you have there and from the statement Mr. Meriam read on Monday, would be clearly that we support the idea that financial control should be a matter of legislative responsibility which is consonant with legislative authority to make appropriations.

Senator BYRNES. I simply want your viewpoint in order to ask some other questions.

Mr. SELKO. Yes,

Senator BYRNES. When you say the ultimate object is to have a more general preaudit, you do not think it would delay the administrative officials of the Government in the administration of their duties?

Mr. SELKO. No, sir.
Senator BYRNES. And you believe it would save money?

Mr. SELKO. Yes, sir; I believe it would expedite both the payment and the settlement of accounts.

Senator BYRNES. Now, we have had some discussion as to whether or not, in the absence of a preaudit, if money is spent illegally, or irregularly, say, $1,000,000, whether it could be recovered for the Government.

Mr. SELKO. Under our plan the administrative officer, when in doubt as to the legality or regularity of a payment, would, as at present, ask for a preaudit of that payment. "If then the Comptroller General, or the Auditor General, as we propose to call him, were to say that payment is illegal or irregular it would indicate that he expected to suspend or disallow that item, providing the law remained the same, when that item came to him for final settlement of the disbursing officer's account, through which the disbursement was made.

Senator BYRNES. The statement has been made by someone who testified that ordinarily the duty of control has been separated from the duty of auditing in private business. Is that your general understanding?

Mr. SELKO. Yes; I think that is true in private business. Ordinarily in private business the comptroller is a representative, an agent of the private business firm, and the auditor is called in from the outside, ordinarily a person who has no proprietary interest in the business, to make an examination of the books of the comptroller and of the treasurer, or other bookkeeping representatives of the company, against all of the papers which they show as evidence for the entries in their books, to certify that their balances are correct according to the evidence submitted. Now, in government the situation is somewhat different in that the Government is in the position of a fiduciary rather than a proprietary entity.

Senator BYRNES. That would stand, I suppose, as to Federal and State Governments ?

Mr. SELKO. Yes, sir.

Senator BYRNES. If it would be effective in the Federal Government's activities the same principle would be effective for the government of Maryland or any other State; would you not say so?

Mr. SELKO. I would; yes, sir.

Senator BYRNES. Let me ask you whether you think this a correct statement as to the difference between audit and control [reading]:

The function of an auditor is one pertaining to the legislative branch. The auditor should be wholly independent of the executive or administrative officer whose acts it is his function to review. This independence is secured by either his popular election or, as in some States, by his appointment by the legislature.

Would you agree with that? Mr. SELKO. I would agree with that; yes, sir. Senator BYRNES (reading): The functions of a comptroller, on the other hand, are the ordering of moneys to be covered into the State treasury, the issuance of pay warrants to issue money therefrom, the settlement of all claims and, as an incident to this, keeping the central accounts of the State, prescribing the branch accounting systems to be maintained by the departments and institutions, the rendering of annual and other financial reports, and as herein recommended, acting for the Governor in the drafting of the budget document to be submitted by the latter to the legislature. These involve purely administrative duties.

The settlement of claims and the matters referred to are purely administrative duties. Would you agree with that?

Mr. SELKO. No, sir; I would not.
Senator BYRNES (reading):

Strengthening the audit. Heretofore, the mixture of responsibility of the State auditor to perform the dual function of administrative accounting and settlement of claims, and the Department of Examiners of accounts of examining all State departments and institutions, has prevented the concentration of all audit functions of the State in the State auditor.

What I have read from is taken from the recommendation of the Brookings Institution for the State of Alabama, and your organization said this:

In Alabama, and the same is true in most of the States, great confusion has resulted through the failure to distinguish clearly between the functions of a comptroller and an auditor. The general tendency has been to impose the duties of both upon a single officer, usually known as an auditor. The primary functions of a comptroller are, as his title indicates, that of controlling the covering of money into the treasury and the issue of money therefrom, the settlement of all claims, the keeping of the central accounts, the rendering of annual and other financial reports and, generally, of exercising that central control over the administration of the financial affairs of the government that is essential if such operations are to be properly performed. The comptroller is, or should be, the chief financial officer of the administrative branch of the government. He should be, in effect, the right-hand man of the Governor in respect to all matters of financial administration. As such, he should be appointed by and hold office at the will of the Governor.

Now, that is what you recommended to the State of Alabama, is it not? I am reading from the report.

Mr. MERIAM. Yes, sir. I would like to make a statement in that connection.

Senator BYRNES. I will give you an opportunity, but I would like to make one or two other statements in connection with it.

Mr. MERIAM. All right, sir.

Senator BYRNES. That is for the State of Alabama. As to the State auditor, you said:

The State auditor should be relieved of all of his ex-officio duties in order that he may not be embarrassed by having to audit organization units in which. he holds membership or over which he exercised administrative direction.. The State auditor should be relieved of all accounting duties, including the settlement of all claims and the drawing of all State warrants on the State treasurer, in order that he and his auditing staff may devote their entireefforts to making a real audit of all State departments, boards, institutions and agencies.

Now, again, you refer to the functions of a comptroller in the settlement of claims and say they involve purely administrative duties.

Now, in Mississippi you made a recommendation for the reorganization of that State government and there, in the State of Mississippi, you said there should be established a service of general administration, and you said:

The chief of this service will have as his subordinates the heads of the several bureaus dealing with the purely institutional activities that have been mentioned, the preparation of the budget, the settlement of claims, the keeping of the central or controlling accounts, the recruitment and handling of personnel, and the making of purchases and contracts.

You were urging that it should be centralized and you said, as to the difference between auditors and comptrollers' functions, in a subhead of your report, under the heading “Distinction between the Auditor's and Comptroller's Functions:''

In keeping with the practice of most unreorganized State governments, Mississippi reposes in one officer the duties of both an auditor and an administrative. comptroller, although the magnitude of work in both functions and the past neglect of auditing amply justify their separation. The general function of a camptroller is to determine what payments should be made to, or by, the Government, and recording them; while the duty of an auditor is to examine subsequently such payments to, or by, the Government to determine their propriety and the fidelity of accountable officers.

Another important principle that has been followed in our recommendations is that of distinguishing between the functions of a comptroller and an auditor. This distinction which is definitely recognized in all well-organized private undertakings, has been discussed in the section dealing with financial administration, and needs no additional comment at this point.

Representative BEAM. Mr. Chairman.

Senator BYRNES. Just a moment. I would like to finish with this: Mississippi report.

In this report to Mississippi the heading is: “The auditor should have no administrative duties." It states:

He should be independent of and not a part of the executive branch in order that he may feel free to call the attention of the legislature to all violations of law and administrative regulations, and all instances wherein in his opinion the administrative staff has failed to conform to administrative law or regulations, where their expenditures have not come within the purview of appropriations, have been guilty of extravagance, or have failed to discharge their official functions in an efficient and economical manner. He will be, in fact, the eye and arm of the legislature in the exercise of the latter's function of general. control.

The report goes on to say that the comptroller should be the arm of the executive and the auditor the arm of the legislature.

Representative BEAM. Senator, I was interested in listening to your analysis of the various duties of the comptroller and the auditor, and in referring to that Mississippi demarcation you stated that the functions of the auditor were to audit the accounts after the comptroller had approved them. I hesitated to interrupt you when you were reading that paragraph. I wanted to be certain in my

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