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We have not been advised of any change in the Army's position to the present date as a result of the Department of Defense Directive 7650.1, issued July 9, 1958.

Copies of the correspondence referred to herein, other than appendixes A, B, and C, attached herewith, have been previously furnished the subcommittee. A chronology of correspondence relating to GAO's access to Department of the Army records is attached as appendix D.

APPENDIX A

DEPARTMENT OF THE ARMY,

Washington, D. C., February 11, 1952. The honorable the COMPTROLLER GENERAL OF THE L'NITED STATES.

DEAR MR. COMPTROLLER GENERAL: In the enclosed Department of the Army Letter, AGAO-S 333 (30 Nov. 51) IG-M, 3 December 1951, subject: Coordination of Administrative Inspection Activities by the Inspector General, I have charged the Inspector General of the Army with the responsibility of coordinating the administrative inspection activities of the Army in the continental United States which have the purpose of assuring that:

(a) The Army receives full value for expenidtures made in business transactions.

(6) The business of the Army is conducted in conformity with law and regulation.

(c) Inefficiency and fraud on the part of representatives of the Army, both military and civilian are promptly detected and corrected. In order that effective use within the Army Establishment may be made of the facilities of the General Accounting Office in connection with the aforementioned responsibilities, and pursuant to our conversation on this subject, I have designated Lt. Col. Floyd R. Gilfoil, Jr., IG, Office of the Inspector General, as the individual responsible for the maintenance of liaison with your Office. It is requested that you designate an officer with whom Lieutenant Colonel Gilfoil can establish a working relationship. It is also requested that I be permitted to extend this system to the field so that the six continental Army commanders may require their inspectors general to establish liaison with the branch offices of the General Accounting Office which are located near the continental Army headquarters.

The obligations of these Army liaison officers would be to establish and maintain a channel of direct personal communication between the two agencies for the purpose of exchanging timely information regarding deficiencies or suspicions thereof found to exist with civilian contractors or military agencies who are concerned with Department of the Army procurement programs, or with other phases of Army activities. Sincerely yours,

FRANK PACE, Jr., Secretary of the Army.

DEPARTMENT OF THE ARMY,
OFFICE OF THE ADJUTANT GENERAL,

Washington, D. C., December 3, 1951.
AGAO-S 333 (30 Nov 51) IG-M.
AGAO-C.
Subject: Coordination of administrative inspection activities by the Inspector

General.
To: Comptroller of the Army (Attention : Audit Division).

Assistant Chiefs of Staff, GSUSA.
Chief of Finance, SSUSA.
Chief, National Guard Bureau, SSUSA.
Chiefs of Technical Services.
The Adjutant General.
The Provost Marshal General.
Commanding Generals :

Continental Armies.

Military District of Washington. 1. The Inspector General of the Army is charged with the responsibility of coordinating the administrative inspection activities of the Army in the continental United States which have the purpose of assuring that:

40377 0–59—pt. 1-6

(a) The Army receives full value for expenditures made in business transactions.

(6) The business of the Army is conducted in conformity with law and regulation.

(c) Inefficiency and fraud on the part of representatives of the Army, both military and civilian, are promptly detected and corrected. 2. In the discharge of the foregoing responsibilities, the Inspector General of the Army will maintain the current inspection systems under continuous review to verify that no gaps exist therein and that the responsibilities for the making of inspections and the objectives thereof are clearly defined and thoroughly understood throughout the Army. He will further rerify that evidence of fraud and culpable mismanagement is systematicaly sought and, when obtained, is acted upon promptly by competent authority.

3. In connection with the foregoing the Inspector General of the Army is authorized direct communication with major commands, the administrative and technical services and the Army Audit Agency.

APPENDIX B

COMPTROLLER GENERAL OF THE UNITED STATES,

Washington, D. C., February 27, 1952. B-108065

The honorable the SECRETARY OF THE ARMY.

MY DEAR MR. SECRETARY: Your letter dated February 11, 1952, relating to the “Coordination of Administrative Inspection Activities by the Inspector General,” states that you have designated Lt. Col. Floyd R. Gilfoil, Jr., IG, Office of the Inspector General, as the individual responsible for the maintenance of liaison with my Office. At your request in that letter, I am designating Mr. Robert L. Long, Assistant Director of Audits, as the liaison officer for survey and audit matters and Mr. Robert L. Chaney, Office of Investigations, for investigations and investigative survey matters, to act as officers responsible for maintaining liaison with the Office of the Inspector General.

I understand that by means of this liaison a channel for direct personal communication between the Inspector General's department and the General Accounting Office will be established for the purpose of exchanging timely information regarding deficiencies or suspicions thereof found to exist with civilian contractors, or other agencies concerned with the procureinent programs of the Department of the Army, or with other phases of Army activities.

It is my suggestion that these officers work out jointly whatever relationships may be found necessary with respect to the extension of liaison to the field offices of the General Accounting Office and the continental Army commanders with a view to accomplishing these same objectives. It is hoped that these liaison activities can be maintained in as informal a manner as possible consistent with the proper conduct of the respective responsibilities of the Depart. ment of the Army and this Office with a view to greater effectiveness in the dayto-day conduct of assigned duties. This is not, however, to limit the normal activities of the Department of the Army or this Office where official responsibilities may be concerned.

I wish to express my gratification in the cooperative attitude displayed in your letter and you may be assured that the representatives of the General Accounting Office will carry out their liaison functions in this same coopera tire spirit. Sincerely yours,

LINDSAY C. WARREN, Comptroller General of the United States.

APPENDIX C

DEPARTMENT OF THE ARMY,
OFFICE OF THE ADJUTANT GENERAL,

Washington, D. C., Setember 11, 1957.
Subject: General Accounting Office expanded audit program.
To: See distribution.

1. The enclosed memorandum, with its attachment, sets forth the policy with respect to granting representatives of the General Accounting Office, upon request, access to (a) internal audit reports and related working papers and (b) records and data pertaining to installations or activities of the Department of the Army. 2. Permanent directive will be issued at a subsequent date. By Order of Wilber M. Brucker, Secretary of the Army:

HERBERT M. JONES,
Major General, USA,

The Adjutant General. Distribution:

Office, Secretary of the Army.
Chief of Staff, U. S. Army.
The Inspector General.
Deputy Chief of Staff for Personnel.
Deputy Chief of Staff for Logistics.
Comptroller of the Army.
Chief of Finance.
Chief of Information.
Chief, National Guard Bureau.
The Adjutant General.
The Provost Marshal General.
Chief of Chaplains.
Heads of Technical Staff.
Commanders in Chief :

U. S. European Command, U. S. Army Element.
U. S. Army, Europe.

U. S. Army, Pacific.
Commanding Generals :

U. S. Army, Alaska.
U. S. Army, Caribbean.
U. S. Army, Japan, and United Nations Command and Eighth Army

(Rear).
U. S. Army Forces, Antilles and Military District of Puerto Rico.
U. S. Army, Ryukyu Islands/IX Corps.
U. S. Army, Southern European Task Force.
U. S. Army Air Defense Command.
U.S. Continental Army Command.
Zone of Interior Armies.
Military District of Washington, l'. S. Army.

Army Logistics Management Center.
Superintendent, U. S. Military Academy.
Chiefs :

U.S. Army Security Agency.
Armed Forces Special Weapons Project.

U. S. Army Audit Agency.
Commandants :

WAC School.
Command and General Staff College.
Command Management School.
Army War College.
The Adjutant General's School, U. S. Army.
Armor School.
U.S. Army Artillery and Missile School.
U.S. Army Air Defense School.
U. S. Army Chaplain School.
U. S. Army Chemical Corps School.
The Engineer School.
Judge Advocate General's School.

Commandants—Continued

Army Medical Service School.
Ordnance School.
The Provost Marshal General's School, U'. S. Army.
U. S. Army Quartermaster School.
Signal School.
Transportation School.
Finance School, U. S. Army.
The Infantry School.

APPENDIX D

Chronology of correspondence relating to GAO's acce88 to Department of the

Army records

Date

To

From

Purpose

Feb. 11, 1952 Comptroller General. Secretary of the Army. Proposed establishment of liaison

between Inspector General and GAO to“* ** maintain a channel of direct personal communication between the two agencies for the purpose of exchanging timely infor

mation Feb. 27, 1952 Secretary of the Army... Comptroller General... Acknowledgment of letter of Feb. 11

and designating GAO liaison offi

cers. Oct. 9, 1956 do.

do..

Advising of our proposed audit of the

Ordnance Tank-Automotive Command and requesting all official documents be made available to

GAO. Dec. 19, 1956 Comptroller General.. Secretary of the Army Acknowledgment of our letter of Oct.

9 and advising that Army should not be asked to make available internal audit reports and advising that all requests for such should be

directed to his Office. Feb. 7, 1957 Secretary of the Army... Comptroller General... Advising that certain arrangements

proposed by Army are unsatis

factory to GAO. Feb. 8. 1957 Secretary of Defense

do.

Transmitting copy of letter of Feb. 7

to Secretary of Army and requesting consideration of our views and the need to establish a more clearly defined policy in the Department

of Defense. Feb. 28, 1957 Comptroller General..--- Secretary of the Army.. Acknowledgment of our letter of Feb.

7 and advising that Army is anxious to assist us and suggests personal call to GAO by Assistant Secretary of Army for Financial

Management. Aug. 13, 1957 Chairman, Senate Com- Comptroller General...- Reporting -GAO failure satisfacmittee on Government

torily resolve Army access to Operations.

records problem with DOD. Aug. 15, 1957 Secretary of Defense. Chairman, Senate Com

Requesting tentative report on the mittee

Govern- matter not later than Aug. 20, 1957.

ment Operations. Aug. 20, 1957 Comptroller General. Assistant Secretary of Enclosing copy of the Secretary of

Defense (Comptroller). the Army's memorandum to the

Chief of Staff concerning guidelines relative to the release of audit

reports to GAO Aug. 21, 1957 Assistant Secretary of Comptroller General...- Recognizing satisfactory solution of Defense (Comptroller).

Army access to records problem and reiterating our understanding that overall Defense directive was

to be issued in the same pattern. Sept. 11, 1957 Commands and activi. The Adjutant General, Distribution of guidelines of Aug. 20,

ties of the Department Department of the 1957.
of the Army.

Army.

on

EXHIBIT VIII-B

as

1957 ARMY GUIDELINES RE GAO AUDITS

DEPARTMENT OF THE ARMY,

Washington, D.C., August 20, 1957. Memorandum for the Chief of Staff. Subject: General Accounting Office expanded audit program.

In my memorandum of December 19, 1956, I referred to my correspondence with the Comptroller General of the United States on this subject intended to clarify the relationships between the Department of the Army and the General Accounting Office. In an effort to fully respond to the cooperative attitude of the General Accounting Office and facilitate their work as well as to gain maximum benefit to the Army from the expanded audit program, I have agreed that requests for the release of internal audit reports and working papers at the field level will be honored and such release effected at that level. In addition, I have agreed that internal audit reports, may be released prior to the formulation of an Army position and the establishment of a program for corrective action as I had previously requested. We have, however, agreed that, in recognition of the principle that the internal audit report will be of limited value until such time

sponsible operating officials have reviewed it thoroughly and an appropriate program of corrective action has been devised, internal audit reports upon which the Army position has not been established will be made available upon request but that the Army position thereon will be furnished the General Accounting Office at a subsequent date.

The guidelines relative to General Accounting Office comprehensive audits are enclosed and I desire that they be disseminated to all commands, installations, and activities.

WILBER M. BRUCKER,

Secretary of the Army. GUIDELINES RELATIVE TO GENERAL ACCOUNTING OFFICE COMPREHENSIVE AUDITS

1. The General Accounting Office has broad authority for conducting audits and investigations in the executive departments and agencies. The purpose of this authority is to enable the Comptroller General, as an agent of the Congress, to determine how each agency under audit discharges its financial responsibilities. In this connection, the financial responsibilities of an agency are to be construed as including the expenditure of funds and the utilization of property and peronnel in the furtherance only of authorized programs or activities and the conduct of programs or activities in an effective, efficient, and economical

2. Section 313 of the Budget and Accounting Act of 1921 provides that:

“All departments and establishments shall furnish to the Comptroller General such information regarding the powers, duties, activities, organizations, financial transactions, and methods of business of their respective offices as he may from time ot time require of them; and the Comptroller General, or any of his assistants or employees, when duly authorized by him, shall, for the purpose of securing such information, have access to and a right to examine any books, documents, papers, or records of any such department or establishment ***

3. The General Accounting Office is departing as rapidly as practicable from the centralized and detailed examination of vouchers and is performing as many audits as possible at the sites of operations. These audits, which are on a comprehensive basis, are performed by personnel from the various General Accounting Office regional offices and the Defense Accounting and Auditing Division in Washington, D. C. The regional offices are in 19 locations in the United States and in overseas areas.

4. General Accounting Office audits are designed to cover Government agencies and their activities as a whole. The extent of detailed examination work in such audits is determined by the adequacy of the management control exercised by the agency under audit. In order to evaluate internal management controls, General Accounting Office personnel examine the history, purpose, authorities, organizations, activities, policies, and procedures of an agency and its component activities, and then review the operating results in the light of the intended purpose and authorities. In making an evaluation of internal control, auditors from the General Accounting Office will necessarily perform various audit steps

manner.

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