MAN-YEARS AND THE AMOUNTS TRANSFERRED

Senator HOLLAND. A year ago, the committee requested you clude in the hearing record a table showing, by agencies, the nu man-years of employment and the amounts transferred.

The pending budget shows the source, by agency, of the a transferred into the new provision item.

Will you insert the corresponding man-year allocations again agencies for fiscal 1965, with the corresponding man-years and a for the current fiscal year?

Mr. CONDON. I will put that in the record, Mr. Chairman. Senator HOLLAND. You do not have that available?

Mr. CONDON. Yes; sorry, sir, my associate tells me we will put it in the record.

(The information requested follows:)

Analysis of man-years and funds available, fiscal years 1964 and

1 Amounts include reimbursements. Amounts shown for 1965 represent 1964 amounts plus the pay act costs in 1965. The 1965 estimate is not broken down by programs.

WORK PLANS, 1965

Senator HOLLAND. Now, I want to be certain that the age counts which were used to finance the creation of your Office to receive the same relative amount of audit and investigativ tion that they formerly saw fit to finance from their provisi administrative expenses when this activity was decentralized.

For example, you estimated last spring that the ASCS wo vide 475 man-years estimated at $5,576,000 under their existing and other costs. Do you intend to apply that many man-y audit and investigation work to the ASCS in fiscal 1964, planned, and how many man-years will that agency be allo fiscal 1965?

Mr. CONDON. Yes, we expect to apply approximately the san ber of man-years of audit and investigation work to the AS grams. The number of audits will be less because we will be ap ing the audit problem from several different techniques.

As an example, for the past several years, ASCS has co an annual audit of all of their county offices throughout the We have made a review of that particular operation, and as understand, this commands a great deal of manpower and

that it will probably be in the interest of the agencies concerned to cut down those audits of counties to approximately 50 percent in terms of each State and increase the audit of each county from approximately 2 weeks' duration, which has been done in the past, to 3 weeks.

The net or end result will be that we will get a much finer or better audit both in scope and depth than we had in the past. It will be a reorientation from, per se, a fiscal-type audit to a management-type audit which will include all phases of the operation of the county office. I think it will be a much better service than has been rendered to the agencies involved. In terms of audits, however, they will be less in number.

EXPENDITURES UNDER NEW SYSTEM

Senator HOLLAND. In terms of expense of the new system as compared with the old, are you increasing the expense?

Mr. CONDON. No, sir; approximately the same expense and approximately the same time or amount of man-hours are being utilized in different parts of the agency, sir. The time we hope to conserve in the county audits we will spend in audit of the Commodity Credit Corporation. It will be a different emphasis in the audit program.

REIMBURSEMENTS

Senator HOLLAND. I note that you still plan to finance 26 man-years costing an estimated $332,600 by reimbursements, primarily from AMS and ASCS. It seems to me that your office should not be reimbursed for any special assignments. If there is the efficiency you claim to have established, you ought to absorb that amount.

Mr. CONDON. The cost of this budget calls for approximately $9,800,000, and the reimbursement amounts to $330,000-odd.

Well, I will defer to our budget officer, Mr. Grant, because the statutes that pertain to the use of these particular funds make it, I have been advised, necessary to finance the activities of OIG in this manner. Mr. Grant.

Mr. GRANT. Mr. Chairman, these items relate to audit of activities which are not financed by Federal appropriation. For instance, the amount for AMS has to do with the audit of activities related to inspection activities performed on a fee basis.

This inspection work is financed by fees, and there is no appropriation in which we can make a reduction and transfer the money to the Office of the Inspector General.

So it is proposed to finance the work by an allocation from the reimbursements received. The same is true with respect to the ASCS item. Senator HOLLAND. I note on pages 9 and 10 of your justification that you are already receiving $2,128,900 from the Agricultural Marketing Service?

Mr. GRANT. Yes, that is for auditing activities relating to the appropriations shown there. Now, in addition to these appropriations the Agricultural Marketing Service conducts a considerable amount of inspection work on a fee basis, that is by reimbursement from the producer, handler, or processor.

This work is not financed from appropriated funds. So, in order to give the Committee a complete picture of the financing of the Office of the Inspector General, a table is shown on page 7.

In addition to the appropriation, there is a certain amount o work to be performed from non-Federal funds.

Senator HOLLAND. Prior to your present organization for tion, did the AMS go to these various agencies for funds fo particular audits?

FLUCTUATION IN INSPECTION WORK

Mr. GRANT. Yes, sir. I want to emphasize the volume of wo vary from time to time because this inspection work is purely tary. It fluctuates. Some years we have more than in others is our best estimate of what it will be for next year.

Mr. CONDON. An example, at the present time, though I into much detail, but in connection with the funding of work in the tobacco marketing, we have run into involvements that w considerable man-year time-far beyond the amount budgete the fund concerned.

I have no estimate of what it is at the present time but I kn it will take more than presently funded.

TOTAL MAN-YEARS AND FUNDS

Senator HOLLAND. Is there any one place where we can tur just how much the Inspector General is intending to spend in of man-years and funds on his various activities?

Mr. GRANT. Page 7 of the justification gives the complete best we can estimate at this time.

Senator HOLLAND. In other words, the total expense of all tions of the Inspector General is stated on page 7 of the justi as $10,206,600, is that right?

Mr. GRANT. That is the best estimate; yes sir.

Senator HOLLAND. Is that a correct statement of the total e tures anticipated in 1965?

Mr. GRANT. That is correct.

Senator HOLLAND. That is for carrying on all activities of spector General?

Mr. GRANT. Yes, sir.

FIELD ORGANIZATION

Senator HOLLAND. What is the nature of your field orga and how many people do you have in that?

Mr. CONDON. We have consolidated during the past ye Chairman, from approximately 23 offices, into 7 regional offic suboffices. The staff in the field amount to 708 and 149 i quarters.

Senator HOLLAND. Have you a table showing how they are down?

Mr. CONDON. We have a table, sir, and would be delighted it into the record.

Senator HOLLAND. I wish you would put it in the record at t (The information requested follows:)

Estimated staffing of OIG offices as of June 30, 1964

Region I:

Region II:

Region III:

Region IV:

Maine

Washington, D.C.

South Carolina

Illinois

New Hampshire

Delaware

North Carolina

Indiana

Vermont

Maryland

Florida

Kentucky

Virginia

Georgia

Michigan

West Virginia

Wisconsin

Minnesota

CHANGES IN AUDIT PROGRAMS

Senator HOLLAND. Page 5 of your statement implies two First that the former agency audit programs were not of th prehensive type required under the Budget and Accounting 1950; and second, that you have conducted an extensive red program.

I wish you would clarify the record on both of those points.

RECRUITMENT AND QUALIFICATIONS OF AUDITORS

Mr. CONDON. Insofar as the recruitment, sir, we have made tensive drive in recruiting capable people, mainly people wit backgrounds for investigative positions and those with a background with an emphasis in accounting for the auditin tions. I am sorry to say, however, that with all of our effo contacts made throughout the various universities and other we were not completely successful. It appears that the wa offer under our program are less than that which prevails countants and lawyers in private industry and we were not cessful as we had hoped.

I want to say, secondly, as we pointed out in our statem difficult task of reorienting our present staff to the broad s comprehensive auditing is one experienced by most agencies. because it takes a great deal more of the know-how in man training than in purely fiscal type auditing which, of cour involves a verification on compliance of accounting figures.

To minimize some of these shortcomings we conducted a hensive training program for all of our personnel on board the past year. A minimum of 1 week of concentrated semin given in each one of the offices including headquarters.

NEW QUALIFICATIONS FOR STAFF

Senator HOLLAND. What specific changes in qualificatio you required under your new concept?

Mr. CONDON. Qualifications in the employees?

Senator HOLLAND. Yes.

Mr. CONDON. None. Basically, the staff that was on the ro to my entry on duty were those who, for the most part, had ground of auditing, either practical experience or academic.

Quite a few of them, however, did not have a comprehensi ing background or for that matter, not too much experien management phases of the work that we are called upon to and which, of course, is in compliance with the Budget and ing Act of 1950. In addition to other controls, its deman agency also include a requirement for internal audit, which wa by the Comptroller General as a comprehensive audit in his s on Internal Auditing of 1957.

Senator HOLLAND. You mean to say prior to your coming new position, they were not complying with the 1950 act?

Mr. CONDON. Not fully. In some agencies, yes, they did d deal of comprehensive auditing. In other agencies, they did were progressing toward that goal but not fully achieving w be defined as comprehensive internal auditing both by the Co