There has never been more than a fictional line of demarcation between the interrelated activities of the two organizations. It is accordingly recommended that legislation be enacted providing for an accounting and audit of the financial transactions of the Panama Railroad Co. and of the business activities conducted by it, for which purpose the following is suggested: That hereafter the fiscal officers of the Panama Canal shall include in their accounts to be audited by the General Accounting Office all fiscal transactions of the Panama Railroad Company and its activities: Provided, That the net profits accruing from the operation of the Panama Railroad Company and its activities shall annually be covered into the Treasury of the United States as miscellaneous receipts. SPONSORS' CONTRIBUTIONS-WORKS PROGRESS ADMINISTRATION Section 3 of the Emergency Relief Appropriation Act of 1935 (49 Stat. 117), provides that In carrying out the provisions of this joint resolution the President may accept and utilize such voluntary and uncompensated services * * * * * * as may be necessary Such provision has been construed to grant authority to any agency of the Government designated by the President to carry out the provisions of the said act (and subsequent relief acts) to accept, when furnished without charge to the Federal Government, personal services, rent, equipment, and other facilities. There appears, however, no provision in such act or other statutory authority whereby any agency of the Government may accept monetary contributions or donations in money to be expended by Federal officials to supplement Federal allotments in the execution of projects approved under the relief appropriation acts. It has been generally held that in the absence of such authority no officer or employee of the Federal Government may accept such gifts. (See 11 Comp. Gen. 355, and decisions cited therein.) Early in 1935 it was disclosed, through the inspection of accounts and records of field offices of the Works Progress Administration and Resettlement Administration, that certain counties, cities, towns, etc., were making monthly contributions in money, usually in small amounts, to defray the expenses of the field office, such as rent, light, heat, etc. In certain instances the funds so contributed were deposited in a local bank by the officials and disbursed therefrom as a personal matter. The agency in question discontinued such practice after being formally advised of the provisions of section 3617, Revised Statutes, which requires that the gross amount of all moneys received from whatever source, for the use of the United States, shall be paid by the agent or officer receiving the same, into the Treasury, without deduction or abatement. During 1935 such contributions to the Works Progress Administration increased in number and amount, and on October 23, 1935, the Commissioner of Accounts and Deposits, Treasury Department, issued the following instructions as Field Office Memorandum No. 105, to Accountants-In-Charge of United States Treasury Accounts Offices: Subject: Accounting and disbursing procedure for contributions of sponsors deposited in the Treasury. A number of States have requested the Treasury Department to account for and disburse contributions made by sponsors of work projects. To accommodate such requests, the following procedure is prescribed: 1. The Works Progress Administrator, or other administrator, should collect and schedule the contributed funds on Schedule of Collections (Form 1044) indicating thereon "Special deposits." The original and three copies of the Schedule of Collections (special deposits) (Form 1044), together with the funds (cash, check, or other acceptable media), should be sent by the Administrator directly to the Treasury disbursing clerk; and simultaneously, one copy of the Schedule of Collections (special deposits) (Form 1044) should be sent directly to the Treasury accountant in charge. The Treasury disbursing clerk will deposit the funds in a special deposit account, on certificate of deposit, Form 6599, and forward receipted copies of the Schedule of Collections to: (a) the sponsor who made the contribution and (b) the Treasury accountant in charge. The accountant in charge will note the receipt on his copy of the Schedule of Collections and forward the receipted copy to the Administrator who scheduled the collection. 2. The Treasury accountant in charge will make the following entries on his books on receipt of Treasury disbursement clerk's acknowledged copy of the Schedule of Collections: Debit―03.37 disbursing clerk's cash-special deposit. 3. Proper instructions should be given to all parties concerned, to the end that documents applicable to a contributor's fund account, submitted to the Treasury Accounts Office both for encumbrance purposes and for liquidation of encumbrances, will definitely show to what account they pertain. 4. Disbursements will be handled in the usual way on standard voucher forms duly certified by a proper official and scheduled on Schedule of Disbursements (Standard Form No. 1064) indicating thereon "Special deposits." The disbursement of sponsor's contributed funds should not be included with the expenditures of Federal funds reported on Form SF-1, but should be reported on a separate SF-1. NOTE. Contributors' funds are to be considered as trust accounts. It is necessary, therefore, to maintain separate accounts for each sponsor by project or allotment account. This should be done by setting up an allotment account for each project to which contributions have been made. 5. Encumbrances should be made against the sponsor's allotment account in the same manner as encumbrances are made against other allotment accounts. 6. (a) Pay rolls and other vouchers chargeable to a project which has both Emergency Relief funds and funds contributed by a sponsor and held in trust by the Treasury Accounts Office, ordinarily should be submitted on separate vouchers so that the entire amount of each voucher is chargeable either to the sponsor's funds or to funds provided by allocations under the Emergency Relief Appropriation Act of 1935. This practice will permit the disbursing clerk to liquidate them by drawing a check on only one account. (b) If, however, a pay roll, or other voucher, is submitted to the Treasury Accounts Office, part of which is to be paid from the regular Emergency Relief fund and part from the funds held for a sponsor, the pay roll, or other voucher, should show on its face the amount to be charged to the regular Emergency Relief fund and the amount to be charged to the special deposit fund held for the sponsor. 7. After a project is completed and all obligations are paid, any balance remaining in the contributed fund account may be returned to the contributor on a properly executed refund voucher (Form 1049). In the early part of 1937 it was disclosed that the practice had grown until it involved 27 States or subdivisions thereof and that millions of dollars were being received, deposited to the credit of official checking accounts of Treasury-State disbursing officers, and disbursed as special deposits. The Administrator, Works Progress Administration, was advised by letter dated March 15, 1937, as follows: Examination by representatives of this office of the accounts and records of the Works Progress Administration in Louisville, Ky., brings out matters to which it is thought advisable to invite your attention, and which are reported substantially as follows: Under an informal agreement with certain officials of the city of Louisville, in return for locating the Works Progress Administration office of the sixth district in that city, office space at 107 South Fifth Street was furnished without charge by the city. Subsequently the Works Progress Administration gave up the said space and leased new quarters at 2500 South Third Street, at which time the city of Louisville and Jefferson County agreed to contribute toward defraying the rent of the new quarters. Of the monthly contributions amounting to $400, $250 was to have been applied toward the payment of rental bills and the balance used for other purposes. Examination of the accounts of P. A. Caulk, Treasury State disbursing clerk, at Louisville, Ky., developed the fact that in November 1936 he was carrying in his "special deposit" account $918.50 which, it was stated, represented contributions by the city of Louisville to cover one-half of the office space rental for the months of September, October, November, and December 1936. However, from the contribution for the December rent $81.50 was used for erecting a cage around the office of the paymaster. With reference to the contributions, it appears that Mr. P. M. Brooks, director, Works Progress Administration, sixth district, Kentucky, received the said checks which were drawn to his order and endorsed and delivered them to Salon F. Russell, treasurer (an official of the city welfare association), for deposit in the Lincoln Bank & Trust Co. to the credit of an account designated "Local Works Progress Administration funds account." The deposits to this account in 1936 were as follows: An examination of the paid checks drawn against the "Local Works Progress Administration funds account" (bank) indicated that a payment therefrom in the amount of $168.52 had also been made, at the direction of Mr. Brooks, to the Louisville Gas & Electric Co., for electricity used by the Works Progress Administration office at 2500 South Third Street. In addition thereto other payments for towels, laundry, etc., had been made, leaving a balance of $297.43 in the account as of December 12, 1936. In discussing with the local officials of the Works Progress Administration the acceptance and use of donated funds, the intention was manifested to use any donations of cash received for the purchase of items, such as electric typewriters, kodak supplies, etc., which could not be secured through the Procurement Division, under the appropriation. While the joint resolution of April 8, 1935 (49 Stat. 115), making appropriations for relief purposes provides in section 3, in part, that in carrying out the provisions thereof the President may accept and utilize voluntary and uncompensated services (which in the spirit of the act, supra, may reasonably include office space, equipment, etc., furnished gratis), there appears to be no lawful authority for the acceptance on behalf of the United States of donations or contributions of cash to be used to supplement the amounts duly allotted for administrative purposes. It has been generally held that in the absence of such authority no officer or employee of the Federal Government may accept such voluntary gifts. However, where such authority has been given, it is the duty and responsibility of the administration accepting the donation or contribution to apply same solely to the specific purposes for which donated or contributed. Assuming that the President has authorized the acceptance of voluntary and uncompensated services, etc., in view of the fact that office space at 107 South Fifth Street was previously furnished gratis by the city of Louisville, and that the subsequent arrangement whereby the city offered to defray a part of the rental cost of the premises at 2500 South Third Street (for which contract was entered into by the Works Progress Administration providing for monthly rental payments of $500) was in effect a continuation of the previous arrangement, the full amount so received by the Works Progress Administration at Louisville, Ky., should be deposited into the Treasury of the United States as a repayment to the appropriation (and allotment) chargeable with the rental payments for the said office space. That portion of the amount contributed to be applied to the December rental which was used for the construction of the cage around the paymaster's office should likewise be deposited into the Treasury of the United States. The district director should be instructed to avoid accepting in his official capacity unauthorized contributions and donations of cash on behalf of the Federal Government. (See 11 Comp. Gen. 355 and citations therein.) Advice as to the action taken on the matter herein reported will be appreciated. In reply thereto the Administrator wrote, as follows, under date of June 15, 1937: Please refer to letter from this Administration under date of March 22, 1937, acknowledging receipt of your communication dated March 15, 1937, file A-51627, inviting attention to a report submitted by representatives of your office in connection with the acceptance of cash contributions by the Works Progress Administration in Kentucky. Comprehensive inquiry into the method of handling the funds in question has been made and you are advised that, inasmuch as the amounts contributed monthly by the city of Louisville are not restricted solely to payments for rental for office space at 2500 South Third Street, it would apparently not be in order to deposit the total amount thereof to the allotment account from which rental payments are made. Since the amounts involved are available for expenditure for items other than rent, it is proposed to continue to accept such contributions and to deposit and expend them in accordance with the provisions of United States Treasury Department Field Office Memorandum No. 105, dated October 23, 1935, and supplement thereto, dated April 12, 1936, copies of which are enclosed for your convenient reference. As to the report that the director of the sixth district of the Works Progress Administration in Kentucky received checks for deposit in the Lincoln National Bank to the credit of a special account designated "Local Works Progress Administration funds account," you are advised that the practice alluded to has been definitely discontinued and that future contributions will be handled in accordance with the procedure outlined in the Treasury Department's memorandum, which, in the absence of further advice, will be considered to bear the approval of your office. Pursuant to letter of March 15, 1937, supra, the Commissioner of Accounts and Deposits, Treasury Department, issued Accounting Procedure Memorandum No. 71, dated April 14, 1937, in part, as follows: To: Accountants-in-Charge, United States Treasury Accounts Offices. Subject: Revised Accounting and Disbursing Procedure for Sponsors' Contributions Deposited With the Treasury. 1. Field Office Memorandum 105, as supplemented, prescribes a procedure for handling sponsors' contributions as special deposits with Treasury State disbursing clerks, from which disbursements are made for the purposes expressly intended by the contributors. 2. It has been determined that to provide better control over large sums contributed, sponsors' contributions hereafter will be handled as trust funds instead of special deposits, with the exception of contributions in connection with sponsored projects in the field of drama, music, art, and writing (referred to in Field Office Memoranda 223 and 243) which will continue to be handled as provided in Field Office Memorandum 105. There have been established in the United States Treasury receipt and appropriation accounts, bearing the symbols and titles set forth in the attached list, to the credit of which will be deposited and made available for expenditure all sponsors' contributions of funds appertaining to the operation of projects other than those in the field of drama, music, art, and writing. 3. The funds constituting each contribution should be scheduled to the Treasury State disbursing clerk as a collection on Standard Form 1044 for deposit into the Treasury on Certificate of Deposit Form 1 to the credit of the trust fund receipt account established for the State in which the sponsored projects are located and the contributions are to be expended. After the deposit of receipts has been covered into the Treasury, the funds will be made available for expenditure upon the books of the Treasury and cash requisitioned for disbursing purposes under the proper trust-fund appropriation symbol.. Cash will be requisitioned for account of the chief disbursing officer who, upon the basis of Form 1669 issued by the Treasury Central Accounts Office, will advance specified sums to the State disbursing clerks for the payment of obligations chargeable to the trust funds allotted as hereinafter explained. 4. The State works progress administrators (or other State administrator) will be authorized to use the funds available in the trust-fund appropriation accounts through the issuance of advices of project authorization (Treasury Form A-2) by the Administrator in Washington. 5. The State administrator, in turn, will allot the funds in his discretion (subject to the terms of the contribution) except as may otherwise be directed in advices of project authorization for obligation and expenditure in connection with approved official projects. The allotments will be made through the medium of advices of allotment (Treasury Form A-3). If sponsors' contributions are made for the purpose of general expenditure upon any projects heretofore or hereafter approved in Presidential letters of allocation, general allotments of such trust funds may be made, against which obligations and expenditures on various official projects are chargeable. If, however, the sponsor restricts the use of a certain contribution to a specified official project or projects, the advice of project authorization will expressly limit the use of the funds for the purpose intended and the advices of allotment under the project authorization should be issued with respect to such specified official project or projects. The Treasury Accounts Office should, therefore, be furnished by the State administrator with two copies of the terms and conditions under which sponsors' contributions are made. The Treasury Accounts Office will advise the Voucher Review Division of the Treasury Central Accounts Office with regard to each contribution upon which special restrictions of any nature are imposed by the sponsor. Such advice to the Central Accounts Office should contain reference to the certificate of deposit (Form 1) upon which the contribution is deposited into the Treasury to the credit of the trust fund receipt account. 6. All obligations or commitments and expenditures against trust funds comprising sponsors' contributions should be covered by encumbrance documents and vouchers relating exclusively to such trusts. All of these documents or related schedules and other accounting forms should contain reference to the Official Projects and Works Progress Administration appropriations with which the transactions are respectively identified. In the examination of trust-fund encumbrances and vouchers, the Accounts Office should determine first the propriety of the transactions from the standpoint of the restrictions imposed by the sponsor, secondly, the limitations prescribed by law, and third, the propriety of the transactions with respect to the restrictions in the Presidential letters relating to the official projects affected. This obviously does not apply to the amounts of limitation of the official projects but to the purposes for which they are approved. Voucher examination requirements governing the propriety of expenditures that will be applicable to trust funds constituting sponsors' contributions will be covered in a separate voucher examination memorandum being issued. 10. Please keep this office informed concerning any new developments with respect to this matter and also with respect to any complications or difficulties that arise in connection with the maintenance by you of appropriate accounts covering trust funds constituting sponsors' contributions. The procedure outlined therein conforms generally to the accepted practice for depositing, covering, and expending trust funds where there exists authority for the acceptance and expenditure thereof, but does not comply with the request contained in letter of March 15, 1937, supra, as to the authority of the Works Progress Administration for the acceptance of such contributions. Pursuant to such accounting procedure memorandum No. 71, there were transmitted to this Office certain warrants for countersignature as to which this Office wrote to the Administrator, Works Progress Administration, under date of May 25, 1937, as follows: The Treasury Department has presented to this office for countersignature covering warrant No. 16787, month of April 1937, proposing to deposit the sum of $60 to a receipt account "Deposits of sponsors' contributions, Works Progress Administration, Louisiana," together with miscellaneous civil appropriation warrant No. 448, dated April 30, 1937, appropriating said amount to a trustfund account "sponsors' contributions, Works Progress Administration, Louisiana," pursuant to section 20 of the Permanent Appropriation Repeal Act of June 26, 1934, 48 Stat. 1233. In this connection reference is made to my letter of March 15, 1937, A-51627, acknowledged by letter of March 22, 1937, from the Acting Administrator, concerning the acceptance by the district director, Works Progress Administration, Louisville, Ky., of donations or contributions of cash on behalf of the Federal |