ment over the old systems. The change from the old systems of symbols and account designations to the new entailed some additional work and expense during the fiscal year 1937, both in the General Accounting Office and in the administrative offices, but the results justify and more than offset the difficulties encountered. In effecting such change the departments and establishments generally cooperated fully. The Treasury Department, however, refused to adopt the prescribed symbols in connection with its records and as a result many administrative offices have been compelled to show both the old and the new symbols on many of their accounting documents. Repeated efforts have failed to elicit from the Treasury Department any real reasons why the new symbols should not be adopted there, or that such adoption would not be altogether in the best interests of the Government. The situation thus disclosed evidences the type of difficulties encountered by the General Accounting Office in its efforts to develop and establish a proper and adequate system of accounts for the Government. Under existing law it may prescribe but no power is given to enforce compliance with prescribed procedures. The success attending the efforts of the General Accounting Office thus far has resulted largely from its ability to convincingly overcome the predilections of those with whom it must deal in such matters. Much more rapid progress would be assured if the law imposing this tremendously important responsibility carried also the means for compelling observance.

With a view to improving the audit of expenditures and receipts there were issued during the fiscal year 1936 General Regulations Nos. 83 and 87. General Regulations No. 83 is designed to cause a classification of expenditures on the basis of limitations set forth in appropriation acts so that in connection with the audit of expenditures it can be determined whether such limitations have been observed. General Regulations No. 87 has as its objectives

(a) A preliminary audit of all receipts prior to countersignature of warrants covering such receipts into the Treasury where they may be available for expenditure or appropriation, and (b) The establishment of adequate accounting control over accountable (disbursing and collecting) officers of the Government.

One of the chief complaints lodged against the General Accounting Office by those now advocating a reorganization of the fiscal and financial administration of the Government is that there has been a failure to establish a proper and adequate centralized accounting control through which there may be available to the Congress, at regular intervals, statements showing the complete financial position of the United States. Such complaints have not taken into consideration the program which has been undertaken by the General Accounting Office or the fact that the foundation work of such program has now been laid and that the structural development is being prosecuted as vigorously as possible.

The devising of an adequate accounting system for the Government presupposes the coordination of many necessarily decentralized records into a properly centralized control. The most efficient, economical, and effective accounting control is universally recognized to be that which builds up from independent sources as a matter of

proper routine. It seems quite obvious also that the effectiveness of any audit is definitely and materially enhanced when there is coupled with the authority and responsibility for audit, the authority and responsibility for prescribing accounting records, forms, and procedures. Such an arrangement makes it possible for the auditor to prescribe the information to be contained in accounting forms, the record to be made of financial transactions and the accounting procedure to be followed, thus insuring against incomplete records and faulty procedures, either of which might cause the audit to be entirely ineffective or practically impossible of accomplishment. Thus, while the forms, systems, and procedures prescribed for observance and maintenance by departments and establishments make due provision for full administrative and budgetary needs, they are designed also to serve for the purpose of audit. In such circumstances the General Accounting Office becomes peculiarly related to the entire fiscal machinery of the Government and through the utilization of the fiscal data necessarily concentrated in the General Accounting Office for the purpose of the audit it constitutes the center into which the accounting records of the Government should and are now being properly coordinated.

The system of accounting adopted does not contemplate the keeping, in the General Accounting Office, of detailed records of the multitudinous fiscal transactions of the Government. Such records are required under prescribed procedure, to be maintained throughout the several departments and establishments. The accounts of the General Accounting Office will comprise summary information to insure proper appropriation limitation and project control; summary information on receivables of the Government, receipts, expenditures, etc.; and complete records with accountable (disbursing and collecting) officers of the United States; and be so organized as to permit the stating, annually or whenever necessary at other times, of complete financial statements for the United States. There should be no interruption of this program at this time. The establishment of a centralized accounting control in the General Accounting Office, aside from the obvious advantages as above stated, is believed to be perfectly logical otherwise. As now constituted the office is an agency responsible directly to the Congress. There reposes in the Congress exclusive jurisdiction over the raising of all revenue and the expenditure thereof. Congress alone has the power to impose such restrictions on spending as shall be for the public good and in the exercise of that power it is unthinkable that there could be disassociated the responsibility for prescribing the manner in which an accounting shall be made. The keeping of public financial records is an extremely important factor in maintaining stability in governments. The manner of keeping such records should not be subjected to the whims and fancies and possibly the abuses of changing administrative personnel but should be carefully guarded by the Congress. For these reasons which are believed to be fully in the public interest the centralized accounting record of the Government is now established in that agency of the Government responsible directly to the Congress-the General Accounting Office, the only place where it seems properly to belong.

LEGISLATIVE

RECOMMENDATIONS

SYSTEM OF APPROPRIATION AND FUND ACCOUNTING

Section 2 of the Budget and Accounting Act of June 10, 1921 (42 Stat. 20), provides:

When used in this Act

The terms "department and establishment" and "department or establishment" mean any executive department, independent commission, board, bureau, office, agency, or other establishment of the Government, including the municipal government of the District of Columbia,

*

Section 309 of said Budget and Accounting Act, 1921 (42 Stat. 25), provides:

The Comptroller General shall prescribe the forms, systems, and procedure for administrative appropriation and fund accounting in the several departments and establishments, and for the administrative examination of fiscal officers' accounts and claims against the United States.

The developing and prescribing of a system of appropriation and fund accounting in the several departments and establishments of the Federal Government including the municipal government of the District of Columbia represent a duty indispensable to, and which cannot be disassociated from, proper audit. Vesting in the General Accounting Office the duty of prescribing accounting forms, systems, and procedure serves not only to make available certain information for the benefit of the head of a department or establishment for use in the administration of his duties, but fixes the responsibility for insuring an accurate and methodical record of all fiscal transactions, in such form as shall make possible an intelligent and adequate audit.

For many years much thought has been given to determining by decisions and regulations the evidence which must accompany accounts submitted for audit, resulting in a substantial standardization of the forms in which the accounts shall be rendered. The duty of prescribing not only the nature of evidence to be furnished with accounts submitted but their form (that is, arrangement, tabulation, exact wording of certificates, etc.) is inherent in the power and duty to audit, and should not be abridged in any manner. Furthermore, the acceptance of accounts submitted for audit as containing satisfactory evidence of the correctness and legality of the fiscal transactions reported therein depends to a large degree upon the knowledge of the adequacy and effectiveness of the examination of the offices, accounts, and records of the fiscal officers submitting their accounts covering such fiscal transactions, and it follows, obviously, that if the Comptroller General of the United States is to be deprived of the control over such administrative examination and accept another officer's judgment as to its adequacy, he must to that extent accept the correctness and legality of the submitted accounts as shown on their face, supported largely by certificates of the parties in interest, or be compelled to resort to expensive field investigations and audit in order to verify to his satisfaction, based upon data furnished by responsible men under his jurisdiction, that the officers who render the accounts are properly handling and recording all fiscal transactions, and that the accounts rendered are a proper reflection of well-kept records.

Coincident with the development of forms for rendering accounts, the audit has been materially strengthened by the development and prescription of account-keeping records to meet the requirements of administration and to serve as the basis for accounting. The accounting systems prescribed by the General Accounting Office have as their direct objectives all of the needs for which accounting records should be maintained, and in the interest of economy and efficiency such accounts as are considered to be essential in a fundamental way are organized so as to serve fully the administrative, budgetary, and executive needs of the Government and necessarily to coordinate with the audit. The experience of the past few years, during the course of which the effectiveness of standardized adequate accounting systems could be noted, has demonstrated conclusively that successful and adequate audit depends largely upon the administrative accounting practice and procedure.

The authority of the Comptroller General of the United States to survey existing accounting systems and procedures and, when in his judgment the conditions warrant, to prescribe systems designed to require a full accounting when such is not available or to curtail when it appears that more is being done than is necessary results not only in economy but in strengthening to a marked extent the audit of accounts. With the right to prescribe the administrative accounting systems and procedure there goes hand in hand the opportunity and the ability to determine what part thereof should be submitted to the General Accounting Office for audit. Opportunity is afforded to see that the accounts are so organized that the limitations and mandates carried in appropriation acts and other general statutes are enforced. Indeed the power to prescribe the manner in which administrative accounting records should be kept is so patently and fundamentally inherent in the power to audit that the two functions though separately described are one and inseparable. The strength of the audit necessarily is limited and bound by the records available on the transactions to be reviewed. Meager and unmethodical records promise meager and unmethodical audits.

On the other hand, prescribed accounting systems accomplish nothing unless they are properly installed and maintained. And, when efforts of the General Accounting Office, pursuant to law, proceed only to the point of a prescription they represent nothing more than a mere gesture. Obviously, it was the intent of the Congress that accounting systems prescribed by the Comptroller General should be installed and maintained by all departments and establishments to which the law applies. Instances arise, however, notwithstanding the plain and unambiguous intent of the law, where prolonged delay and apparent disregard of prescribed procedures amount to substantial refusal to comply. The law, though unmistakably clear in intent, as previously stated, affords to the Comptroller General no means for enforcing compliance. Thus the authority to prescribe, when put to the test, becomes an empty authority and the duty imposed becomes a duty which cannot be discharged.

It is not believed that such is the will of the Congress, and unless the Congress is willing to relax its control over the fiscal affairs of the Government, no condition should be permitted to prevail which tends to weaken the effectiveness of the organization which it has created as a means of exercising such control.

Illustrative of the growing tendency of resistance to the installation of proper accounting systems and procedures prescribed by the Comptroller General is the case of the municipal government of the District of Columbia, the pertinent facts of which are as follows:

The General Accounting Office, during the fiscal year 1928, caused a survey to be made of the accounting systems and procedure then in effect and during the course thereof it was observed that the bookkeeping procedure of the office of the assessor, which is charged with the responsibility for maintaining the basic accounting records on more than two-thirds of the gross revenues of the District of Columbia, provided no features for proper and necessary reconciliations or proofs and that such records were not coordinated with, nor subject to control through, the primary and related records of the auditor and the collector of taxes. The financial records of the police court and police precincts were found to be inadequate and not susceptible to audit. It was noted that disbursements made by the collector of taxes on account of gasoline-tax refunds were not being audited by the auditor for the District of Columbia, and that very meager records on such transactions were being maintained. In connection with practically all revenue accounts it was observed that there did not exist any method of centralized control though the facilities therefor were readily available. The records of the auditor's office on receipts comprised merely a set of memorandum accounts which were built up almost entirely from reports of collections by the collector of taxes and did not, in any case, reflect the true status of receivables accruing through the activities of the various departments. The financial records of the municipal court were found to be in such condition that desirable and necessary reconciliations could not be made and a partial check of the transactions disclosed an apparent shortage of approximately $660, of which $194.50 was restored by the clerk of the court on September 11, 1928. The balance of $465.50 has not since been restored.

The entire accounting structure of the municipal government of the District of Columbia was deemed to be entirely inadequate and therefore, pursuant to law, accounting systems and procedures, designed to provide a proper record of financial transactions and to afford due safeguards to public funds, have from time to time been prescribed.

All of the accounting systems prescribed by the General Accounting Office were devised to afford such unification throughout as would provide better and safer administrative control and to facilitate audit. While there has been cooperation in portions of the District government and the system so prescribed has in such portions been installed, there has not been similar cooperation throughout and what has been accomplished by painstaking and persistent effort has not been sufficiently extensive to effect the improvements believed to be vitally necessary.

Many letters have been addressed to the boards of commissioners of the District of Columbia in office during the period 1928 to 1935, inclusive, urging in the interests of economy, efficiency, and protection of public funds that the prescribed systems be adopted. To a number of such letters no response whatever has been made.

On August 4, 1934, a letter was addressed to the president, Board of Commissioners, calling attention to the fact that a recent examination of the records of the assessor and of the collector for the purpose