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Mr. FASCELL. All military expenditures and all State Department expeditures ?

Mr. BLAIR. That is right.
Mr. FASCELL. How about Public Law 480 money?
Mr. BLAIR. That too.
Mr. FASCELL. Is that within your purview, too?
Mr. BLAIR. That is right.
Mr. FASCELL. It is just as broad as it is for the main office ?

Mr. BLAIR. Yes, sir. The Budget and Accounting Act of 1921 imposed upon the Office the responsibility for investigating all matters relating to the receipt, disbursement, and application of public funds, both at the seat of government and elsewhere. That statute applies to us here. There are certain technical functions that we do not carry out. We do not carry out the claims function, for instance. We do not carry out a transportation audit. That is carried out strictly at home. We do not conduct site audits in the sense that we take exception to payments by the disbursing officer. We make recommendations to our home office and the home office is the one that takes over that responsibility. However, we develop the facts for them.

Mr. FASCELL. As we go on, I trust that any member of the subcommittee who has any questions will speak right up, and the same goes for the staff. Let us not pass a point where you might be interested and then have to come back to it later. Let us do this questioning as we move along

What is the relationship between personnel and workload in your branch? Is it good, bad, indifferent, or otherwise!

Mr. BLAIR. Mr. Fascell, the policy that I have followed is not to ask for more people than we need. We have more work per

staff member than we can handle with ease. We could have a larger staff but I feel that we can do a most effective job with the size staff that we have. Basically, our workload is dependent upon the staff that we have. We do not conduct an examination in Europe as it is done in certain instances Stateside where an exhaustive or comprehensive type audit is performed in the sense that all of an agency's operations and activities are examined. I would like to point out that the average grade of employees in the branch is a 12. "We have a highly professional staff. Fourteen are C. P. A.'s. We have 10 who have been admitted to the bar, and three-quarters of our staff is made up of college graduates. We take what I would say is a high level approach to all of the problems here. For that reason wethe European Branch-have had to be selective in our work and I feel that that operates to the best advantage of our office and to the Congress.

Mr. FASCELL. Let me see if I understand. You are telling us that you are able to keep up with all of your work although this puts a burden on your staff?

Mr. BLAIR. That is right, sir.

Mr. FASCELL. You really could use more people but you would rather be more selective than have quantity?

Mr. BLAIR. That is right. I think we have quality and I think it operates to the advantage of the office and the Congress that we in the European branch continue to devote our efforts to the major areas. We


do not make exhaustive studies of all operations of an agency and you will find that we have not examined and audited every agency over here. That is because we do not have the staff and I do not recommend that we bring a staff over here to examine every agency's complete activities because I feel that our efforts should be limited to the most significant areas.

Mr. Fascell. That raises a question, Mr. Blair, as to whether or not comprehensive audit of every agency is a desirable thing, or necessary. In other words, you say you are not doing it now and that is the best way to do it?

Šír. Blair. In my opinion in the sense that the European branch should not examine all the operations of every agency in all of their aspects.

Mr. FASCELL. In your opinion. I cannot see why-we nonprofesfessional people will not argue with you—but it does raise a question. Is it possible to give us a for instance? That is, what would you be required to have if you were to undertake a comprehensive audit of every outfit, as most of us think is being done? What would it take in the way of staff?

Mr. BLAIR. I would estimate, offhand, that we would require a staff of approximately 125 or 150. That is the minimum requirement. As I say, we operate with grade 12 as the average grade for the staff. When I say "average grade," I take in the stenographic help that receives grades 5 and 7.

Mrs. HARDEN. Mr. Blair, I understood you to say that the total number on your staff was 64. Is that correct?

Mr. Blair. That is the authorized positions. We have 64 positions authorized. We can fill, as of the first of the month, 64 positions. We had 52 on board then. In other words, we have a requirement for an additional 12 men. In other words, we have vacancies in our staff here that number 12 people. Mrs. HARDEN. How

many women do

you have on your staff ? Mr. BLAIR. We have 5 who serve in secretarial positions in Paris and 4 at the other stations.

Mr. MICHEL. Vacancies for what positions?

Mr. BLAIR. One secretarial position and 11 audit positions. We have a vacancy in Madrid, for instance. We have a vacancy in Frankfurt and the others are here in Paris.

Mr. FASCELL. Mr. Blair, is there any anticipated difficulty, personnel-wise or work-wise, with your program supervisor for systems development in view of the law we passed last year in putting everybody on an accrual basis?

Mr. BLAIR. Mr. Wootton, would you care to answer that question?
Mr. Wootton. I will make an effort, Mr. Chairman.
I have only been aboard 2 days.

Mr. FASCELL. That is a good enough answer. We will come back and talk to you later.

Mr. WOOTTON. I do not mean to pass that over lightly, sir. The former systems adviser carried on a very strong effort in carrying out the responsibilities assigned to the Comptroller General in the accounting area. As to the degree that he went into accrual accounting under the law that you mentioned, I am not too sure. There may be other staff members here who could add to it.


Mr. BLAIR. We have not gotten into that area. The reason I called on him is that we were discussing this problem the other evening, the problems involved in that particular system. We do not know the extent of our problems in that area here in Europe.

Mr. FASCELL. I am sure that the subcommittee understands that if you run into difficulty that the home office knows about it and then we will know about it next.

What is the total number of reports that have come out of this branch since it was organized ?

Mr. BLAIR. We have broken out schedules, Mr. Chairman, on reports issued by the branch from July 1, 1955, to date.

Then we prepared a schedule of reports issued by the branch from its inception to date. We have not recapitulated those figures. We can supply it for the record later if you wish.

Mr. FASCELL. It is over 100 ?

Mr. ROSENBERGER. It is 187 plus 75 plus 200. That is, investigations, audits, and systems in total.

Mr. BLAIR. 462 reports.

Mr. FASCELL. I am not sure that I know the difference between a report, survey, investigation, audit, and comprehensive audit. Let us get the record straight on that.

Mr. BLAIR. 462 reports. When I say “report” I mean investigative or audit actions that have been reduced to a piece of paper. We have submitted a memorandum, a letter, or a formal report such as this issued by the Washington office [indicating]. In other words, 462 examinations that we conducted. If it was such that it did not warrant the dignity of a report of this kind, we submitted a letter report. I do not want you to get the idea that these 462 reports were of this formal kind [indicating].

We have submitted a written statement or report on matters that we have looked into in 462 instances.

Let me inquire. Does this also include matters that we have closed locally?


Mr. BLAIR. In addition, we have handled 72 matters locally. There should be a list of those in this material that your staff requested. We have not referred these to Washington for the reason that the investigation of the facts failed to substantiate the initial allegation so that no further action was required. The audit action resulted in corrective action being taken locally. It was not of sufficient importance to report to Washington. Then there are other matters. We are continually receiving information from informants and people in the military or civilian agencies, who for one reason or other, are not satisfied with the way the Department is operating. We receive that information and act on it when time permits, if the allegation is substantive or specific enough.

Mr. FASCELL. Let me see if we have in the record now the difference between a survey and an investigation.

Mr. Blair. That would get into technical diffierences. Mr. FASCELL. I do not want to extend it too much, but we would like to get an idea of what you are talking about so that we are in the same general frame of reference here.

Mr. BLAIR. A survey would be the term you would apply to an examination we would make, let us say, in the supply area. We go



down to a supply depot and make a preliminary survey of their supply operations to determine the extent of a proposed audit examination. Mr. FASCELL. You take a look at it?

Mr. BLAIR. Then we decide which area needs developing;, which area looks all right, and how many men to put on this job. An examination of the agency audit report may show that certain areas are under control. We make this survey that can serve two purposes. First, to determine the area that requires further development; second, a survey, such as we did in the military assistance program which was an examination or survey across the board in several countries here and which was part of a worldwide survey conducted by the office resulting in the release of this overall report.

Mr. FASCELL. You call this a survey, this report on the military assistance program worldwide. That is a survey and yet it is reduced to writing?

Mr. BLAIR. Yes.
Mr. FASCELL. It is a report. A survey is a report?
Mr. BLAIR. Yes.
Mr. FASCELL. A survey has elements of investigation in it?
Mr. BLAIR. Absolutely.

Mr. FASCELL. Is there a technical difference between an investigation and a survey?

Mr. BLAIR. There would be this technical difference: The end result may be that they both may come out in a report. That has no significance to it. The form of it has no significance.

An investigation may arise while you are conducting your survey at a supply depot because of Government property which is allegedly being stolen. We would run that allegation down to see if there is sufficient substance to it and if it appears true then we refer it for handling to the military since they are primarily responsible for protecting that property.

If you run a survey of a disbursing office and in checking out their cash you find them short, you would then run an investigation of that shortage to find out if the department-do not misunderstand me, I am not talking about a particular case

Mr. FASCELL. We understand that that is an example.

Then this report of the survey in the case of the military assistance program is not an audit?

Mr. BLAIR. It is an audit.
Mr. FASCELL. Not a comprehensive audit?

Mr. BLAIR. Not a comprehensive audit in the sense preivously mentioned.

Mr. FASCELL. It is an audit?
Mr. BLAIR. Yes, sir.
Mr. FASCELL. It is a survey and a report?
Mr. BLAIR. Yes, sir.

Mr. FASCELL. It has elements of an examination or otherwise you could not make your report?

Mr. BLAIR. Right. It can encompass all of the elements and it is possible that an investigative report would be issued separately from the survey. I cannot think offhand of any particular instance when that has happened.

Mr. FASCELL. I think we have a general idea now of the technical differences there. We recognize that in your selective reports that you turned up some problem areas and in a great many cases there have been corrective actions. Also, in many cases it has wound up by saving some money for the Government.

This Subcommittee on Government Operations would be particularly interested in selective cases where you have had corrective action taken and while they were substantially handled as a matter of internal operations and maybe not reported to the Congress, we would also be interested in the record of specific instances, all of them, in which there were actually money savings as a result of the activity of this branch. If that is included in your report, fine, but if not, we would like to have it for the record.

Mr. Blair. Mr. Chairman, I would like to point out that in the report on the European branch

Mr. FASCELL. The one dated May 31, 1957?

Mr. BLAIR. That is correct, exhibit K. On page 15 we report the collections that this office effected for fiscal year 1957. We submit a quarterly report to our office and it just so happens that this worked out nicely for the fiscal year reporting. We were actually responsible for deposits of miscellaneous receipts in the Treasury of $94,462. That is money back. Then we were instrumental in obtaining recoreries of some $885,000.

Mr. FASCELL. Where are you reading from now?
Mr. BLAIR. Exhibit K, page 16. It is page 74 of the report.

We had estimated that the savings resulting from our examinations during the year amounted to some $2,854,000. I would like to point out that you cannot measure the work

Mr. FASCELL. In terms of dollars recovered ?
Mr. BLAIR. That is right.

Mr. FASCELL. We are always interested in pointing with pride to the operations of the policemen.

Mr. BLAIR. We are very proud of our operations. These are firm dollar figures.

In addition, in our examination at Chateauroux we found that they did not need the supplies that they had on requisition. As a result Chateauroux canceled some $2.5 million requisitions. Those figures are not included in here.

Mr. FASCELL. Those are specific savings in canceled contracts for stuff they do not need? It looks like you are saving money. I think you are being too modest in your report and maybe you ought to take a second shot at it.

Mr. POLAND. Mr. Blair, where would the savings that you reported in Germany on transportation costs of over $2 million be shown! That does not show up in here? Where would that be shown?

I am speaking of the ones that required payment out of German funds that had not theretofore been done, out of the $2.75 million or thereabouts.

Mr. FASCELL. May I interrupt there?

This was a transaction where the German Government owed the United States money and it had not heretofore been collected; is that what we are talking about?

Mr. ROSENBERGER. I believe Mr. Poland is speaking of the situation we found in MAAG Germany. The MAAG's local expenditures are paid by the host government out of local currency, contributed cur

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