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TREASURY DEPARTMENT,
OFFICE OF AUDITOR FOR Post OFFICE DEPARTMENT,

Washington, D. C., April 25, 1910. Mr. M. O. CHANCE,

Chairman Committee on Auditing, Treasury Department. SIR: In compliance with your direction of February 21 last, I submit the following report:

Two of the principal duties assigned by law to the Treasury Department are, first, to secure safe custody and legal disbursement of the money of the United States, and, second, to secure accurate accountability and full public statement of the receipts and expenses of the Government.

There is a field for an authoritative work on the Government's accounting system in its entirety. The subject may not be interesting to the lay reader, but its importance to the service will be conceded. The finances of the United States have been written up repeatedly; but the investigator finds too often that the data pertaining to the auditing of the Government's accounts is an incidental feature in a great number of reports and miscellaneous treatises.

The accounting system of the Treasury Department, designed to concentrate all accounting agencies in that department, was created by Alexander Hamilton, the first Secretary of the Treasury. Comptroller Bowler said it was originally planned that no demand for the payment of money by the United States should be paid until a claim or an account had been certified by the accounting officers. But a practice grew up in the early history of the Government, without express authority of law, of employing agents to disburse appropriations. Subsequently disbursing officers were authorized by statute and in 1853 were provided for the several departments.

In the original organization of that department, by the act of September 2, 1789, provision was made by the First Congress for a Secretary of the Treasury, an assistant to the Secretary, a Comptroller, an Auditor, a Treasurer, and a Register. The last four were accounting officers. In the common acceptation of the term, however, the Comptrollers and Auditors are essentially the accounting officers and are so taken in this report.

It was the duty of the Auditor created by the act of 1789 to receive all public accounts and, after examination, to certify the balances and transmit the accounts, with vouchers and certificates, to the Comptroller for his decision thereon. The claimant was given the

right of appeal from the Auditor's decision to the Comptroller at any time within six months, which afforded an opportunity to present additional evidence which might assist the Comptroller in reaching a conclusion.

It was the duty of the Comptroller to superintend the adjustment and preservation of all public accounts; to examine all accounts settled by the Auditor, and certify balances arising thereon to the Register; to countersign all warrants drawn by the Secretary of the Treasury, which were warranted by law; to report to the Secretary the official forms of all papers to be issued in the different offices for collecting the public revenue, and the manner and form of keeping and stating the accounts of the several persons employed therein; to provide for the regular and punctual payment of all moneys which may be collected and to direct proceedings for all delinquencies of officers of the revenue and for debts due the United States.

There were certain administrative duties assigned to that officer. The Secretary of the Treasury, under the authority of the act of May 8, 1792, directed that the Comptroller should superintend the collection of customs. By law the Comptroller passed upon the sufficiency of official bonds.

It was the duty of the Register to receive the adjusted accounts from the Comptroller and keep accounts of receipts and disbursements.

The Treasurer received and kept the moneys of the United States and disbursed the same on warrants drawn by the Secretary of the Treasury, countersigned by the Comptroller and recorded by the Register.

There are many interesting side issues in the laws, such as duties in connection with the recovery of debts, authentication of official papers, etc., but they are passed over as foreign to the purpose of this review.

It was the aim of the act of 1789, in part, to have all public accounts settled first and last at the Treasury Department. It was not long, however, before innovations were attempted, the object being, undoubtedly, to reduce the Auditor's work and to provide for a more accurate and expeditious settlement of those accounts.

In 1792 an accountant was provided for the War Department. He settled the accounts of the Army, subsistence of officers, bounties to soldiers, and the contingent expenses of the War Department. Twenty-four years later an additional accountant was created to adjust the accounts of the War Department existing at the close of the war with Great Britain.

An accountant for the Navy Department was appropriated for in 1798. This official settled accounts for moneys advanced and for stores and supplies issued or distributed by the Secretary of the Navy. The accountants were required by law to submit their settlements, for the inspection and revision of the Comptroller of the Treasury.

From 1789 to the establishment of the Office of the Auditor for the Post Office Department the Postmaster General obtained accounts from the postmasters (deputies as they were then called) and rendered his accounts for receipts and expenditures of the postal service, quarterly, to the Treasury Department for final audit.

The accounts of the Post Office Department, War Department, and Navy Department therefore received a double audit, first in the executive departments and second in the accounting offices—the forerunner of the present system of administrative examination of accounts prior to final audit.

In 1812 a General Land Office was established. The law provided that the commissioner of that office should audit and settle all public accounts relative to the public lands and certify balances thereon and transmit the accounts and vouchers and certificates to the Comptroller of the Treasury, who was required to examine the accounts and make his decision thereon.

Under the act of April 9, 1816, Congress created a commissioner to pass upon claims for property lost, captured, or destroyed in the military service of the United States. The commissioner was subject to such rules and regulations as the President of the United States might prescribe. In 1818 those duties were transferred to the Third Auditor, who, for a time, settled the accounts on a single-settlement" basis; that is, his action was not subject to review by the Comptroller or any other officer. In 1842 appeals from the Auditor's decisions to the Second Comptroller were authorized.

On March 3, 1817, Congress passed an act to provide for the prompt settlement of public accounts and authorized the employment of four additional Auditors and one Comptroller.

The Comptroller mentioned in the act of 1789 became the First Comptroller, and the Auditor the First Auditor. The accountant for the War Department gave way to the Second Auditor; the additional accountant to the Third Auditor, and the accountant for the Navy Department to the Fourth Auditor. The Fifth Auditor was established to adjust certain accounts hereinafter mentioned.

While the act of 1789 did not contemplate the administrative examination of accounts, yet a system somewhat similar was maintained in the Post Office Department and was subsequently introduced into the War and Navy Departments, as shown. The act of 1817 dispensed with such examinations, and it was not until 1862 that they were sanctioned by law.

The celebrated provision of law in force to-day, that all claims and demands by or against the United States and all accounts in which the United States are interested, either as debtors or creditors,

shall be adjusted in the Department of thu Treasury, will be found in the act of 1817.

The following is a brief description of the duties of the Comptrollers and Auditors under the legislation of 1817:

FIRST COMPTROLLER.—To examine all accounts settled by the First and Fifth Auditors, and certify the balances arising thereon to the register; to countersign all warrants drawn by the Secretary of the Treasury, which were warranted by law; to report to the Secretary the official forms to be used in the different offices for collecting the public revenue, and the manner and form of keeping and stating the accounts of the several persons employed therein; to superintend the preservation of the public accounts subject to his revision, and provide for the regular payment of all moneys which may be collected.

He also performed the administrative duties above set forth. SECOND COMPTROLLER.–To examine all accounts settled by the Second, Third, and Fourth Auditors, and certify by the balances arising thereon to the Secretary of the department in which the expenditures were incurred; to countersign all warrants drawn by the Secretaries of the War and Navy Departments, which were warranted by law; to report to the said Secretaries the official forms to be used in the different offices for disbursing the public money in those departments, and the manner and form of keeping and stating the accounts of the persons employed therein, and to superintend the preservation of the public accounts subject to his revision.

FIRST AUDITOR.-To receive all accounts accruing in the Treasury Department, and, after examination to certify the balances and transmit the accounts, with the vouchers and certificates to the First Comptroller for his decision thereon.

In addition to said statutory assignment the First Auditor settled the accounts for salaries and expenses of all departments, except as otherwise provided.

SECOND AUDITOR.--To receive all accounts relative to the pay and clothing of the Army, the subsistence of officers, bounties, and premiums, military and hospital stores, and the contingent expenses of the War Department, and certify the balances and transmit the accounts, with the vouchers and certificates to the Second Comptroller for his decision thereon.

Later the accounts of Indian Affairs were transferred from the Fifth to the Second Auditor. In those cases the Second Auditor reported direct to Congress, annually, the application of the appropriations made for Indian Affairs.

The Second Auditor was charged, by order dated May 28, 1816, of the Secretary of War, with the settlement of half-pay pensions and other claims of deceased officers and soldiers.

THIRD AUDITOR.—To receive and examine all accounts relative to the subsistence of the Army, the quartermaster's department, and generally all accounts of the War Department other than those provided for, and certify the balances and transmit the accounts, with vouchers and certificates to the Second Comptroller for his decision thereon.

It was within the discretion of the President to assign to the Second or Third Auditor the settlement of the accounts in charge of the additional accountant for the War Department prior to 1817.

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Claims for pensions under the act of April 6, 1838, and claims of States and Territories for military services were settled by this officer. In 1818 claims for property lost, captured, or destroyed in the military services were transferred to the Third Auditor, as heretofore stated.

Fourth AUDITOR.—To receive and examine all accounts accruing in the Navy Department, or relative thereto, and certify the balances and transmit the accounts, with vouchers and certificates, to the Second Comptroller for his decision thereon.

Accounts for arrearages of pensions, under act of March 3, 1837, and for pensions of invalid officers of the Navy, act of August 16, 1841, were stated by the Fourth Auditor and certified to the Comptroller.

FIFTH AUDITOR.–To receive and examine all accounts accruing in or relating to the Department of State, the General Post Office, and those arising out of Indian Affairs, and certify the balances and transmit the accounts, with the vouchers and certificates, to the First Comptroller for his decision thereon. · The jurisdiction of the Fifth Auditor was materially reduced by the acts of February 24, 1819, and July 2, 1836. The former transferred the accounts relating to Indian Affairs to the Second Auditor, and the latter created the office of the Sixth Auditor to settle the accounts of the Post Office Department.

In lieu thereof the Secretary of the Treasury assigned to the Fifth Auditor the administrative work of superintending the Lighthouse Establishment. In a work entitled the “United States Fiscal Department” it is said that the Fifth Auditor's Office as an auditor's office was nearly extinct in practice, but as superintendent of lighthouses it was recognized and established by a proviso in the act of 1845 which directed that this Auditor should continue to superintend the several matters connected with the lighthouses. It is said further:

In regard, then, to the superintendence of the Lighthouse Establishment, which seems now to be the mainstay of the Fifth Auditor's Office, it is certainly not an auditorship, no more than it was a commissionership of revenue, when it was assigned as an additional duty to the Commissioner of the Revenue, formerly * * * the office of Commissioner of Revenue was created by the act of 8th May, 1792, was abolished by the act of 6th April, 1802, was reestablished by the act of 24th July, 1813, and was again abolished by the act of the 23d December, 1817-thus vacillating with the enactment and repeal of internal duties and direct taxes, for the superintendence of the collection of which the office was established; and for the want of some convenient disposition of the superintendence of the Lighthouse Establishment, Congress authorized the Secretary of the Treasury to assign to the said commissioner such other duties as he might deem proper; and he accordingly assigned to him “the care and supervision of the Lighthouse Establishments." But, when the office of Commissioner of the Revenue was finally abolished, on account of the repeal of both those branches of the internal revenue (direct taxes and internal duties), the superintendence of which in fact constituted the real character and denomination of the office, the supervision of the Lighthouse Establishments was assigned to the Fifth Auditor two years thereafter by the Secretary of the Treasury, say on the 1st of January, 1820. How, it may be asked, did the assignment to the Fifth Auditor's Office of a

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