RECOMMENDATION NO. 13 "That the allotment system be greatly simplified. As an objective each operating unit should be financed from a single allotment for each appropriation involved in its operations." Comment of Veterans' Administration It is presumed that this recommendation intends that each operating unit be financed from a single allotment for each congressional appropriation limitation involved, and the Veterans' Administration endorses the recommendation as a statement of objectives under that presumption. During the past 2 years the Veterans' Administration has reduced the number of allotments made to the operating units and installations by approximately 90 percent. It is contemplated that the present relatively limited subdivision of allotments below the levels required by appropriation language will be further reduced as additional experience is gained under the cost approached to internal Veterans' Administration budget management. RECOMMENDATION NO. 14 "That Government accounts be kept on the accrual basis to show currently, completely and clearly all resources and liabilities, and the costs of operations. Furthermore, agency budgeting and financial reporting should be developed from such accrual accounting." Comments of Veterans' Administration The Veterans' Administration favors the accrual basis of accounting, and with minor exceptions, now uses that basis for agency budgeting and financial reports. The Veterans' Administration accounts and financial reports reflect all resources and liabilities as well as all costs payable from the appropriations and/or funds from which its respective activities are financed. Recommendation No. 14 in conjunction with the Commission's explanatory comments appears to advocate the expansion of Government accounts to reflect as costs such items as depreciation, interest on capital investment, and taxes which would be payable if the activity were assumed by private industry. None of these items are now reflected in Veterans' Administration accounts for activities financed from appropriations. Depreciation is charged for capital assets of the supply and canteen funds and amounts so reserved remain available for replacement or other use under the business-type budgets applicable to those activities. Interest on investment is reflected only for the direct-loan program, and in that case interest payments are made from the fund to the Treasury. No expense "in lieu of taxes" is accrued for any Veterans' Administration activity. The Veterans' Administration is unwilling at this time to endorse any expansion of the accrual system of accounting to include elements of cost which would not constitute budgetary charges to the appropriations and/or funds under which its various activities are conducted. However, this agency would welcome the opportunity to study and comment upon any legislative or regulatory proposals for funding depreciation and similar elements of expense as budgetary charges. RECOMMENDATION NO. 15 "That after appropriate accrual and cost-accounting techniques have been established by the Government agencies, the creation or continuation of revolving funds should be reviewed to determine whether they will add to efficient management." Comments of Veterans' Administration It is believed that the Veterans' Administration canteen and Veterans' Administration supply revolving funds are the only funds now available to the Veterans Administration to which this recommendation applies. The Veterans' Administration agrees that as a general principle revolving funds should be reviewed periodically to determine whether they contribute to effective financial management. However, it is believed that revolving funds for financing inventories may be found desirable under a cost-type appropriation structure as discussed under recommendation No. 7. RECOMMENDATION NO. 16 "That the executive agencies accelerate the installation of adequate monetary property accounting records as an integral part of their accounting systems." Comments of Veterans' Administration The Veterans' Administration has maintained dollar records of personal property as an integral part of its accounting system for several years. The basic account structure for reflecting monetary value of real property also has been in existence for some years, but the actual accounts do not currently reflect all construction and related costs in the case of hospitals, and so forth, built since World War II. Depending on the degree of modification in Veterans' Administration's present account structure which may be required by other agency regulation along the lines of the Commission's report on real property management, it is hoped that the installation of an adequate system of real property accounts will be completed during the current fiscal year. The Commission's discussion indicates that adequate property accounting should incorporate depreciation of capital assets for "industrial- and commercial-type installations." As indicated in the comment concerning recommendation No. 14, the Veterans' Administration now maintains depreciation accounts only for equipment of the supply and canteen revolving funds and would favor the expansion of depreciation accounting only under the circumstances outlined in that comment. RECOMMENDATION NO. 17 "That each department and agency be authorized to maintain a single account under each appropriation title or fund for controlling the amount available for the liquidation of valid obligations. Comments of Veterans' Administration No action can be taken upon this recommendation by the Veterans' Administration as such; however, it is indicated in the report that the General Accounting Office is engaged in drafting the required legislation. Although the recommendation would not result in a substantial reduction in the number of book entries, it would result in a savings of thousands of line entries in the financial reports of this agency alone. The Veterans' Administration endorses the objectives of recommendation No. 17. RECOMMENDATION NO. 18 "That vouchers which are otherwise valid but as to which appropriations have lapsed should not be referred as 'claims' to the General Accounting Office, but should be settled within the agencies." RECOMMENDATION NO. 19 "That the Comptroller General be given the authority to relieve accountable officers of financial liability except where losses result from their gross negligence or fraud." Comments of Veterans' Administration The Veterans' Administration endorses the general objectives of recommendations Nos. 18 and 19. RECOMMENDATION NO. 20 "That the Bureau of the Budget and General Accounting Office make a study to determine what can be done to eliminate (a) duplicate accounts within the Treasury Department and (b) duplicate accounting as between the Treasury Department and the various departments and agencies." RECOMMENDATION NO. 21 "That increased and continuing emphasis be placed upon the review and modernization of central fiscal reports by the Treasury Department, to the end that they may meet the changing requirements of the executive branch, the Congress, and the public. These fiscal reports should show the Government's cash position and related cash transactions." Comments of Veterans' Administration The Veterans' Administration supports the objectives of reducing duplication in the Government's accounting structure and of increased effectiveness in the financial reporting structure. Tests are currently being conducted by the Veterans' Administration in conjunction with the Treasury Department, the General Accounting Office, and the Bureau of the Budget looking toward Veterans' Administration assumption of disbursing functions now exercised by the Treasury Department. Such a transfer of responsibility would eliminate the largest remaining area of duplication as between that Department and the Veterans' Administration. RECOMMENDATION NO. 22 "That Congress consider amending the Budget and Accounting Procedures Act of 1950 to make the Bureau of the Budget responsible for developing comprehensive reports (other than purely fiscal reports) showing the financial results of the activities of the Government as a whole and of its major component activities." Comments of Veterans' Administration This recommendation appears to fall within the framework of recommendation No. 10 and Veterans' Administration's comments with respect to the latter are applicable. RECOMMENDATION NO. 23 "That in selecting individuals for comptrollership, civilians with broad management and accounting experience and competence be appointed." RECOMMENDATION NO. 24 "That the comptrollers in the military departments be responsible only to the Secretary of their respective services, and that concurrent responsibility to a Chief of Staff or equivalent be discontinued." Comments of Veterans' Administration These recommendations are identified as applying to the Military Establishments only. RECOMMENDATION NO. 25 "That the Bureau of the Budget and the General Accounting Office be requested to make an intensive study to determine the adequacy of internal auditing in Government agencies and what steps should be taken to improve it." Comments of Veterans' Administration The Veterans' Administration would welcome review by the Bureau of the Budget and the General Accounting Office of the internal audit program inaugurated during fiscal year 1954 pursuant to the recommendation made by the House Appropriations Committee in providing funds for that year. The Veterans' Administration internal audit program is conducted by a separate service in the Office of the Controller and appraises the effectiveness, adequacy, and efficiency of all policies and procedures set by management and the extent of compliance therewith at all organizational levels within the agency. In addition, each of the three Veterans' Administration operating departments maintain a system of fiscal auditing of field stations under its jurisdiction aimed at ascertaining compliance with financial policies and procedures, as well as systems of management review of the various operating programs. О |