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where they can be approved by our Office, as required by the Accounting and Auditing Act of 1950. In 1966, about a third of the civil departments and agencies and the Army Corps of Engineers (civil functions) had approved systems. Now, about: 55 percent of the civil department and agency systems have been approved. In addition, for the Department of Defense, we have approved 26 statements of accounting principles and standards and 4 systems designs. We plan to continue working with all agencies to promote improved systems and methods of producing reliable financial and program information.

A major financial management project started last year is the development of auditing standards and guidelines for application under Federal grant programs. This work is being carried out under GAO leadership by a working group composed of representatives of the principal Federal agencies involved in grant programs. Assistance is being obtained from State and local governments and various professional organizations. The objective is to develop audit standards and guidelines that will be applicable to audit work performed at State and local government levels and for other recipients of Federal grants irrespective of who performs the audit work.

CLAIMS SETTLEMENT AND DEBT COLLECTION

The Budget and Accounting Act of 1921 places final responsibility for settling most claims for and against the Government in the General Accounting Office. The passage of the Federal Claims Collection Act of 1966 increased the authority of the departments and agencies to compromise and terminate debts of the United States under certain conditions. As agencies gain more experience in exercising the authority granted under the act and their debt collection operations improve, it is expected that the GAO debt collection operations will gradually diminish. Accordingly, we plan to decrease from 141 in 1971 to 139 in 1972 the man-years applied to these claims activities.

EXECUTIVE DIRECTION AND ADMINISTRATIVE SUPPORT

Our program category of Executive Direction and Administrative Support includes:

Control and direction of the General Accounting Office and performance of duties by the Comptroller General as specified in the Budget and Accounting Act of 1921, the Budget and Accounting Procedures Act of 1950, the Legislative Reorganization Act of 1970, and other laws.

Policy review of reports prior to release.
Administrative services.
Personnel management.

Computer services. These activities, which will involve 391 man-years in fiscal year 1972, are necessary to the internal management and administration of the Office.

Mr. Chairman, I have covered, very briefly, the highlights of our major program requirements and operations. We are very proud of the high quality and productivity of the members of our organization, both in Washington and in the beld. It is our goal to make continuing improvements in this respect. To this end, we will devote increased effort to improving our program planning, as well as our internal organization and management practices during fiscal year 1972. Additional details concerning our activities are contained in our budget justification and I will be happy to answer any questions you may have.

This concludes my statement.

REVISED ESTIMATES FOR FISCAL YEAR 1971

Mr. Staats. Our original appropriation for 1971 was $74,020,000. Then we had a supplemental appropriation which was $5,971,000, bringing the total appropriation for 1971 to $79,991,000.

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IMPACT OF MANDATORY INCREASES

In the next paragraph we indicate what the effect of inflation has been. I might say here that our overall budget request for 1972 has been increased by $9 million more than our 1972 budget would have been without the two pay increases, and the associated costs that go with it. I bring this up only to show you what the impact of inflation in terms of pay costs has been.

Chairman ELLENDER. What is that for?

Mr. STAATS. Those two pay bills that went through. It cost us $9 million as against what our 1972 would have been.

Senator COTTON. All that was on the supplemental for increased pay costs?

Mr. Staats. Almost entirely pay costs. There was a little increase in there on travel costs because of the application of an 8-percent tax to air fares.

BUDGET ESTIMATES

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On page 2, we bring this out a little more clearly in more detail. Our 1972 estimate of $87,598,000 is an increase of $7,607,000 over our 1971 appropriation. This increase is composed of the additional cost of the January 10, 1971, pay increase. Put it on a full-year basis and that cost is $2,267,000.

The net increase of 177 positions, average positions, 162 professional and 15 supporting staff, that is $2,060,300. That is made up of four items: salaries, $1,560,900; the benefits, $156,900; travel, $286,000; and other costs that go along with the personnel, $56,500.

Chairman ELLENDER. You add that your pay increases of $7 million so that the total is 9 plus; is that it?

Mr. Staats. That is correct.

Other increases in salary costs are $2,585,300, which includes these items: the periodic step increases which are provided for by law, $823,600; promotions to fill vacancies and grade increases, $1,561,600; and other increases of $200,100; the increases in employee benefit costs of $422,000 made up of the health benefits of $193,200, the contribution to the retirement fund of $201,900 and other costs of $16,900.

Increases in travel and per diem costs, $132,000; and other increases, $139,800.

INCREASED STAFF: JUSTIFICATION

In preparing our 1972 estimate, we considered the growing demand on the GAO imposed through recent legislation and other congressional actions. The increases in specific requests of congressional commitees and individual Members of Congress for GAO work, expansion and growth of Government programs and the congressional efforts to intensify and broaden GAO reviews of programs to better assist Congress in its oversight responsibilities.

Chairman ELLENDER. Could you be a little specific as to what those laws were ?

Mr. Staats. Yes; I have that, and I will be sure to cover that before you have to leave.

Chairman ELLENDER. All right.

Mr. Staats. We have found it necessary to request for fiscal year 1972 an increase of 177 average positions over our revised fiscal year 1971 estimate of 4,744, for a total of 4,921 average staff for fiscal year 1972.

The requested increase of 177 is made up of 162 professional positions and 15 support positions. The increase will be applied primarily to activities involving direct assistance to Congress and reviews of civilian programs.

BUDGET REQUEST: HOUSE ACTION

I would like to make a comment at this point with regard to our proposed increase of 177 average positions. I am sure you are aware that the legislative branch appropriation bill for 1972 has now passed, and provides the GA0 with an appropriation of $86,618,000 based on an increase of 93 in lieu of the requested 177. The reduction of 84 was made “in the areas where work and projects are initiated by the General Accounting Office" and resulted in an allowance of $980,000 less than the $87,598,000 requested.

MANPOWER REQUESTS

Our justification of estimates provides some detail on our plans for applying staff resources to reviews of management efficiency and program results in the many departments and agencies. These plans, including the determination of resources needed, were developed on the basis of in-depth reviews and analyses of the proposed program and manpower budgets submitted by our accounting and auditing operating divisions.

In addition to requiring each division and office to submit to our Program Planning Committee an extensive written justification to support their requests for manpower, we require each division director and his top managers to present their proposals to the GAO committee much the same as we do at our hearings before the Appropriations Committees.

In comparison to the 4,921 total positions which we are requesting in our budget justification, our divisions and offices requested 5,364 or 443 more than we are asking for. Most of this 443 was requested by our accounting and auditing divisions concerned with making reviews of management efficiency and program results. We believe, therefore, the reduction of 84 will place us well below the minimum staff resources needed to achieve the program objectives established for fiscal year 1972.

As I mentioned previously, the major requirement for the requested increase of 177 average positions stems from the need to adequately review and evaluate the rapidly expanding domestic civilian programs, especially those related to poverty, health, education, housing and urbanization, and environmental quality.

To enable us to achieve this objective, we have actually provided for a reduction in the 1971 fiscal year level of resources applied in the audits and reviews of defense activities (71), international activities (10), and transportation activities (3). Details of these reductions are included in our justification of estimates.

The House committee report stated that "The increase of 36 manyears for assistance to Congress has been approved which will provide

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an availability of 760 man-years during next year.” That is, for that purpose.

While we make a distinction in our program categories between “Assistance to the Congress” and “Reviews of Management Efficiency and Program Results," all of our audit, review and evaluation work is directed assisting the Congress in maintaining legislative oversight of governmental programs and activities with the objective of achieving more effective and economical operations.

FINANCIAL BENEFITS ATTRIBUTABLE TO WORK OF GAO

In fiscal year 1970 the collections and other measurable savings attributable to work of the General Accounting Office amounts to $250 million-about three times the annual cost of GAO operations. Most of this was effected through our self-initiated reviews of management efficiency and program results.

More important, however, many significant financial benefits to the government, not fully measurable in financial terms, result from actions that are taken by the Congress, the departments and the agencies to eliminate unnecessary expenditures or to otherwise correct deficiencies brought to light in GAO's audit reports on our self-initiated reviews. The reduction of the manpower planned for application to reviews of management efficiency and program results would adversely affect our ability to assist the Congress overall in its legislative oversight of Government operations and in its efforts to obtain needed improvements and economies.

IMPACT OF CONGRESSIONAL ACTIONS ON GAO PROGRAMS

As I will mention in more detail later in my statement, a significant number of bills passed in the last session of the Congress, including the Legislative Reorganization Act, will increase the assistance requested by congressional committees; other legislation creating or expanding Government programs will require additional manpower resources to carry out our audit responsibilities. With our limited number of professional staff resources, it is becoming increasingly difficult to adequately examine into the many programs and operations of direct interest to the Congress or which should be reviewed by GAO as an arm of the Congress.

PROFESSIONAL STAFF REQUIREMENTS

Finally, I would stress our objective to increase our emphasis on, and our capability to perform, appraisals of Government program management. More specifically, we are placing more of our effort toward determining whether programs are achieving the objectives intended by the Congress in enacting legislation, as well as whether funds and resources are utilized only for authorized programs and activities, and whether agency resources are managed efficiently and economically. To accomplish these objectives effectively, we have found the need to add professional staff educated and experienced in disciplines other than accounting, such as economics, business administration, mathematics, actuarial science, engineering and systems analysis. We were planning this year to continue our recruiting efforts in this direction. Any significant reduction to our requested increase of 177 average positions, of course, would adversely affect our plans in this regard.

In view of the factors outlined, I must urge that your subcommittee, in considering the legislative branch appropriation bill for 1972, restore the $980,000 reduction—84 average positions made by the House in the General Accounting Office appropriation request.

I would like now to discuss more specifically the anticipated impact of recent legislative and other congressional actions on GAO programs.

STAFT ATTRIBUTABLE TO SOUTH VIETNAM AND KOREAN WARS

Chairman ELLENDER. To what extent did you have to increase your force because of the situation in Southeast Asia ?

Mr. Staats. Very substantially. I will have to supply the figures for the record, but we do have an office there. We have had to establish an office in Saigon.

Chairman ELLENDER. Furnish the information and we will insert it in the record.

(The information follows:) We have a resident force of 19 in Saigon and 17 in Manila. This has been supplemented by temporary assignments of men from our other offices as needed. The impact of Vietnam has extended to some degree throughout our military and international work demands in the United States, particularly in relation to matters of congressional interest and requests requiring work in Washington. We expect that our resident staff needs in Saigon and Manila will not be any less in 1972.

PROPOSED DECREASES
Chairman ELLENDER. I remember that, and also in Tokyo?

Mr. Staats. Tokyo has been closed. We put an office in Manila. We couldn't get enough unmarried people to serve in Saigon.

Chairman ELLENDER. If this war winds down and if the troops are removed from South Vietnam, as contemplated, the chances are that the force you have there now could be decreased

Mr. STAATS. We have put a sizable number of men in there on what we call the phasedown, to be sure the supplies are well handled. In other words, to see that excesses are turned over properly to the Vietnamese and that those supplies are being used in military assistance programs wherever they can.

We have planned a reduction of 71 in our military work for next year. But I think we are still going to have a sizable workload in Vietnam.

Chairman ELLENDER. As we get out of Vietnam and out of Korea, you are anticipating that and decreasing your workers ?

Mr. STAATS. Yes, sir.
Senator HOLLINGS. You have a decrease of 71 ?
Mr. Staats. Average, anticipated in our defense work in 1972.

Senator HOLLINGS. It seems to me when you get your fighting forces out, the audit crowd would have to come in and increase their work. We outfitted over 1,700 small vessels, the transportation depot in our backyard, and they are going to be there and stay. You will have a

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