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That raises the next question which Mr. Poland wanted to ask.

Mr. POLAND. I merely wanted to ask who determines the area of the work! Who initiates these programs? Is that determination made here, in Washington, or on a basis of conferences ?

Mr. BLAIR. There will be information on that point in the European Branch report, but I can summarize it for you.

We develop a 6-month work program. In other words, we project our work into the future over a period of 6 months.

Mr. POLAND. By “we” you mean whom? Mr. BLAIR. The European Branch. Mr. FASCELL. Basically, then, the answer to the question is that you fellows select your areas that you want to go into here and then you submit it to Washington for approval and if they say O. K., you start?

Mr. BLAIR. That is right. I would also like to point out that the Defense Accounting and Auditing Division was organized only a year ago. We are now getting greater guidance from Washington. For instance, this military-assistance program was one that they directed. We are attempting to coordinate our work here with the stateside operations. For instance we will conduct our examination of Ordnance Supply at the same time that our stateside organization is doing that.

In the early stages, as Mr. Montgomery knows, the European Branch initiated all of its work. As a matter of fact, it is in the last vear and a half that we

Mr. FASCELL. A coordinated effort tied in with what the home office was trying to find ?

Mr. BLAIR. That is right. Working on a worldwide basis. Because we have our branch in the Far East and we have a branch here, the office can come up to the Congress with a worldwide study on a particular problem and thereby be much more effective in developing the report.

Mr. FASCELL. Before we leave this very comprehensive report on the history of the organization, I want to get back to exhibit J for a moment.

Mr. Carlson. Could I ask one more question with reference to Mr. Poland's question?


Mr. CARLSON. The selection of area for audit or investigation, or whatever, you say that you make the recommendations to Washington and get approval?

Mr. BLAIR. Yes.
Mr. CARLSON. On what basis do you make those selections?
What indicates to you the areas that you are going into?

Mr. BLAIR. A number of factors enter into our decision as to whether we will get into this area or that area. We want to have a broad coverage so we will schedule work within both the civilian side of the Government and the military. In an effort to have broad coverage we will initiate work in the various departments. Then with respect to the military we attempt to examine the areas significant from the standpoint of expenditure. As to our source of data on that, the military agencies issue financial reports which reflect how much money they have expended or tied up in a particular seryice, for example. We use that as a basis. The governing criteria, because of the limited staff we have, is the big money area. That is the reason when the office was set up, we got into offshore procurement. That was an area of big expenditure. New contracting under OSP is phasing out but the administration of contracts continues. We are also concentrating our efforts in the supply area.

Mr. FASCELL. This problem that Mr. Carlson is talking about, do you want to pursue that further?

Mr. CARLSON. In other words, your selection is objective in that you do not wait for any indication of something being wrong in that area before you go into it?

Mr. BLAIR. That is correct. However, we do receive reports from people within the agency and go into them if warranted. For instance, that was one of the prime reasons we went down to Nouaseur, North Africa.

Mr. FASCELL. Where is that?
Mr. Blair, Morocco. The Air Materiel Command has a large

. depot located there. We were going in there a year ago and we deferred examination because of one factor that is classified. Then we got information that the situation was really bad and we went in there. That would be an instance where we initiated an audit on the basis of a confidential report that an area needed attention.

Tab E of the brief presented to you sets out the criteria used for the establishment of work programs.

I might point out that each office recommends its own program and sends it into Paris for coordination.

Mr. FASCELL. This criteria that you are talking about is in this overall brief?

Mr. BLAIR. That is right.
Mr. FASCELL. Could we include that in the record completely?
Mr. BLAIR. Yes.
(The material referred to is as follows:)


CRITERIA FOR ESTABLISHMENT OF WORK PROGRAMS The primary problem encountered in planning the operations of the branch is that of selectivity. In view of the significant sums of taxpayers' money being spent and our inability to comprehensively review all United States activities within our geographical confines, areas wherein the greatest amount of appropriated dollars are scheduled for expenditure are given first consideration. This has been and probably will continue to be the primary criterion in the development of proposed work plans. Subsidiary to the dollar consideration is our desire to carry out a well-rounded and balanced review program of United States activities within available manpower resources.

Some of the specific criteria utilized by the field station managers, program supervisors, and staff assistants to the Director in the formation of branchinitiated work plans are briefly summarized below :

1. Followup of findings developed during previous reviews—whenever practical, followup reviews are initiated within 1 year after we report areas of deficiency to management. This is done in order to satisfy ourselves that appropriate corrective action has been taken.

2. Offshore procurement summaries developed by J-4, United States European Command.

3. Financial inventory accounts and other fiscal reports in the military supply


4. Various other financial and statistical summaries to which we have access from originating agencies.

5. Listings of United States contracts.
6. Liaison with major headquarters of military commands.

7. Coordination with internal audit agencies—to avoid duplication of efforts and to assure maximum coverage of United States activities.

8. Coordination requirements of Headquarters Office scheduling of reviews of similar activities concurrently with those planned stateside.

9. Historical reports issued by major commands.
10. Listings of military locations.
11. Complainants.

Another example of unanticipated workload would be comptroller General requests stemming from congressional desires on matters of current and immediate interest.

To illustrate the manner in which the responsible operating division outlines the scope of work to be undertaken and the objectives to be achieved by the Branch, and the manner in which the Branch implements such workplans, pertinent documents and correspondence relative to the work-planning stage of assignment NB 230_review of military assistance program-is contained in appendix A. The planning documents involved as well as a brief explanation of their purpose follows:

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A. MDAP audit program.

Issued by operating division to communicate and coordinate review objec

tives. B. Message dated October 16, 1956, To inform MAAG's of pending GAO from OASD/LSA to interested MAAG's. review through military channels. Message is classified.

C. Letter dated November 7, 1956, General planning instructions. from GAO/W to EB. D. Classified summary of probable To inform MAAG's of pending GAO

of weakness developed by ent areas of weakness. GAO/W. Message is classified. E. Suggested work assignments. To assure availability of required

manpower and inform individuals of

pending travel assignments. F. Letter dated November 26, 1956, To apprise management of work from EB to EUCOM.

plans and to make necessary transpor

tation and security arrangements. G. Memo dated November 28, 1956, To inform field office of specific work from EB Paris to EB Frankfurt. plans. Similar memos sent to other

field offices. H. Letter dated December 4, 1956 To arrange necessary visas, from European Branch to American Embassy, Germany.

I. Supplementary spare parts pro- Additional guidance developed by gram.

GAO/W to assist European Branch. J. Audit assignment sheet for To communicate general instrucMAP/EUCCN.

tions-Similar assignment sheets pre

pared for other locations. K. MAP-Review instructions.

Implementing review instructions de

veloped by European Branch. L. MAP-Reporting instructions. Implementing reporting instructions

developed by European Branch. Implementing by branch

Suggested work program for a 6-month period are submitted to the Director semiannually by the field station managers and program supervisors, the former within their geographical areas of responsibility and the latter within their functional areas of responsibility. The Director and his staff assistants review the suggested work programs and an overall work program for the branch is formulated. This work program is then submitted to Washington for coordination with stateside programs and for final approval.

For all branch activities, including congressional requests, the Director determines whether accounting, auditing, or investigative techniques, or a combination thereof, should be used to best fulfill work-program objectives. By so doing, all the tools or special talents available to the branch are utilized to the fullest and most effective degree in the execution of its program responsibilities.

In many instances, we find it necessary in Europe to initiate special projects in the accomplishment of our investigative responsibilities. Such special projects or assignments are necessary in view of our inability to sustain a general audit-accounting-investigation program within each major organizational entity found in this overseas area. However, whenever matters arise requiring investi. gative techniques for which a general program is in process, the special assignment is made a part of the general program whenever practicable.

Investigative assignments arise from three principal sources: (1) Congressional requests forwarded to us by the Washington office; (2) information developed or received during fieldwork on audit assignments (this includes material referred to us by the Washington office and data developed in Europe) ; and (3) complaints, allegations, or other information received from (a) United States military and civilian agency personnel, (b) confidential informants, and (c) newspaper and magazine articles. These assignments are normally referred to European branch investigative staff personnel.

To illustrate the manner in which we implement our work plans for a branchinitiated-type assignment, pertinent work-planning documents for a current assignment-BE 839—Review of Army Signal Supply Activities—are contained in appendix B. The planning documents involved as well as a brief explanation of the purpose served by each follows:

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A. Assignment sheet.

To communicate general instructions. B. Audit program-Signal.

To outline scope of review and obSupply Control Operations. jectives to be attained at Supply Con

trol Agency. C. Audit program--Depot Opera- To outline scope of review and obtions.

jectives to be attained at Signal Depots. D. Trip report dated April 13, 1957. To inform management officials of our Contacts made with CONE and Signal review objectives and to make neces. officials.

sary work arrangements. E. Review of Signal Supply Opera- To communicate and coordinate basic tions-Workplanning.

workplans. F. Letter dated June 19, 1957, from To coordinate our audit activities European Branch to Air Force Auditor with those of the Auditor General General.

within the Air Force.


From a work-planning viewpoint, the reviews performed by the European branch of United States activities in the European, North Africa, and Near East areas can be broken down into two major categories; those initiated or coordinated by the Civil or Defense Accounting and Auditing Divisions, headquartered in Washington, D. C., and those initiated and coordinated by the branch. The manner in which review assignments are programed, and the workplans made to implement approved assignments is discussed in succeeding paragraphs. Programing by headquarters office

Since the reorganization of the General Accounting Office on July 1, 1956, which placed greater emphasis on Department of Defense activities, a larger proportion of branch assignments have been initiated, controlled, and coordinated by the respective operating divisions headquartered in Washington, D. C. The considerations which go into the programing of such assignments are, of course, beyond branch competence or responsibility. A notable example of an assignment initiated and coordinated by Washington staff was the worldwide review of the military-assistance program. Branch participation in this worldwide review was limited to an examination of six country programs in the European and Near East areas.

The branch is usually informed by the responsible operating division of pending reviews of this nature in sufficient time to incorporate the assignment within its projected work program. However, there are occasions when the urgency of a particular matter does not allow for its advance programing, in which erent substitutions within the existing branch work program must be made and certain assignments deferred until a later date. This condition occurs when the findings developed during a review conducted either in CONUS or Europe require that the scope of the work be extended beyond that originally contemplated, so as to include other related activities or locations.

Mr. FASCELL. I think that is a very fine point Mr. Carlson brought out, and we ought to have the criteria established for the programs used.

Mr. BLAIR. We have included examples of our work programs in tab E of the brief. They are the instructions we give the field officers on how to perform the audit.

Mr. POLAND. Is that appendix A?

Mr. Blair. Yes. We have given you two examples. One is the MDAP audit program. We also gave you examples of the European branch programing. You see how the Washington office operates and how this office operates.

Mr. FASCELL. What tab are you talking about?

Mr. Blair. Tab E. There are four pages of that, including a statement on the criteria for establishment of work programs, prepared at the request of the staff members

Mr. FASCELL. You are talking about appendix A of that tab?
Mr. BLAIR. Yes, and also exhibit B of tab E.
Mr. FASCELL. Appendix A deals with the MDAP audit program?

Mr. BLAIR. The classified data of that appendix is not put in. It is available for your review. It is the program that we received from Washington pointing out the area that they want examined. It is a working paper.

Mr. MONTGOMERY. I understand that you have something noted here as being omitted because of classification.

Mr. BLAIR. That is right, but it is available for the committee.

Mr. FascELL. This is a step-by-step summary of how you go about setting up your program; is that right?

Mr. ROSENBERGER. That is right.

Mr. FASCELL. In this narrative you are telling this committee how that is done?

Mr. ROSENBERGER. By giving you copies of actual documents used in this program.

Mr. È ASCELL. Exhibit A of tab E that we are talking about, headed "MDAP Audit Program," is an extract of the actual document setting up this work program!

Mr. ROSENBERGER. It is the document. Mr. FASCELL. With the classified material extracted ? Mr. ROSENBERGER. Which is available to you, sir. Mr. FASCELL. MDAP means what? Mr. Coons. Mutual defense assistance program. Mr. FASCELL. This is a working paper which dealt with the worldwide summary on military assistance ?

Mr. ROSENBERGER. That is correct.

Mr. FASCELL. For two reasons, I think it ought to be in the record. It deals with the current program, which is of tremendous interest, and it also sets out the actual technical steps by which you get into these things. From that standpoint, unless there is objection, we will include appendix A in the record immediately following the other.

Mr. BLAIR. Mr. Chairman, for your consideration this program represents our modus operandi. A businessman does not like to let an outsider know how he runs his shop, let me put it that way. I suggest that consideration be given to not making the appendix at the back of the report a part of the record. This is a working paper on

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