Mr. COOPER. That is right.

Another section of that act provided that payments to persons to whom money was due from the Treasury should be made to those certified to be entitled thereto by the auditor. That is where you get your preaudit before payment.

Certain expenses, for instance star-route carriers, railroads, contract air mail, and formerly the ocean mail are so paid. The Post Office Department carries those accounts and sends them to us and we audit them; and if we approve of them, we return the account to the Department and a warrant is drawn, signed in the name of the Postmaster General by the Superintendent of Finance, and comes to us for countersignature, and then it goes out.

Senator O'MAHONEY. That is a different system than exists with respect to any other department?

Mr. COOPER. That is true.

Senator BYRD. Have you got the right to make a preaudit without the request of the Postmaster General?

Mr. COOPER. That is the law, Senator. The only people who can pay first are the postmasters. They can pay the expenses of their offices.

Senator BYRD. I am speaking of preaudit. They do not seem to have you in this list of vouchers which they have given us as to how many have been preaudited. Do you preaudit the expenditures of the Post Office Department?

Mr. COOPER. Some of them; 20 percent.

Senator BYRD. Do you do it upon request?

Mr. COOPER. No, sir. The law says we shall do it.

Senator BYRD. It has been testified here before, that you do not have the power to preaudit.

Mr. COOPER. They left us out.

Senator O'MAHONEY. They were referring to special character of work.

Mr. ELLIOTT. The Post Office Department work is under a different set-up.

Senator BYRD. That is not included in these figures?

Senator O'MAHONEY. That is not included in these figures. They are in a different category.

Mr. COOPER. I might read this:

The said act

referring to the act of June 8, 1872

required (1) that all payments on account of the postal service shall be made to persons to whom the same shall be certified to be due by the auditor, and, (2), vouchers for all deductions made by the postmaster out of the receipts of his office on account of the expenses of the postal service shall be submitted for examination and settlement to the auditor for the Post Office Department, and no such deduction shall be valid unless found to be in conformity with law.

Senator O'MAHONEY. That auditor was a functionary of the Department of the Treasury?

Mr. COOPER. That is right.

Senator O'MAHONEY. Called the Auditor for the Post Office Department?

Mr. COOPER. That is right.

The next change was in the Dockery Act, and it included the Post Office audit; they did not do anything about it, but said the accounts of the Postal Service should be kept as authorized by law.

Senator O'MAHONEY. That was a compliment to the Post Office Department.

Mr. COOPER. To the auditor.

The next change was in the Budget and Accounting Act of 1921, of course.

I take it that the history of the audit shows that the Congress has been trying to get away from an audit by the person who spends the money, and in 1835 Postmaster General Kendall, I think it was, said he was perfectly satisfied with the system prescribed for the Post Office Department, because he said that the man who incurs the obligation should not settle the account.

I think that is good today. The administrative officers that really spend the money should not audit the accounts. I think Mr. Denit has explained that.

When you obligate your appropriation, when you make a contract, when you set up your pay roll, you are obligating your appropriation, and we do not interfere with it, and have no authority to interfere with it. Another thing which we endeavor to do, which has been explained, is by prescribing appropriation accounting to prevent the overexpenditure, or the overallotting which will cause an overexpenditure. If you can prevent that at the time that the administrative officer begins to incur his expenditures, then you do not have your deficiency in appropriation.

Senator O'MAHONEY. You do not understand that this bill provides that the administrative officers who incurred the expenditures shall be given authority to audit their own accounts?

Mr. COOPER. Did they not have that up to the time of the General Accounting Office?

Senator O'MAHONEY. I am not talking about what we have had in the past, but I am asking: Do you understand that this bill prescribes it?

Mr. COOPER. The auditor will be an officer of the Treasury Depart

ment.

Senator O'MAHONEY. But not an officer of the Agriculture Department.

Mr. COOPER. But the Treasury Department is a spending agency and will check their own accounts.

Senator O'MAHONEY. The administrative officers in the Department of the Interior, for example, will, under this bill, have nothing to do with approving their accounts of expenditures monthly. Mr. COOPER. I do not get that, Senator.

Senator O'MAHONEY. You do not understand, do you, that this bill proposes to authorize the executive and administrative officials in every department to audit their own accounts?

Mr. COOPER. No; it is not so stated, but there are

Senator O'MAHONEY. But this function of which you speak is being transferred to an official in the Treasury Department, and to the extent that that official audits the expenditures of the Treasury Department; there is this situation to which you have referred? Mr. COOPER. That is right.

Senator O'MAHONEY. And only to that extent?

Mr. COOPER. Yes; but you do have an officer who is with a spending agency, auditing the accounts of another spending agency.

Senator BYRD. Is it not true that you transfer this function to an executive branch of the Government from a so-called independent branch?

Mr. COOPER. I was Assistant Chief of Investigations for about 9 years, and my experience is, when we transferred a man from one of the departments to our force, we had to get into him the traditions of the General Accounting Office. He came to us with the traditions. of the administrative office. If the administrative officer said, "This is all right", he had a tendency to say it is all right, but we do not do that. We dig into it.

The CHAIRMAN. You had to teach him it was all wrong?

Mr. COOPER. No; we taught him there was a doubt.

Mr. ELLIOTT. We had to teach him to see if there was not possibly something wrong with it.

Mr. COOPER. If an auditor accepts everything that the administra tive officer approves, without checking up the law, of course he would not be much of an auditor.

The CHAIRMAN. We had an auditor for every office in the Treasury, prior to the Budget and Accounting Act.

Mr. COOPER. Yes, sir.

The CHAIRMAN. Under this the auditor would not be under any department except the Treasury.

Mr. COOPER. Yes, sir.

The CHAIRMAN. He would be under the Director of the Budget, who is under the administrative control of the President and not the Secretary of the Treasury. That is what the Budget and Accounting Act provides.

Mr. COOPER. That is right.

The CHAIRMAN. Even its personnel must be selected according to rules approved by the President and not by the Secretary of the Treasury, and compensation and everything else has to be done under the approval of the President.

Is there anything else which you desire to state, Mr. Cooper?

Mr. COOPER. I wish to call attention to the cooperation that there has been with the Post Office Department in several matters. The money-order business is a huge affair, and the system which they had back in the old days broke down. The burden was so great that they began to look around to see how it could be done more efficiently and economically.

Senator O'MAHONEY. Were you in the General Accounting Office when the act of 1921 was passed?

Mr. COOPER. Yes, sir; I was in the office of the auditor for the War Department. They installed adding machines, and we checked up the accounts on the adding machines. Then in 1912 the auditor's office installed electric accounting machines, and they punched cards. for the orders and substituted those cards for the orders and checked them with the paid and issued lists.

Then it was thought, after that system had been in effect for awhile, that it might be well to extend it to the field to avoid the filing of the coupons and all the work incident to that. If they could run these cards through the machines and get the list of the paid orders, the postmaster would have the list to refer to.

That system was extended to Philadelphia in 1916, and it was in a number of cities, I think about 12 or 13, when the General Account

ing Office took charge; since that time we have extended the number, and the cards are now punched in 17 electrical accounting cities. They come to our office, and we use those cards, checking the paid side and the issued side, and one question that the General Accounting Office raised was the matter of economy, which was to be decided in each particular case, and also existing equipment was to be used to the fullest extent.

Senator O'MAHONEY. All that work could be done in exactly the same way under this bill as it is now being done?

Mr. COOPER. I presume it could. This would be done by the Treasury.

Senator O'MAHONEY. What you are talking about would not be affected by this bill.

Mr. COOPER. I merely wish to point out that we do work with the departments in working out their problems.

Assertions have been made regarding the General Accounting Office, which I think are unjust. No department which puts up its problems to us is turned down.

Take, for instance, district accounting. In 1922 they put that problem up to the Comptroller General. They wanted to consolidate the postal and money-order accounts at the small offices, and we agreed to that. We had a law which said the auditor of the Post Office Department should keep the postal and money-order accounts separate. We let them come in together, and then we unscramble them in our office, in our audit.

Another matter is this: The Postmaster General is responsible for the fixing of salaries of postmasters in first-, second-, and third-class offices, which are based on the gross receipts of the offices.

Senator O'MAHONEY. He fixes the salaries under the law, which sets up a schedule of exactly what the salaries are to be.

Mr. COOPER. That is right. We found in connection with the audit we could gather the gross receipts and card them, and I figured out one time that it took about six clerks 1 year to do that. I got uneasy about it, and I called the attention of the Comptroller to it one time; we made an investigation and finally we decided that it could be done. more economically, so far as the Government was concerned, in our Office than in the Post Office Department, and we continued to do it. Those are three matters which I think the General Accounting Office should be given credit for. We cooperate with the departments in their accounting problems, and we work them out to the best interests of the Government.

The CHAIRMAN. That is all. Who is your next witness?

Mr. ELLIOTT. I have two more witnesses, but I do not know whether you want anything out of the law department or not, and Mr. Durst over there is Chief of Records.

The CHAIRMAN. I will leave it to you for 15 minutes, Judge. There is evidence of a desire to adjourn here by 5 o'clock.

Mr. ELLIOTT. I would like to have you ask Mr. McFarland, the assistant general counsel, some questions, if you have any.

The CHAIRMAN. I will ask Mr. McFarland, after listening to his associates, if he thinks he can add anything to the situation. If you are inspired to say anything, we would be delighted to hear from you.

STATEMENT OF J. C. MCFARLAND, ASSISTANT GENERAL COUNSEL, GENERAL ACCOUNTING OFFICE

Mr. MCFARLAND. As I understand this bill, the requirement of the law with respect to rendering decisions would remain just as it is. The heads of departments could get decisions, disbursing officers could get decisions, but they would get them from the Director of the Bureau of the Budget instead of from the Comptroller General.

Senator O'MAHONEY. You think that that should be retained by the Comptroller General?

Mr. MCFARLAND. I do not see any advantage of changing it. Of course it looks like you could get as good a lawyer one place as another. The CHAIRMAN. If we took the staff of the General Accounting Office over there, that would be all right?

Mr. MCFARLAND. If you had a good man at the head of it.

The CHAIRMAN. I would agree with that, with a good man at the head of it.

Mr. MCFARLAND. It seems to me that there would be some duplication in the audit, with the establishment of an Auditor General. The accounts would be paid by the disbursing officer, apparently, without any audit. Then they would go to the Auditor General for audit. Then they would go to the Director of the Bureau of the Budget for audit and settlement.

Senator O'MAHONEY. Do you find any general defect in this bill? Mr. MCFARLAND. There might be duplication.

Senator O'MAHONEY. Do you find any outstanding defect in this bill?

The CHAIRMAN. Outside of the fact that the lawyers ought to be moved over to the new department.

Mr. MCFARLAND. It is a question as to what would be a defect. You would not have an independent audit.

Senator O'MAHONEY. Mr. McFarland, what I am trying to bring out is this:

Of course any bill that was presented to any committee of Congress would be subject to discussion as to detail, and persons would necessarily disagree as to the advantage of certain details.

Mr. MCFARLAND. Exactly.

Senator O'MAHONEY. That is going on all the time. Of course you can take this measure and pick a lot of flaws in it, and improve it here and improve it there. That goes without saying. What I am asking you is whether from your examination of this bill you see any outstanding defect in it?

Mr. MCFARLAND. So far as the audit and settlement of the accounts and claims are concerned, there would be no change, other than the office in which it is to be done, and the head of the office to do it.

Senator O'MAHONEY. If this bill were passed as it stands with reference to the General Accounting Office, would the public interest, in your mind, suffer any serious loss?

Mr. MCFARLAND. I could not say as to that.

Senator O'MAHONEY. You could not say that it would?

Mr. MCFARLAND. No; except that I do think that there would be an increase of expense.

Senator O'MAHONEY. I can understand that there would be some dispute about that.