due and payable. As a result, there has been a substantial decrease in the number of routine cases referred to the General Accounting Office for settlement as claims and the Office was able to release or reassign to more important work personnel costing $600,000 a year; agencies were able to pay creditors more promptly, and an unmeasured savings has accrued to the agencies in the reduction of paperwork and processing of routine bills.

In addition to these improvements in the organization and methods of the General Accounting Office during the period from 1948 to the present, the Office worked with the Bureau of the Budget, the Treasury Department, and the several administrative agencies in developing improved accounting, budgeting, financial reporting, internal auditing, and other financial management methods in the agencies and for the Goverment as a whole. These improvements were developed under the joint and cooperative working relationships of the joint financial management improvement program.

REDUCED COSTS

As a result of the many improvements in the organization and methods of the General Accounting Office since 1948, there is more comprehensive and effective coverage of the responsibilities of that Office with the employment of less personnel. At June 30, 1958, GAO had 2,967 on the rolls engaged in accounting, auditing, and investigative activities (exclusive of those engaged in transportation audit work) as compared with 6,612 at June 30, 1948-a decrease of 3,645, or 55.1 percent, during the 10-year period.

Expenditures for these activities declined from $23,868,512 in fiscal year 1948 to $22,427,606 in fiscal year 1958, a reduction of $1,440,906, or about 6 percent, as follows:

The decrease of $1,440,906 in expenditures is not a complete measure of the savings made by the General Accounting Office in its accounting, auditing, and investigative activities as the result of improved methods of operation. During the period since 1948 there have been increases in salary and per diem travel expense rates, and agency contributions to employees' group life insurance and retirement funds by the agencies were started during that period. General Accounting Office absorbed these price level increases in addition to reducing its annual expenditures by $1,440,906. A comparison of the 1948 costs, and the 1958 costs, with 1948 adjusted to 1958 price levels, discloses a cost reduction in excess of $12 million.

TREASURY DEPARTMENT

ORGANIZATION CHANGES

1. Establishment of the Fiscal Service.-To coordinate the fiscal activities in the Treasury Department, the Fiscal Service was established in 1940 by Reorganization Plan III. The Fiscal Service is headed by the Fiscal Assistant Secretary of the Treasury and includes the Office of the Fiscal Assistant Secretary, the Bureau of Accounts, the Bureau of Public Debt and the Treasurer's Office.

2. Bureau of Accounts. As a part of the general plan for reorganizing the system of central accounting and reporting pursuant to the Budget and Accounting Procedures Act of 1950, the Bureau of Accounts was reorganized in 1953. Existing central accounting and reporting functions, including those of the Division of Disbursement, were concentrated in a Division of Central Accounts and a Division of Central Reports, and a new departmental Internal Audit Division was established.

3. Establishment of Division of Disbursement.-Prior to 1933, each agency had its own disbursing offices. In the interest of economy and efficiency, the Division of Disbursement was established pursuant to Executive Order No. 6166 dated June 10, 1933, and was placed in the Bureau of Accounts, as the central disbursing agency of the Gov

ernment.

CENTRAL ACCOUNTING

1. Legal Basis.-Prior to 1950 the central accounting system rested largely on the act of September 2, 1789, establishing the Treasury Department and the Dockery Act of July 31, 1894, which reorganized the Treasury accounting organization. The Budget and Accounting Act of June 10, 1921, provided a budget system and an independent auditing agency, but left the central accounting and reporting system very much as it was. As time went on it became more and more apparent that the legal basis for the central accounting and reporting system needed revision, and that the warrant system of covering money into the Treasury and withdrawing it therefrom imposed by the old laws could be improved and simplified both as a medium for control of funds provided by the Congress and as a basis for reports on receipts and expenditures and status of funds.

In part to meet this situation, the Budget and Accounting Procedures Act of 1950, approved September 12, 1950, was enacted. This act provided the basis for much of the subsequent work of improvement in the area of central accounting and reporting. Among other provisions, the act authorized the Secretary of the Treasury to reorganize the central accounting and reporting organization and procedures, and authorized the Secretary of the Treasury and the Comptroller General of the United States to waive requirements of law requiring preparation of requisitions and issuances of warrants in connection with the receipt and disbursement of public money. The Secretary and the Comptroller General were also given authority to have disbursing officers draw directly on the general account of the Treasurer of the United States.

2. Modification of warrant procedures.-Four joint regulations were issued by the Secretary of the Treasury and the Comptroller General of the United States between 1950 and 1955, which eliminated the use of warrants in connection with covering money into the Treasury and the use of requisitions and warrants for advancing funds to disbursing officers. These actions had the widespread effect of simplifying a large variety of accounting processes and reducing paperwork throughout the Government. The elimination of rigid central fiscal requirements which the warrant system had imposed on the operating agencies played an important part in establishing a general framework for modernization of accounting systems in the operating agencies themselves.

3. Change in basis of central accounts.-A new system of central accounts was installed, providing, for the first time, an accounting for all of the Government's cash assets and liabilities, to which receipts and expenditures and the Treasury's cash operations are directly related, including checks outstanding, deposits in transit and cash held for authorized purposes by Government disbursing and collecting officers and the Treasurer of the United States. Accounts for these cash assets and liabilities, together with other cash accounts maintained centrally, provide the basis for tie-in with the accounts of the Treasurer of the United States, disbursing officers, and other Government agencies. The new system reflects expenditures and appropriation balances on a checks-issued basis, obtained from monthly statements of disbursing officers prepared for audit purposes. Receipts are entered in the central accounts on the basis of collections or deposits reported in statements rendered by disbursing and collecting officers monthly for audit. Previously receipts were given effect in the central accounts only after advice of deposit was received through banking channels and the Office of the Treasurer of the United States and the issuance of covering warrants.

4. Change in basis of disbursing officers' accountability.—Before the changes under the Budget and Accounting Procedures Act of 1950, disbursing officers were required to maintain accounts showing amounts advanced to them by warrant and the undisbursed balance of advances by individual appropriation, and rendered their accounts for audit accordingly. The disbursing officer is now responsible for payments made and the proper disposition of cash received either for making cash payments or for deposit in the Treasury. In the accounts he renders monthly he must support payments by vouchers duly certified by the administrative agency having control of the appropriation. The administrative agency is solely responsible for seeing that vouchers are not certified in excess of available funds. All collections must be supported by evidence of deposit in Treasury, or to the extent collections are undeposited, by cash on hand. The documentation used in rendering accounts has been improved to facilitate preparation and use for central accounting and other purposes. The essence of the change made is that disbursing officers are held accountable simply for the transactions they consummate whereas formerly they were held accountable for balances of appropriations and funds, a responsibility which they shared with administrative agencies.

5. Reduction of appropriation accounts.-Formerly, there were four sets of appropriation accounts in the Government: (1) Those collectively maintained by agencies to which appropriations are made which reflected all transactions in detail; (2) those collectively maintained by disbursing officers which reflected advances to them by warrant and undisbursed balances of advances; (3) those maintained by the Treasury Department centrally which reflected expenditures and balances on the basis of warrants; and (4) those maintained by the General Accounting Office which were on the same basis as the central accounts maintained by the Treasury. With the changes effected under the Budget and Accounting Procedures Act of 1950, there are only two sets of appropriation accounts; viz, those maintained collectively by the agencies showing the detail of transactions and those in the Treasury centrally which are in summary form, based on monthly reports and which back up the Treasury's central reports.

CENTRAL REPORTING

1. Scope of reporting. Under section 114(a) of the Budget and Accounting Procedures Act of 1950, the Secretary of the Treasury is required to prepare such reports for the information of the President, the Congress, and the public as will present the results of the financial operations of the Government. Under this provision, central reporting, which historically has been a Treasury function because of its position as the focal point of financial transactions of the Government, became a considerably expanded function. The enlarged scope of reporting covered four major areas; namely, that of (1) all receipts and expenditures of the Federal Government, (2) receipts and expenditures of foreign currency acquired without payment of dollars, (3) the proprietary accounts of the Federal Government as exemplified by statements of financial condition, income and expense, etc., and (4) fiscal operations including reports on all the major trust funds and statistical data on various major programs.

2. Daily and monthly Treasury statements.-Until 1954, the daily Treasury statement had been the medium for current reporting of budget receipts, expenditures, and the Government's surplus or deficit. Various improvisations had been made to enable daily reporting and the results were not susceptible to tie-in with other Treasury and agency financial reports. In February 1954 the daily Treasury statement, as a result of policy established by the Secretary of the Treasury, the Director of the Bureau of the Budget, and the Comptroller General, was changed to a statement which shows only the cash assets and liabilities in the account of the Treasurer of the United States and cash deposits and withdrawals of the Treasurer's account under certain broad classifications tied in with changes in the public debt.

Classified receipts and expenditures and the budget surplus or deficit have been published since February 1954 in a monthly Treasury statement, based on information contained in accounts submitted by disbursing and collecting officers as reflected in the Treasury's central accounts. The monthly Treasury statement has the advantage of a direct tie-in with the central accounts and the accounts of the various agencies and the classifications are such that the information is readily compared with other Treasury reports and the budget estimates.

Expenditures are shown consistently on the basis of checks issued and cash payments made and receipts on the basis of collections reported in accounts of disbursing and collecting officers, without the necessity of maintaining numerous subsidiary checking accounts for the purpose of establishing reporting classifications.

3. Proprietary statements. Based on the central accounts, a statement of cash assets and liabilities is now published annually in the combined statement of receipts, expenditures, and balances of the U.S. Government which shows the cash assets and cash liabilities of the Government to which receipts and expenditures and the Treasury's cash operations are directly related. Previously, information for such a complete statement was not available.

Complete balance sheets and other financial data are required from all public enterprises, agencies having revolving funds, and certain other business-type enterprises. Information is obtained from all other agencies annually relating to property and other assets. This information is used in compiling annually information relating to property and other assets which has been requested by the Committee on Government Operations, House of Representatives, and for other reporting purposes.

4. Foreign currency.-With the increase in activities of the Government abroad, particularly those involving economic and military assistance, the Government has been acquiring large amounts of foreign currency which are available for certain specified purposes or general needs of the Government. As a result of legislation contained in section 1415 of the Supplemental Appropriation Act of 1953, and study of this situation, the President, by Executive Order No. 10488, dated September 23, 1953, authorized the Secretary of the Treasury to issue regulations governing the purchase, custody, transfer, and sale of foreign currency. The Treasury Department accordingly has prescribed regulations and developed a system of accounting control and reporting of foreign currency assets.

5. Combined statement of receipts and expenditures.-The annual combined statement of receipts, expenditures, and balances of the U.S. Government is required by statute to be submitted to Congress on the first day of each regular session. In recent years the statement has been improved in various respects to make it more informative. For example, unexpended balances of appropriations are analyzed to show obligated and unobligated balances and receivables; information is included showing transactions and balances of foreign currency accounts; and there is also included the June 30 balance sheet (item 3 above) showing cash assets and liabilities of the Government as related to its cash receipts and expenditures.

CENTRAL DISBURSING

1. Certifying Officers' Act.-This Certifying Officers' Act, approved December 29, 1941, as amended, provided that disbursing officers shall disburse only on the basis of vouchers certified by duly authorized and bonded certifying officers, and shall be held responsible, accordingly. The certifying officer is responsible for any error in certification. This makes it unnecessary for the disbursing officer to have review procedures beyond those necessary to establish that payment is being made strictly as certified.