Unfortunately joint use of disbursing facilities of one military department by two or more services, where appropriate, has not been as common as it should be because of the existence of different detailed procedures in accounting for cash transactions in the several services. Some progress has been made in developing uniform procedures, but more remains to be accomplished.

REPORTS OF PROPERTY (SEC. 410)

Financial property accounting records have been established and reports based thereon have been provided under the authority of this act for all three military departments. Property covered by financial accounting has included inventories of consumable materiel held in stock funds, other inventories of consumable materiel, equipment, ships, aircraft, etc., investments in real property and installed equipment, and materiel and equipment in the hands of Government contractors.

Prior to the enactment of title IV, the Army and Air Force had had no financial accounting for property. However, the Navy had long had this type of accounting.

The use of financial accounting for property and reports thereon has permitted more effective utilization of property, provided more accurate data for use in property management, and enabled better inventory management, including reduction of stock levels and minimization of procurement requirements and disposition of excess property than was possible without the use of data provided by this system. It is significant that Public Law 863 extended the requirements of accounting for property to all Government agencies, as well as the Department of Defense.

For the future, considerable work needs to be done to integrate financial accounting for property with accounting for fund expenditures (other than in the area of working capital funds), to reduce paperwork involved in financial accounting for property transactions, to improve financial property reports and to bring about the most effective utilization by management of the data provided in the records and reports on inventories and other property.

FINANCIAL IMPROVEMENTS OF THE POST OFFICE DEPARTMENT

GENERAL

The first task of the Post Office Department was to modernize the accounting organization and system and install a financial control and reporting program adequate for the needs of management.

Formerly financial practices were primarily concerned with the accountability of public funds. Financial statements were neither adequate nor timely and therefore were not useful as a management tool. Uncoordinated accounting, budgeting, and costing were done independently by the varions bureaus. There were few professional accountants and no certified public accountants on the rolls engaged in accounting work.

Once the need for rebuilding the financial structure had been determined, a modern controllership program was established.

The Department recruited and retained personnel to staff both the departmental and regional controller offices and in a substantial way in larger post offices, assuring continuity. Over 60 certified public accountants have been attracted to our program and are presently on the rolls.

Postmasters have been relieved of more than two-thirds of their bookkeeping and office details through the centralization of this work in the 15 regional controller offices. Complete reorganization of the accounting procedures was made and the latest types of mechanical and electronic equipment were installed to develop the facts and report them.

Through intelligent analysis and interpretation, postal management at all levels receive timely and comprehensive financial and operating reports.

In addition, an effective internal audit program was developed and is now in operation whereby the Postmaster General is informed as to the integrity of the Department's financial operations.

POST OFFICE DEPARTMENT FINANCIAL CONTROL ACT OF 1950 1

(PUBLIC LAW 81-712; 64 STAT. 460)

I. Administrative accounting and reporting by the Postmaster General

On November 15, 1950, for the first time since 1836, the Post Office Department assumed the same responsibility for performing its own accounting functions as has been imposed upon other Government agencies. This was made possible by the enactment of the Post Office Department Financial Control Act of 1950, approved August 17, 1950, which was revised and codified in Public Law 86-682, approved September 2, 1960 (see app. E).

A. Transfer of functions, records, property, personnel and funds and continuation of policies.-Functions performed by the General Accounting Office for the Post Office Department with respect to administrative accounting and reporting were transferred under this act to the Post Office Department, along with such records, property, personnel, appropriations and other funds of the General Accounting Office as determined by the Postmaster General, Comptroller General, and the Director of the Bureau of the Budget, to be in connection with the transfer of functions.

Policies, procedures, and directives: All policies, procedures, and directives relating to the functions transferred, not inconsistent with this act, were to remain in effect.

Decentralization of functions: To secure maximum benefit from the change, most of the functions transferred were decentralized to 12 areas in the field, corresponding to the 12 Federal Reserve Areas, where the accounts of all post offices in the region were consolidated. Control of all expenditures was to be directed from Headquarters, but the accounting at Headquarters was to be limited to integrating the accounts maintained at post offices with those maintained at the departmental level through combining the 12 consolidated accounts with those of the Department.

1 Provisions of the Post Office Department Financial Control Act of 1950 codified and enacted as part of title 39, United States Code, by Public Law 86-682. (See app. E.)

Further decentralization of functions: The regional accounting offices began active operations on July 1, 1951. In December 1953, the regionalization plan for the entire Department went into effect, and by 1957 the present 15 regions were activated.

Money order accounting, control, and audit: A specialized development preceding enactment of the Post Office Department Financial Control Act of 1950 was the development and installation of a completely revised plan of operations for postal money orders, and related accounting, internal control, and audit. The detailed audit done by the General Accounting Office was eliminated. The new system was coordinated with the other functions transferred by Public Law 81-712 under the jurisdiction of the Bureau of Accounts, July 1, 1951.

B. Establishment of systems of accounting and control; collection of debts, remission of fines, penalties, and forfeitures. This act provided that the Postmaster General establish and maintain adequate and efficient systems of accounting for and control over accountability for all funds, property, and other assets for which the Department is responsible, including provision for internal audit; assembling of financial information needed for management purposes and reporting of results of operations; in conformance with principles and standards prescribed by the Comptroller General. Provision was made for the Postmaster General to collect debts due the Department and collect and remit fines, penalties and forfeitures arising out of matters affecting the Department, referring to the General Accounting Office debts uncollectible through administrative action, if desired.

Transition period: When the accounting functions were transferred to the Department on November 15, 1950, most of the operations were carried on the same as they had been under the General Accounting Office. A complete revision of the accounting system and procedures was initiated by the Post Office Department with the cooperation of the General Accounting Office.

Controllership function established: During 1953 substantial progress was made in developing improved accounting and financial administration in the Department. The program was directed by a public accounting firm, acting as adviser to the Postmaster General, and with which the General Accounting Office coordinated its systems and audit staffs. All aspects of accounting, budgeting, cost analysis, systems and procedures, and internal audit were consolidated under the newly established Bureau of the Controller. The regional accounting offices became regional controller offices.

Merger of financial management: Effective November 1, 1954, the Bureau of the Controller and the Bureau of Finance were merged, consolidating the authority and responsibility for effective financial management in all its phases under the the direction of a single Assistant Postmaster General. The merger was the final step to eliminate the former diffusion of the financial management functions of the Post Office Department.

Internal audit function: The Division of Internal Audit was established to coordinate and carry out the internal audit functions. The purpose of this Division was to provide management with an independent appraisal of the adequacy of the accounting, financial and related

operations and adherence to policies, regulations, and instructions. New accounting system development: A new accounting system on an obligations incurred basis was developed to start producing financial information required by management to control operations, safeguard assets and disclose results of operations and the stewardship of public funds. A new classification of accounts was developed and general ledgers were installed on July 1, 1954, in the regional offices, to provide for the systematic collection, classification, compilation, and reporting of the numerous and widely varied financial transactions which occur at the various levels of responsibility within the Postal Establishment.

New reporting system: Beginning July 1, 1956, the Post Office Department adopted a reporting system of 4-week accounting periods to simplify comparative reporting for management purposes. Each period consists of two biweekly pay periods, permitting the use of actual payroll figures rather than estimated accruals at the end of each period. The adoption of the 13-period year for internal reporting has facilitated the integration of the man-hour control system with the payroll and accounts. The Government's fiscal year is still used for all external reporting.

Codified instructions: Codified manuals and handbooks are used to incorporate accounting instructions and procedures, for proper maintenance of the Department's accounting system.

C. Cooperation and approval.-This act provided for the cooperation of the Comptroller General in the establishment of the accounting system and approval of such system when he deems it to be in conformity with prescribed principles and standards.

Development of accounting practices: Accounting practices in the Department were developed generally in accordance with sound accounting principles as set forth by the Comptroller General and deviate from these principles only where full application of accrual accounting would not justify the added expense. Cooperation and assistance was furnished by representatives of the General Accounting Office assigned to the Post Office Department.

Approval of system: As the first and most important phase in the approval of the accounting system of the Post Office Department by the Comptroller General, a comprehensive statement of accounting policy and a summary description of the accounting system, together with justification for the deviations, have been prepared by the Department and will be submitted to the General Accounting Office for evaluation.

II. Establishment and use of revolving fund

Public Law 81-712 established the Post Office Department Fund with the Treasurer of the United States and provided for deposits to such fund, subject to withdrawal by check by the Postmaster General (1) amounts requisitioned against appropriations available out of the general fund of the Treasury, (2) such amounts as the Postmaster General, in his discretion, may pay into the fund from receipts of the Department.

Status. The Postmaster General uses the funds of the Department in the exercise of any power or function vested in him, within limits of appropriations and subject to provisions of law.

III. Administrative examination of accounts

The Postmaster General was authorized to designate place or places where administrative examination of accounts would be performed. He may waive the administrative examination in whole or in part, with the concurrence of the Comptroller General, when it is determined that the accounting and audit procedures of the Department otherwise adequately protect the interests of the United States.

Department's action. The administrative examination of accounts is performed as a part of the accounting system at the 15 regional controller offices designated by the Postmaster General. The right of the Postmaster General to waive, in whole or in part, this examination of accounts, has not been exercised.

IV. Audit by the General Accounting Office

This act provides for audit of financial transactions of the Department by the General Accounting Office at the Department in Washington, D.C., as well as the regions where the accounts are normally kept, and availability at those places of all things necessary to facilitate and complete the audits.

Audit function decentralized.-During the transition period between November 15, 1950, and the establishment of the regional accounting offices, the General Accounting Office discharged its audit function through a small staff of newly formed Postal Audit Division at Asheville, N.C. The audits are now carried out through the Washington, D.C., and regional offices of the General Accounting Office, and the personnel of the Post Office Department's offices have cooperated fully by supplying space and designating personnel to assist the auditors.

BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950 (PUBLIC LAW 81-784) AND POST OFFICE DEPARTMENT FINANCIAL CONTROL ACT OF 1950 (PUBLIC LAW 81-712)

I. Section 111. Congressional declaration of policy

This section sets forth requirements for adequate accounting, reporting, and auditing for the Government. Public Law 81-712 sets out primarily the same requirements for the Post Office Department; however, the specific improvements are recorded under Public Law 81-784. The last two parts of section 111 provide that (1) emphasis be placed on making orderly improvements resulting in simplified and more effective accounting, financial reporting, budgeting, and auditing requirements and procedures and the elimination of duplication or those procedures or requirements not serving a purpose commensurate with costs involved, and (2) the Comptroller General, Secretary of the Treasury and Director of the Bureau of the Budget conduct a continuous program for the improvement of accounting and financial reporting in the Government.

Summary of improvements. Since the development of a new accounting system in 1953, many improvements have been made in the accounting, financial reporting, budgeting and auditing procedures of the postal establishment. A modern controllership program was established in headquarters, the 15 regional controller offices, and the large post offices.