considered in the establishment of accounting and reporting systems and requirements. A summary of the policy of Congress set forth follows: (a) Accounting objectives of the Government are full disclosure of results of financial operations, adequate financial information for operating and budgetary purposes, and effective control over receipts, expenditures, funds, property, and other assets. (b) Needs and responsibilities of both legislative and executive branches should receive full consideration in the establishment of accounting and reporting systems. (c) Maintenance of accounting systems and producing of financial reports are the responsibility of the executive branch. (d) Auditing by the Comptroller General should be directed toward determining the extent to which accounting and financial reporting fulfill the purposes specified by law, regulation, or other legal requirement, maintain adequate internal financial control, and afford an effective basis for settlement of accounts of accountable officers. (e) Emphasis should be placed on simplified and more effective accounting, reporting, budgeting, and auditing procedures and elimination of duplication. (f) A continuous program for the improvement of accounting and financial reporting should be conducted by the Comptroller General, the Secretary of the Treasury, and the Director of the Bureau of the Budget. (8) Provided that the responsibility for prescribing principles, standards, and related requirements for accounting to be observed by the executive agencies shall be imposed on the Comptroller General. He was to exercise this responsibility in such a manner as to permit the executive agencies to carry out their responsibilities, set out for the first time in this act, for establishing and maintaining systems of accounting and internal control, and to set up requirements for suitable integration between agency accounting processes and Treasury accounting. The Comptroller General was required to consult with the Secretary of the Treasury and the Director of the Bureau of the Budget, before prescribing accounting principles and standards, as well as to consider the needs of the other executive agencies. He was also required to cooperate with the agencies in the development of their accounting systems, and with the Treasury in the development of a system of central accounting and reporting. The General Accounting Office was to review the accounting systems of the executive agencies from time to time and the results of such reviews are to be made available to the heads of the executive agencies concerned, the Secretary of the Treasury, the Director of the Bureau of the Budget, and to the Congress. (9) Provided that the head of each executive agency should establish and maintain systems of accounting and internal control in conformity with the principles, standards, and related requirements prescribed by the Comptroller General. The systems of accounting and internal control should be designed to provide full disclosure of the financial results of the agency's activities; adequate financial information needed for management purposes; effective control over and accountability for all funds, property, and other assets for which the agency is responsible, including provision for internal audit; reliable accounting results to serve as the basis for the preparation and support of the agency's budget, and for providing financial information required by the Bureau of the Budget under section 213 of the Budget and Accounting Act, 1921; and suitable integration of agency accounting with the central accounting and reporting of the Treasury Department. prepare (10) Provided that the Secretary of the Treasury should reports presenting the results of the financial operations of the Government for the information of the President, the Congress, and the public. Such reports are to include financial data required by the Director of the Bureau of the Budget. The Secretary was given authority to require, by rules and regulations, such reports and information from the executive agencies of the Government as are necessary for the compilation of the central reports, and to establish the facilities necessary for their production. He may reorganize accounting function within his department to this end. (11) Authorized the Secretary of the Treasury and the Comptroller General to issue joint regulations for the waiver of the requirements that warrants be issued and countersigned in connection with the receipt and expenditure of public funds when sufficient safeguards. over control and accounting of public funds have been established. Such joint regulations may also be issued to provide for the payment of vouchers by means of checks issued against the general account of the Treasurer of the United States rather than against advances to disbursing officers by individual appropriations. (12) Authorized the Comptroller General to discontinue the maintenance in the General Accounting Office of appropriations, expenditure, limitation, receipt, and personal ledger accounts when in his opinion the accounting systems and internal control of the executive, legislative, and judicial agencies are sufficient to enable him to perform properly the functions to which such accounts relate. (13) Provided that the financial transactions of the executive, legislative, and judicial agencies shall be audited by the General Accounting Office in accordance with such principles and procedures as may be prescribed by the Comptroller General. In the determination of auditing procedures and the extent of examination of vouchers and other documents, the Comptroller General was to give due regard to generally accepted principles of auditing, including consideration of the effectiveness of accounting organizations and systems, internal audits and control, and related administrative practices. (14) Provided, that, whenever the Comptroller General determines that the audit can be conducted at the place where the accounts and other records of the agency are normally kept, he may direct such agency to retain all documents, instead of submitting them to the General Accounting Office as provided by law, under such conditions and for such period of time, not to exceed 10 years, as he may specify. (15) Authorized the head of each executive, legislative, and judicial agency to designate the place at which the administrative examination of its fiscal officers' accounts shall be performed and, with the concurrence of the Comptroller General, to waive such administrative examination in whole or in part. (16) Required the approval of agency heads before submission to the Bureau of the Budget, the President, or the Congress, by departments of requests for legislation authorizing subsequent appropriations. It also authorizes the transfer of balances of appropriations incident to reorganizations in the executive department. Funds transferred as a result of reorganizations may not be used for purposes other than those for which they are appropriated. (17) Repealed 106 provisions of existing laws in whole or in part, which were obsolete, or in conflict with the provision of the act. Of this total, 89 were either inconsistent with or superseded by the Budget and Accounting Act of 1921, or other existing laws; 13 had been superseded by or modified by appropriations acts, or could be more appropriately provided for on an annual basis in the texts of the various appropriation acts rather than in permanent law; 3 repealed laws calling for reports having only doubtful value; and 1 provision repealed existing requirements of law relating to personnel ceilings and limitations, which were considered to be unnecessary under existing budgetary controls and appropriation procedures. SUPPLEMENTAL APPROPRIATION ACT OF 1955-SECTION 1311 (PUBLIC LAW 83-663; 68 STAT. 830) Section 1311 of the Supplemental Appropriation Act of 1955 resulted from the difficulty encountered by the House Appropriations Committee in obtaining reliable figures on obligations from the executive agencies in connection with the budget review. It was not uncommon for the committees to receive two or three different sets of figures as of the same date. This situation, together with rather vague explanations of certain types of obligations particularly in the military department, caused the House Committee on Appropriations to institute studies of agency obligating practices. In 1953 and 1954, at the request of the committee, the General Accounting Office made three examinations in the military departments and submitted reports to the committee. Also, the committee staff, with the assistance of the General Accounting Office, made an extensive examination of obligations reported by the then Foreign Operations Administration in 1954. The result of these examinations laid the foundation for the committee's conclusion that loose practices had grown up in various agencies, particularly in the recording of obligations in situations where no real obligation existed, and that by reason of these practices the Congress did not have reliable information in the form of accurate obligations on which to determine an agency's future requirements. To correct this situation, the committee, with the cooperation of the General Accounting Office and the Bureau of the Budget, developed what has become the statutory criterion by which the validity of an obligation is determined. This criterion was included as section 1311 in the general provisions of the Supplemental Appropriation Act, 1955 (Public Law 663, 83d Cong.), approved August 26, 1954, pertinent provision of which follows: DOCUMENTATION REQUIRED FOR RECORDING AN OBLIGATION Section 1311(a) provided that no amount shall be recorded as an obligation of the Government of the United States unless it is supported by documentary evidence of— (1) a binding agreement in writing between the parties (2) a valid loan agreement, showing the amount of the (4) an order issued pursuant to a law authorizing pur- (5) a grant of subsidy payable (i) from appropriations made for payment of, or contributions toward, sums required to be paid in specific amounts fixed by law or in accord with formulas prescribed by law, or (ii) pursuant to agreement authorized by, or plans approved in accord with an authorized by, law; or (6) a liability which may result from pending litigation brought under authority of law; or (7) employment or services or persons or expenses of travel in accord with law, and services performed by public utilties; or (8) any other legal liability of the United States against an appropriation or fund legally available therefor. The eight forms of documentary evidence were intended to encompass all types of obligations incurred in the course of Government activities. The House Committee on Appropriations in its report on the supplemental appropriation bill for fiscal year 1955 considered that section 1311 represented a definition of an obligation and it has been looked upon as such by many in the Government. REPORTING REQUIREMENTS OF SECTION 1311 Section 1311(b): The original provisions of this section required the head of each agency to report, by September 30 of each year, the unliquidated obligations and unobligated balance as of the previous June 30 for each appropriation or fund under its control to the chairmen of the House and Senate Appropriations Committees, to the Comptroller General, and to the Director of the Bureau of the Budget. This subsection did not require any specific examination or report by the General Accounting Office to the Congress. Due to congressional interest, however, the General Accounting Office was requested by the chairman of the House Committee on Appropriations to review the reports submitted by the agencies and report to the committee as to compliance with the provisions of section 1311. A special audit program was designed to review these reports and to fit such review into a time period after September 30 that would assure reports to the committee before the start of each agency's annual budget hearings. This special review and reporting was discontinued with the enactment of section 210(a) of the General Government Matters Appropriation Act, 1960. (Public Law 86-79, approved July 8, 1959.) Section 210(a) of the General Government Matters Appropriation Act, 1960, removed the requirement for agencies to submit certified annual reports to the Congress covering appropriations and fund balances under section 1311. A new form of annual report was developed by the Department of the Treasury to obtain data formerly available from the section 1311 report and to serve other needs that had been supplied by other reports and procedures. The new report will serve (1) as the Treasury's trial balance of the central appropriation and fund accounts, (2) as the agencies' requests for transfers and withdrawals under Public Law 798, approved July 25, 1956, and (3) as the agencies' analyses of appropriation and fund balances in terms of availability, for use in publishing the annual "Combined Statement of Receipts, Expenditures and Balances of the U.S. Government." The House Committee on Appropriations in its report (H. Rept. 366, 86th Cong.) on the bill H.R. 7176 explained the objectives of the amendment to section 1311 (b) as follows: The committee has included language in the bill, section 210, to eliminate annual agency reports to the Committee on Appropriations, the Bureau of the Budget, and the General Accounting Office pursuant to section 1311 (b) of the Supplemental Appropriation Act, 1955, as to obligated and unobligated balances under each appropriation and fund of the agency. These special reports, required not later than September 30 as to status of balances on June 30 preceding, were a necessary feature of section 1311 which, for the first time, comprehensively defined an obligation of the Government for accounting, budgeting, and reporting purposes. They have served their purpose and can now be dispensed with. The proposition in the bill is to substitute for the present reports a simple report to the Budget Bureau, when submitting requests for appropriations, that statements of obligations furnished therewith consist of valid obligations in accord with definitions in subsection (a) of section 1311. Under the law, the figures on obligated and unobligated balances shown in the annual budget document are required to accord with section 1311 definitions. That would continue, as would the requirement that any other statement of obligations furnished by any agency to the Congress or committee thereof include only such amounts as may be valid obligations under law. CERTIFICATION OF OBLIGATION REPORTS Section 1311 (c) required that each report made pursuant to subsection (b) should be supported by a certification of the official designated by the head of the agency. The conference report on the Supplemental 61157-61-7 |