Appropriation Act, 1955 (H. Rept. 2663, 83d Cong.), stated in part as follows:

As to subsection (c) it is the intention of the committee of conference that the officials designated by the head of agency to make certifications of obligations shall be of those officials having overall responsibility for the recording of obligations as distinguished from those engaged in detailed recording operations, and in no event should the designation be below the level of the chief accounting officer of a major bureau, service, or constituent organizational unit.

This subsection further required that the certification and supporting records should be retained in the agency in such form that would facilitate the audit and reconciliation for the period covered by the certification. Also, the official designated by the head of the agency to make certifications should not redelegate the responsibility to someone else.

AVAILABILITY OF APPROPRIATIONS FOR EXPENDITURES

Section 1311(e) provided that no appropriation or fund which is limited for obligation purposes to a definite period of time should be available for expenditure after the expiration of such period except for liquidation of amounts obligated in accordance with section 1311 (a); however, under no circumstances are such appropriation or fund available for expenditure beyond that authorized by law.

This subsection was interpreted to make the requirements of section 1311(a) retroactive so as to apply to obligations recorded prior to, but unpaid at, the effective date of the act, with respect to appropriations for definite periods wherein the period of availability for obligations had expired.

PAYMENT OF CERTAIN CLAIMS BY AGENCIES AND RESTORATION OF UNOBLIGATED BALANCES FROM LAPSED APPROPRIATIONS

(PUBLIC LAW 84-798; 70 STAT. 647)

The passage of Public Law 798, 84th Congress, approved July 25, 1956, was designed to improve accounting procedures of the Government in two major respects: (1) To merge all prior-year obligated balances into one consolidated account for the same general purposes within each agency 2 years after the appropriation expired for obligations, and (2) to authorize the agencies of the Government to pay those bills on which there is no dispute but for which the appropriations have lapsed and make them chargeable to the lapsed appropriations in the same manner as bills payable from currently available appropriations. The consolidated accounts authorized to be established by this act are known as M accounts.

Enactment of Public Law 84-798 was the result of action by the Senate Committee on Government Operations on S. 2678, S. 3362, and a companion bill in the House, H.R. 9593. Hearings were held on S. 3362 in March 1956, after which intensive study and negotiation was conducted by the staff with representatives of the General Accounting Office, Department of the Treasury, Bureau of the Budget, and Department of Defense to develop amendments which would im

prove the bill and at the same time be workable and acceptable to all of the agencies concerned.

After the amendments were concurred in by the department and agencies primarily responsible for processing the claims or delayed invoices, a copy of the perfected bill was made available to the House Committee on Government Operations, which, on April 19, 1956, reported H.R. 9593, after amending it by striking out all of the language after the enacting clause and inserting the provisions of the revised Senate bill.

The House passed H.R. 9593 on June 5, 1956, and on June 7 this committee reported (S. Rept. 2266, 84th Cong.) S. 3362 with amendments. Both the Senate and House bills were called up for consideration by the Senate on June 20, 1956, and the House bill was passed with the Senate amendments. Differences between the House and Senate amendments were resolved in conference and the conferees report (H. Rept. 2726, 84th Cong.) was accepted by both Houses.

PROCEDURES PRIOR TO PASSAGE OF PUBLIC LAW 84-798

Prior to passage of Public Law 84-798, unexpended balances of appropriations with limited fiscal year availability lapsed or ceased to be available to the agencies to which they were provided, at the end of 2 full fiscal years following the fiscal year or years for which appropriated. At that time such balances were transferred to a consolidated Treasury Department appropriation account known as "Payment of certified claims."

Bills of creditors which were not paid before the appropriations chargeable therewith had lapsed were liquidated from the "Payment of certified claims" account. However, as prerequisites to payment, the Comptroller General of the United States was required to certify that the bills were lawfully due; that they were chargeable to appropriations which had lapsed; and that the balances of the appropriations against which the obligations were originally incurred were sufficient to make such payments. After processing by the Comptroller General, payments were made by the Department of the Treasury out of the certified claims account.

Since the account "Payment of certified claims" was classified as a Treasury Department appropriation account, the liquidation of outstanding obligations against lapsed appropriations were recorded as an expenditure of that department, rather than an expenditure of the agencies benefiting therefrom. This accounting treatment overstated expenditures of the Treasury Department and correspondingly understated expenditures of the agencies which incurred the obligations. Enactment of Public Law 84-798 corrected this situation since agencies' payments are made from their own "M accounts" established under this law.

HOOVER COMMISSION RECOMMENDATIONS

The enactment of Public Law 84-798 was in general accord with two recommendations of the second Hoover Commission in its report on budget and accounting as follows:

That each department and agency be authorized to maintain a single account under each appropriation title or fund

for controlling the amount available for the liquidation of
valid obligations. [Recommendation No. 17.]

That vouchers which are otherwise valid but as to which
appropriations have lapsed should not be referred as "claims"
to the General Accounting Office, but should be settled within
the agencies. [Recommendation No. 18.]

PRINCIPAL PROVISIONS OF PUBLIC LAW 84-798

Public Law 84-798 authorized Government agencies to pay, without referral to the General Accounting Office, certain obligations which previously had been referred to the General Accounting Office for settlement. In order to make these payments the agencies were authorized to restore certain amounts from the "Payment of certified claims" account established pursuant to the act of July 6, 1949 (63 Stat. 407; 31 U.S.C. 712b), and may now retain obligated balances of appropriation which otherwise would have been transferred to that account.

It did not extend the period of availability for obligation of such appropriations, however, nor did it abridge the existing authority of the General Accounting Office to settle and adjust claims, demands, and accounts involving doubtful questions of law or fact or claims which otherwise are required to be settled in the General Accounting Office.

Government agencies were required to withdraw and restore to the general fund of the Treasury or to special or trust fund, as appropriate, unobligated balances of appropriations upon expiration of the period of availability for obligation. These transactions were referred to as "withdrawals." Restorations to the appropriations were authorized in such amounts as may be found necessary to correct errors or make adjustments in such withdrawals.

Government agencies were also required to transfer obligated balances on June 30 of the second full year following the fiscal year or years for which the appropriation was available for obligation to an appropriation account of the agency or subdivision thereof responsible for the liquidation of the obligations, in which account should be merged the amounts so transferred from all appropriation accounts for the same general purposes.

REPORTING REQUIREMENTS

Section (a) (2) of Public Law 84-798 provided that after the head of the agency concerned had determined that a portion of the unobligated balance was required to liquidate obligations and effect adjustments, such portion of the unobligated balance may be restored to the appropriate accounts provided

That prior thereto the head of the agency concerned shall
make such report with respect to each such restoration as
the Director of the Bureau of the Budget may require, and
shall submit such report to the Director, the Comptroller
General, the Speaker of the House of Representatives, and
the President of the Senate.

The restoration reports submitted to the President of the Senate by law were referred to the Committee on Government Operations.

Section 3(b) of Public Law 84-798 required the Comptroller General of the United States, in connection with his audit responsibilities, to report to the head of the agency concerned, to the Secretary of the Treasury, and to the Director of the Bureau of the Budget respecting operations under the act, including an appraisal of the unliquidated obligations under appropriation accounts established by the act. Within 30 days after receipt of the report, the agency concerned was to take such action as the report shows to be necessary.

The examination by the General Accounting Office of M accounts established under Public Law 84-798 was accomplished concurrently with the work performed under section 1311 of the Supplemental Appropriation Act of 1955, since the criteria for recording obligations is that specified under section 1311 (set forth in the preceding section of this report) and appraisal of unliquidated obligations are essentially the same under both acts.

In addition to complying with reporting requirements of section 3(b) stated above, the General Accounting Office reported to the Committee on Appropriations of the Senate and the House of Representatives on examination work under Public Law 84-798 through the medium of their reports on examination work under section 1311 of the Supplemental Appropriation Act of 1955. This reporting was discontinued by the enactment of section 210 (a) of the General Government Matters Appropriation Act, 1960 (Public Law 86-79), approved July 8, 1959.

During the 1st session of the 86th Congress, Senator McClellan introduced a bill, S. 899, to provide for discontinuance of certain reports now required by law. Item 45 of this bill provided that restoration reports required to be submitted to the President of the Senate and the Speaker of the House of Representatives under section (a) (2) of Public Law 84-798 be discontinued.

S. 899 was referred to this committee and favorably reported on March 25, 1959, and passed the Senate April 10, 1959, with amendments. In its report (S. Rept. 146, 86th Cong.) the committee stated:

Item No. 45.-The reports submitted to the Senate and referred to the Committee on Government Operations, pursuant to paragraph (a) of Public Law 798, 84th Congress (70 Stat. 648), are, in the majority of incidents, filed from 6 to 9 months after the adjustments have been made in the accounting records. No action is required on the part of the committee, and, should action be taken, it would place the committee in a position of disapproving an operating or administrative function which is within the jurisdiction of the executive branch of the Government. During the 85th Congress, 49 such reports were submitted to the Senate and referred to the Committee on Government Operations. Experience has shown to date that this or other committees cannot or do not take any action on these reports. It is therefore proposed, since further information is not available to indicate the need for these reports, that they should be discontinued.

The restoration of balances under this provision of law is primarily an interval adjustment of the accounting records of the agency concerned which occur after the end of the fiscal year when the outstanding balances of certain accounts are transferred after receipt of bills or invoices requiring payment in excess of the amount set aside for that purpose. These are usually caused by unforeseen contingencies, an underestimate of the obligation, or other instances over which the recordkeeping officials have no control. The information is made a part of the agency records and is available when required for audit or other purposes.

After passage by the Senate, S. 899 was referred to the House Committee on Government Operations where it was favorably reported with amendments and passed the House of Representatives on April 19, 1960 (H. Rept. No. 1458, 86th Cong.). The Senate concurred in the House amendments and S. 899 was approved by the President as Public Law 86-533 on June 29, 1960. In the future, reporting on violations under section 1311 and Public Law 84-798 will be made by the General Accounting Office through their regular audit reports to the Congress.

COST-BASED BUDGETS AND ACCRUAL ACCOUNTING

(PUBLIC LAW 84-863; 70 STAT. 782)

During the 84th Congress, the most significant action of the Senate Committee on Government Operations relative to budget and accounting legislation was the enactment of Public Law 84-863, approved August 1, 1956, providing for improvements in budgeting, accounting, and appropriations procedures, as recommended by the second Hoover Commission.

Public Law 84-863 amended the Budget and Accounting Act of 1921 and the Budgeting and Accounting Procedures Act of 1950 to enable the President to include in the annual budget information on program costs and accomplishments. The departments and establishments are required to develop their requests for appropriations, to the extent deemed desirable and practicable by the President, from cost-based budgets. It further provides that for purposes of administration and operation, including administrative subdivisions of funds, such cost-based budgets shall be used by departments and establishments concerned and their subordinate units.

The act directs the head of each agency, in consultation with the Director of the Bureau of the Budget, to take whatever action deemed necessary to achieve, (1) consistency in accounting and budget classifications, (2) synchronization between these classifications and organizational structure and (3) support of budget justification by information on performance and program costs.

The head of each agency was also directed, in accordance with principles and standards prescribed by the Comptroller General, to maintain accounts on an accrual basis to show the resources, liabilities, and costs of operations of such agency so as to facilitate the preparation of cost-based budgets and to include adequate monetary property accounting records as an integral part of the system.