parts.) The services operated their laboratories independently of each other, differed in their criteria for frequency of analysis, and were separately planning to acquire 357 additional laboratories at a cost of $7.1 million. At GAO's suggestion DOD studied the operations and established a new program under the direction of the Navy. (See Item 216.)

Administration of Military and
Civilian Pay and Allowances

The number, variety, and complexity of entitlements provided by legislation covering military pay and allowances create difficult administrative problems. Although the military departments have taken prompt action with respect to erroneous or illegal payments identified by GAO and have accepted suggestions for corrective measures to preclude recurrence, erroneous payments in significant amounts continue to be made. It is the opinion of the General Accounting Office that the administration of military pay and allowances will not be improved significantly until the present complex laws are simplified. The Department of Defense has made a number of studies in recent years with the view of simplifying the pay and allowance structure and has considered preparing legislative proposals for submission to the Congress. However, no legislative proposals for simplifying the military pay and allowance structure have been submitted by the Department.

GAO issued one report to the Congress on military pay and allowances. The report dealt with the accounting for military leave in the Army and pointed out that inaccuracy in the accounting, which had been the subject of a number of GAO's earlier reports, was a continuing problem despite the Army's adoption of additional procedures and controls. Inaccurate balances of unused leave have been a major factor contributing to improper payments by the Army to its military personnel. Based on the incidence of the errors, GAO estimated that overpayments of about $23 million and underpayments of about $3 million could result annually. Should the military personnel choose to use their erroneous leave balances, rather than receive payment at time of separation, a net loss of about 4,600 man-years of manpower availability could result. The Army concurred, in general, with GAO's findings and recommendations for corrective measures. (See Appendix, Section I, Item 192.)

GAO's review of civilian pay and allowances included an evaluation of the effectiveness of the internal controls and internal audit work, a statistical sampling of the propriety of salary rates, a review of the procedures for determination of entitlements to severance pay and computation of the amounts payable, and an evaluation of the effectiveness of the conversion of National Guard technicians to Federal employee status as provided by the National Guard Technicians Act. of 1968.

The 1968 act converted Army and Air National Guard technicians from State to Federal employee status, effective January 1, 1969. One of the principal purposes of the act was to provide an adequate and uniform retirement and fringe benefit program. In a report issued to the Congress, based on a review of the records of over 1,000 technicians selected at random in 12 States, GAO noted that the conversion, generally, had been carried out in accordance with the act and implementing regulations and instructions. There were many discrepancies, however, in data pertaining to prior service. The erroneous data had no significant effect on the status of the technicians at the time of conversion and generally will have no significant effect so long as they are employed by the Federal Government. But the errors could have an effect on the technicians' retirement rights and benefits and on the related cost to the Government. DOD agreed with GAO's recommendation that the National Guard Bureau, in cooperation with the States, review and correct the data pertaining to prior service of the technicians. (See Appendix, Section I, Item 195.)

Manpower Utilization

GAO issued three reports to the Congress on this subject. Digests of the reports are presented in the Appendix, Section I, and are further identified in the following summaries.

GAO concluded that civilian personnel ceilings or hiring restrictions, whether imposed by statute or by the Office of Management and Budget, do not provide the most effective management control. They tend to be arbitrarily applied, inflexible, and uneconomical. GAO proposed that the Director of the Office of Management and Budget permit departments and agencies to accomplish their programs without restrictions on numbers of personnel-being limited only by the availability of funds. In December 1970 the Director agreed to eliminate employ

ment ceilings in the Department of Defense for a 1-year trial period. (See Item 234.)

About 10 percent of the enlisted personnel at the four Army installations in the continental United States where GAO made its review were assigned to duties for which they had not been trained. Information obtained in other reviews showed that the rate at overseas installations was even higher. GAO recognized that the number of men entering and leaving the Army and the number being assigned and reassigned had increased in recent years and had added to the problem of personnel management. The Army agreed with the general thrust of GAO's findings and recommendations for corrective measures and stated that increased attention to the personnel management area had been programmed by the Army Audit Agency. (See Item 235.)

The Naval Air Reserve units at the four naval air stations visited by GAO were not achieving their primary purpose of having trained units and suitable equipment available for active duty in time of war or national emergency. Priority given to the Active Navy was a contributing factor to the low-readiness status of the units. The development of a 5-year plan to improve the readiness of the Naval Air Reserve had been approved by the Navy in April 1969 but, as of June 30, 1970, had not been fully developed. Development and implementation of the plan would provide a sound basis for the needed corrective action. (See Item 236.)

Administration of Education and Training Programs

Three reports were issued to the Congress on this subject.

One report pointed out that over 4,200 military officers were enrolled in full-time graduate education programs in fiscal year 1969 at an estimated cost of at least $70 million. These officers were selected for the graduate education on the basis of certifications that the positions they were to occupy required such education. The criteria for determining the graduate education requirements for the positions and the ways in which the criteria were applied were so broad and permissive that almost any officer position could be certified as requiring such education. Furthermore, many officers with graduate education were not assigned to positions requiring their specialized education.

In response to GAO's findings and its suggestions that the objectives of the graduate education program be clarified and that the existing criteria be revised to limit the broad, permissive interpretations, the Department of Defense contended that GAO had failed to take into account the intangible accepted values and benefits of graduate education. In view of this position, and the announced plans of the military services to expand the program, GAO suggested that the Congress might wish to consider limiting the full-time, fully funded graduate level education program to those positions for which such education was essential for the satisfactory performance of duty and to those officers who could be used primarily in the positions. (See Appendix, Section I, Item 193.)

Another report noted that the U.S. Armed Forces Institute, which provides educational services to members of the Armed Forces on subjects normally taught in civilian academic institutions, had experienced low course-completion rates in recent years. The rates were about 10 percent in the correspondence program and about 31 to 39 percent in the group-study program. Although DOD internal auditors had observed this situation in a 1965 review and had made recommendations for improvement, no action had been taken by the Institute. However, during the course of GAO's review the Institute took action to deal with the low completion-rate problem. The action included a study to provide an information base on dropouts and student nonstarts (students who, after enrolling, do not submit lessons). (See Appendix, Section I, Item 194.)

Another report presented findings of weaknesses in accounting and reporting of costs incurred under the Government Employees Training Act. The act provides for Government-sponsored programs to supplement and extend self-education, self-improvement, and selftraining of employees. A 1967 House Report on the operations of such programs had identified accounting for training costs as one of the problem areas and had recommended certain improvements. The weaknesses identified in 1967 regarding training costs continued to exist within the Department of Defense. The cost accounting and reporting systems were inadequate and did not include all training costs. Internal training costs, which represent more than 75 percent of the total costs, and trainee salaries were not included. DOD and the Civil Service Commission agreed, in general, with these findings and cited corrective actions which appeared to be responsive to the conditions cited in GAO's report. (See Appendix, Section I, Item 60.)

Administration of Communications

In a report issued to the Congress, GAO pointed out that, although some progress had been made toward the integrated communications system contemplated in 1960 when the Department of Defense established the Defense Communications System, much remained to be done. There was a lack of coordination

among the organizations involved in communications and, other than the Secretary of Defense, there was no one person or office serving as a focal point with authority and responsibility to coordinate all aspects of communications. DOD accepted some of GAO's recommendations and established a new position of Assistant to the Secretary of Defense (Telecommunications). (See Appendix, Section I, Item 246.)

CHAPTER SIX

AUDIT OF INTERNATIONAL OPERATIONS AND PROGRAMS

GAO's audit efforts relating to international operations and programs during fiscal year 1971 have been devoted primarily to the U.S. activities in Southeast Asia and foreign assistance programs throughout the world. In these reviews GAO has emphasized the need for improved management and operating controls, and financial administration.

The International Division is responsible for carrying out the audit work of the General Accounting Office relating to all U.S. Government programs and activities conducted in foreign countries and Hawaii. The division is under the supervision of Oye V. Stovall, Director, and Charles D. Hylander, Deputy Director. An organizational chart is shown on page 100.

During fiscal year 1971 the following reports on international matters were issued:

In addition to the foreign assistance programs, other major elements subject to review in 1971 included foreign trade programs; U.S. participation in international organizations and institutions; management and utilization of U.S.-owned foreign currencies; activities affecting the U.S. balance-of-payments position; and management and operations of U.S. embassies, consulates, and other installations in foreign countries.

Defense international activities are discussed in this chapter. Other audit work performed overseas pertaining to the Department of Defense and the three military departments is incorporated in Chapter Five.

During the year, GAO conducted audits in countries outside the United States as summarized below, including those performed at U.S. military installations abroad.

To a limited extent GAO provides advisory assistance in improving financial management to Government officials, heads of foreign audit institutions, officials of international organizations, and students of foreign countries, many of whom are sponsored under U.S. foreign assistance programs. This year GAO provided briefings to and engaged in discussions with individuals and groups from 21 countries, the Organization for Economic Cooperation and Development, and the World Health Organization. GAO efforts in this area are limited to a few hours of orientation and briefing and do not involve long-term training.

The visiting foreign nationals included ambassadors; embassy officials; heads of audit organizations and their staff members; finance, budget, and treasury officials; members of parliaments; national bank officials; staff members of international organizations, and others holding senior financial management positions in government. They were interested in the functions and operations of the General Accounting Office and its role in relation to activities of the executive and legislative branches. Specific interests varied through such subjects as audits independent from the executive branch; relationships with and reporting to the Congress; accounting systems reviews and approvals; staff development; auditing by automatic data processing equipment; and GAO's work in the field of programming, planning, and budgeting systems.