Mr. HARVEY. Would you not agree with me that one of the chronic devices of the Federal Government is the deficiency appropriation! Mr. WARREN. Absolutely.

Mr. HARVEY. Then the question that I am asking you is: Will this performance budget help to cure that?

Mr. WARREN. I am not passing on that, Mr. Harvey. I do not know. I will say that if Congress wants the information and calls for it, Congress can get it under a performance budget.

Mr. HARVEY. But you are not sure that it will help to cure the real ill of most of our Government agencies, are you?

Mr. WARREN. It has never applied to our agency.

Mr. HARVEY. I am not talking about your particular agency.

Mr. WARREN. I do not know whether it would, or not, but it certainly will provide better accounting for control and management of operations as a basis for identifying and preventing deficiencies.

Mr. HARVEY. You will agree with me, will you not, that that is one of the greatest problems that we have, so far as our Federal appropriations are concerned?

Mr. WARREN. That is correct.

Mr. HARVEY. And to really justify a substantial change in our procedure, it ought to be able to correct that particular evil that has been so prevalent.

Mr. WARREN. I hope it will.

Mr. HARDY. Will the gentleman yield?

Mr. HARVEY. Yes.

Mr. HARDY. I think what he is afraid of is that we may run into a fiasco on the performance budget, such as we did on the omnibus appropriations bill.

Mr. HARVEY. To go ahead regarding this section 116, would you have any estimate as to the number of ledger accounts that would be eliminated if the authority were given to the Comptroller General? Mr. WARREN. None whatever.

Mr. HARVEY. Would it be 2, 20, or 500?

Mr. WARREN. We would have no idea in the world of that until we got the figures.

Mr. HARVEY. It could be as many as 500, could it?

Mr. WARREN. Yes.

Mr. HARVEY. How many ledger accounts do you carry?

Mr. WARREN. They would run up to the thousands.

Mr. HARVEY. Could you give me an example of one that might well be eliminated under this?

Mr. WARREN. Mr. Weitzel, I wish you would give an example of that.

Mr. WEITZEL. Mr. Harvey, one of those would be limitation accounts which are kept in the General Accounting Office, where there is a limitation of so many dollars under a particular appropriation, for example, on how much can be spent on personal services in the District of Columbia. We keep in the General Accounting Office a limitation account for each of those, and there are hundreds of those. The agencies keep those accounts, and we have found from long years of experience that the effective way of auditing to see whether the agency keeps within those limitations is right within the agency itself.

We have had a system under which the agencies furnish us information from their records, which we post on those ledger accounts.

But we have no way of verifying whether that information is correct without inspecting agency accounts.

I do not want to discount the value of that under the present system, but as we go out and work with the agencies in setting up proper controls and prescribe certain related accounting system requirements and make comprehensive audits of the agencies right at the site of their operations, that is the place where we can check whether they are keeping within the limitations.

In that event, the limitation accounts in the General Accounting Office may not only become nonessential but wasteful.

Mr. HARVEY. You will have to keep in the General Accounting Office, however, will you not, some method of a record, at least, of whether the limitations have been complied with?

Mr. WEITZEL. We have in the General Accounting Office, as I indicated, this record; which means only as much as the reports that come in to us.

In other words, there is no comprehensive check on the accuracy of the reports that are furnished by the agencies to the General Accounting Office.

When we get out to the agencies, we can do it at each agency and see for ourselves in a far better way that the agencies are observing those limitations.

In other words, we will have the right to prescribe the principles and standards under which those agencies' books are kept, and then we will cooperate with the agencies in developing the systems under this bill.

Then we will make an independent audit of the agencies' accounts, see that they are keeping them in the way which will properly classify that information. If it is not proper, we will see that it is put on a proper basis. It can be done there far better than it can be done in any single place.

That is one of the examples of the kinds of accounts we are keeping in the General Accounting Office now. As the whole system is changed and the emphasis is placed on keeping the accounts within the agency, where it will serve the needs of the agency managements and Congress also, and the President, there is much development that can take place, but it has to be done on an agency basis.

Mr. HARVEY. You said just a moment ago that the checks or chits, or whatever you call them, are sent down there to your agency and they may or may not be of any value at all. Do you mean to say that they just are so ineffective, or so poor, in their accounting procedure that you cannot depend upon reports to you of expenditures?

Mr. WEITZEL. Mr. Harvey, I would not say that. But I would say that a far better way is to get out the agencies' books and see what is in the agencies' books and what they are putting in, and how they are putting it in, rather than depending on thousands of pieces of paper coming in to Washington to be posted to central accounts.

The Government has gotten so big that we, in conjunction with all other central control agencies, have found that we get all tied up in red tape in attempting to have every piece of paper on every transaction posted in the agency, sometimes in the Treasury and then, again, in the General Accounting Office.

If the Congress ever wants us to save money and at the same time produce results, a simplified and modernized accounting system is

the answer. That is the only way we can do it, to go right back to the grass roots in the agencies and put on them the responsibility to keep proper accounts and to post transactions to those accounts and then go out there and see that they do it.

Then for the first time we will have a realistic control of expenditures in this tremendous Government today. The system that is in use now was developed when Government expenditures were one-tenth of what they are today.

Mr. HARVEY. That brings up another point that I have heard discussed quite frequently, which is that the Comptroller General acts more or less as an advisory agent to the agencies of Government with regard to expenditures. That is, they will come to you first of all and ask you the question: Is the expenditure legal? Then they ask you to prepare for them a report as to whether a given expenditure is legal or not. Is that correct? That has been the common procedure, has it not?

Mr. WEITZEL. That is, Mr. Harvey, and it will continue to be. There is absolutely no effect in this bill on that procedure.

In other words, this bill affects in no way whatsoever the disallowance power of the Comptroller General, his power to settle accounts, and his authority under the law to render advance decisions to agencies. That is reserved entirely under this bill.

Mr. HARVEY. How can you harmonize that, then, if that has been your procedure?

I am talking to Mr. Warren now.

How can you harmonize that with the expression that has just been made here, that the reports that have come up from the agencies have no value?

Mr. WARREN. I do not think it is a question of harmonizing at all. We have found from long experience that the reports do have only partial value, and this new procedure will give us the opportunity to get better control through the setting up and maintenance of proper accounting controls in the agencies.

Mr. HARVEY. You go down and check them anyway, now do you not?

Mr. WARREN. We audit them. I think you are not distinguishing between auditing and accounting.

Mr. HARVEY. You have to have both of them, do you not?

Mr. WARREN. We cannot afford to do both the accounting and the auditing especially since we can prescribe accounting system require

ments.

Mr. HARVEY. Of course, I do not expect you to go down and do their accounting for them, if that is what you infer.

Mr. WARREN. No; this bill will permit the agencies to do the accounting under certain principles and requirements prescribed by and subject to audit by the Comptroller General to hold that control for the Congress.

Mr. HARVEY. I still do not think the question has been satisfactorily answered, but we will take it up in greater detail, or I would like to, if the opportunity is afforded, with the Director of the Budget.

On page 19, section 203, I note there that this gives a great deal of authority to the President to modify reserves from appropriations. I am wondering whether that does not also give the President by that very authority the right to discontinue any particular appropriation

that he thinks does not happen to suit his thinking, even though the Congress may have enacted the legislation in good faith.

Mr. WEITZEL. Mr. Chairman and Mr. Harvey, there is a point we should make. This provision is already covered by a section which is in the general appropriations bill which has passed the House, section 1111. That section provides authority for setting up budgetary reserves for contingencies and to provide for improvements in efficiency after the date of the estimates, and so forth.

In view of that, we would have no objection-and I do not think the Budget Bureau would, either, to eliminating that section from this bill.

I would also like to say, Mr. Harvey, that that completes the answer also to your question about agencies spending more money than they have. That same section 1111 contains stringent antideficiency provisions, bringing up to date the Antideficiency Act and providing for an apportionment system and for agencies to stay within those apportionments.

So that those problems should be solved as near as possible by those provisions of section 1111 of the bill.

Mr. HARVEY. It seems to me, as Hoover said about prohibition, that it is a noble experiment and that is all.

Mr. WEITZEL. Mr. Chairman, I would like to make the one point that this bill arises out of the combined efforts and with the endorsement of the Comptroller General, the Secretary of the Treasury, and the Director of the Budget. It is a realistic way of putting into effect the objectives of the Hoover Commission. The Hoover Commission would go much further than this bill does in stripping the Comptroller General of his authority to act for Congress in the control of public expenditures, and for that reason feel that this committee would far prefer to see a bill of this nature, which has been carefully worked out as a single system for the first time putting the proper responsibilities in the proper places, so that there will be more control by Congress, not less.

Mr. HARVEY. Would you then recommend the elimination of section 203?

Mr. WEITZEL. We have no objection to that, and the elimination of section 201 and section 103, also, to which Mr. Hoffman objected.

There have been some amendments prepared, if the committee cares to use those.

Mr. BURNSIDE. I have one question right there, Mr. Chairman.
The CHAIRMAN. Yes, sir.

Mr. BURNSIDE. Would not this eliminate one whole set of unnecessary vouchers?

Mr. WEITZEL. It could, Mr. Burnside, by providing-and we have not touched on those provisions especially-for decentralization and refinement of the General Accounting Office audit, for making selective audits at the site, and the retention of the documents at the site of operations, so that a whole set of vouchers and accompanying documents could be eliminated under this procedure.

Mr. BURNSIDE. Not only that, but when you go back to the agency you not only go to the voucher, but you can go behind the voucher if you see it is necessary and your information is available right there. Mr. WEITZEL. That is correct, Mr. Burnside. We will audit the whole accounting system.

Other provisions of the bill will provide for periodic reviews of the accounting systems of the agencies. Audits will be made in the light of internal controls and administrative practices and the way in which that agency enforces the laws you enact.

The CHAIRMAN. Are there any other questions?

Mr. LOVRE. Mr. Chairman.

The CHAIRMAN. Yes, Mr. Lovre.

Mr. LOVRE. I have just one question with reference to the performance budget.

Mr. Hardy's subcommittee brought out the fact that in connection with the cost of administering the NSLI program, the budget itself showed a cost of around approximately $40,000,000, while in truth and in fact, the cost ran better than $80,000,000 according to the oral testimony.

My question is: Under this performance budget, would you be able to determine the exact cost of administering any particular program? Mr. WEITZEL. Mr. Lovre, I think much better information would be available to the Congress. Again, the detail of that information depends on the cost of producing it. But under lines that will be laid down in cooperation with the Appropriations Committees on both sides, every effort will be made to make that budget more informative and better supported by accounting data, so that the Congress can know what it is doing when it appropriates money for a program, and not have a large number of appropriations that may be related, but which show no relation among themselves.

Mr. BURNSIDE. I have one further question.

In Mr. Hardy's subcommittee we were unable to find the exact cost of administering that particular program under the present set-up. With this performance budget, and also with this bill, would you then be able to determine the exact cost of administering any program? Mr. WEITZEL. That cost would be determinable. We are looking into the accounting system right now in the Veterans' Administration in the light of all that was brought out before the Hardy subcommittee on the cost of the veterans' life insurance program, and we are going to bear that in mind in helping them with the design of their system. We worked very closely with Mr. Hardy's subcommittee on this matter. Mr. LOVRE. Then do I understand that you will be able to determine the exact cost of administering any particular program? That is my question.

Mr. WEITZEL. I think you will be, Mr. Lovre.

The CHAIRMAN. Thank you very much, Mr. Warren and the staff. We have been very much benefited again by your testimony.

We have with us the Secretary of the Treasury of the United States, the Honorable John W. Snyder.

We are happy to have you with us, Mr. Snyder. Will you take the witness chair, please?

STATEMENTS OF HON. JOHN W. SNYDER, SECRETARY OF THE TREASURY; AND EDWARD F. BARTELT, FISCAL ASSISTANT SECRETARY OF THE TREASURY

Secretary SNYDER. Mr. Chairman and gentlemen of the committee, my purpose in being here with you today is for the purpose of express