INCREASED AUDIT EFFORT IN AID PROGRAM

Mr. STOVALL. If I might add on the AID mission auditors, they have approximately doubled. All in all I think with the plans that are now in being for people being lined up to go to Vietnam for the various departments, there will be a little more than tripling of the effort being applied over there.

Mr. STAATS. Mr. Chairman, could I make the general point here, we have come to the conclusion that we have not really done an adequate job in the review of our overseas AID program generally. Many countries we have not been into at all.

Mr. ANDREWs. What is that due to?

Mr. STAATS. This has been lack of personnel. We have now on March 31, 1967, increased our number of personnel assigned to work on the international area from 144 as of June 30, 1966, to 171. In our current program for 1967 we plan to go up to 187. We have plans in our 1968 budget, if it is approved by the Congress, to go up to 225. This means that we will be able to go into some areas that we have not been into before, particularly on foreign aid programs.

We also plan to review on a fairly comprehensive basis all the aid programs in a given country. This includes programs of the Export-Import Bank, Economic Assistance and other agencies of Government such as Treasury, Labor, and Agriculture. We feel that this is an area that we really have not given enough attention to.

Mr. ANDREWS. With all that overseas responsibility and the war on poverty at home, you are going to have your hands full for the next few years.

Mr. STAATS. We really will.

Mr. ANDREWS. The President has said there would be no letup on the war on poverty and for fiscal 1968 there would be a minimum of $25 billion available to aid the poor in fiscal 1968. That is in all Government agencies.

SHIFTS IN ASSIGNMENT OF GAO STAFF EFFORTS

Mr. Staats, will you explain your statement on page 3 which reads as follows:

In prior years we have been able to more than offset increases in our professional staff by decreases in our fiscal voucher audit work and in other areas of the office.

Mr. STAATS. As I have indicated in my statement, we have had a growth in our professional accounting and auditing staff, but in terms of total employment for the GAO as a whole we have been able to offset those increases numberswise by reductions in our staff on transportation audit and claims. We had hoped this might be possible for next year. Because of the increase in the audit work for transportation bills growing out of the Vietnam operations, we are going to have to have an increase in that area-an increase of 40-Which I mentioned in my statement.

Mr. Sullivan, who is head of our Transportation Division, is here and if you would like he could give you a brief résumé of how this increase in transportation audits work has come about.

INCREASE IN TRANSPORTATION AUDIT FORCE

Mr. ANDREWs. Mr. Sullivan.

Mr. SULLIVAN. Actually, in terms of the question of the reduced personnel in the Transportation Division, one statistic that might be helpful is that back in July 1960, we had 1,198 people in the Transportation Division. As of last December 31, 1966, we were down to 732.

Prior to that time we were keeping current on our work as far as auditing the transportation bills of the various carriers. However, the great influx of traffic moving into the Southeast Asia area, which also, of course, travels overland here in the United States, showed that we would not be able to keep current on our audit unless we had the increased personnel.

Mr. ANDREWS. You are requesting 40 additional.

Mr. SULLIVAN. Yes, sir, for fiscal year 1968.

Mr. ANDREWS. Tell us briefly, Mr. Sullivan, just what does your office do?

Mr. SULLIVAN. We have the final audit responsibility for the audit of transportation bills of the carriers against the Government. Mr. ANDREWS. Do you audit all of them?

Mr. SULLIVAN. We audit substantially all traffic moving for the account of the Government.

Mr. ANDREWS. Does that include rail, ship, air?

Mr. SULLIVAN. Rail, ship, air, bus, motor, and various forwarder organizations that utilize the same underlying-type carriers. Mr. STAATS. There is a big increase in air, Mr. Chairman.

Mr. ANDREWS. How do you get those vouchers?

Mr. SULLIVAN. They are paid in the Department of Defense in three disbursing offices. In the civil agencies of the Government they are paid in roughly 900 disbursing offices. These are sent in to us periodically, monthly, and come into our office in Washington where they are audited centrally.

Mr. ANDREWS You audit nearly 100 percent of them?

Mr. SULLIVAN. Yes, sir.

Mr. ANDREWS. In making an audit of those vouchers, what do you try to determine whether or not the carrier has overcharged the Government?

Mr. SULLIVAN. Substantially that is it, whether they have overcharged the Government because of failure to apply the proper tariff rate or properly to describe the shipment that moved, thereby causing it to move at a higher tariff or quotation rates.

Mr. ANDREWS. Stated simply you are trying to protect the interests of the Government?

Mr. SULLIVAN. That is correct.

Mr. WEITZEL. Could we pause there for one more important purpose of the transportation audit which Mr. Sullivan is developing, similar to our professional audits in the other divisions, and this is the management reviews that we are making of transportation management practices in the Department of Defense and the civil agencies, so that we can aid them in developing better management of their transportation and traffic management and thereby save the Government money.

Mr. ANDREWS. In other words, teach them to get the best price possible for the Government.

Mr. WEITZEL. Exactly. If they ship some material by a particular route and ask that it go that way and describe it in a certain way they have to pay that rate. But by seeing the patterns of shipments or examining their overall practices with respect to shipment of household effects, for example, we can frequently make recommendations to them so that they can ask for a different kind of a service that would be more economical to the Government.

Mr. ANDREWS. Why is it that you audit all transportation vouchers but do not apparently audit all other types of vouchers 100 percent? Mr. STAATS. You are speaking outside of the transportation field? Mr. ANDREWS. That is right.

Mr. SULLIVAN. I could clarify one point. We audit all transportation vouchers. A certain portion of the audit is done on a so-called preliminary visual basis where our technicians, because of their experience can look at a great volume of vouchers going through and pass those that under certain dollar minimums would not be economic to audit in depth.

Mr. WEITZEL. The primary reason for this situation where we audit all the transportation vouchers is the provisions in the Transportation Act of 1940 and other legislation which permit agencies to pay transportation bills prior to audit and leave the final responsibility for determining errors in classifications, errors in rates, up to the General Accounting Office. If we find an overpayment in the amount that is paid to the carrier by the administrative agency-this applies to those carriers that are under the Interstate Commerce Act-then we can issue an overpayment notice and collect it back, or if the carrier does not pay. then we can ask that it be deducted from some future payment.

This was supposed to help the carriers in a time of great stress and strain on their finances and it leaves the audit primarily up to the GAO. We carry this out with a centralized rate and tariff file that we feel is probably the best either in or out of the Government. In this way there is one single audit and we are able to take advantage of seeing the whole pattern of transportation payments, and the agencies generally do not attempt to make a final audit. In the case of the other areas under the Budget and Accounting Procedures Act of 1950, we are permitted and encouraged by the Congress to make a selective audit, based on our examination of the systems in the agencies, their policies, their practices, their accounting systems in operation, and their observance of governing statutes and other legal requirements, so that we make audits of segments that are representative of their total operations and come up with reports on those audits. Mr. ANDREWS. But you do audit 100 percent all transportation vouchers?

Mr. SULLIVAN. Yes, sir.

Mr. ANDREWS. Let me ask you this: How much savings has your Department been responsible for?

Mr. SULLIVAN. In the last fiscal year we had recovered from the carriers approximately $8.5 million, I believe.

Mr. ANDREWS. Fiscal year 1966?

Mr. SULLIVAN. Yes, sir. This year so far through March 31, 1967, we have stated overcharges against carriers amounting to $11.3 million, of which around $10 million has already been collected.

Mr. ANDREWS. From what Mr. Weitzel said you have a lock on collecting the rest of it.

Mr. SULLIVAN. Pretty much.

Mr. ANDREWS. If they want to do business with the Government. Mr. SULLIVAN. As it pertains to carriers, who come under the ICC Act. In other areas, such as maritime shipping we do not enjoy the right to deduct.

Mr. ANDREWS. When you say you recovered $8.5 million in 1966, you mean you saved the Government that much money in 1966? Mr. SULLIVAN. That is correct.

Mr. ANDREWS. So far in 1967 you have saved them $11.3 million? Mr. SULLIVAN. Yes, sir.

Mr. ANDREWS. Do you have the figure for 1965?

Mr. SULLIVAN. I believe I have. On page A-2 of the justification, $9.6 million.

COLLECTIONS THROUGH EFFORTS OF GAO, 1957-66

Mr. ANDREWS. It seems you saved $47,655,000 in 1957.

Mr. WEITZEL. We were working on the reaudit of World War II transportation payments in which we recovered some $250 million over and above what had been recovered on the original audit.

You will see those figures tapering down in the early sixties when we were finishing up reaudit of World War II; and we are now on a

more current basis.

Mr. STAATS. You have a spreadout of the effects of that reaudit.

Mr. ANDREWS. Does this table reflect the amounts that the General Accounting Office can claim as having saved the Government in the field of general audit, transportation, general claims, and total collections?

Mr. STAATS. These are just collections, Mr. Chairman. These are actual cases where the Government collects money back from payments made.

Mr. ANDREWS. Due to your examination and audit.

Mr. STAATS. Yes.

Mr. ANDREWs. "Efforts" is the word I want. Collections by or through the efforts of the General Accounting Office, 1957 through 1966. You show a total of collections by the Government through your efforts from 1957 through 1966 of $417,376,000.

Mr. STAATS. That is correct.

Mr. ANDREWS. Without objection we shall insert page A-2 in the record.

1957

1958. 1959

1960.

1961.

1962

1963.

1964

1965.

1966

(Page referred to follows:)

Collections by or through the efforts of the General Accounting Office, 1957-66

The decrease in transportation audit collections results from the completion in December 1961 of the reaudit of World War II transportation payments. The collections from this program since 1957 total almost $115 million.

The decrease in General Claims collections is directly related to the decrease in claims workload since 1957.

Mr. WEITZEL. This figure for transportation is actual collections only. As Mr. Warren used to say, it is cash on the barrelhead put back into the Treasury.

On page A-12 of the justifications, for example, you will see there were further savings due to the transportation work of $1 million, savings in transportation costs by reduction of the number of empty CONEX containers shipped from Europe to the United States, estimated annual savings; and also over a half million dollars annual savings from partial consolidation of duplicate shipping services to the Canal Zone; and a nearly $300,000 saving in reduction in travel costs through greater utilization of Air Force passenger aircraft. Those are in addition to the collection figures for transportation. Mr. ANDREWS. You say your recommendations are responsible for savings here?

Mr. WEITZEL. Yes, sir.

Mr. ANDREWS. On page A-2 we are talking about cash on the barrel head, money you got back and put into the Treasury of the United States.

Mr. WEITZEL. Exactly.

Mr. ANDREWS. Can you tell us how much your division, the Transportation Division, cost to operate?

Mr. SULLIVAN. Approximately $6.6 million.

FINANCIAL SAVINGS FLOWING FROM GAO WORK-IDENTIFIABLE DURING

FISCAL YEAR 1966

Mr. ANDREWs. Correct the figure if it is not correct.

Insert pages A-3 through A-19.

(Pages follow:)