which the conversion would have the greatest significance.

Use of consistent classifications

Public Law 863 also provides that each agency, in consultation with the Bureau of the Budget, shall take whatever steps are necessary to develop, insofar as possible, consistent budget and accounting classifications synchronized with the agency's organization structure.

For effective integration of the budgeting and accounting functions, common classifications should be employed for programing, budgeting, accounting, and reporting purposes. In the application of this principle, accounting classifications should be developed that will provide accounting support for the data required for the budget document.

Efforts toward development of the desired relationship between the agency budget and accounting classifications should be consistent with the pertinent provisions of Bureau of the Budget Circular No. A-11. For example, the accounts should, to the extent practicable, be correlated with the activity classification used in the budget document to provide a firm accounting basis for the activity presentation. Similarly, the accounting system used by the agency should enable development of (a) information for certain uniform classifications of the sources of amounts available, and categories of balances needed for statements in the budget document; (b) classifications of data for special analyses in the budget, such as public works, research and development, investment expenditures; and (c) information for the uniform classification of transactions by object as required in the budget document.

With respect to synchronization with the agency's organization structure, this provision does not mean that the budget activity classification and the organizational structure have to be identical, but does require at a minimum that they be systematically related to one another. For example, a single activity classification may be used to cover two or more organization units, provided the basic accounting classifications are susceptible to combination either by activity or by organization.

Justification data by organization

In connection with the provision for synchronization between accounting and budget classifications and the organization structure, Public Law 863 also provides that each agency, in consultation with the Bureau of the Budget, shall take whatever action may be necessary to achieve, insofar as possible, support of the

mance and program costs by organization al units.

Where budget activities and organizational units coincide, no special effort is necessary to comply with this requirement. Where they do not coincide, the budget justifications should contain information by organizational units. Generally, this will require by analysis a breakdown by organization unit of financial data for each activity, to enable appropriate disclosure in the justification materials. Similarly, the justifications should break down data on accomplishments, including work measurement information, by organization unit insofar as possible. These justification materials should be presented on a basis consistent with the type of presentation made in the budget document. When an agency converts to a cost-based budget in accordance with Public Law 863, for example, the justification material also should be changed to a cost basis.

Simplification of allotment structure

The Antideficiency Act is amended by Public Law 863 to provide that agencies shall work toward the objective of financing each operating unit, at the highest practical level, by a single allotment from each appropriation or fund involved.

The allotment structure normally represents an administrative subdivision of available appropriations or funds, within the limits of apportionments made by the Bureau of the Budget. The agency regulations that prescribe the system of administrative control required by the Antideficiency Act are subject to the approval of the Director of the Bureau of the Budget.

To conform to Public Law 863, allotments of funds should be made at the highest practicable. level, consistent with the requirements of agency management for control of obligations, and any limitations on the use of funds imposed by the executive and legislative branches. Accounting processes other than allotments should be employed to develop necessary operating or management data through use of cost classifications.

The lack of such cost classifications in the traditional accounting system in Government in many cases has led to use of a complex allotment structure that was developed primarily to satisfy a management need for operating information as opposed to being used solely for the intended purpose of controlling available funds. This provision in Public Law 863 is intended to focus agency attention on existing allotment practices and to stimulate improvement action.

In addition to the improvements necessary to to conform to the provisions of Public Law 863, attention will also be given to any action needed to attain, within the provisions of existing law, the objectives of other recommendations of the second Hoover Commission, and to meet the requirements of the Budget and Accounting Procedures Act of 1950.

To illustrate, the complexities of financial management in Government require close coordination of the budget and accounting functions in an agency. As part of its expanded improvement effort in this field, the Bureau of the Budget will give attention to the existing organization for financial management in the agencies to insure in each case that it is appropriate to the needs of the agency and provides for adequate coordination of budgeting and accounting. The subject of financial organization in the agencies was highlighted in one of the Commission's recommendations that is not covered by Public Law 863. As a result of that recommendation, the budget and accounting legislation initially considered by the Congress provided for the use of comptrollers in executive agencies. This provision was deleted, however, on the basis that a set pattern of organization

cies, and that steps to provide the most appropriate organization for financial management in each agency should and could more effectively be taken by administrative action in the executive branch.

RESPONSIBILITIES AND ASSISTANCE

The initiative and the primary responsibility for accomplishment of financial improvements rests upon the head of each agency. The objectives have been set forth in legislation, in Presidential statements, and in the other materials referred to above. The pattern of desired improvements is therefore well defined. The basic problem is essentially one of obtaining effective results as soon as possible.

Efforts toward the improvement of financial management on a governmentwide basis will be coordinated under the joint accounting program. While the initiative and responsibility for accomplishment rests with the individual agencies, staff of the Bureau of the Budget, the General Accounting Office, and the Treasury Department will provide guidance and assistance in the development of necessary improvements to the extent of the resources available for this purpose.