IMPLEMENTATION OF THE BUDGETARY AND FISCAL INFORMATION PROVISIONS OF THE LEGISLATIVE REORGANIZATION ACT OF 1970 (By Financial and General Management Studies Division, U.S. General Accounting Office) BACKGROUND MATERIAL March 7, 1973 "TITLE II-FISCAL CONTROLS "PART 1-BUDGETARY AND FISCAL INFORMATION AND DATA "BUDGETARY AND FISCAL DATA PROCESSING SYSTEM "SEC. 201. The Secretary of the Treasury and the Director of the Office of Management and Budget, in cooperation with the Comptroller General of the United States, shall develop, establish, and maintain, insofar as practicable, for use by all Federal agencies, standardized information and data processing system for budgetary and fiscal data. "BUDGET STANDARD CLASSIFICATIONS "SEC. 202. (a) The Secretary of the Treasury and the Director of the Office of Management and Budget in cooperation with the Comptroller General, shall develop, establish, and maintain standard classifications of programs, activities, receipts, and expenditures of Federal agencies in order "(1) to meet the needs of the various branches of the Government; and "(2) to facilitate the development, establishment, and maintenance of the data processing system under section 201 through the utilization of modern automatic data processing techniques. The initial classifications under this subsection shall be established on or before December 31, 1971. "(b) The Secretary of the Treasury and the Director of the Office of Management and Budget shall submit a report to the Senate and the House of Representatives on or before September 1 of each year. commencing with 1971, with respect to the performance during the preceding fiscal year of the functions and duties imposed on them by section 201 and subsection (a) of this section. The reports made under this subsection in 1971 and 1972 shall set forth the progress achieved in the development of classifications under subsection (a) of this section. The reports made in years thereafter shall include information with respect to changes in, and additions to, classifications previously established. Each such report shall include such comments of the Comptroller General as he deems necessary or advisable. "AVAILABILITY TO CONGRESS OF BUDGETARY, FISCAL, AND RELATED DATA "SEC. 203. Upon request of any committee of either House, or of any joint committee of the two Houses, the Secretary of the Treasury and the Director of the Office of Management and Budget shall "(1) furnish to such committee or joint committee information as to the location and nature of data available in the various Federal agencies with respect to programs, activities, receipts, and expenditures of such agencies; and "(2) to the extent feasible, prepare for such committee or joint committee summary tables of such data." PRIOR LEGISLATION Budget and Accounting Act of 1921, Legislative Reorganization Act of 1946, Budget and Accounting Procedures Act of 1950, 1956 Amendment to the Budget, and Accounting Procedures Act of 1950. Note. The prior legislation stressed the responsibilities of each executive agency to develop their accounting and budgetary systems, including proper internal controls, adequate financial disclosure, and improvements in auditing and procedures. The Legislative Reorganization Act of 1970, for the first time in law, stressed the importance of Government-wide classifications and standard data systems. The purposes being (1) to facilitate the consolidation of financial data from multiple sources in the executive branch; (2) to provide more meaningful summary data to Congress, including comparisons of like activities in different executive agencies; (3) more timely reporting; and (4) to facilitate the use of modern data processing techniques. WHAT HAS OMB/TREASURY DONE SINCE ENACTMENT OF THE LEGISLATIVE REORGANIZATION ACT OF 1970? On Classifications • Standardized codes used for fund accounting by OBM and Treasury. • Proposed standard codes for organizations at the first two levels. -Department or agency. -Principal component. • Began initial work on a "program classification structure" to improve budget presentations in terms of objectives and purposes (recognized to be a very major undertaking, didn't get resources, not active). Other • Expanded the catalog of Federal Domestic Assistance to over 1,000 items and increased the amount of information on each program. This catalog is very useful to potential beneficiaries. • Produced summary information on 42,000 grants reported under provisions of the Intergovernmental Cooperation Act of 1968. These are made available to all states. • Instituted performance management systems in four program areas narcotic supply, narcotic demand, corrections and minority business enterprise. These involve 14 agencies. Implementation in an additional six program areas involving 16 agencies is underway. JOINT COMMITTEE ON CONGRESSIONAL OPERATIONS-HEARINGS, REPORT AND RECOMMENDATIONS In 1972, the Joint Committee reviewed the progress in implementing the budgetary and fiscal information provisions of the 1970 act. Hearings were held in March and April 1972. The Committee's report of August 15, 1972, contained the following recommendations: SUMMARY OF JOINT COMMITTEE RECOMMENDATIONS To move this project forward in a timely and orderly manner, the Joint Committee recommends the following: • The OMB, which has assumed primary responsibility within the executive, must develop at the earliest possible time an effective plan-not now in evidence-for implementing title II and incorporating congressional requirements. Such planning should include a firm schedule for major elements of the work involved as well as a realistic budget request for the technical and management staff needed by OMB, the Treasury Department and other executive agencies for its timely and successful completion. (For details, see pp. 15-17; and 19-20.) • The Congress should specifically require the OMB and the Treasury Department, in cooperation with the Comptroller General, to develop, establish, and maintain an up-to-date inventory of executive branch fiscal, budgetary, and program-related information and data sources. As the agent of Congress, the Comptroller General should be directed: (1) to review this inventory on a continuing basis and determine whether it is satisfying congressional needs and requirements; and (2) to provide assistance, upon request, to committees and Members of Congress in assessing the sources identified in the inventory and in appraising an analyzing information obtained from them. (For details, see pp. 17-18.) To insure that congresional needs already identified in our hearings and supplementary studies are accommodated, we also recommend the following: • The OMB should be required to notify the Congress immediately whenever any Executive action effectively precludes the obligation or expenditure of appropriated funds and significantly affects the operation of a legislatively prescribed program or activity. Further, this Office should be required to provide to Congress regular summaries of these so-called impoundment actions, including the amounts and programs, projects, or activities affected. (For details, see pp. 18-19). The OMB should be required to bring the Federal Domestic Assistance Catalog up to date for publication on a regular, twice yearly schedule. Moreover, the Office should be required to maintain the catalog in machine readable form, continuously updated to include current Our purpose in making these recommendations is the same as the general intent of title II. We are not seeking to strengthen either the Congress or the Executive at the expense of the other. Our purpose is to overhaul and supplement existing fiscal, budgetary, accounting, and managment information systems to better serve the needs of both branches. What we expect is a parallel development, to make more meaningful information more readily available to Congress and to other users throughout the Federal establishment. OMB and Treasury Report, September 1, 1972, states: (1) Proceeding with basic improvements "Required largely to meet executive branch needs." (2) Substantial additional resources would be required to meet needs of the Congress. (3) No further resources will be applied until agreement is reached on congressional requirements. WHAT HAS GAO DONE THUS FAR? • Surveyed 258 people representing: 44 Committees 69 Members • Issued report describing general needs of Congress, November 10, 1972. • Now in process of determining specific needs of committees. Participated on Steering Committee established by OMB/Treasury. (Future Uncertain) WHAT DOES CONGRESS SAY IT NEEDS? Easily Obtained Financial Data On: • Federal Programs and projects: Basic financial information, such as budget requests, authorizations, appropriations, obligations, expenditures, and information essential to the assessment of results and impacts. • Federal Fiscal Policies : Socioeconomic information and national estimates, such as gross national product, consumer income, and cost-of-living indices; Federal subsidy programs; tax expenditures; foreign currency holdings; and other information indicating impact. • Federal Financial Actions Affecting States and Political Subdivisions: Information on revenues, outlays, domestic assistance programs, and other information essential to the assessment of results and impact related to States and their political subdivisions. MEANINGFUL SUMMARIES OF THE ABOVE FOR VARIOUS -Authorizing and appropriating legislation and responsible co gressional committees -Responsible Federal Government organizations -Federal programs and project objectives or subject areas -Rural and urban areas -Target groups WHAT INFORMATION DOES CONGRESS Now RECEIVE? • President's Budget Budget Appendix Special Analyses (19) Agency Justification of Budget • Agency Testimony on Budget "Scorekeeping" Report prepared by the Joint Committee Reduction of Federal Expenditures • Monthly and Annual Report of Receipts and Expenditur by the Department of Treasury • Annual Report of Federal outlays by State (OEO compi from agency reports) Catalog of Domestic Assistance Programs Updated Ser annually Plus-750 individually required recurring reports PROBLEMS • Lack of adequate information about programs. • Lack of standard definitions and terms. CONCLUSIONS The problem of meeting the needs of Congress is.... • But the fact that data is scattered in many different docume and files, fragmented, difficult to aggregate in consistent f mats, and • Committees often cannot go to any one source to obtain inf mation which cuts cross agency lines. SUBJECTS FOR FURTHER DISCUSSION BY THE PRINCIPALS • Scope of the undertaking • Resource commitments |