HOUSE OF REPRESENTATIVES, SPECIAL STUDIES SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Hon. WILLIAM L. DAWSON, Chairman, Committee on Government Operations, Washington, D.C. DEAR CHAIRMAN DAWSON: As you know, the Special Studies Subcommittee has been overseeing the submission of agency accounting systems for approval by the Comptroller General. As a result of our last set of hearings, we submitted to the full committee for consideration a report which was approved and submitted to the Speaker of the House on March 5, 1968 (H. Rept. 1159). One of the recommendations in that report was that the Comptroller General issue an annual report to the full committee on the progress and problems he has encountered relating to the improvement of Federal agency accounting systems. The following committee print is the Comptroller General's first annual report to our committee. It is a record of significant progress and, unfortunately, of continuing procrastination-an indication of areas in our Federal Establishment where we have energetic leadership, and where such leadership is plainly lacking. I commend this report to all Members of the Congress. Sincerely yours, (III) JOHN S. MONAGAN, Chairman. COMPTROLLER GENERAL OF THE UNITED STATES, B-115398. Hon. WILLIAM L. DAWSON, Washington, D.C., October 23, 1969. Chairman, Committee on Government Operations, DEAR MR. CHAIRMAN: In view of your committee's past strong support of our efforts to promote better accounting in the Federal Government, I believe you will be interested in the letter on this subject that we recently sent to the heads of Federal departments and agencies. A copy is enclosed. For some time I have been considering changes which would enable us to more effectively perform our functions in this important area. Based on a comprehensive reconsideration of our policies, procedures, and methods of operation, we have decided to limit our formal approval actions in the future to agency statements of principles and standards to govern their accounting systems and the proposed general designs of those systems. In adopting this policy, we will continue to emphasize that it is the responsibility of each executive agency to install and maintain accounting systems in accordance with the principles, standards, and related requirements and the proposed design which we approve. However, we will not undertake to review these systems specifically for the purpose of approving them in operation. Instead, we will conduct reviews of agency accounting systems in operation from time to time, as required by the Budget and Accounting Procedures Act of 1950, and report on our evaluations of those systems to the Congress and to agency heads as appropriate. Our primary objectives in carrying out our accounting responsibilities are stated in the 1950 act and remain basically unchanged. The foregoing change in the manner in which we carry out these responsibilities is intended to provide a more effective method of operation and to result in our making more evaluations of the operation of agency accounting systems and proposing constructive recommendations for strengthening or otherwise improving those systems. I believe that it is very important that we give greater emphasis to this phase of our responsibility. Another reason for this change is that accounting systems for Federal agency operations are seldom static since they must keep abreast of changes in information system concepts, technology, and changes in Federal program operations. To attempt to keep the "approved" status of all systems in operation on a current basis can be an impossible objective. We have concluded that we can accomplish as much, if not more, in the way of promoting needed improvement by (a) continuing to cooperate with the executive agencies in their accounting systems development work, and (b) making periodic reviews of accounting systems or selected segments in operation and preparing evaluation reports, with appropriate recommendations for the use of agency heads and for the information of the Congress. We believe that this rearrangement of our procedures, along with the centralization of our accounting systems responsibilities as described in the enclosed letter, will result in substantial improvement in our operations; will enable us to promote the objectives stated in the Budget and Accounting Procedures Act of 1950, more effectively; and will assure continuing emphasis on this important work throughout the Government. Sincerely yours, B-115398. ELMER B. STAATS, Comptroller General of the United States. COMPTROLLER GENERAL OF THE UNITED STATES, To: Heads of Federal departments and agencies. Subject: General Accounting Office operations with respect to executive agency accounting systems. Under the Budget and Accounting Procedures Act of 1950, each executive agency is responsible for establishing and maintaining adequate systems of accounting and internal control for the programs and activities for which it is responsible. Such systems must be designed to accomplish the objectives set forth in the act and they must conform to the principles, standards, and related requirements prescribed by the Comptroller General of the United States. Under the same act, the General Accounting Office has four functions with respect to accounting in the Federal Government. 1. Prescribing principles and standards and related requirements for accounting to be observed by each executive agency. 2. Cooperating with executive agencies in the development of their accounting systems. 3. Approving executive agency accounting systems when deemed adequate and in conformity with prescribed principles, standards, and related requirements. 4. Reviewing and reporting on agency accounting systems from time to time. The principles and standards of accounting prescribed by the Comptroller General for observance by executive agencies are set forth in title 2 of the General Accounting Office Policy and Procedures Manual for Guidance of Federal Agencies. Other requirements are, stated in titles 4, 5, 6, 7, and 8 of this manual. Title 2, in chapter 3, also sets forth our instructions for the review and approval of agency accounting systems. Under these instructions, Comptroller General approval may be requested in three stages: 1. Principles and standards of accounting to be followed. 2. Design of the accounting system. 3. The accounting system in operation, For some time we have been considering changes which would enable us to more effectively perform our functions in this important area. Based on a comprehensive reconsideration of our policies and practices |