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made. Since the enactment of the Federal law, payments of the amounts due may be made promptly, and the splitting of charges can be accomplished subsequently.

I should emphasize that the law does not permit the appropriations as finally adjusted to be charged or used for any purpose for which the funds are not otherwise available. The law merely makes it possible to account temporarily for the costs of common items or services until such time as the costs can be allocated to the appropriation actually benefited.

Public Law 89–473 is applicable to any executive department or independent establishment. Its principles could be equally suitable for the municipal government of the District of Columbia, although we defer to the views of the District of Columbia concerning the need therefor. We have no objection to the enactment of H.R. 8712.

Mr. RANDALL. If there are no further questions we will move on then to Mr. Moore.

Mr. TILLER. Thank you, sir.
Mr. RANDALL. Thank you.

Mr. John W. Moore, Assistant General Counsel of GAO; and he is accompanied by Mr. Willard Russ, Assistant Director of the Civil Division. You have a prepared statement, Mr. Moore, if you will proceed.



Mr. MOORE. Thank you, Mr. Chairman.

We appreciate the opportunity to appear before your subcommittee in connection with H.R. 8712.

H.R. 8712 would extend the authority of all executive departments and agencies of the Federal Government under Public Law 89-473 to the municipal government of the District of Columbia. It would permit any appropriation available to the District of Columbia to be used for initially financing, within the limitations applicable thereto, the procurement of materials and services or financing other costs, for which funds are likewise available in other appropriations of the District of Columbia. The costs would be adjusted to the benefiting appropriations during, or as of the close of, the fiscal year.

Under existing law, appropriations are available to the District of Columbia only for the specific purposes for which they are made and no others, and such appropriations are required to be designated on the relevant documents prior to the time that the expenditure check is drawn. It thus is necessary in some situations that the charges be split in an appropriate manner among two or more different appropriations prior to payment. It is not always feasible to make the necessary accounting distributions with accuracy at the time the expenditure checks are drawn. The distribution can be made without too much difficulty a short time later.

The District government already has authority for one department, office, or agency to place orders with any other department, office, or agency of the District for materials, supplies, equipment, work or services and to advance funds to, or to reimburse, the performing agency there for on an actual cost basis. We believe that the authority proposed in H.R. 8712 could provide for more economical and efficient operations. It could facilitate the accounting and payrolling for common service types of activities such as supply inventories, technical services, and joint use of automatic data processing equipment. It could promote economies through permitting the establishment of joint service activities rather than having duplicate activities maintained by several offices in the District of Columbia.

I would like to emphasize that H.R. 8712 will not permit the appropriations as finally adjusted to be charged or used for any purpose for which they are not otherwise available. It does not authorize the establishment of any new fund accounts nor the transfer of funds from one appropriation account to another. The bill merely provides an accounting expediency to account for the cost of common items or services until such time within the same fiscal year as the costs can be properly allocated to the appropriation actually benefited.

Mr. RANDALL. Thank you very much, Mr. Moore.
Mr. Russ, do you have any comment!
Mr. Russ. No, sir, not beyond what Mr. Moore has made.

Mr. RANDALL. Well, I believe, Mr. Moore, you have answered the questions raised just a moment ago, and not only have you answered the questions so far as attempting to pervert in any way the appropriation process, but you have also been very illuminating in the last part of your testimony—not only must the funds be appropriated, but for that fiscal year. In other words, you couldn't borrow from a future fiscal year and there couldn't be any transference of funds between fiscal years. In other words, an appropriation must exist between the joint uses and must be for that fiscal year. Is that what you told us?

Mr. MOORE. That is correct. The existing public law for Federal agencies specifically says for which funds are available both in the financing appropriation to be charged and in the appropriation so benefited. The law requires the appropriations to be made, they have to be available for the same purposes at the time that the payment is made.

Mr. WYDLER. I have no question other than to say in your judgment then the Federal Government has received benefit by the enactment of the public law in this case?

Mr. MOORE. Yes, we have no reason to believe they haven't. I haven't any specific information on it, frankly. We haven't had any audit reports directed to this particular point.

Mr. WYDLER. I don't vote in favor of bills because they don't have any bad effects. This is not a very good argument really for passage of legislation because we could pass almost anything on that basis. But I mean,


view at all—has GAO ever made any type of study concerning the operation of this particular law?

Mr. MOORE. I don't know of any specific study having been made directed to this particular law. But we certainly concluded at the time the original law was enacted that there was a need for this legislation in the Federal Government, and we concluded that there would be savings.

Mr. WYDLER. You have had no reason to think otherwise since that time?

Mr. MOORE. That is correct.
Mr. WYDLER. Thank you.
Mr. RANDALL, Mr. Collins.
Mr. Collins. No questions.
Mr. RANDALL. Mr. Goldwater.

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Mr. GOLDWATER. Mr. Moore, is it difficult to keep track of these funds that are paid out by one agency or one program and then having them spread out among others later on? Is it difficult to keep track of?

Mr. MOORE. No.

Mr. GOLDWATER. What is the mechanism that is used for keeping track of these funds?

Mr. MOORE. Well, Mr. Russ can probably answer that question better than I can, but there is no question that the distribution has to be documented at the time it is made, and it is part of the accounting records available for audit.

Mr. Russ. It would basically involve some kind of cost allocation method. For example, a payroll could be paid out of one appropriation and spread on generally accepted accounting methods to the various programs and appropriations that benefit. .

Mr. GOLDWATER. So you make a general entry in these otherMr. Russ. That's right.

Mr. GOLDWATER (continuing). Other programs on the books there, saying that is a liability that will be accounted for later. Mr. Russ. That could

be done, yes. Mr. GOLDWATER. What is the mechanism that is used and how do you keep account of these funds?

Mr. Russ. Well, you would take the total, let's say, payroll, for example

Mr. GOLDWATER. Take what?

Mr. Russ. Payroll. You have a payroll operation which maybe involves 1,000 people working on 10 different programs. You could take the total payroll and charge it to one appropriation, and then you would set up your receivable from the other nine appropriations that would reimburse the appropriation for their share of the payroll expense.

Mr. GOLDWATER. And it is normal for the government to balance their books at the end of the year?

Mr. Russ. It certainly is.
Mr. GOLDWATER. Thank you, Mr. Chairman.
Mr. RANDALL. Mrs. Abzug.
Mrs. ABZUG. No, no questions, thank you.
Mr. RANDALL. Mr. Robinson.
Mr. ROBINSON. No questions.

Mr. RANDALL. Well, that is a good illustration that you gave us, Mr. Russ. One thousand people on 10 programs, and you immediately set up your accounts receivable right there.

What do you do about it? Do you send notices to these different departments that they owe so much money?

Mr. Russ. You work it through a transfer document, what they call an appropriation transfer document.

Mr.RANDALL. That is called an appropriation transfer?
Mr. Russ. Right.

Mr. RANDALL. And you are speaking now as a part of GAO and you are speaking from actual experience the way this has operated in the other departments, including Census and some of the others ?

Mr. Russ. Well, yes.
Mr. RANDALL. From your knowledge, your oversight of it?
Mr. Russ. Right. I have seen this at Agriculture, for example.
Mr. RANDALL. And it is pretty widely used at Agriculture?

Mr. Russ. I would believe so. I can't specifically say for certain, but I can think of agencies like the Farmers Home Administration, for example, that operate maybe eight or 10 different loan programs. They have different appropriations for each one of these programs. Each appropriation can be used for administrative expenses. What they would very well do would be pay the administrative expenses out of one appropriation and then allocate the proper cost to each benefiting appropriation and get reimbursed. This would be the typical way I believe it would work.

Mr. RANDALL. Any questions, Mr. Stewart or Mr. Wasserman?
Mr. STEWART. I have no questions. Thank you, Mr. Chairman.
Mr. RANDALL. No further questions. Thank you very much.

That concludes our witness list. And I see no advantage or any reason to call for an executive session, but we will consider the bill at this time. You have heard the witnesses, and it is up to the subcommittee now to report H.R. 8712 or fail to report it, either pass or do not pass it to the full committee.

What is your pleasure?
Mr. WYDLER. I move that we—or it may not be proper for me to


Mr. COLLINS. I yield.

Mr. WYDLER. I will move that we send the bill to the full committee for further action with a recommendation that the bill be passed.

Mr. COLLINS. I second that motion, Mr. Chairman.
Mr. RANDALL. You have heard the motion and the second.
Any discussion?
As many as are in favor of the motion let it be known by saying

[Chorus of “Ayes."]
Mr. RANDALL. Opposed?
[No response.]
Mr. RANDALL. The “Ayes” have it. The bill is reported.
We stand adjourned.
(Whereupon, at 11 a.m., the subcommittee adjourned.)

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