The GAO Review, Fall 1971

Published by the Government Accountability Office on 1971-01-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)


The United States General Accounting Ofice, established in 1921, is an independent, non-
political, nonpartisan audit 0rgan:zation in the legislative branch of the Federal Government.
Directed by the Comptroller General of the United States, it is responsible solely to the
Congress and serves a key role in the Federal system of checks and balances. One of its
major functions is to review the performance of management and recommend improvements
in the operation of the various departments and agencies of the executive branch.

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Contents   The Challenges to Creativity               z&,:J=2<
              ROBERT F . KELLER . . . . . . . . . . . . . . . . . . . . . .     1
           2AO Auditors Help Save a Life
               ROBERT TAYLOR, RONALD FEKETE, ERIC            Pr""
                 AND ANTHONY SALVEMINI . . . . .                          ..    7
           Effective Surveys: Key to Productive Audit;
               DEAN K. CROWTHER AND J. WILLIAM GADSBY             .a/.5&>
           GAO's Role in the C-5A Saga
               ZANE GElER                                                      18
           Using Computer-Aided Techniques in Financial
             Audit Work
               CLARENCE 0. SMITH AND GERALDINE F. JASPER              *7g&i    28
           Reflections on a Congressional Committee
                                      d3 /---J-e
              THEODORE F . ZEUNGES . .( '-2. . . /' . . . . . . .              38
           Dictating-An Important                  and      Underutilized
              Management TooI
               JOHN J . CRONIN, JR,     .....................                  42
           As We Look to Others               ..................               46
           Approval of Department of Commerce Account-
             ing Systems . . . . . . . . . . . . . . . . . . . . . . . .       48
           More on GAO's First 50 Years                .............           51
                  50th Anniversary Activities . . . . . . . . . . .            52
                  Personalities Contributing to the Enact-
                    ment of the Budget and Accounting
                    Act, 1921
                         MARGARET F . MACFARLANE AND JUDITH HATTER             57
                  General Accounting Office Officials-
                    February 15, 1922. . . . . . . . . . . . . . . .           72
                  The First Field Audits
                      J , PHILIP HORAN . . . . .                               74
       Comptroller General McCarl’s Farewell
         Message . . . . . . . . . . . . . . . . . . . . . . .      78
       Capsule History of the Denver Regional
         Off ice
              W . C. EMM . . . . . . . . . . . . . . . . . . . .    80
       The Seattle Regional Office . . . . . . . . . .              82
GAO Honor and Service Awards-1971                         ......    84
National Association of Accountants Conference
  Report . . . . . . . . . . . . . . . . . . . . . . . . . . . .    100
News and Notes           .......................                    104

Hearings and Legislation                r;2/a-3/
                                       ................             109
Automatic Data Processing . . . . . . . . . . . . . . .             112
Systems Ana Iysi s . . . . . . . . . . . . . . . . . . . . . . .    114
GAO Staff Changes . . . . . . . . . . . . . . . . . . . . .         118
Professional Activities . . . . . . . . . . . . . . . . . . .       149
New Staff Members . . . . . . . . . . . . . . . . . . . .           161
Readings of Interest . . . . . . . . . . . . . . . . . . . .        164

           Published quarterly for the professional staffs of the
                      U S General Accounting Office

          The Challenges to Creativity

          The following address was delivered on June 28, 1971, by
          Mr. Keller at the commencement exercises of Benjamin
          Franklin University, Washington, D.C. M r . Keller’s
          address was printed in the Congressional Record for
          July 27, 1971.

   A few days ago at one of our uni-      minutes. This example of modern tech-
versities here in Washington, the         nology and its threat to the environ-
commencement address was given by a       ment is said to be the answer to the
newspaper columnist whose specialty is    developer who has a heavily wooded
humor. I understand his remarks drew      area to clear so that he can build new
a good many laughs. Let me state at       houses. It takes 30- 50- 70 years to
the outset: I am neither a columnist      grow trees, depending on the size and
nor a humorist. You cannot look for-      kind; yet here is a machine that can
ward this evening to a searing com-       make an entire tree disappear in min-
mentary in the guise of humor on          utes. Obviously, a machine of such
those who occupy positions of respon-     devastating power must be used with
sibility in the present administration.   extreme care.
Neither am I a Bob Hope. Some of             Since we, in this country, often seem
you may recall the occasion a few         too ready to poke fun at our leaders
years ago when Hope, speaking to a        and institutions, thereby chipping
graduating class, said: “My advice to     away at the public’s confidence in so-
those of you who are anxious to g o out   ciety, this is another area where ex-
into the world is-reconsidery      and    treme care is always needed. Not that
don’t do it.” But Bob Hope has had a      political and other leaders should be
change of heart. This year in speaking    immune from ribbing and criticism.
at a college graduation he had this       But there is a time and place for every-
 advice: “To you people who are grad-     thing.
 uating-who are about to go out and          I have spent most of my working
 make this a better world-all I can say   life in the Federal service, at the Gen-
 is: HURRY! There is a lot of work to     eral Accounting Office-where          we
 be done.” And there is.                  work closely with the Congress, its
    Not long ago I read in the papers     committees, and Members, year in and
 about a new and big machine that can     year out-and I know how fragile and
 chew up a large tree into chips, from    precious a thing public confidence is.
 trunk to branch tips, in a matter of     Like the trees, it takes generations to


build a viable society. Just because        helped to shape, the events of his life-
someone does not like a particular          time. In a book of reminiscences pub-
administration or a particular public       lished this year called “Pieces of the
figure does not excuse those who-in         Action,” Dr. Bush has something of
that time-worn but apt phrase-seem          importance to say to us here today.
all too ready to throw out the baby            In every civilization, at some time, there
along with the bath water.                  has been confusion, with young men doing
    I came into the job market in th8       foolish things, with the great body of the
1930’s. This was at the bottom of wh,at     public inert or yearning to be led some-
was rightfully called the Great Depres-                        .
                                            where, anywhere. . . Yet always there has
                                            been a small minority, intelligent, compre-
sion. The ratio of unemployed to the        hending the current political system, scorn-
total available work force was far          ing both the flighty radical and the protest-
higher than today’s 6 percent. The eco-     ing reactionary groups. . . . It is this central
nomics of the depression pushed my          core that ruled our last generation, its busi-
                                            ness, its churches, its government. Amid the
generation off the campus and into all
                                            tumult, we have today a group that under-
kinds of experiences, few of our own        stands and that will rule in the next gen-
choosing. Perhaps it was a good thing.      eration. I am not saying that this outstand-
We were forced to learn to swim even        ing group has always ruled us well in the
if the water was frigid.                    past, or will rule as well in the future-I
                                            merely say there is a group that will rule.
    Then along came World War I1 and        We do not need to worry too much about
most of us were directly affected.          the ones that harass us with their insanities;
World War I1 was different from our         as they become older they will be controlled.
involvement in Vietnam. But that is         But we need to think more about the solid,
                                            keen, presently undemonstrative youths who
not the point; the paint is that then, as
                                            will build our system of government and in-
today, forces were at play which drasti-     dustry of the future, and who will build it
 cally altered our personal lives and       not as we dictate, but as we transmit to
 our career aims.                            them, as best we may, the wisdom to do it
    But these events had their plus side.
 They forced us to grow and develop.
We wouldn’t have planned it that way        Looking Ahead to the
 but, given those circumstances, most of    Year 2000
 us managed and emerged the better for
 it all. And rhat is why I do encourage        What kind of a world are you going
 you today to go out into the world         out into? Today’s generation knows a
 with conviction, courage, and with one     lot more about the world than mine
 other quality that is indispensable-as     did when we were where you are now,
 much common sense as you can bring         so I hesitate to answer that question.
 to bear upon your experiences and ad-      Instead I suggest a sort of quantum
 ventures.                                  jump to some 29 years ahead. Why
     I am seconded in these thoughts by     29 years? Because we are that close to
 one of our great scientists, now a sen-    a new century, the year 2000 A.D.
 ior citizen, Dr. Vannevar Bush, who           This gets me to some extent into the
 for 60 years participated in, and          business of making predictions on se-

                                                           CHALLENGES TO CREATIVITY

rious matters. Perhaps you have heard       from S v t a Barbara to Los h g e l e s to
the nuclear physicist’s definition of an    San Diego and the Mexican Border.
optimist-“someone who still believes        The area from Chicago to Pittsburgh
the future is uncertain”?                   and north to include Detroit, Toledo,
    Toward the close of Thomas Jeffer-      Cleveland, Akron, Buffalo, and Roches-
son’s l i f e 4 am going back many gen-     ter will likely contain more than one
 erations now to 1825-about 10 per-         eighth of the US. population.
cent of our people lived in cities and         These three areas will contain nearly
towns. By 1960-some 135 years later         one half of the total U S . population,
--some 70 percent of the population         including the overwhelming majority
 lived on 1 percent of the land-in cities   of the most technologically and scien-
 and towns. The remaining 30 percent        tifically advanced, and the most pros-
 lived on 99 percent of the land. By        perous and creative elements.
 2000 A.D. 90 percent of the American
 people will live in urban areas on less
                                            Increased Productivity and
 than 2 percent of the land (excluding
                                            Some of Its Effects
 the new State of Alaska). Fortunately,
 much of the Nation will still be rela-         Accompanying and contributing to
 tively open area. The chief effect of      the expansion in population and urban-
 these changes will continue to be, as it   ization have been spectacular increases
 is now, the necessity to adjust to mass    in productivity-on the farm and in
 living in large urban areas.               the factory, in transportation and com-
     In 1935 the population of the United   munication, and in health and recrea-
 States was approximately 127 million.      tion. We have contrived to produce the
 Now we are a nation of some 200 mil-       products required to meet the needs of
 lion. In the year 2000-if present          our society through the skillful appli-
  trends continue-we may have a popu-       cation of resources and inventions and
 lation of more than 340 million. The       through the liberal use of the raw ma-
  economic and social consequences of       terials of the world. Today 5 percent
  our population growth will multiply       of our people grow more than enough
  our responsibilities for providing food   food for all the rest.
  and shelter by geometric progression.         Much of the society that we know is
     There will be heavy concentrations     a product of the scientific revolution
  of people on the Atlantic and Pacific     which is in full tide over much of the
  coasts within 50 to 100 miles of the       world: in communications, nuclear
  oceans. The population of the Atlantic    power, medical care, increased produc-
  seaboard today from Boston through         tion of food, and a seemingly limitless
  Washington is upwards of 27 million.       number of additional achievements.
  Bureau of Census projections show an          In the United States the number of
  increase to over 60 million along this     professional manpower made up of sci-
  400-mile strip by 1990. An equally         entists, engineers, and teohnicians is
  massive metropolitan area is foreseen      larger than ever before. In the 1960’s
  for the 200-mile Pacific coast zone        they numbered nearly 2 million; in the


1970’s their number will climb to 4 population accelerates the depletion of
million or more.                          our natural resources and increases the
  But these figures do not tell the pollution of our environment. Re-
whole story. It is, and will be, the role source depletion and pollution, in turn,
of the scientists and engineers to dis- have been important factors in increas-
cover and develop; it is, and will be, ing business costs.
the role of others-no    doubt most of      The most careful planning; the
you in this room-to      understand the highest degree of cooperation between
implications of these developments for business, government, and labor; and
both public and private benefit.          the greatest ingenuity of our scientists
   That is the challenge, as Dr. Jerome and engineers will be necessary to re-
B. Weisner of the Massachusetts Insti- solve these and the many related
tute of Technology has said and I social, environmental, and economic
quote :                                   problems.
   Although most of us appreciate the indi-
vidual creations of science for what they per-
                                                 Defining National Purposes
mit us to do, we do not fully comprehend
the fundamental change that the scientific       and Goals
revolution has brought about. . . . Our only
hope lies in understanding the forces at        Our future will turn on reassessing
work, and then trying to guide the evolu-     and redefining our national priorities.
tionary process more to our liking.           You will live increasingly in an econ-
   In commenting on today’s high omy of priorities and of agonizing
standard of life in the United States choices between public purposes and
and in words sin’plarly appropriate to private preferences. Unless some magic
this occasion, Dr. Weisner has also step is taken to achieve a national con-
said :                                        sensus as to our paramount purposes
                                              and goals the challenge of priorities
   I’m not sure we’re all that much happy for
having this degree of affluence. It may very  will be one of the greater historical
well be that the young will teach us some- tests of our political machinery.
thing about this; it is one of their sermons    We must close the gap between the
to us. There are other things in life.
                                              two cultures, the scientific and the hu-
    If I were asked-what is the central manistic. We can no more leave
aspect of concern today and tomorrow science entirely to the scientists than
-1 would say it is the change in the we can leave government entirely to
scale of movements and the sweep of the politicians. We must comprehend
events. This change of scale goes right the scientific environment. We must
across the board: from the pace of find ways to make science and public
population growth to the increase of policy compatible, not merely as to na-
new inventions and new products to tional purpose, but particu1,arly as to a
communications to weaponry.                   working compatibility.
    Unfortunately, the relentless drive to       How else shall we make a contribu-
 improve our material standard of liv- tion in the fields of weapons control
 ing at a time of rapid growth in our and disarmament? In eliminating envi-

                                                            CHALLENGES TO CREATIVITY

ronmental pollution? In harnessing our       neutral role in American society of
energy sources for both human and            earlier years. It began to grow. Its pol-
industrial needs? In understanding the       icies now began to affect economic,
requirements of education and voca-          social, scientific, and other forces for
tional motivation? In meeting the re-        improvement.
quirements of an exploding population           With World War 11, the discovery
at home and abroad? In providing the         of nuclear fission, and the cold war,
rising nations of the world with gifts       the Federal Government grew even
of technology?                               more rapidly. The policies of the Fed-
   These are the questions that face         eral agencies as they beoame more in-
you now as well as in the next 29            volved with the private sector gave im-
years and probably beyond. But I be-         petus to the accounting profession for
lieve that no problem is more directly       developing higher       standards    of
related to the future of our democratic      accounting, auditing, and reporting,
society than the necessity of attracting     and the development of expertise in
the’best talent available for the public     related fields. Someone said recently :
service. That is where you come in.          “The accountant should bow to Wash-
   While a democratic society’s govern-      ington three times each morning be-
ment is not expected to have a monop         cause its laws and regulations have
oly of the most able people produced         made the profession what it is.” I
by that society, it can ill afford to pro-   don’t buy that completely but it has
vide for the public service an iota less     had its effect.
than its full share of talent. And this         Having become the biggest business
applies to all our governments: Fed-         in the world, the Federal Government
eral, State, and local.                      looks at accounting as a great deal
                                             more than just recordkeeping. Today
Challenges for Accountants                   the needs of the Congress, agency
                                             heads, and the public require that
   High on the list of the requirement       accounting be used not only as a tool
for unusual talent is the accountant. As     for recordkeeping and for the evalua-
some of you may know, my organiza-           tion of recordkeeping, but also as a
tion in government-the          General      tool for management and for the evalu-
Accounting Office-is      observing its      ation of management. Top manage-
50th anniversary this month. The law         ment in the Government, including the
creating GAO came into being June            Congress, had previously emphasized
10, 1921, and GAO opened for busi-           how well the agencies controlled and
ness the following July 1. Between the       spent their appropriations. It is now
time that GAO started and World War          equally, or even more, interested in
11, many circumstances profoundly af-        knowing how efficiently the managers
fected the environment in which the          perform. Are programs achieving their
accounting profession developed. The         objecltives? Are better alternatives
depression of the 1930’s had forced the      available? Because of this emphasis on
Federal Government out of its more           more efficient management and pro-


gram evaluation, staff members of the      of its physical work; in organizations
GAO have increasingly developed their      that now use teams of specialists to
capability in these fields.                measure and evaluate performance in
   I believe that there will be even       rapidly shifting circumstances, it
greater challenges to creativity in the    seems clear that you will be called
future than there have been in the past    upon to be far more innovative and
and that these challenges will include a   far more creative than those who have
need by the accountant for a greatly       come before. It seems clear, in short,
expanded body of knowledge. This will      that the challenges to your creativity
be true for all accountants-those in       will be almost endless.
the Federal Government, in State and          We are standing on the outer edge
local governments, in private industry,    of that new world of auditing. YOU
in public accounting, and in the teach-    will soon be deep within it. Do you
ing profession.                            need any further encouragement from
   The accountant is no longer a book-     me? I don’t think so. I think most of
keeper, a writeup man, or a tax pre-       you are prepared to cope with the un-
parer; he is a professional evaluator of   foreseen and the unforeseeable.
and an adviser to management. As a            I was concerned in preparing for
professional, he must first obtain,        this occasion. I wondered if I could
usually from a formal educational          communicate a message to you. In case
process, a common body of knowledge.       I have not let me try once more. Ap-
You have reached this point. But,          propriate to all I have said-and much
throughout his life, he must-like doc-     more concise-are these words by the
tors, engineers, scientists, and lawyers   writer Elting Morison:
--continually learn and apply new
knowledge as it is discovered.             How to give individual men the evidence
                                           they need to make sensible judgments about
   In a society that is moving more and    the kind of world they want to live in, and
more toward placing human values           How to give them the power to make their
above the physical and material; in a      judgments stick,
profession that increasingly uses auto-    That is the unfinished business of the next
mation and electronics in a great deal     third of a century.


                 GAO Auditors Help Save a Life

                 Sometimes in the course of our work people ask us to help
                 them in ways which may be called above and beyond the
                 line of duty. The following is such a story about four New
                 York Region auditors who helped a 6-year old Cuban
                 refugee get the medical attention needed to save her life.
                 This is a true story. However, names and places have been
                 changed to protect the privacy of a minor.

   In April 1971, we were reviewing                             building new lives for themselves and
the Cuban Refugee Program (CRP)’                                their families in exile. Thus on the
in a small New Jersey city located on                           night of April 27, 1971, with the aid
the crest of the fortress-like rocks of                         of interpreters, we were interviewing
the Palisades. Over the past decade the                         several Cuban refugees at the local
town has become a stronghold of free-                           community action center. At about 9
dom for the Cubans i,n exile.                                   o’clock that night, Mrs. Jose Gomez
   One of the review segments involved                           (as we will refer to her), the young
interviewing Cuban refugees to learn                            mother of a 6-year old girl, said that
the problems they faced in being reset-                         she came to talk to “the men who work
tled and the assistance they needed in                          for Congress.” She said that she had a
  ‘ T h e CRP p r w i d e s needy refugees with s e r v ~ e s
                                                                serious problem and was desperate for
which include cash assistance and welfare services              a solution.
to those in n e e d ; education and health services; and
assistance in planning and urdertakmg resettlement                 Clutching her young daughter in her
opportunities. The program 1s administered by the
                                                                arms, she sobbingly told us that 6
Social and Rehabilitation Service of the Department
of Health, Education. and Welfare.                              months earlier she came to Miami on

    Robert Taylor joined the GAO in 1968. H e received his Bachelor of Arts degree
    from Transylvania College, and his Master of Business Administration degree from
    the University of Kentucky, both with majors in economics.
    Ronald Fekete joined the GAO in August 1970. He received his Bachelor of Arts
    degree from Long Island University where he majored in business administration.
    Eric Krebs joined the GAO in October 1970. H e received his Bachelor of Science
    degree from Union College where he majored in accounting.
    Anthony Saliemini joined GAO in May 1970. He received his Bachelor of Science-
    Business Administration (B.S.B.A. ) degree from Manhattan College where he majored
    in economics.


the Cuban airlift without her husband.        to us for help. We assured her that we
He had been detained in Cuba. At that         would try to help her daughter.
time she and her daughter registered             The next morning, two of us set out
with the Cuban Refugee Program                for city hall, where we asked the may-
which immediately relocated them to a         or’s bilingual secretary to help us
large city on the west coast of the           find out why the girl could not get the
United States near rellatives. She was        proper medical attention. The mayor’s
advised to take her daughter to see a         secretary called city, school, and health
physician for treatment of a heart con-       officials and confirmed the fact that the
dition. West coast physicians told Mrs.       girl had been referred to the medical
Gomez that her daughter’s condition           center. Next, she called the csounty wel-
was serious and required immediate            fare office and found out that under
treatment. However, because the ex-           the Cuban Refugee Program both              ’

citement caused by any recurrence of          mother and child were entitled to the
the recent earthquake could overtax           medical assistance which they had
the girl’s weak heart, the doctors also       been refused. As a bewildered and
advised her to take her daughter out of       frightened refugee who had in a short
the area. Consequently, Mrs. Gomez            time entered and traversed a strange
borrowed money from her relatives so          land, Mrs. Gomez had nolt presented
that she and her daughter could fly to        the medical center with the medical
the east coast.                               card which would have entitled the
   After they arrived there, Mrs.             hospital to reimbursement for the med-
Gomez tried to enroll her daughter in         ical services provided to the child.
a local public school. As a prerequi-             That same morning we went back to
site, the little girl was sent to the local   the community action center and ar-
health clinic for inoculations and a          ranged to have a bilingual social
health examination. The physicians re-        worker accompany Mrs. Gomez, her
fused to inoculate her since this might       daughter, and medical card to the
endanger her heart. They recom-               medical center. We felt that Mrs.
mended that she go to a large, well-          Gomez, who did not speak or under-
known medical center, located in the          stand English, should have an inter-
area, for treatment of the heart condi-       preter accompany her to make sure the
tion.                                         hospital officials fully understood her
   Mrs. Gomez told us that the medical        simtuation. Later that afternoon the
center refused to admit her daughter          three of them went to the medical
because she had no money. Instead,            center which agreed to ad,mit the child
they sent her to another hospital in the       after she was examined by a group of
area with the same result. She was ad-        hospital specialists.
vised to return to the city health clinic        On May 24, 1971, the girl under-
which again sent her to the medical            went a successful open heart operation
center which still refused to admit the       and is now on the mend.
child. Finally, in desperation, she came          We consider our review a success.


            Effective Surveys:
            Key to Productive Audits

            Preliminary survey work is a vital phase of all GAO audit
            work. This article presents a step b y step description of
            the survey phase of a review of a complex scientific research
            program of the Atomic Energy Commission.

   A large pavt of the work of the Gen-        committee, the Joint Committee on
eral Accounting Office oansists of mak-        Atomic Energy. The pressures of con-
ing reviews of the programs of Federal         gressional requests with tight dead-
agencies. Whether initiated by GAO or          lines, together with dealing with a
the Congress, such reviews often in-           highly technical and scientific subject
clude evaluations of the effectiveness         matter managed by competent manag-
of management in administering rather          ers in both fin.ancial and scientific
complex programs that are difficult to         fields, creates, in part, an illustration
assess or measure in terms of end re-          of the challenge of such an assignment.
sults.                                            AEC program manzgement has re-
   The GAO staff assigned to the audit         sponsibility for administering and con-
of activities of the Atomic Energy             trolling about $2.5 billion of public
Commission (AEC) , Germantown,                 funds each year. The programs are di-
Md., enjoy a somewhat unusual chal-            verse and involve both the military
lenge in an area with diversified and          and civilian sides of the Government.
complex work assigniments. They also           The programs also involve research
enjoy a rather close working relation-         and production activities carried out
ship with the congressional oversight          in-house and under contract. Such a

   Mr. Crowther is an associate director of the Civil Division responsible for the coordi-
   nation of health reviews performed by GAO. He joined GAO in 1955 and holds
   B.C.S. and M.C.S. degrees from Benjamin Franklin University. He is a CPA (District
   of Columbia).
  Mr. Gadsby is a supervisory auditor in the Civil Division and is currently assigned to
  the House Committee on Interstate and Foreign Commerce. He joined GAO in July
  1963 after graduation from the University of Rhode Island.
  Both Messrs. Gadsby and Gowther were assigned to the review of AEC operations
  prior to their current assignments.


challenge requires the development of         The Biology and
creative new ideas and audit tech-            Medicine Review at AEC
                                                 On April 16, 1969, the Comptroller
  This case history was prepared in           General issued a report to the Joint
full recogni,tion of the value of a sur-      Committee on Atomic Energy entitled
vey and the inherent requirements for         “Administration and Management of
per,forming it well so that the results       the Biology and Medicine Research
will provide a basis for sound judg-          Program” by the Atomic Energy Com-
ments of areas to be reviewed. While          mission. The review was carried out at
this survey has certain unique features       six AEC contractor-operated laborato-
                                              ries and included an examination of
regarding subject matter, timing, and
                                              several broad activities related to the
organizational relationships with AEC         conduct of the program. An extensive
and the Joint Committee, it probably          amount of ooordination was required
has all the salient features needed to         to insure that similar information was
demonstrate a successful survey.               developed at all locations.

                                                                                   AEC Photo

 Staff members of AEC‘s ultrastructural anatomy laboratory, operated by Oak Ridge Associated
 Universities, Inc., study an electron microscope autoradiograph for human body tumors.

                                      EFFECTIVE SURVEYS: KEY TO PRODUCTIVE AUDITS

   A discussion follows of the team ef-    would enable them to make a judg-
fort of the GAO staff at the AEC audit     ment regarding the adequacy of the
site and members of the GAO regional       program's management and provide a
office staffs from Chicago, Cincinnati,    basis for determining to what extent
Los Angeles, New York, and San Fran-       the program should be examined dur-
cisco.                                     ing the authorization hearings.
                                              Obviously the time available for per-
                                           forming the review and preparing the
Initiating the Survey
                                           report was limited in comparison to
   The AEC has broad and diversified       the amount of work involved. There-
responsibility which places a heavy        fore, we immediately established some
burden upon the Joint Committee in         milestone dates to give us an indica-
its congressional oversight role. Conse-   tion of how much time could be made
quently, with limited time each year       available for the different phases of the
for program reviews during authoriza-      work. During the first month and a
tion hearings, the Joint Committee         half, from June 15 to August 1, 1968,
holds hearings only on selected pro-       the Washington staff was to (1) per-
grams of importance during a given         form survey work at AEC Headquar-
year.                                      ters to establish its role in managing
   During a meeting with the staff of      the program and (2) determine at one
the Joint Committee on Atomic Energy       contractor-operated laboratory how the
on May 28, 1968, John T. Conway, the       program was being managed at that
staff director, asked GAO to review the    level. Also, survey work was to be
overall management of AEjC's biology       performed at the National Institutes of
and medicine research program, in-         Health and the National Science Foun-
cluding the coordination with other        dation to establish how their biology
Government agencies supporting simi-       and medicine programs related to
lar research. Mr. Conway indicated         AEC's program.
that he would like a report for use           The next 31/2 months, from August
during the hearings planned in connec-      1 to November 15, would be devoted
tion with the authorization of AEC's       to conducting the necessary field work
fiscal year 1970 budget to be held         to complete both the survey and the
early in calendar year 1969.               detailed review phases of our work.
   The Joint Committee had been con-       The decision was made that the survey
cerned about the biology and medicine      should be comprehensive, but that it
program since its budget had been in-      had to be completed in September. Im-
creasing for the past several years and    mediately fol1,owing completion of the
the fiscal year 1969 level was about       survey, a meeting would be held dur-
$90 million. Also, the Joint Committee     ing the first week of Octaber between
had been concerned about certain as-       the Washington staff and the field su-
pects of the program's management.         pervisors from the participating re-
   Our job was to provide the Joint        gional offices to discuss and evaluate
Committee with the information which       the survey and determine the areas to


be included in the detailed review. On mation to enable us to prepare mean-
June 13 a letter was sent to the manag- ingful survey guidelines.
ers of the participating regional offices   We learned that the AEC biology
informing them of our plans.              and medicine program is very compre-
   From June 15 through July 20 the hensive and includes both basic and
biology and medicine program yas applied research, primarily in the
surveyed at AEC Headquarters. The areas of the effects of radiation on
Washington staff met with officials re- man and his environment. Generally,
sponsible for the various aspects of the each laboratory has one or more radia-
program and discussed the organiza- tion sources, considerable equipment,
tion as well as the specific policies and and many animals raised under con-
procedures used to manage the pro- trolled conditions for use in perform-
gram. We also met with representa- ing experiments.
tives of the National Institutes of         Early in the survey, we recognized
Health and the National Science Foun- the challenge and the complexity of
dation to discuss the nature of their reviewing the organization and man-
programs and the coordination which agement of suah a scientific program,
existed between them and the AEC. and therefore, it was necessary to es-
Also, we viewed a number of AEC tablish survey objectives and parame-
films which showed highlights of the ters before initiating the field survey.
biology and medicine program at sev-        On August 1, Dean Crowther, the
eral laboratories. This provided famil- assistant director, advised the partici-
iarity with the types of facilities used pating regional offices that we had
in the program and the terminology completed the survey at Headquarters
used by the scientists.                   and preliminary guidelines would be
   At the end of this 5-week period, we sent out shortly to assist the regional
had a good understanding of the man- office staffs in initiating their part of
ner in which the program was admin- the survey. Also, he discussed the
istered from the AEC Headquarters problems which might be encountered
level and how it was coordinated with as a result of the limited time available
similar programs of other Government and indicated that the final survey
agencies.                                 guidelines would be sent out as soon as
   Argonne National Laboratory, lo- they were completed.
cated near Chicago, Ill., was selected        One of the problems encountered in
as the site for the laboratory phase of    the early stages of the survey was that
our survey. From July 22-26, the           each laboratory was organized and
Washington staff together with the         managed differently. Some laboratories
Chicago Regional Office staff discussed    had structured organizations while oth-
the management of the biology and          ers were quite unstructured. Although
medicine program with various labora-      the stated lines of responsibility in
tory officials. At the conclusion of the   structured organizations were clear, we
laboratory phase, we had gathered a        soon found that scientists tend to oper-
sufficient amount of background infor-     ate independently of the formal organ-

                                          EFFECTIVE SURVEYS: KEY TO PRODUCTIVE AUDITS

ization to a large extent, particularly        guidelines were sent to the participat-
in those cases where there was an emi-         ing region'al offices. The accompanying
nent scientist at a laboratory.                transmittal letter indicated when the
   The absence of actual authority             Washington staff would make its first
within the organization and manage-            site visit and stressed that as much
ment structure seemed to exist to the          work as possible should be done in
greatest extent in the areas where there       each survey area prior to that date. It
was a predominance of basic research.          also indicated that a meeting would be
   Recognition of these kinds of prob-         held in Washington during the first
lems was helpful in understanding the          week of October for the staffs of the
need for close communication with re-          participating regional offices to discuss
gional offices performing the work in          the progress of the survey and to de-
order to obtain uniformity in a review         termine which survey areas should be
of such diverse organizations and man-         examined during the detailed review.
agement.                                          Separate guidelines were also pre-
   On August 22, the final survey              pared for use in performing further

                                                                                    AEC Photo

In Brookhaven National Laboratory's plant radiobiology laboratory the egects of varying doses
of radiation on plant materials are studied both on the macroscopic and microscopic scales.
Such studies can lead to an increase o f our knowledge of plant genetics and the mechanisms
of mutation production.


survey work at AEC Headquarters, the         munications and high motivation are
National Institutes of Health, and the       always a challenge to be mastered in
National Science Foundation.                 order to get the most out of a job.
   With the preparation of the survey
guidelines, we believed that we had
laid the groundwork for a successful         Terminating the Survey
                                               The Washington staff contacted the
                                             regional office staffs during September
Conducting the Survey                        2&26 and made a deter'mination as to
                                             how much progress had been made in
   From September 4-25, representa-          covering each of the survey areas.
tives of the Washington staff visited        Considering the time restrictions, it
each audit site to discuss the survey        was decided that sufficient work had
guidelines, review the progress of the       been performed to permit an adequate
work, and reaoh agreement on the             evaluation of each survey area re-
objectives and approach for the work         quested by the Joint Committee.
to be performed before the October              On September 27, we discussed the
                                             progress of the survey and our planned
   Throughout the conducting phase of        approach to the detailed review with
the survey, detailed progress reports        the staff of the Joint Committee. The
were received and frequent telephone         committee staff made several sugges-
conversations were held with repre-          tions concerning the areas to be inves-
sentatives of each field staff to resolve    tigated which we incorporated into our
minor problems and provide the neces-        guidelines. Agreements with congres-
sary coordination to insure that the         sional committees aTe often compro-
various staffs were approaching each         mises in terms of both scope of work
 survey area on a consistent basis.          and the time to be devoted to the job
    Site visits together with the detailed   since it is impossible to review a broad
progress reports and telephone con-          area in detail in a short period of time
tacts provided excellent mechanisms          as is quite often requested.
 for controlling and coordinating the
                                                We informed the committee staff of
survey so that all the objectives could
                                             the planned meeting with our regional
be accomplished.
   Of all the factors which influenced       office staffs and invited them to speak
 the survey the one which greatly en-        to the group. We indicated that this
 hanced its conduct was the close per-       would give our staff better insight into
 sonal working relationship with the         the committee's specific interests and
 various audit groups working at each        the personal contact would provide ad-
 location which resulted in motivation       ditional motivation in performing the
 and interest on the part of all partici-    review. The staff members accepted
 pants. We were fortunate in having          our invitation.
 good staff, but in any complex review          After our discussions with the re-
 carried out in several locations, com-      gional office staffs and the staff of the

                                      EFFECTIVE SURVEYS: KEY T O PRODUCTIVE AUDITS

Joint Committee, we were ready to              "he regional office staff heard pres-
evaluate our survey work.                   entations from and had discussions
                                            with Dr. Spofford G.*English, AEC's
                                            assistant general manager for research
Evaluating the Survey                       and development, and representatives
                                            from the Division of Biology and Med-
   From October 1 4 we met with rep-
                                            icine. AEC's controllm, John P. Abba-
resentatives of each participating re-
gional office. Because of the time limi-    dessa, also presented information re-
tations confronting us, we did not ask      garding budgeting $or various pro-
                                            grams and activities.
the regional office staffs to prepare a
 survey report or summary to serve as          As indicated earlier, the regional
a basis for discussion. In situations       office staffs had discussions with Wil-
where time permits, however, such a         liam T. England, staff counsel, and
document could serve as an effective        John B. Radcliffe, technical consultant,
basis for discussion.                       to the Joint Committee regarding their
    During the meeting we discussed         opinions on prolblms in the biology
 and evaluated each survey area by           and medicine program and the role of
having the responsible regional office      the committee in overseeing the pro-
staff member present the results of his     gram.
work and give his evaluation of its            The discussions with both the AEC
potential for detailed review. The ques-    and Joint Committee representatives
tions raised and the observations made      provided positive motivation for all
by each regional office staff member,       staff members attending the meeting
based on his own experiences, gener-        since it enabled them to obtain a first-
ated considerable discussion and con-       hand impression of the manner in
tributed significantly to a better under-   which the program was managed from
standing of each survey area. The dis-      AEC Headquarters and evaluated by
cussions also provided insight into         the Joint Committee.
many of the problems that might be             By October 4, decisions had been
encountered during the detailed review      made regarding the areas to be cov-
and enabled u s to discard inappro-         ered during the detailed review, the
priate audit approaches.                    objectives of the work in each area
   After the discussion of each survey      and the approach to be taken to
area, we jointly established our objec-     amomplish these Objectives. At the
tives for the detailed review and devel-    conclusion of the meeting the regional
oped a detailed audit program to            offices were provided with copies of
accomplish these objectives. Also, we       the detailed audit guidelines developed
sh,owed several AEC films pertaining        during the meeting with the under-
to the conduct of its biology and medi-     standing that the finalized guidelines
cine program at several laboratories so     would fallow soon after.
that the regional office staffs could          The desirability of such a confer-
become familiar with the programs at        ence under the cirmmstances cannot
different locations.                        be emphasized too strongly. If prop-


erly planned and executed such a meet-     Congressman Chet Holifield of Califor-
ing will assist in molding the group       nia, discussed several of the matters
into a team with uniform objectives. It    presented in the report with AEC
serves to motivate each staff member       officials. Also, he stated that because of
to think creatively and use his own        the importance he attached to the re-
initiative to a greater degree. Also, it   port, he had written to the Chairman
provides for a mutual understanding        of the AEC and asked him to give
of the nature of the job, a personal       personal attention to the matters dis-
acquaintance and identification with       cussed in the report.
the staff of the cognizant congressional      Since the report was published, AEC
committee, and exposure to the agency      has implemented our recommendations
program managers.                          which were directed toward areas such
                                           as irnpmving the system for establish-
Subsequent Events                          ing priorities for the seleotion of spe-
                                           cific research projects. In a letter to
   Subsequently, all areas agreed upon     the Joint Committee dated March 2,
during the October meeting were ex-        1971, AEC indicated that the GAO rec-
amined during a very detailed and          ommendations had served to focus in-
elaborate review which resulted in a       creased emphasis on areas impontant
report to the Joint 'Committee on          to the management of the program,
Atomic Energy on April 16, 1969. Be-       and the cooperative efforts of AEC and
cause we believed that the report          laboratory management in implement-
would be of general interest, we re-       ing these recommendations should re-
quested and obtained permission of the     sult in improved management.
committee to distribute the report to         Whether our work and the agency's
the Congress as a whole and the gen-       actions that follow to improve the
eral public.                               management of a program can be
   Many ,of the areas discussed in the     properly considered a success is a mat-
report were used by the Joint Commit-      ter of judgment. However, the basic
tee as a basis for questioning officials   issue here is that any success in terms
of AEC's Division of Biology and           of reporting or achieving corrective
Medicine during bhe hearings on            action in a complicated research area
AEC's budget request for fiscal year       is attributable in a large part to the
1970, which were held in April 1969.       effective management and timely com-
   The chairman of the committee,          pletion of a survey.

Often cited, by auditors anyway, is the identity of two of the worlds biggest liars. One is the
auditor who upon arrival informs a management oficial that he is there to help him. T h e
other is the same management oficial who responds that he is glad to see the auditor.
I n this drawing, staff members Marvin Doyal and Mark AbJes of the Dallas Regional Ofice
depict their version of a Federal agency oficial’s v i m of the GAO auditor who has just
arrived and advised that he is there to help him.


           GAO’s Role in ttie C-5A Saga

           The following paper discusses the origin of GAO’s present
           reviews of major weapons acquisitions and summarizes the
           results uf several major reviews of the controversial C-5A
           aircraft program.

   The acquisition of weapons for mili-      congressional hearings by the Subcom-
tary forces is one of the most complex       mittee on Economy in Government of
technical-eoonomic-political processes       the Joint Economic Committee, under
ever evolved. The sheer size and com-        the chairmanship of Senator William
plexity of the system boggles the mind.      Proxmire of Wisconsin, focused atten-
Changes and refinements have been            tion on a large cost overrun in the
going on since the Continental Con-          C-5A aircraft program and on cost
gress first provided money to buy ri-        overruns in all weapon systems. These
fles for Washington’s troo,ps. But           hearings and others like them received
recent economic and political pressures      a great deal of public attention and
have increased national interest in the      quickened the interest of the Congress
defense acquisitlon process.                 in dealing more effectively with rising
   At the behest of the Congress, GAO        expenditures for weapon systems pro-
has embarked on a program to better          curement because they represent such
identify and report problems in the          a large chunk of the national budget.
acquisition process and to recommend            The problems of the new C-5A
improvements. In so doing, reviews           cargo plane and its cost history were
are being made of a host of major            well publicized in the news media. The
weapons acquisitions, including the          giant transport became a cause celebre
controversial C-5A aircraft.                 for congressional and public critics.
                                             The cost of the program was expected
The Year of the Cost Overrun                 to overrun the original estimate by
                                             more than $1 billion; prominent De-
  In the first half of 1969 a series of      fense    Department officials were

  Mr. Geier is an audit manager in the Atlanta Regional Officet. He has been with GAO
  20 years and has served in Europe and South America as well as in Atlanta. Mr.
  Geier was educated at the University of Alabama, Georgia State University, and
  Harvard University. He is a member of the Federal Government Accountants Associa-
  tion, the American Society for Public Administration, and the National Contract
  Management Association.
                                                       GAO’S ROLE IN THE C S A SAGA

accused of suppressing information port to be made periodically to the
about the C-5A cost overrun; and the Congress. The report would include in-
main contract was found to have a re- formation such as estimated and actual
pricing clause providing a “reverse in- costs, underruns and overruns, deliv-
centive” for cost reduction in certain ery data, progress payments, perfom-
circumstances.                           ance standards, and impact of contract
   This case had considerable impact changes. The committee went even fur-
on the rising demand for more and ther and recommended that GAO ex-
better information on defense procure- plore the feasifbility of making its own
ment for all Members of the Congress independent estimates of what contrac-
as well as the public. Congressional tors’ costs should be.
committees and individual Members          The Comptroller General’s response
asked GAO to do more checking and was to advise the chairmen of the
reporting on costs and performance of Committees on Armed Services and the
defense weapon systems, particularly Joint Economic Committee that GAO
the C-5A.                                would increase its review of defense
   In June 1969 GAO reported to cer- procurement by adding more employ-
tain key congressional committees on ees in this area. A major new operat-
the causes of cost increases in the ing group within the GAO was cre-
C-5A. GAO found that a major rede- ated to review major weapon systems
sign effort to control weight, reduce acquisitions. It is headed by a senior
drag, and beef up the wing had im- associa,te director within the Defense
pacted heavily on all elements of cost; Division and is staffed by some of
the initial cost estimates were overly GAO’s best, most experienced men.
optimistic; and inflation in the aero-     The Comptroller General established
space industry, due largely to the back- three objectives for the new group:
log of orders created by the war in
Southeast Asia, increased costs across     -Furnish        data on individual
the board. GAO noted that Air Force           w-eapon    systems   to the Congress
studies as early as May 1968 showed            that will  be  useful in its authori-
that C-5A contract costs at completion        zation   and    appropriation    proc-
would be in excess of ceiling prices.         esses.
    Later, in May 1969, Air Force stud-     -Provide an annual report on the
ies showed that Lockheed would incur          status of major acquisitions.
a loss of about $285 million on the        -Evaluate     the fundamental manage-
program but Lockheed estimated its             ment  concepts   and processes used
loss to be only $13 million.                  by  DOD     in determining   the need
                                              for and in acquiring major
                                               weapon systems.
 New Role for the GAO
                                            GAO’s first report, a summary and
   The Joint Economic Committee rec- 10 supplements with classified infor-
 ommended that GAO develop a mation on specific systems, was issued
 weapon systems acquisition status re- in February 1970. Essentially, it was a


status report as of June 30, 1969, on      formance. We also reviewed some of
over 50 weapon systems and was based       the key decisions made by the system
mainly on the selected acquisition re-     managers and tested the quality of the
porting system of the Department of        data on which these decisions were
Defense. It showed that cost growth        based.
had occurred on most systems-aver-           The production phase of the C-5A
aging about 50 percent higher than         acquisition cycle started in December
original planning estimates; perform-      1969. General Electric Company builds
ance objectives were not being attained    the engines and Lockheed builds the
on a large number of the systems;          airframe and produces the integrated
and, schedule slippages of from 6          system, including support and spare
months to 3 years were being experi-       parts.
enced on many systems. This work
                                              Generally, we found that the C-5A
paved the way for a more penetrating       has experienced shortfalls in all three
review of the underlying causes of         principal indicators-cost,    schedule,
these conditions and a look at the
                                           and performance-mostly       on Lock-
acquisition process employed at all lev-
                                           heed's part of the program.
els of the Department of Defense.
                                              Cost-wise, the original Air Force es-
                                           timate in 1964 for 120 planes and
The C-5A Acquisition Process               spare parts, the one used to sell the
                                           program to the Congress during the
   In 1970 we examined into how well       concept formulation phase, was $3.4
the system managers on the C-SA had        billion. At June 30, 1970, 6 years later,
complied with the Department's cri-        the Air Force estimated the C-5A sys-
teria in advancing the system from one     tem to cost $4.6 billion, but for only
phase to another. The Department has       81 planes. Thirty-nine planes were cut
prescribed criteria that should be met     from the program as an eoonomy
before a system is allowed to proceed      measure. More significant is the differ-
from concept formulation to valida-        ence between the 1965 estimate of
tion, or from development into produc-     $31.8 million a plane and the Fe'bru-
tion and so on. The five phases are:       ary 1971 estimate of $61 million a
  --Concept formulation.                   plane.
  -Validation and ratification.               Schedule-wise, the C-SA has not met
  -Development .                           certain key milestones. For example,
  -Production.                             the first operational aircraft was to
  -Deplo p e n t .                         have been delivered in June 1969; it
  We identified some of the major          was actually delivered in December
problems that had occurred at various      1969. The last production aircraft, No.
phases of the C-5A life cycle and ex-      120, was to have been delivered in
amined into their causes. These prob-      April 1972; now the last production
lems were also analyzed in terms of        aircraft, No. 81, is expected to be de-
their effect on cost, schedule, and per-   livered in February 1973. The testing

                                                       GAO’S ROLE   IN   THE C-5A SAGA

program is far behind schedule. Two            cost-type with extraordinary finan-
aircraft have been lost due to fire.           cia1 relief.
   Performance-wise, the C 5 A has            The big decision during the contract
fared somewhat better. Speed, engine       formulation phase was to use the total
thrust, and takeoff and landing dis-       package procurement concept; that is,
tances are within initial target esti-     separate fixed-price-incentive contracts
mates, but the plane is somewhat over-     with Lockheed and General Electric
weight and this has reduced its range
                                           for the entire program covering over 8
slightly. Cracks have occurred in the
                                           years of work and including all devel-
wings. While these are being fixed and
                                           opment, testing, production, and sub-
the wing design is being completely
                                           stantial system support, such as spare
tested, certain limitations have been
                                           parts and equipment. This was the
placed on operational use of the air-
                                           largest    aircraft   “package”     ever
craft. Problems have also been encoun-
                                           awarded by the Air Force.
tered in certain important subsystems,
particularly in the avionics area. For        The theme for contract administra-
                                           tion under the total package concept
example, serious problems have been
                                           was disengagement; that is, the cus-
encountered in the multimode radar
                                           tomary Air Force approvals were re-
and in certain navigation equipment
                                           duced and greater reliance was placed
that have caused development work to
                                           on arm’s-length surveillance over con-
be extended although the plane itself is
                                           tractor activities.
now in full-scale production and some
have been delivered for operational           The concept, embodied in the con-
use.                                       tract, provided for Lockheed to design,
                                           develop, and ‘build the plane in accord-
                                           ance with certain firm performance
Some Big Decisions                         commitments; that is, it would weigh
                                           so much, fly so far, at a certain speed,
  We looked at a few of the key man-
                                           with a specified payload, and so on.
agement decisions that have had such
                                           Although the plane was very large and
a profound effect on the C-5A pro-
                                           included many sophisticated features
gram. Some of the key decisions were:      and subsystems, the plane was sup-
  -Use of the total package procure-       posed to be within the “state of the
    ment concept.                          art” but the design was not firm. The
  -Exercising of a contract option in      contractor was expected to manage the
    January 1969 to buy the second         program as he saw fit, with minimum
     production lot, referred to as run    involvement by the Air Force, as long
     B.                                    as the contractor met the performance
  -Reduction in the contract buy in        requirements and delivered on time.
    November 1969 from 120 to 81              Subsequent events have shown that
    planes.                                the main weakness in the total package
  -Recent restructuring of the con-        procurement concept used on the C-5A
    tract from fixed-price-incentive to    was its application on too big a finan-


 cia1 package, over too long a period of            cost of the increment then on contract
time, with insufficient provision for               -five development and test airplanes
trade-offs of cost, schedule, and per-              and 53 production airplanes referred
formance when problems arose. Lock-                 to as run A-was       estimated to cost
heed lays much of the blame for its                 $2.4 billion, or almost $1 billion over
near financial disaster on the C-5A                 the contract target cost.
program to the total package procure-                   But the Air Force exercised the con-
ment concept.                                       tract option for run B anyway, because
    Another big decision was made in
                                                       --It needed the planes.
January 1969 when the Air Force ex-
                                                       -Time was about to expire under
ercised the option under the contract
                                                           the option.
to buy the second production lot,
                                                       -If it did not exercise the option,
known as run B. At that point in time
                                                           Lockheed faced the prospect of fi-
both the Air Force and Lockheed knew
                                                           nancial disaster.
that the C-5A program was in big
troubIe, cost-wise. In fact, in hearings               Congressional and public interest in
before the House Armed Services                     the C-5A cost overruns continued to
Committee in June 1969 concerning                   mount in mid-1969. Attempts to cut
the C-5A program, the Comptroller                   the C-5A program back were debated
General testified that an Air Force                 in the House and the Senate and were
study in October 1968 showed that the               unsuccessful. The majority apparently

                                                                      Lockheed-Georgm Company Photo

W i t h a length of 248 f e e t , a wingspan of 223 feet, and a height of 65 feet over the tail, the
C-5A is the world‘s largest airplane.

                                                      GAO'S ROLE   IN THE C-5A SAGA

viewed the C-5A as essential to na-       would otherwise have been decided in
tional defense.                           favor of the Air Force.
   Nevertheless, cuts in the defense         What caused these problems and
budget for fiscal year 1970 forced the    shortfalls in the C-5A system? Were
Air Force to reduce the program. Con-     they the fault of the acquisition
sequently, in November 1969, the con-     process? We believe they were, in
tract was amended and the total buy       large measure. This is so because we
was limited to 81 airplanes.              have found that similar problems have
   The effect of the reduction on Lock-   occurred on other programs of compa-
heed was most severe. Lockheed was        rable size and complexity-as, for ex-
already in trouble on some of its other   ample, the F-111 aircraft.
Government programs and large               A GAO staff study on the C 5 A
amounts of funds were tied up in          acquisition process, issued in March
pending claims. Also, several large       1971, stated that the system shortfalls
items were in dispute on the C-5A         occurred because of failure of the De-
program. These disputed items in-         partment of Defense and the Air Force
volved repricing provisions of the con-   to observe and satisfy certain funda-
tract concerning the exercising of the    mental criteria before proceeding from
option for run B, the decision to pur-    one acquisition phase to another. Some
chase only 23 of run B planes, the        of the major areas of weakness noted
effect of economic escalation, and        and discussed in the report were:
correction of deficiencies.                 -Underestimation of costs and de-
   Lockheed's board chairman, D. J.            velopment risks accompanied by
Haughton, placed the value of the dis-         the application of a new and un-
puted items on the G 5 A program               tested procurement system which
alone at over $400 million. In Maroh            restricted trade-offs in cost, sched-
1970 he appealed to the Department             ule, or performance.
for special financial relief. He said       -A compressed schedule which was
that, since prompt negotiated settle-           further tightened causing concur-
ment of the disputed claims was not            rency in development and produc-
likely, there was a critical need for          tion.
interim financing if Lockheed was to        -Lack of cost-effectiveness studies
continue performing. Negotiations led          at critical decision points.
to agreement in January 1971 to             -Procurement of a larger aircraft
convert the C-5-4 contract to cost-type        than required.
with the Air Force providing all the        -Insufficient testing of aircraft de-
                                               sign prior to award of contract.
funds necessary to complete the pro-
gram. We estimated that this action          The staff study also showed that the
added about $496 million to program       Air Force was accepting G 5 A aircraft
costs based on the assumption that all    with major deficiencies in the wings,
disputes and disagreements existing       landing gear, and avionics. We found
between the Air Force and Lockheed        that numerous deficiencies in the first


15 operational aircraft restricted their   1972 in order to complete the pro-
performance to Basic cargo operations      gram.
only; the C-5A cannot perform its tac-       Public Law 9 1 4 1 stated that no
tical mission until certain deficiencies   part of the contingency fund could be
are corrected. We also observed that       used for:
the contract required Lockheed to            -Direct costs of other contracts.
correct the deficiencies at no cost to       --Interdivisional profits.
the Government. But to delay accept-         -Bid and proposal, independent re-
ance of the planes to correct the defi-         search and development, and simi-
ciencies would have had an unfavora-            lar costs.
bIe financial impact on Lockheed, at a       -Depreciation     and amortization
time when Lockheed’s financial ability          costs.
to complete the program was in jeop-
ardy.                                      It required that a special bank account
                                           be established from which the contrac-
                                           tor may withdraw funds subject to ap-
More Money                                 proval by the contracting officer. It
but Tighter Controls                       also empowered Defense to make such
                                           other restrictions as it saw fit.
   In its fiscal year 1971 budget re-
quest, Defense was faced with the em-         But more significantly, from GAO’s
barrassing prospect of having to ask       standpoint, the public law required au-
the Congress for additional funds to       dits of payments from the special bank
cover the massive cost overrun. The        account by both the Defense Contract
Air Force was faced with the prospect      Audit Agency (DCAA) and the GAO.
that the ceiling price of the contract     The Comptroller General was required
would be reached in early 1971, yet        to submit quarterly audit reports to
only 30-plus planes would have been        the Congress. GAO has been working
delivered. Additional funds were re-       closely with DCAA in structuring an
quested to permit uninterrupted per-       audit program that minimizes dupli-
formance while contract disputes were      cate effort, yet is mutually satisfactory.
being settled and the contract was
being restructured.                        GAO Looks at Lockheed’s
   After considerable debate over the      Financial Capability
merits of the request, on October 7,
1970, the Congress authorized, in             In September 1970 Senator Prox-
Public Law 9 1 4 1 , a special $200        mire and Senator Richard S. Schwei-
million contingency fund to augment        ker of Pennsylvania asked GAO to ex-
procurement in fiscal year 1971, but       amine into Lockheed’s financial capa-
imposed certain restrictions and con-      bility to complete the C-5A aircraft
trols on its use. An additional incre-     program. Congressman William S.
ment, variously estimated at between       Moorhead of Pennsylvania also asked
$500 million and $600 million is ex-       GAO for information regarding the le-
pected to be required in fiscal year       gality of the use of Public Law 85-804

                                                       GAO’S ROLE   IN T H E C S A SAGA

which authorized extraordinary finan-      not guarantee that bankruptcy of
cial relief in the settlement of defense   Lockheed would be precluded. We
contracts. In December 1970, the Dep-      stated that, because the full effect of
uty Secretary of Defense requested         Lockheed’s financial problems asso-
GAO to participate in a review of the      ciated with the G l O l l could not be
financial data submitted to Defense by     determined, action should be taken to
Lockheed in support of its request for     insure that additional funds made
financial assistance.                      available for the C-5A will continue to
   GAO responded on April 12, 1971,        be used on that program even in the
with a special report entitled “Finan-     event of bankruptcy.
cial Capability of Lockheed Aircraft          We recommended that Defense es-
Corporation to Produce C-5A Air-           tablish close surveillance over Lock-
craft” (B-169300). Special constraints     heed’s activities to insure that condi-
were placed on our review of Lock-         tions which resulted in previous cost
heed’s financial data because it em.       growth and financial difficulties have,
braced all activities, including com-      to the extent possible, been corrected
mercial, and not just C-5A.                and are not likely to recur. We recom-
   We found that, based upon review        mended also that the Department
and evaluation of the financial infor-     conduct a review of the “should cost,’
mation submitted by Lockheed to the        type of Lockheed’s operations concern-
Office of the Secretary of Defense,        ing the production of C-5A aircraft.
Lockheed did not have the financial        The purpose of these recommendations
capability to complete performance         was to give the Government greater
under its C-SA contract without finan-     assurance that Lockheed’s future oper-
cial assistance from the Government.       ations are conducted in an efficient and
Large financial commitments to other       economical manner and that only nec-
programs, notably the G l O l l com-       essary costs are incurred in completing
mercial aircraft, had impaired Lock-       the C-5A aircraft.
heed’s ability to add additional funds
to cover the loss on the C-5A contract.
                                           A New Ball Game-
   GAO also reviewed the legislative
                                           Cost-Minus-Fixed-Loss Contract
history of Public Law 85-804 and
found nothing to preclude its use as          Under the plan of assistance adopted
the basic authority for Defense to mod-    by Defense, the existing C-5A contract
ify the C-5A contract. The authority       was converted on May 31, 1971, to
is quite broad and permits contract        cost-minus-fixed-loss-type - something
modification without regard to other       relatively new on the defense pro-
provisions of the law relating to con-     curement scene. The converted con-
tracts whenever such action is deemed      tract provides that the Government will
to facilitate the national defense.        furnish all funds necessary to complete
   GAO agreed with the Department of       the contract and that Lockheed will ab-
Defense conclusion that conversion of      sorb a fixed loss in excess of $200
the C-5A contract to cost-type would       million. Lockheed will forfeit $100

million already invested in C-SA costs     nent place in defense procurement his-
which would otherwise have been al-        tory. Most will agree that while the
lowed; Lockheed is required to repay       end product itself-the C-5A aircraft
to the Government $100 million, with       -has been generally satisfactory thus
interest, starting in 1974; Lockheed is    far (except for some deficiencies,
also required to absorb disallowed         which probably can be corrected with
costs associated with the contingency      enough time and money), the cost has
fund authorized by Public Law 9 1 4 1      been monumental. Public disclosure of
-estimated to be an additional $4.8        the C-5A cost overrun, the advent of
million.                                   cost-minus-fixed-loss contracting, and
   The new cost-minus-fixed-loss con-      the financial plight of Lockheed-our
tract gave the Government a much           Nation’s largest defense contractor-
greater role in management and con-        have been landmark events. From
trol of C-5A contract activities. The      these experiences it seems appropriate
concept of disengagement originally        that we sum up the more important
employed in administering the C-5A         lessons learned.
contract has been abandoned. The Air
                                             -The concept of disengagement in
Force staff at the plant has been in-          contract administration has no
creased; new, more sophisticated finan-         place in extremely long, complex,
cial management control systems have           and costly system procurements.
been adopted. Lockheed has taken ex-           In such circumstances the Govern-
traordinary management actions to               ment has no choice but to become
make its operations more economical            involved with the contractor in
 and to otherwise conserve cash.               key decisions that significantly
                                               impact cost, schedule, and per-
Summary                                        formance of the system.
                                             -The    procurement package must
   Because of increased public interest         not exceed the contractor’s finan-
and a congressional mandate, precipi-          cial capability. Smaller contrac-
tated in large measure by the problems         tual increments, such as separate
of the C-5A, GAO has undertaken a              development      and     production
large-scale review of how the Depart-           phases, require less financial risk
ment . of Defense acquires major               to both the Government and con-
weapon systems. The scope of the work          tractor.
is broad as well as deep. It deals with      -The contract should be structured
the status reporting system and short-         to facilitate trade-offs of cost,
falls that have occurred in cost, sched-        schedule, and performance when
ule, and performance. It deals with the        the need arises.
broad concepts and principles of the          Several useful reports have come out
acquisition process at the Defense and     of this work, dealing with families of
military department levels.                systems, specimfic systems such as the
   The C-5A saga occupies a promi-         C-5A, and functional areas within sys-

                                                          GAO'S ROLE   IN THE    C-SA SAGA

tems, that have 'been well received by      tal improvements in the acquisition
the Congress, key committees, and           process and will provide Congress with
Members. Hopefully, as this work con-       greater visibility and surveillance over
tinues it will produce some fundamen-       defense spending.

                    GAO's Reputation for Objectivity
            Since the Congress does not always speak with one voice, the GAO
         has to serve many masters. There is always the danger of being hurt
         in the crossfires of political conflict. The GAO practice has been to
         stick to the facts and stay neutral in politics. Despite occasional
         carping and criticism, wh'ch every public agency is exposed to, and
         Congressmen are used to, the GAO has built a reputation for objec-
         tivity. This reputation should be jealously guarded.

                                  Representative Chet Holifield of
                                   Speaking at 1971 Annual GAO Awards
                                    Ceremony, June 11, 1971.


               Using Computer-Aided Techniques
               in Financial Audit Work

               This article identifies and describes the computer-aided
               techniques used during a recent audit. It also illustrates how
               the techniques were combined with regular audit procedures to
               obtain greater confidence and other benefits during the
               financial audit work.

   Today computers are being used for            procedures for the analysis of auto-
an ever-increasing variety of business           mated data processing systems.
applications. As each generation of                 Management is currently confronted
computers becomes larger and faster              with a staggering increase in the
than the preceding one, very complex             amount of paper records and reports      I

and technical programs are needed to             produced by computer systems. Simul-
operate the huge devices. These com-             taneously, it is being told that those
plicated programs represent a substan-           records and reports may not accurately
tial change in the nature of the normal          reflect the financial condition of the
paper trail and present a formidable             company producing them. As one
challenge to the auditor with limited            burly programmer stated in the Wull
experience in data processing opera-             Street Journal, by using the company’s
tions. However, recent disclosures in            computer, he could steal the company
the press of the misuse of the computer          blind and leave its books balanced. In
by employees of private concerns re-             other instances, systems and program-
veal a dramatic but practical case for           ming personnel, versed in company op-
the serious involvement of auditors in           erations and the data processing sys-
the development of new techniques and            tem, have juggled stock purchase

     Mr. Smith is an audit manager in the Washington Regional Office. H e holds a B.S.
     degree in accounting from Fresno State College and has been a previous contributor
     to The GAO Review (“Useful Techniques for Examining Automated Data Processing
     Systems”-Fall 1969).
     Miss Jasper is a supervisory auditor in the Washington Regional Office and holds a
     B.S. degree in accounting from The Pennsylvania State University.
  Both Mr. Smith and Miss Jasper are working on master’s degrees in ADP at The
  American University and both are active members of the Federal Government Ac-
  countants Association.

                                    COMPUTER-AIDED TECHNIQUES I N FINANCIAL AUDITS

accounts, extracted corporate cash, and     gram by providing a method for audit-
shorted inventory accounts without the      ing through the computer. For these
knowledge of either management or           reasons, it was our desire, as the re-
the auditor.                                gional ADP specialists, to assist the
   For these as well as other reasons,      audit staff in using the computer’s ca-
the auditor must develop new tech-          pabilities to their advantage and to
niques and procedures that will help        minimize the amount of clerical check-
him determine whether the computer-         ing and verification work that had been
oriented internal controls are effective    performed previously. We also wanted
and efficient. These new methods            the new techniques to have broad ap-
should help to assure both manage-          plication so they could be used on
ment and the auditor that financial         other audits.
records and reports are accurate. For
example, during the 1970 GAO audit
                                            Audit Objectives and
of the Government Services, Inc.            Responsibilities
 (GSI), we wanted to use new and re-
vised procedures to achieve greater            The basic objective of the audit was
confidence in the audit. In this in-        the examination of the corporation’s fi-
stance, we desired to develop an audit      nancial statements and the expression
method that could be used to establish      of an opinion on the fairness with
the reliability of the financial records,   which they presented the financial posi-
reduce the number of financial trans-       tion and results of operations at the
actions to be audited, and improve the      end of the calendar year.
audit program. These objectives were           To perform this work we assumed,
not easily accomplished.                    among other things, that the auditor’s
                                            knowledge of the transactions reflected
The Problem                                 in the accounts and in the financial
                                            statements would be limited to that
   During past years, the annual audit      acquired through the audit examina-
had primarily relied on the effective-      tion. Therefore, the problem was to de-
ness of manual procedures and con-          vise an audit plan or program that
trols, whereas the GSI accounts were        would allow the auditor to establish
processed and summarized by com-            the reliability of the financial records
puter equipment. A recent considera-        while at the same time substantially
tion of the audit program indicated         limit the number of transactions to be
that it had become out of date and          examined.
required the staff to make a large num-
ber of onsite revisions to make it usa-
                                            The Audit Plan
ble. Specifically, much of the prior
audit program required the staff to            We first divided the work into three
audit around the computer rather than       phases: a review of the internal con-
through it. To resolve this problem, we     trols, an audit of transactions, and the
wanted to improve the prior audit pro-      verification of the existence of assets


and liabilities. The division into three     computer by employees and the capa-
phases was considered to be important        bility of the computer to quickly pro-
because it assisted in the planning and      duce numerous errors amply illustrate
direction of the work, allowed each          ineffective and inefficient systems of in-
staff member to readily understand           ternal control.
how his assigned work was related to            Recognizing the need for good inter-
the entire audit, and allowed the staff      nal control, we classified GSI’s
to take maximum advantage of the             accounting operations into five func-
computer’s capabilities.                     tions: management control, data
   In practice, the review of internal       collection and recording, data conver-
control differed from regular audit pro-     sion, operation monitoring, and infor-
cedure because we had to consider not        mation and/or check distribution. This
only the usual manual internal controls      technique helped to serve as a basis
but also those built into the data proc-     for organizing the work so that no im-
essing system by the manufacturer and        portant aspect of it would be over-
those included in the computer pro-          looked. During the audit each function
grams.                                       was analyzed to the extent necessary to
   However, the real difference in our       ascertain whether the internal controls
program came in the phase involving          were effective for their intended pur-
the audit of transactions. Here we de-       pose.
parted from the traditional audit-by-
account method. Instead, we decided to       The Management Control Function
have the staff audit a random selection
                                                This function includes all the man-
of all the transactions processed dur-       ual and computer control procedures
ing the year, a procedure which we
                                             necessary to assure management that
called the audit-by-transaction method.      the system performs in the desired
   In the final phase of our audit we        manner and achieves the desired and
used traditional verification procedures     necessary level of reliability. It is the
and only used the computer to save the       most important single function in any
audit staff time in clerical and verifica-   system.
tion functions like preparing lists of          To effectively evaluate this function
assets or liabilities or checking inven-     we first identified the flow of financial
tory extensions.                             data through the automated accounting
                                             system. This was accomplished by re-
Evaluation of the System of                  viewing the updating system flow-
Internal Control                             charts. The updated charts identified
                                             all the sources of financial data origi-
   Where automated data processing           nation and recording; the procedures
systems are involved, the need for           used to transmit the data to the GSI
strong and effective internal controls is    main office; the manual procedures
just as great, if not greater, than where    used to prepare the data for computer
the work is performed manually.              processing ; the procedures used to
Recent disclosures of the misuse of the      convert the data into machine-readable

                                    COMPUTER-AIDED TECHNIQUES IN FINANCIAL AUDITS

form; the methods used to process the          Generally, source data represents the
data using the computer; and the na-        weakest link in the chain of computer
ture and disposition of all computer-       processing events. The reliability of
produced documents, records, or re-         computer equipment is very high and
ports. Thus, the updated charts gave us     a computer program can usually be
an overview of the entire accounting        successfully debugged over a short in-
system and its operations and served        terval of time, but the problem of the
as a basis for our evaluation of GSI’s      source data is a continuing one.
system of internal control.                    Source data may be in error for one
                                            of four general reasons:
The Data Collection and                       -It   may be incorrectly recorded at
Recording Function
                                                 the point of origination.
   This function includes the initial         -It may be incorrectly converted to
collection of financial data, the record-        machine-readable form.
ing of the data on a source document,         -It may be lost in handling.
the procedures and devices used to            -It may be incorrectly read when
transmit the data from its point of              entered into the computer.
origination to the Accounting Division,
and the procedures used to convert the      Therefore, to ascertain the reliability
data into machine-readable form.            of this function at GSI we tested the

GSI employees and the authors review source program listing. From the left: William
Melera, Assistant to the Comptroller, GSI; Tamara Orebaugh, Assistant Data Processing
Manager, GSI; and Clarence Smith and Geraldine Jasper of GAO.


effectiveness of internal controls at      alert operating and managerial officials
three different points in the system:      to any data processing problems or er-
  -The     point where the data was        rors occurring in the system so they
      originated.                          can initiate the appropriate corrective
  --The    points where the data was
     manually handled within the or-          Our tests of selected reports showed
     ganization and converted i&o ma-      they were quite reliable for their in-
      chine-readable form.                 tended purpose and that operating
                                           level officials generally initiated quick
  -The point where the data entered
                                           and appropriate corrective action when
     the computer.
                                           these reports brought processing errors
                                           to their attention.
The Data Conversion Function

  This function includes the receipt of    The Information and/or
data to be processed from the Account-     Check Distribution Function
ing Division and the computer process-
                                              The information distribution func-
ing of the data, including the prepara-
                                           tion represents the purpose for which a
tion of various reports to be distrib-
                                           system is designed and operated and
uted to management.
                                           consists of all reports, documents, and
   During the conversion function a        records, including checks, resulting
record could be lost or errors could be    from the conversion function. Such
made (1) in reading the data by the        information may be in the form of
input device, (2) in transmitting the      printed reports or listings, or may be
electronic signal from one computer        in machine-readable form such as mag-
device to another, (3) because data        netic tapes or discs.
was not processed, or (4) in wholesale        To ascertain the degree of reliability
quantities by using the wrong com-         that could be placed on the distribu-
puter programs or the wrong master         tion function, we thoroughly tested the
file. We tested the GSI accounting sys-    management controls over the data
tem to determine whether these types       recording, data conversion, and opera-
of errors occurred in their system.        tion monitoring functions. It was our
                                           view that if these other functions were
The Operation Monitoring Function          reliable, the records, reports, and doc-
                                           uments produced by the system had to
   This function includes a wide vari-
                                           be equally reliable.
ety of reports directed to various oper-
ating and managerial levels of respon-
sibility within the corporation. These     Auditing Financial
reports are designed to tell them the      Transactions
accuracy of the data recording and
data conversion functions. Thus, the          Following our evaluation of GSI’s
monitoring function represents a sur-      system of internal control we began
veillance-type function intended to        the preparation of a plan for the selec-

                                             COMPUTER-AIDED TECHNIQUES IN FINANCIAL AUDITS

tion of the financial transactions to be               processed during the year. Further-
audited in detail.                                     more, the reliability of the estimate
   The prior year’s financial statements               can be measured in numerical terms.
served as our starting p0int.l If the                     Another advantage of statistical
transactions processed subsequent to                   sampling is the possibility of obtaining
the prior year’s audited balances were                 better results from examining fewer fi-
processed accurately, it seemed reason-                nancial transactions. When judgment
able that the ending balances the fol-                 sampling was used the number of
lowing year would also be accurate.                    transactions examined varied depend-
   This audit-by-transaction method                    ing upon the auditor rather than upon
permitted more efficient use of statisti-              the characteristics of the data. How-
cal sampling than would have been                      ever, statistical sampling enables the
possible under the traditional audit-                  auditor to calculate the number of
by-account concept. In prior years, the                transactions that must be examined in
auditors selected from certain accounts                order to obtain the precision required
judgment samples of transactions to be                 to meet the audit objective. In the case
audited. The samples were based on                     of GSI, the auditor now examines
such factors as the dollar balance in                  fewer transactions but audits each
the account and the account activity.                  transaction thoroughly.
Hence, the proportion of transactions                     The audit staff wanted to be 95..per-
audited varied from account to                         cent confident that t h e true error rate
account. Although this was an accepta-                 did not exceed 5 percent of the trans-
ble audit procedure, the audit staff be-                actions and that the average error did
lieved it could be improved upon be-                   not exceed $25. If the audit of the
cause such samples are usually less re-                sample transactions disclosed condi-
liable for estimation and prediction                   tions greatly exceeding these toler-
purposes than a statistical sample.                     ances, the audit work must be ex-
Under the audit-by-transaction tech-                   tended and possibly it would be neces-
nique, the probability (or likelihood)                  sary to qualify the opinion on the fi-
that a transaction will be audited does                 nancial statements.
not depend upon the dollar balance in                      With the assistance of statisticians
the account(s) or the account activity.                in the GAO Office of Policy and Spe-
    The use of statistical sampling in-                cial Studies, a plan for selecting the
 stead of judgment sampling provides                   sample transactions was developed.
the auditor with a more independent                    This plan required us to develop esti-
 and objective basis for his opinion. He                mates of the following information:
is able to estimate the percentage of
                                                          1. The number of financial transac-
 transactions in error and the dollar
                                                             tions processed by GSI during a
 amount of errors for all transactions
                                                             1-year period.
                                                         2. The range (difference) between
   ‘ A n unqualified opinion had been given in thc
report “Audits of Government Services, Inc., it8 Em.        the dollar amounts of the largest
ployee Retirement and Benefit Trust Fund and its            and the smallest transactions.
Sopplemental Pension Plan, year ended Dec. 31. 1969”
 (8--114820, Apt. 1 . 1970).                             3. The distribution of transactions


       between these two extremes               of    approximately similar dollar
        (e.g., proportion of transactions       amounts would be grouped into the
       that could be classified as small,       same stratum. Independent random
       medium, and large).                      samples of transactions were selected
                                                from the entire group of transactions
   After analysis of the prior year’s           in each stratum. Shown below are the
data, we decided to group the transac-          strata used, the number of transactions
tions into seven nonoverlapping                 in each stratum, and the number of
groups, or “strata.” Thus, transactions         transactions audited.
                                                               Number of                 Number of
       Stratum                                           fronsaetrons in Sfraturn   transactions audited

$50,000.00or more .................................                537     ............     537
 10,000.00 to 49,999.99 ..............................           1,538     ............     149
  1,000.00 to 9,999.99 ..............................           24,755     ............     241
    100.00to 999.99 ..............................              89,806 ............          88
     10.00to      99.99 ..............................         175,697 ............          20
      1.ooto       9.99 ..............................          94,937 ............           2
Less than $1.00 ....................................            34,770 ............           0
     Totals   ........................................         422,040 ............        1,037

   Since the transactions were recorded the assembly language used on the
on magnetic tape, a sampling interval computer at GSI.
with a random start was the most              We discussed this problem with GSI
efficient method of selecting the sample personnel who agreed to write the pro-
transactions. Each year new sampling grams for us. However, it was neces-
intervals must be calculated and new sary for us to take special precautions
random starting points determined so that their preparation of the com-
since the number of transactions will puter programs would not violate the
vary from year to year. To insure con- principles of good internal control. We
trol over the selection process, the sam- wanted to be certain that any improper
pling intervals and the starting points or unauthorized financial transactions
should not be given to GSI personnel had an equal opportunity to be se-
until just prior to processing of the lected in the sample and that the GSI
computer programs to select the sam- personnel could not write the special
ple.                                       programs in such a way as to prevent
   After the sampling plan was pre- us from detecting such transactions if                                 .
pared there was one additional prob- they existed. Accordingly, we included
lem that had to be solved. How do we the following procedures in the pro-
prepare the computer programs neces- grams so that the audit staff would
sary to implement it? Although we always retain control over the process-
could prepare programs in several dif- ing of the programs and the files of
ferent computer languages            (Le., financial transactions.
BASIC, COBOL, FORTRAN, MAD,                   First, we examined the program
ALGOL, and APL/360), we did not documentation to ascertain its compli-
have the capability to write them in ance with the sampling plan and also

                                   COMPUTER-AIDED TECHNIQUES I N FINANCIAL AUDITS

to be certain that no computer instruc-           it placed the sample transactions
tions had been added or deleted which             in the same sequence as they
would tend to minimize the statistical            were filed.
reliability of the results.
                                               Following the selection of the sam-
   Next, we obtained a source program
                                            ple it was necessary to develop only
listing showing the actual computer in-
                                            four sets of audit procedures, one set
structions stored in the computer’s
                                            of procedures for each book of origi-
memory and the sequence in which
                                            nal entry, instead of separate proce-
these instructions are executed by the
                                            dures for each major financial state-
computer. The regional ADP special-
                                            ment account classification. This was
ists compared this listing with the
                                            possible because the four books of
system documentation to make certain
                                            original entry (cash, inventory, vouch-
that there were no differences between
                                            ers payable, and general journal)
the two. The audit staff was of the
                                            served as the primary connecting link
opinion that such comparisons should
                                            between last year’s financial statements
be made by a specialist becaufe of the
                                            and the current year’s statements.
complex nature of the computer in-
                                            Thus, all transactions affecting GSI’s
structions and the system documenta-
                                            account balances were recorded in one
                                            of these four books.
   The processing of these special com-
puter programs provided the audit              When performing the work for the
staff three different printouts :           period ending December 31, 1970, the
                                            staff audited 1,037 transactions with a
  1. A statistical summary which in-        monetary value of $104,332,738
     cluded the total number of trans-       ($56,003,259     in     debits      and
      actions that were processed by        $48,329,479 in credits 1. The number
     GSI during the calendar year           of transactions audited represented
     and dollar amounts for each            only 0.25 percent of those processed
      stratum. This summary also in-        during the calendar year. However,
     cluded comparable data for the         their monetary value represented 46
     sample and was used to make            percent of the value of all the transac-
      certain that all transactions proc-   tions.
     essed during the year were sub-
                                               When the audit work was completed,
     ject to selection in the sample.
                                            the statistical evaluation of the results
  2. A detailed listing of sample
                                            was quite encouraging. As would be
     transactions by stratum. This
                                            expected the audit staff did detect some
     listing also included appropriate
                                            errors in the recording of transactions
      control totals by stratum.
                                            on the financial records. The statistical
  3. A detailed listing of sample
                                            evaluation of these errors disclosed
     transactions sorted first by
                                            their effect on the financial statements
     accounting period, then by book
                                            as follows:
     of original entry, and finally. by.
     voucher number. This listing fa-         1. The staff could be 95 percent
      cilitated the audit work because           confident that the net error could


      range from a $30,792 overstate-       servation, inquiries, and confirmations
     ment of net worth to a $24,476         to afford a reasonable basis for render-
     understatement of net worth.           ing an opinion as to the existence of
  2. The staff could be 95 percent          the recorded assets and liabilities. It
     confident that the corporation’s       was their view that where these inspec-
     net worth at December 31, 1970,        tions, observations, inquiries, and con-
     lay between 84,682,893 and             firmations could not be performed this
      $4,738,161 (net worth per bal-        fact would have to be disclosed in the
     ance sheet at Decemher 31, 1970,       audit report and, if the amounts in-
     was reported by the corporation        volved were material, the audit report
     to be $4.,713,685). Thus, there        would be appropriately quali,fied. For
     was only a 1-in-20 chance that         these reasons the staff performed the
     the results of a complete audit of     work normally required for each of
      all transactions would be outside     the major asset and liability accounts
     the interval shown.                    listed in GSI’s general ledger. When
  3. The probability was 97.5 percent       this work was completed, it was their
      that the rate of occurrence of all    view that the existence of the assets
     types of errors affecting net          and liabilities recorded in the general
     worth did not exceed 0.8 per-          ledger was reasonably assured.
  4. The probability was 97.5 percent
     that the average dollar value of
     all types of errors did not exceed        Following the completion of this
     2 cents.                                work a new audit program was pre-
  Thus, the results of the audit were       pared which provided the audit staff
well within the tolerances specified by     an improved basis to obtain substan-
the audit staff.                            tially greater confidence in the finan-
                                            cial audit work. The new audit pro-
   Although our audit of the financial
                                            gram was based on dividing the work
transactions disclosed that we could
                                            into three segments: an evaluation of
place a high level of reliance on them,
we still had to assure ourselves of the     GSI’s system of internal control, the
existence of the indicated assets and       detailed audit of financial transactions,
liabilities as recorded in the accounts.    and the verification of the existence of
                                            corporate assets and liabilities. Recog-
                                            nizing the need for good internal con-
Ascertaining the Existence                  trol, we further divided the GSI auto-
of Assets and Liabilities                   mated accounting system into five dis-
                                            tinct functions. Each function was then
   In addition to ascertaining the relia-   analyzed to the extent considered nec-
bility of the financial transactions        essary. Thus, each staff member per-
processed by GSI, the audit staff de-       formed a more thorough analysis in a
sired to obtain sufficient competent evi-   smaller and more clearly defined audit
dential matter through inspection, ob-      area than was previously possible.
                                    COMPUTER-AIDED TECHNIQUES I N FINANCIAL AUDITS

During the detailed audit we quickly       ceivables, physical observation of in-
learned that the computer could per-       ventories, and the confirmation of lia-
form checking and verification rou-        bilities. As a matter of necessity, this
tines much quicker and more reliably       work must be performed primarily
than they could be performed man-          without the aid of the computer.
ually, and we used it to the maximum          Overall, the work resulted in in-
extent possible.                           creased confidence in the reliability of
   In regard to the procedures used to     the statements, while at the same time
verify the existence of the corporate      substantially reducing the number of
assets and liabilities, we were not able   transactions audited. Finally, this work
to make significant improvements in        eliminated the need for the audit staff
them by the use of the computer. Gen-      to judge intuitively the reliability of
erally, these procedures include the       their work by providing a much more
reconciliation of bank accounts, sur-      independent and objective basis for
prise cash counts, confirmation of re-     such evaluation.

              Reflections on a Congressional
              Committee Assignment

              One of the ways in which the GAO carries out its
              responsibilities to the Congress is b y assigning some of its
              staff members from time to time to work temporarily on
              congressional committee staffs. Each congressional
              committee has its own modus operandi. In this article, the
              author relutes his recent experiences with the House
              Appropriations Committee staff.

Management and Organization of                      The staff is composed of Govern-
the Committee Staff                              ment personnel, most of whom have
                                                 extensive experience in auditing, law,
   The Surveys and Investigations Staff          or investigative work. Government em-
operates at the direction of, but physi-         ployees who are experts in other fields
cally apart from, the House Appropria-           are also used to assist the committee in
tions Committee. The staff is managed            complex or technical aspects of its
by a director and an assistant director          studies. GAO staff members are loaned
located at the Health, Education, and            to the committee on a temporary basis.
Welfare building and a second assist-            Consequently there are periodic turn-
ant director for work in the Depart-             overs and fluctuations in the total num-
ment of Defense located at the Penta-            bel- assigned throughuut the year. The
gon. A group leader is in charge of a            size of the staff ranges from about 25
part of the staff that works on civil            to 35.
agency assignments. This group is                   Committee staff personnel represent
housed in the Department of Agricul-             a variety of Government agencies from
ture building. Staff directors are               both the Washington, D.C., area and
 usually appointed for 3 years. Each             cities outside the Washington area.
 year they move to the next higher posi-         The committee desires to keep the
tion, serving as staff director during           identity of its staff members’ agencies
 their final year.                                confidential because, while assigned to


     Mr. Zeunges is a supervisory auditor in the Research and Development Group, Defense
     Division. H e is a graduate of St. Francis College, Loretto, Pa., and has been with GAO
     since 1965. He was assigned to the Surveys and Investigations Staff of the House
     Appropriations Comm’ttee from July 1969 to March 1971.

                                               A CONGRESSIONAL COMMITTEE ASSIGNMENT

the staff, these staff members represent       time. New teams are usually formed
the House Appropriations Committee             for new assignments.
and not their respective agencies.                Work assignments usually begin by
                                               researching recent congressional hear-
                                               ings and any other available material
How the Committee Staff
                                               for background information on the
                                               subject matter and for some indication
    The House Appropriations Commit-           of the committee’s interest in the topic
 tee designates its areas of interest to its   of the directive. An investigative out-
 staff through brief letters called direc-     line which lists the areas that the staff
 tives. A directive states, in general         intends to pursue is then prepared.
terms, the various aspects of programs         The investigative outline serves as a
that the committee wants investigated          broadly defined audit program for the
 and reported on. These programs may           assignment. Notification letters are
 have received considerable attention in.      then sent to appropriate agency officials
recent congressional hearings or they          when the new job is started. After ini-
 may be scheduled for discussion in fu-        tial briefings have been held the staff
ture hearings. The reasons surround-           begins its detailed work.
ing the issuance of the directives are
not always apparent to the committee           Experiences with the
staff. In some instances, the director         Committee Staff
will meet with a member of the perma-
nent committee staff for clarification of         During my tenure with the commit-
the directives.                                tee staff, I participated in four assign-
    The staff is usually divided into          ments which individually and collec-
teams in order to efficiently perform          tively provided me with valuable in-
the work called for in the directives.         sight into current programs in the De-
The size of the teams varies according         partment of Defense of interest to the
to the complexity of the job, the de-          committee. My first assignment in-
gree of urgency required to complete           volved a review of the policies, prac-
the work, and the availability of staff        tices, and procedures of the Depart-
members. The ideal team has four               ment of Defense with respect to small
                                               purchases (items costing less than
members, one of which is designated
                                               $2,500,. As a result of this assignment
team leader. The team leader is re-
                                               I obtained a better picture of the inter-
sponsible for the conduct of his study
                                               relationships of the functions of pro-
and the resulting report.                      curement and supply in the Depart-
    The length of job assignments may          ment of Defense.
vary from 3 weeks for such programs               A subsequent study of the Depart-
as reviews of military construction to         ment’s air-to-ground weapons systems
over a year for jobs of greater com-           was interrupted so that a review of the
plexity. As many as a dozen or more            proposed Defense office building at
studies may be in process at any given         Bolling Air Force Base, Washington,


 D.C., could be performed and reported       ment of findings made in the course of
 on in time for the fiscal year 1971        the study. The urgency of the report
hearings. The Congress subsequently         deadline often necessitates deferring
canceled this project, the second time      the referencing of the facts in the re-
it has done so. However, the project        port to supporting documentation until
was included in the budget submitted        after the report has been issued.
for the following year.                        One of the principal differences be-
   My h a 1 assignment with the com-        tween GAO and committee reports is
mittee involved a review of the overall     that agency officials do not have an
Army truck program. Like the weap-          opportunity to review or comment on
ons systems study, the truck program        the committee’s reports. A limited
study required crossing several func-       number of copies of the reports are
tional areas such as research and de-       printed for the committee’s use. Copies
velopment, procurement, supply, inven-      of the reports are made available to
tory control, and requirements deter-       interested parties only by authority of
minations. Individual weapons and ve-       the committee.
hicles have received considerable atten-
tion in recent congressional hearings.
The truck study and the weapons sys-        Advantages and Disadvantages
tems study provided an insight into         of Congressional Committee
how individual systems are considered       Assignments
in light of overall defense goals.
                                                Any listing of the pros and cons of a
                                             congressional committee assignment
The Reporting Process                        must be an arbitrary one based on an
                                             individual’s particular experiences. I
   The results of the staff‘s studies are    feel that a significant advantage of
set forth in reports to the House Ap-        such an assignment is furthering one’s
propriations Committee, There is no
                                            career development. A congressional
standard reporting format prescribed
                                            committee staff is a step closer to
for the reports which vary in length,
                                            working more directly with the Con-
some exceeding 100 pages. The staff
reports are largely informative in na-      gress, a step -not everyone is able to
ture and worded very informally. No         take. There is also the attendant better
conclusions or recommendations are          treatment from agency personnel than
made.                                       is normally experienced as a GAO aud-
   The preparation of the report            itor.
usually begins after a reporting dead-         Staff members can achieve job satis-
line has been set by the director. The      faction quickly because of the tight
staff is given about 4 to 6 weeks in        time schedule of the assignment and
advance OI the deadline date to begin       the fact that there are only three re-
preparation of the report draft. The        port review officials. In addition, some
establishment of a reporting deadline       staff members consider the opportunity
many times prevents the full develop        for travel an important advantage of

                                            A CONGRESSIONAL COMMITTEE ASSIGNMENT

committee staff work. Almost every as-      members. Many of these same people
signment requires a certain amount of       were frequently selected for congres-
travel since the committee has no re-       sional assignments on a recurring
gional offices to perform its field work.   basis. As a result, some of the younger
Some assignments require overseas           staff members were suspicious of
travel.                                     congressional committee assignments
   The major disadvantage of congres-       and considered them undesirable.
sional assignments is that a staff mem-
                                               There has been a noticeable trend in
ber is frequently away from his agency
                                            recent years toward assigning more of
for a period longer than anticipated.
As an example my “6-monthy’ assign-         the younger staff members to congres-
ment lasted almost 20 months. The           sional Committee work. As more staff
Legislative Reorganization Act of 1970      members become exposed to such as-
now limits the assignment of GAO per-       signments, a change in attitude regard-
sonnel to congressional committees to       ing such assignments is gradually
1year.                                      evolving. By participating in congres-
                                            sional assignments at an early stage in
                                            his GAO career, a staff member can
                                            develop a better appreciation of the
  In the past many congressional com-       role that GAO plays in furnishing staff
mittee assignments were given to the        members for congressional committee
older and more experienced GAO staff        work.


            Dictating-An Important and
            Underutilized Management Tool

            Dictating skill is an important aid to efficient managers,
            including accountants and auditors, in conserving time and
            energy. This article provides some encouragement for
            developing such a skill.

   The conference with the agency              lem to us in GAO but also to other
officials is over, much information has        Government agencies and private com-
been obtained, and a number of im-             panies as well. The saddest part of all
portant agreements have been reached.          is that in many cases the junior staff
On the return to the office an awkward         member does not have the complete
silence comes over the participants.           picture because the meeting covered
The silence is finally broken by those         areas outside the scope of his assigned
familiar words, “OK, who will write            tasks, and, therefore, it is likely that
the memorandum?” At this point the             any documentation prepared by him
junior man, unable to make himself             will be deficient. While this practice
invisible, heads for his office and his        creates a problem for the junior staff
pencil and paper, receiving suggestions        member, it creates a bigger problem
until out of earshot, such as:                 for the organization.
  Don’t forget what Mr. Smith said.
                                                  Now that we have defined the prob-
  Don’t forget to include my comments on       lem, let’s discuss its solution. On the
Mr. Carver’s suggestion.                       return to the office after the meeting,
  Be sure to see that Jones and Davis get      one of the senior men should spend 10
                                               to 15 minutes dictating his comments
   Sound familiar? You bet. It in-             to either a stenographer or a dicta-
volves the age-old problem of delegat-         phone rather than spending that time
ing seemingly unpleasant tasks to the          or longer reviewing what took the jun-
junior staff member and is a scene              ior staff member several hours to pre-
often repeated. It is not only a prob-         pare.

   Mr. Cronin is a supervisory auditor in the Civil Division. He holds a B.B.A. degree in
   accounting from Manhattan College and has attended the Center for Advanced Orga-
   nizational Sciende at the University of Wisconsin. He is a certified public accountant
   in Maryland and a member of the American Institute of CPAs and the National Asso-
   ciation of Accountants.

                                                      DICTATING-A   MANAGEMENT TOOL

   My own experience with dictating          ing 120 words per minute, it would not
has been somewhat different than the         take mu& time to have a typed draft
above example. Because of extremely          of the memorandum as well as drafts
poor penmanship (due in part to a            of any related memoranda going to
childhood mishap) I was forced to use        our regional offices. In cases where we
dictation long before I reached the          are working under time pressures, for
level of a manager. After acquiring          example, preparing memoranda relat-
some basic skills and confidence             ing to agreements reached at meetings
through trial and error with a dictat-       with Members of Congress, the value
ing machine, it was easy for me to           of dictating cannot be overemphasized.
recognize the fear of dictating that is      With a good stenographer the data can
present in so many of us.                    even be dictated over the phone and
   I could have a supervisor stuttering      the draft of the memorandum will be
excuses for 5 minutes if after a meet-       waiting on your desk when you return.
ing I would say, “Want to borrow my          With experience and training it is even
dictaphone? I’d be glad to have your         possible to have a good stenographer
memorandum transcribed for YOU.” Or          edit your material and have the final
later, as a manager I could make a           memorandum ready for your signature
newly assigned supervisor very nerv-         on your return.
ous by saying, “You did a good job at            Now, if I have whetted the appetite
the meeting and covered a lot of terri-       of the reader, let’s explore how we go
tory. Dictate the memorandum to my            about developing the management skill
secretary so we can get it out in a           of dictating.
   The sink-or-swim philosophy which
                                             When and How To Start
I admit to having used is not always
the best. It can have a lasting negative        In my opinion, our professional staff
effect on an individual. I prefer the        members should start dictating at the
 soft-sell approach to dictating by start-   GS-11 and GS-12 levels by using a
 ing an individual off using a machine       machine. Of course, it should be re-
 and gradually building up his dictat-       membered that we cannot forget the
 ing skills to a point where he can be at    secretary in all this since she too is an
ease dictating to a stenographer. I          essential part. If the secretary can take
cannot overemphasize the value of de-        dictation, then the chances are she can
veloping these skills because of the         use a transcriber (the playback ma-
 countless hours of pushing the pencil       chine from the dictaphone that allows
that are saved. Those who have               the secretary to slow down the record-
 worked with me, I am sure, remember         ing to an acceptable speed for typing).
 my usual statement to my secretary          If she is not a stenographer and has
 after returning to our office from a        never used a machine it might take a
 meeting, “Vickie, come in and bring         bit of selling, but if your penmanship
 your book.”                                 is as bad as mine it does not take
    With a stenographer capable of tak-      much.


   The next step is pure logistics-get      distortion is noted at normal playback
the machines.                               speed, try speaking a little slower and
                                            enunciating more clearly.
Using the Machine                              Always remember to enunciate
                                            clearly since the secretary will tran-
   It is considerably easier to familiar-   scribe what she hears. This is particu-
ize the secretary with the transcriber      larly true for the last syllable of words.
than it is to make a good recording.        When a little of my New York accent
The most difficult adjustment is for the    slips in every now and then, words like
dictator. For some reason the first at-     “in depth” are typed “in debt” and so
tempt at pushing a button and speak-        on. Bad habits in enunciation will be
ing into a live microphone that is re-      quite clear when a typed draft is re-
cording seems to be a traumatic experi-     turned. Remember, if it is the wrong
ence. A few simple hints may help.          word, it’s your fault and not the secre-
  1. Become familiar with the ma-           tary’s.
     chine, including the location and
     use of its controls.
                                            The Move to a Stenographer
  2. Make a test record by reading a
     memo you wrote by hand. Re-               A good stenographer can be an in-
     member to speak slowly and             valuable asset to a manager. Frankly,
     clearly. Record a few sentences        even in the accounting profession, I
     at a time and play them back to        can’t understand how some managers
      determine the proper control set-
                                            can get along without them. I shudder
                                            every time I think of having to write a
  3. Try the real thing but remember
                                            memorandum by hand; yet we all
     to speak slowly and clearly. Al-
     ways prepare a brief outline of
                                            know many managers who still do,
     the memo so you can keep your          probably because they fear that “bap-
     thoughts organized in a logical        tism of fire” that makes a soldier a
     flow. This will pay off when you       veteran.
     edit the draft.                           I can say from experience that it is
                                            not that difficult when a new dictator
                                            and stenographer first work together.
Avoid Bad Habits
                                            It is probably a tossup as to who is
   When you play back your first re-        more nervous. The most difficult part
cording you probably won’t recognize        of live dictation, in my view, is for the
yourself. Most people don’t. You might      dictator to speak at a speed within the
also think you sound like Donald            limitations of the stenographer. Once
Duck. Most people do. The machine           this is accomplished the speed of both
records in such a manner that the sec-      can be increased.
retary can slow the record down with-          Again, as with the machine, when
out distortion. However, if extreme         working with a stenographer for the

                                                        DICTATING-A    MANAGEMENT TOOL

first time, start out with a short memo-     have become an expert-recognizing
randum. Don’t forget to encourage the        of course that some individuals adapt
stenographer to interrupt if she does        more quickly than others. Then the
not understand. If you are not sure of       next time you attend a meeting, if one
the correctness of something just dic-       of your associates or superiors says,
tated, ask her to read it back. Don’t be        Use my secretary if you want to
afraid to edit while dictating.              speed up this memorandum,” you can
   After you have used live dictation        reply, “Thanks. Send her over and tell
three or four times, you will find you       her to bring her book.”

                                   Good Advice
           If an ordinary word fits, use it. Write short sentences. Don’t look
         for original ways to repeat yourself. Don’t use words that send people
         running to the dictionary or out on a coffee break. Don’t assume every.
         one knows exactly what you’re talking about. The purpose is to in-
         form, not impress.

                                   Robert A. Podesta
                                   Assistant Secretary of Commerce for
                                     Economic Development.
                                   Quoted in The Sunday Star, Washington,
                                     D.C., April 26, 1970.

           As We Look to Others

           The GAO review of the Federal Government’s Indian
           education program led to the assignment of three GAO
           auditors from the Los Angeles Regional Ofice to do work at
           the Sherman Indian High Sch.001 at Riverside, Calif. Their
           appearance there aroused some curiosity among the students.
           Ultimately, the school paper Sherman Highlights (January-
           February 1971) printed the story which follows.
           The piece was written by Roselyn Duwyenie, a Hopi Indian
           girl from Hotevilla, Ariz. Miss Duwyenie, an outstanding
           student, had such creditable achievements on her record as
           vabdictorian, 1971 graduating class; recipient of DAR
           Citizenship Award to Outstanding Senior Girl and Most
           Successful in Business Award; editor of school paper; and
           participant in numerous other school activities.

General Accounting Auditors                  These auditors, Mr. Dave Zyks, Mr.
                                           Larry Bridges, and Mr. George Gaza-
   We kept seeing these strangers visit-   way, work out of the Los Angeles Gen-
ing on campus. They seemed to be           eral Accounting Office which is di-
everywhere, in and out of classrooms,      rectly under the GAO in Washington,
dining hall, other offices, etc. Then we   D.C.
found they were located in an office
                                              Actually, they work for Congress,
next to our Highlights room.
                                           arid they said they are sometimes re-
   We decided if we could find out who
they were and what they were doing at      ferred to as the “Watch Dogs” for
Sherman, it would be a good article        Congress. There are many teams of
for our newspaper, so we went next         these auditors who go all over the
door and asked for an interview, and       country, and sometimes into far cor-
to “investigate.” We the “interviewer-     ners of the world to check on many
investigators” found out quickly that      different kinds of problems; or make a
they were “investigators,” or, auditors    study and survey of how the money
from the General Accounting Ofice.         appropriated by our Government is
When we left their office, we felt that    being spent, or being used to the best
we had been “interviewed” instead of       advantage. The reports of their find-
being the “interviewers,” but we did       ings, good or bad, are taken to the
find out many interesting things.          Washington Head Officer who reports

                                                                  AS W E LOOK TO OTHERS

to Congress. If any problems are en-          at all Indian boarding and reservation
countered, they set about to improve          schools.
the situation.                                   They described their jobs to us, and
   These auditors are now looking into        told us about the tYPe of studying we
Indian Education to see if they can           might take if we were interested in
find any problems, and then try to            being GAO auditors. These jobs pay
                                              very good salaries, and the promotions
help solve any problems they might
                                              are fast and good. Besides a good sal-
find. They will also write up any good
                                              ary which they make, they also get all
points they find because these might be
                                              their traveling expenses paid. The
used by other agencies of the govern-
                                              starting salary is good, and at the end
merit. They           make recornmen-         of each year they get a raise f o r the
         to Congress of the needs of the      first four years. After that, one gets a
school.                                       raise every two years, so you see, one
   When these auditors left here: one         could get to the top in no time. To me
was going with another team to Phoe-          it would be interesting to travel all
nix, and one to Washington. They will         over our country. It sounds to me like
travel all over the U S . to take a look      a good position to train for.

                                     We Agree
            If the General Accounting Office did not exist, it would have to be
          invented. The necessity for an independent agency to examine how the
          Government spends public funds in the discharge of its responsibilities
          was obvious from the very beginning of constitutional government in
          this country.

                                    Management Accounting, April 1970.

              Approval of Department of Commerce
                  mnting Systems

   President Nixon commended the De- the Secretary and his associates for
partment of Commerce in May 1971 this “significant accomplishment.”
for becoming the first Cabinet agency     Immediately after his appointment
whose complete accounting system de- to the Cabinet in January 1969, Secre-
signs have been approved by the tary of Commerce Maurice Stans es-
Comptroller General, as required by tablished as a priority task the mod-
law. His letter of commendation ap-
                                       ernization of the Department’s account-
pears on the next page.
                                       ing systems and their approval by the
   The Comptroller General, Elmer B.
                                       Comptroller General.
Staats, also wrote to the Secretary of
Commerce noting that “the design of       In addition to Mr. Stans’ personal
all seven of the accounting systems of interest. top Department leadership for
the Department of Commerce, includ- this work was provided by Larry A.
ing appropriate ADP documentations, Jobe, Assistant Secretary of Commerce
have been approved” and commending for Administration.

Larry A . l o b e , Assistunt Secretary o f Commerce for Administration, accepts congratulations
for his leadership role in improving and obtaining GAO approval o f the d e s g n s 01 the
Department o f Commerce accounting systems. A n inlormal celebration of this accomplish-
ment was held at the Department o f Commerce on June 18, 1971. From the l e f t : Comptroller
General Elmer B. Stuats: Secretary oj Commerce Marurice H . Stuns. Mr. J o b e ; and E. H .
Morse, Jr., Director, Ofice of Policy and Special Studies.


                    THE W H I T E HOUSE

                                 May 7, 1971

Dear Maury:

It was interesting to l e a r n that the Department of
Commerce h a s passed a significant milestone i n
becoming the f i r s t Cabinet Department whose com-
plete accounting system design h a s been approved
by the Comptroller General as required by law.

You and Assistant Secretary Jobe d e s e r v e a special
word of appreciation for the leadership responsible
for this accomplishment. I know that both of you a r e
keenly aware of the significant contribution that a c -
curate, intelligible and timely financial data can
make to the efficiency and the economy of execution
of our programs. This is what I tried to convey i n
my August 12, 1969 memorandum. We must indeed
have "financial systems that illuminate every level
and stage of decision-making: f r o m the first-line
supervisor to the President and the Congress, f r o m
the long-range forecast to the c r i t i c a l post-audit. ''

I a m confident that you will move ahead with the s a m e
quick responsiveness i n putting these accounting systems
into operation. Your accomplishments should s e r v e to
demonstrate to all F e d e r a l agencies how p r o g r e s s can
be made in strengthening administrative practices.

With w a r m e s t regards,


Honorable Maurice H. Stans
Secretary of Commerce
Washington, D. C. 20230


  Mr. Jobe’s leadership was recog-           erative accounting systems develop-
nized not only by President Nixon and        ment program. Under the leadership of
Secretary of Commerce Stans, but by          Daniel Borth, deputy director, and
the Federal Government Accountants           Richard Maycock, assistant director, of
Association. This organization pre-          the Office of Policy and Special Stud-
sented Mr. Jobe with one of its Distin-      ies, the following GAO staff members
guished Leadership Awards for this           assisted the Department’s agencies in
work during its 20th Annual National         their systems work since 1969:
Symposium in Washington, D.C., June             Ernest R . Porter
30, 1971.                                       Jack Ell
   The Department of Commerce                   Arthur Martin
accomplishment was not without a                Earl Wysong
strong assist from GAO under its coop-          Frankie Schlender

Department of Commerce financial systems staff with top departmental officials and the
Comptroller General a t informal celebration on June 18. From the left: Elmer B. Stuats,
Comptroller General; Maurice H. Stans, Secretary of Commerce; Eleanor Clark; Meir S.
Gabbay, Chief, Financial Systems Staff; C. L. Harvill; Ben L. Brown; John J . Zych; Harry
Kirst; W. R. Kuttner; June Williams; Joyce Cicala; and Larry A. Jobe, Assistant Secre-
tary for Administration.

More on GAO’s First 50 Years

  The Summer 1971 issue of the Review was devoted
completely to commemorating GAO’s 50th anniver-
sary. It contains numerous items relating to the history
and evolution of the Office.
  In this issue, a number of additional items in this
vein are included in further recognition ,of 1971 as the
year when GAO completed its first 50 years.

                                                     GAO Tatchdog Photo

             50th Anniversary Activities

            In recognition of the 50th anniversary of the Budget and
            Accounting Act, 1921, which created the General Accounting
            Ofice, a variety of activities and events took place during
            the month of June 1971.'

June 11 Activities                                  George P. Shultz, Director, Of-
                                                       fice of Management and
  On this date the principal observ-
ance of the anniversary was held in
                                                    Russell E. Train, Chairman,
Washington with the following events:
                                                       Council on Environmental
  -Presentation of three of the 50th
    anniversary year series of lectures
                                                    Dr. Robert C. Weaver, Profes-
    on improving management for
    more effective government. These                   sor of Economics, City Uni-
     lectures were delivered during                    versity of New York
    the morning in the West Audi-              -The     annual honor awards cere-
    torium of the New State Depart-              monies of the General Accounting
    ment Building to an audience of              Office with the Honorable Chet
    about 800 people, consisting of              Holifield, Representative from
    GAO officials, employees, and                California, as the guest speaker
    guests. The lecturers were:                   (see p. 84).

                                                                     GAO Watchdog Photo
Comptroller General Elmer B. Staats opens the morning sessr'on on June I1 at the West
Auditorium, New State Department Building, b y greeting GAO oficials, employees and

                                                            50TH ANNIVERSARY ACTlVITlES

                                                                        GAO Watchdog Photo

Leadoff speaker un June 11 in the State Department Auditorium was George P . Shultz,
Director, Ofice of Management and Budget.

  -An     evening reception sponsored          11 were video-taped and are being
     by the GAO Employees Associa-             made available in this form to all GAO
     tion in the Ben Franklin Room             regional offices for presentation to
     of the New State Department               their staffs. These lectures are part of a
     Building. About 600 guests at-            year-long series of 15 lectures which
     tended.                                   will be compiled into book form for
   All of the lectures delivered on June       distribution early next year.

                                                                        GAO Watchdog Photo

A portion of the audience listening to Mr. Shultz. Seated on the platfonn are the Comp-
troller General, Elmer B. Staats; the Assistant Comptroller General, Robert F. Keller; and
GAO division and ofice heads and their deputies.


                                                                           GAO Watchdog Photo
Speakers. Robert C . Weaver, Professor of Economics, City University of New York, and
Russell E. Train, Chairman, Council on Environmental Quality, participated in the morning
lecture program, a segment of the GAO’s 50th Anniversary Ceremonies on Jane 11. From
the left: Mr. l e a v e r ; Elmer B. Staats, Comptroller General; Mr. Train; and Robert F.
Keller, Assistant Comptroller General.

Congratulatory Speeches by                       that Office; and be it further
Members of Congress                                Resolved, That as it is fitting and proper
                                                 to commemorate the fifty-year history of the
                                                 General Accounting Office, the month of
  Numerous speeches by Members of                June 1971 is designated for ceremonies ap-
Congress congratulating and com-                 propriate to such commemoration.
mending GAO on its 50th anniversary
were printed in the Congressional
                                                 Published Articles on GAO
Record during June 1971.
                                                  A number of articles relating to
Congressional Resolution                         GAO appeared in the publications of
                                                 professional associations. Those pub-
  The House of Representatives ap-               lished during January-August 1971
proved the following concurrent reso-            were:
lution on August 3, 1971. (The Senate
had not acted on it up to the time of            The Journal of Accountancy
the August 1971 recess.)                         (June 1971)
   Resolved by the House of Representatives         Profile on Comptroller General
(the Senate concurring), That the Congress       Elmer B. Staats written by James
of the United States extends its congratula-     Nolan, managing editor, plus an edi-
tions to the farmer and present officers and
employees of the General Accounting O5ce
                                                 torial entitled “GAO Is Fifty Years
on the occasion of the fiftieth anniversary of   Old.”

                                                            50TH ANNIVERSARY ACTIVITIES

Management Accounting                         The Federal Accountant
(May 1971)                                    (June 1971)
  An NAA salute to GAO on its 50th              “Outline of History of the US. Gen-
anniversary which also refers to the          eral Accounting Office 1789-1971”
April 1970 issue of the same journal          accompanying message from FGAA
containing an article describing GAO          national president ( E . H . Morse, j r . ) ,
activities and problems.                      entitled “What About the Next Fifty
The Accounting Review
                                              Army Finance Journal
(July 1971)
                                              (May-June 1971)
  “A Perspective of Accounting” by              “The     United     States General
Leo Herbert, director, Office of Person-
                                              Accounting Office-A Half-Century of
nel Management.
                                              Service to the Public.”

The Ofice                                     tVashington/The Sunday Star
(January 1971)                                (August 22, 1971)
  “Accountants Evaluate Federal      Man-        “Sniff, Sniff, the GAO” by Miriam
agement,, by E. H. Morse, Jr.                 Ot tenberg.

                                                                        GAO Watchdog Photo
Attentive listeners in the State Department Auditon’um, June 11.


Special GAO Publications                             ments relating to GAO’s predeces-
                                                     sor organizations, 1789-1921.
  The following publications were de-
voted to GAO history and develop-                 South Lobby, main floor-
ment :                                               Pictures and facsimiles of docu-
  The GAO Review, Summer 1971                        ments pertaining to GAO’s first
  GAO Newsletter, June 11, 1971                      50 years.
                                                  Seventh floor-
Special Displays in                                  Pictures of Comptrollers of the
GAG Building in Washington                           Treasury, 1789-1921; and Comp-
                                                     trollers General, Assistant Comp-
  North Lobby, main floor-                           trollers General, and General
     Pictures and facsimiles of docu-                Counds, 1921-1971.

            The General Accounting Office is a great office and you can be
         ,proud to be a part of it, and of the contributions the Office has made
         to hetter government. If I may say so modestly, together we have
          revolutionized the Office, raised its stature and made its influence felt
          for good throughout the Federal Government. This has only been ac-
         complished by constant recognition that an organization is only as
          strong as its members. The General Accounting Office is no one group
          or individual, but a team with every one of you playing a vital part.
          I know you will give the next Comptroller General the same teamwork
         and loyalty you have given to me.

                                    Lindsay C. Warren
                                    In letter to GAO employees at time of his
                                      retirement in 1954.


           Personalities Contributing to the
           Enactment of the Budget and
           Accounting Act, 1921

           The question “What is he really like?” is posed frequently
           about people in the public eye. At this special time in the
           history of the General Accounting Ofice, it is of more
           than passing interest to learn something about those
           idividuals who were instrumental in the enactment of the
           Budget and Accounting Act, 1921. The biographical abstracts
           that follow help to humanize this part of GAO’s history and
           make more meaningful the words and actions of the
           individuals who were so important in the conception and
           birth of the General Accounting Ofice.

The Cleveland Commission                      required to furnish the Senate with the
                                              names, qualifications, and salaries of
  In 1911 President William Howard            the members of the Commission. As a
Taft appointed a Commission on Econ-          result of this senatorial request for in-
omy and Efficiency to look into ways          formation, we have the following bio-
and means to improve the Federal              graphical sketches of the members of
Government. The Commission was                the Commission.
chaired by Frederick A. Cleveland who
                                                  Frederick A . Cleveland, chairman: Age
had been instrumental in updating the          46; salary as chairman of the President’s
accounting procedures in New York              Commission on Economy and Efficiency,
State.                                         $10,000 per annum; appointed March 8,
  The Congress was interested in the           1911. Official positions previously held: In-
                                               structor of finance, University of Pennsyl-
makeup of this Commission and pur-
                                               vania, 1900 to 1902; professor of finance,
suant to a Senate resolution approved          School of Commerce, Accounts, and Finance,
January 25, 1912, President Taft was           New York University, 1903 to 1905: member

  Mrs. Macfarlane was chief of the Legal Reference Services, Office of the General
  Counsel, until her retirement June 24, 1971. She holds an A.B. degree from National
  University and an LL.B. degree from National University Law School. She is a mem-
  ber of the Bar of the District of Columbia.
  Miss Hatter is assistant chief of the Legislative Digest Section, Office of the General
  Counsel. She has been with the General Accounting Office since 1957.


                                                             From Library of Congress collections

Frederick A . Cleveland, Chairman of the President’s Commission on Economy and Efficiency,
appointed b y President T a f t in 1911.

of commission on finance and taxation ap-     city of New York; director, bureau of munic-
pointed by Mayor McClellan, of the city of    ipal research, Philadelphia ; director, bureau
New York, 1905 to 1906; member of com-        of municipal research, New York City.
mittee appointed by Comptroller Metz for         William F. Willoughby: Age 44; salary
the revision of accounts and administrative   as member of the President’s Commission
methods of New York, 1907 to 1908; member     on Economy and Efficiency, $6,000 per an-
of committee on office methods and prac-      num; appointed March 8, 1911. Official posi-
tices, appointed by Controller Prendergast,   tions previously held: Expert, Department of

                                  ENACTMENT      OF THE BUDGET AND ACCOUNTING ACT, 1921

Labor, 1890 to 1901; treasurer of Porto Rico,     of Massachusetts, 1910 to 1911; president of
1901 to 1907; secretary of Porto Rico and         Massachusetts Society of Public Accountants;
president of the Executive Council of Porto       trustee and member of executive committee
Rico, 1907 to 1909; Assistant Director of         of American Association of Public Account-
the Census, 1909 to 1911.                         ants.
   Walter W . Warwick: Age 43; salary as            Merritt 0. Chance, secretary: Age 42;
member of the President’s Commission on           salary as secretary of the President’s Com-
Economy and Efficiency, $6,000 per annum;         mission on Economy and Efficiency, $6,000
appointed April 20, 1911. Official positions      per annum; appointed March 8, 1911. Offi-
previously held: Clerk to United States cir-      cial positions previously held: Assistant
cuit judge, 1892 to 1893; confidential clerk,     messenger, Post Office Department, 1888;
law clerk, and chief law clerk, Treasury De-      clerk, War Department, 1890; clerk, Post
partment, 1893 to 1898, and 1905 to 1908;         Office Department, 1891 to 1894; clerk and
deputy auditor Isthmian Canal Commission          private secretary to Fourth Assistant Post-
 (Washington office), 1904 to 1905; examiner      master General, 1895 to 1899; chief clerk,
of accounts of the Isthmian Canal Commis-         Fourth Assistant Postmaster General, 1899 to
sion and auditor of the government of the         1901: private secretary to the Secretary of
Canal Zone (on duty on the Isthmus), 1908         War, 1901 to 1904; superintendent of post-
to 1911; appointed associate justice of the       officesupplies, Post Office Department, 1904;
supreme court of the Canal Zone, 1911. (Did       chief clerk, Post Office Department, 1905 to
not enter on duties of office last named be-      1908; auditor for the Post Office Depart-
cause of appointment as member of the com-        ment, 1908 to 1911.1
  Frank J . Goodnow: Age 53; salary as
                                                    Of the 26 reports issued by the
member of the President’s Commission on          Commission, two dealt with the Na-
Economy and Efficiency, $6,000 per annum;        tional Budget System and contained
appointed April 20, 1911. Official positions     recommendations that were ultimately
previously held: Professor of law, Columbia      incorporated in legislation that became
University, New York, since 1883; member
of commission appointed by Gov. Roosevelt
                                                 the Budget and Accounting Act, 1921.
in 1900 to revise the charter of the city of     These reports were “The Need for a
New York; member of commission on finance        National Budget System” (issued June
and taxation appointed by Mayor McClellan        27,1912,62d Cong., H. Doc. 851) and
of the city of New York, 1905; member of         “A Budget for the Fiscal Year 1914”
commission appointed by Mayor Gaynor to
inquire into the causes of congestion of          (submitted as an example of the type
population in New York, 1910; delegate of        of budget that would be proper, 62d
the United States Government to the first        Cong., S. Doc. 113).
Congress of Administrative Science at Brus-
sels, 1910.
   Harvey S. Chase: Age 50; salary as mem-        Walter W. Warwick
ber of the President’s Commission on Econ-
omy and Efficiency. $40 per day while on            One of the members of the Commis-
duty at Washington, without cost to the Gov-     sion, Walter W. Warwick of Ohio, was
ernment for traveling and personal expenses,     appointed by President Wilson on Sep-
the total cost per annum not to exceed $6,000;
                                                 tember 1, 1915, to be Comptroller of
appointed June 30, 1911. Official positions
previously held: Consulting expert in the        the Treasury. Comptroller Warwick
installation of uniform systems of accounting    served in this capacity until June 30,
for the State of Ohio, 1902; expert“ for         1921, when the GAO and the Office of
finance commission of the city of Boston,
1908 to 1910; expert for governor of State          Congressional Record, Vol. 48 (1912). p. 1834.


the Comptroller General went into op-       He considered his memorandum “as a
eration.                                    call to aid the new office to make it a
   Several days before President Wilson     model of efficiency among Government
vetoed the Budget and Accounting Act        establishments.”
bill on June 4, 1920, Comptroller War-
wick wrote a memorandum to the prin-        Medill McCormick
cipal members of his staff inviting
comments on steps to implement what            Senator Medill McCormick of Illi-
he termed “the most important and far       nois, chairman of the Senate Commit-
reaching law with reference to the fi-      tee on Expenditures in the Executive
nancial and accounting work of the          Departments, introduced the bill which
Government that has been enacted            ultimately became the Budget and
since the original Treasury Act of          Accounting Act, 1921.
                                               Medill McCormick was born on May
   To make the transition as smooth         16, 1877, in Chicago, Ill., the son of
and effective as possible he stated, “I
                                            Robert S. and Katherine Medill
conceive it to be a duty of the present
                                            McCormick. He was educated in the
office of the Comptroller of the Treas-
ury to do all of the preliminary work       public schools of Chicago, a prepara-
on organization lines that it is possible   tory school at Groton, Mass., and
to accomplish before July 1, in order       graduated from Yale University in
that the Comptroller General when ap-       1900. During his career as a journal-
pointed may have the benefit of the         ist, Mr. McCormick covered the war in
knowledge and suggestions of those          the Philippine Islands in 1901. He was
persons who have been responsible for       the publisher and owner of the
many years for the operations of the        Chicago Daily Tribune and later pur-
accounting offices of the Treasury.” He     chased an interest in the ChveEand
further elaborated that “the assign-        Leader and Cleveland News.
ment to organization units of definite         Mr. McCormick was a delegate to
duties and the fixing of responsibility     the Republican National Convention at
for planning and executing those du-        Chicago in 1916 which nominated
ties are vital. Organization in this        Charles Evans Hughes and Charles W.
sense is a separate and distinct subject    Fairbanks.
from that of personnel. Organization           His political career began with serv-
should not be built around qualifica-       ice in the Illinois General Assembly to
tions or peculiarities of individuals       which he was twice elected. Mr.
whether the head of the office or oth-      McCormick was subsequently elected
ers.” He added, “Believing that the         to the 65th Congress as Representative
question of organization is distinct        at Large from Illinois and to the U.S.
from that of personnel I am anxious         Senate where he served from Novem-
that the best plan of organization for      ber 5, 1918, until his death on Febru-
immediate operation be worked out.”         ary 25, 1925.

officials, and, in my opinion, more real econ-        was admitted to the bar in 1890. He
omy and efficiency will result through the            served his State as judge of Uvalde
creation of this office than any other single
step we could possibly take.
                                                      County and as a member of the Texas
   The creation of an independent auditing            House of Representatives. He was dele-
department will produce a wonderful change.           gate to three Democratic National
The officers and employees of this depart-            Conventions, 1900, 1904, and 1916.
ment will at all times be going into the
                                                         Mr. Garner died at Uvalde, Tex., in
separate departments in the examination of
their accounts. They will discover the very           1967, at age 98.
facts that Congress ought to be in possession
of and can fearlessly and without fear of
removal present these facts to Congress and           James W. Wadsworth, Jr.
its committees.***
                                                         Another Member of Congress who
   Representative Good served as chair-
                                                      deserves a significant place in the ros-
man of the House Select Committee on
                                                      ter of those instrumental in the estab-
the Budget which considered the legis-
                                                      lishment of the Office of the Comptrol-
                                                      ler General as an independent agency
   Mr. Good was born September 24,
                                                      responsible to the Congress was James
1866, in Lenn County, Iowa. He was a
                                                      Wolcott Wadsworth, Jr.
graduate of Coe College (Cedar Rap-
                                                         Mr. Wadsworth was born in Gene-
ids). A lawyer, Mr. Good received a
                                                      seo, N.Y., August 12, 1877; received
bachelor of laws degree from the Uni-
                                                      his preparatory education at St.
versity of Michigan in 1893. Mr. Good
                                                      Mark's School, Southboro, Mass.; and
served in the House of Representatives
                                                      was graduated from Yale University in
from March 4, 1909, until June 15,
                                                       1898. After the Spanish American War
1921. President Hoover appointed
                                                      he engaged in livestock and agricul-
Good as Secretary of War. He served
                                                      tural pursuits near Geneseo. He was
from March 5, 1929, until his death,
                                                      elected to the New York State Assem-
November 18, 1929.
                                                      bly 1905-1910 and to the US. Senate
                                                      in 1914 where he served until 1927.
John Nance Garner                                     He was an unsuccessful candidate for
                                                      reelection in 1926. In 1933 he was
   Former Vice President of the United                elected to the 73d and seven succeed-
States John Nance Garner was a mem-                   ing Congresses and he died in 1952.
ber of the House Select Committee on                     While Mr. Wadsworth served in the
the Budget. During his tenure in the                  Senate during the time that the Budget
House of Representatives he served as                  and Accounting Act was going through
minority floor leader and in the 72d                  the legislative process, it was his exten-
Congress as Speaker of the House.                     sive speech on the floor of the House
   Mr. Garner was born November 22,                   of Representatives on February 1,
1868, in Red River County, Tex. He                    1937, that saved the GAO from aboli-
had a limited elementary education,                   tion. In this speech Congressman
studied law in Clarksville, Tex., and                 Wadsworth provides us with a per-
 2   Congressional Record, Vol. 58 (1919), p. 7085.   sonal r6sumC of the legislative history

                                        ENACTMENT OF THE BUDGET AND ACCOUNTING ACT, 1921

of the Budget and Accounting Act,                      fashion. Accountability for expenditures au-
1921. Excerpts from the speech and                     thorized in the first instance by Congress,
                                                       was scattered in pretty nearly all of the de-
the related discussion on the House                    partments. Confusion existed; lack of sys.
floor                                                  tem, and the inevitable waste which comes
                                                       with an ill-ordered governmental structure.
    Mr. WADSWORTH. Mr. Chairman, we
                                                       In 1920 the movement for reform achieved
 have before us in Committee of the Whole
 House the annual appropriation bill for the           great force, and Members of both Houses,
 support of the so-called independent offices.         looking back over the years, made up their
 One of the items in the bill is the appropria-        minds that if the Government was to be con-
                                                       ducted in orderly fashion from that point on
 tion for the support of the office known as
                                                       and be put in a position where it could stand
 the General Accounting Office and the C o w -
                                                       the strains which the future might put upon
 troller General and his assistant. If my
                                                       i t - o f course, the strains are of a financial
 recollection serves me right, that appropria-
                                                       character principally-it was absolutely nec-
 tion calls for the expenditure of approxi-
 mately $5,300,000. The fact that this item of         essary to establish a budget system. Several
 appropriation for the support of the Comp-            States of the Union had established budget
 troller General and the General Accounting            systems prior to that time, but there had
 Office is contained in this bill perhaps              been nothing approaching it in the Federal
 furnishes me an excuse, if not a good reason,         Government.
 to discuss the origin of the Office itself and,
                                                           I think it fair to say that the best minds in
having traced that as briefly as I may, dis-           both Houses and on each side of the aisle in
 cuss its functions, especially in view of the         both Houses, gave their attention to the
 great task that confronts the Congress, look-        establishment of a budget system. In 1920
 ing toward the reorganization of the execu-           the first effort was made, and a bill was
tive departments of the Government.                    passed establishing the office of Director of
    During the World War the Government of             the Budget, with duties assigned to him such
the United States of necessity grew in its            as you are all familiar with, duties which he
dimensions by leaps and bounds. Nearly all            still bears. Needless to say, the establish-
of that growth was for the purpose of meet-           ment of that office made it possible for the
ing the emergency incident to the Great War.           Congress and the country as a whole to get
The demobilization period consumed the                a better view of the financial condition of
years 1919 and 1920, speaking generally.              the Government; a better view and under-
Demobilization was accomplished in due                standing of the requests for money coming
time, but it became apparent to the Mem-              from the Executive, the revenues which
bers of the House and Senate of that day              might accrue from tax measures, and finally
that in coming back to normal condition in            the appropriations made by the Congress
government, those who were to manage it,              itself.
including the members of the legislative                   As an integral and essential part of the
branch, were bound to find additional com-            Budget system, attempted first in 1920, there
plications and ramifications incident not only        was established the General Accounting Of-
to some of the lessons learned in the war             fice and the office of the Comptroller Gen-
                                                      eral and Assistant Comptroller General.
itself, but incident, perhaps more especially,
                                                      Around the establishment of the General Ac-
to the natural growth of the country.
                                                      countine; Office, and particularly around the
   Prior to 1920, dating clear back to the in-
                                                      establishment of the office of Comptroller
ception of our Government, there had never
                                                      General. a considerable controversy took
been made any especially determined effort
                                                      D k e . The House of Representatives at that
to see to it that as the Government. in its
                                                      time. in passing the Budget bill, proGded
executive departments. grew from year tn
                                                      for the office of Comptroller General, and
year, it grew in systematic and orderly
                                                      inserted in the act provisions to the effect
  Congressional Record, Vol. 81 (1937). pp. 652-56.   that the Comptroller General should be ap-


                                                               From Library of Congress collections

James   w. Wadsworth, Jr., U.S. Senator, 1914-27, and Representative from N e w York, 1933-52.
pointed by the President, by and with the          The Senate accepted the House provision
advice and consent of the Senate, and should     in very large measure, and the bill was
serve until he was 70 years of age, or during    passed. Woodrow Wilson was President of
good behavior. The bill provided that he         the United States at that time. If my recol-
might be removed by concurrent resolution        lection is correct, each House of Congress
of the Congress for malfeasance in office,       was controlled by a majority of the Republi-
incompetency, or neglect of duty, or he          can Party, although the majorities were not
might be removed through impeachment             heavy.
proceedings.                                       Mr. Wilson vetoed the bill. In his veto

                                   ENACTMENT OF THE BUDGET AND ACCOUNTING ACT, 1921

message he expressed his regret that he felt          President Wilson’s message gave rise to a
impelled to veto the Budget Accounting h  t ,      very interesting debate. I t was submitted, of
acknowledging as he did that it would bring        course, first to the House of Representatives
about great reforms and emphasizing the            as the body in which the bill had originated.
fact that his only reason for vetoing it was       The gentleman from Iowa, Mr. Good, was
on account of the provision in the bill which      chairman of the Committee on Appropria-
failed to give him, the Chief Executive, the       tions in those days and had charge of the
right to remove the Comptroller General. I         bill during its passage through this body. It
think it might be of interest to the Members       will be remembered that he was a most d i c
of the Committee who do me the honor to            tinguished man and served in this House for
listen to me if I read a portion of President      many years, later becoming Secretary of War
Wilson’s veto message of House bill 9783,          and, unhappily, dying in office. Mr. Good
sent to the Congress on June 4, 1920. I read       was one of the persons who took part in the
an excerpt from the veto message:                  discussion of the President’s veto. He said
   “I do this with the greatest regret. I am       on that day immediately after the message
in entire sympathy with the object of this         was read:
bill and would gladly approve it but for the         “I regret more than I can express that the
fact that I regard one of the provisions con-      President has thought it necessary to veto
tained in section 303 as unconstitutional.”        the Budget bill. I cannot a m v e at any con-
                                                   clusion other than that the legal advice he
  I may interject the observation that Presi-
                                                   has received as to the constitutional powers
dent Wilson was referring to the power of
                                                   of Congress in this respect is, indeed, faulty.
removal of the Comptroller General when he
                                                   In creating the General Accounting Office
used that sentence. H e goes on to say:
                                                   and providing for the Comptroller General
  “The effect of this-”                            and Assistant Comptroller General the com-
  That is, the removal provisions which            mittee was guided by a single thought; that
lodged the power in the Congress-                  was, that these two officers should be placed
  Mr. RANKIN. Mr. Chairman, will the               upon a plane somewhat comparable to the
gentleman yield?                                   position occupied by a Federal judge.”
   Mr. WADSWORTH. I yield.                           That is, the Comptroller General and
   Mr. RANKIN. Did the original bill pro-          the Assistant Comptroller General-
vide that the President might remove the
Comptroller General?                                  “The positions are somewhat judicial,
   Mr. WADSWORTH. No; the original bill            and it was the opinion of the committee that
provided that the Comptroller General should       we should remove them as far as possible
be appointed by the President, but might           from political considerations. It was con-
be removed only by concurrent resolution           sidered that as to the President’s appoint-
of the Congress for malfeasance, incompe-          ment, if it was made a political office, the
tency, neglect of duty, or by impeachment          President would, in all likelihood, appoint
proceedings. President Wilson went on to           someone of his political faith. It is the desire
say:                                               of the committee that that situation should
   T h e effect of this provision is to prevent    be avoided if possible. There is no decision
the removal of these officers for any cause        of the Supreme Court construing a statute
except either by impeachment or by concur-         such as we have attempted to enact. I think
rent resolution of Congress. I t has, I think,     it may be stated-”
always been the accepted construction of the
Constitution that the power to appoint offi-          Said Mr. Good-
cers of this kind carries with it as an incident   “. . . as a   general rule that the power given
the power to remove. I am convinced that           to the President to appoint an officer carries
the Congress is without constitutional power       with it the inherent power of removal unless
to limit the appointing power and its inci-        that inherent right or incidental right is
 dent, the power of removal.”                      taken away by the statute itself; and that


    is what this Congress intended to do, to take   time on the vote to override the President’s
    from the President the incidental right of      veto of the Budget Act.
    removal and to provide the circumstances           We find, for example, voting t o override,
    and the method of removal.”                     the gentleman from Alabama, Mr. Bankhead,
      The course of the debates on that day in-     the present distinguished Speaker of the
    dicate very clearly that when the Congress      House; the gentleman from Texas, Mr. Bu-
    sought to create the office of Comptroller      chanan, the present chairman of the Com-
    General it did not seek or intend to create     mittee on Appropriations of this House; the
    an executive office. It sought and intended     gentleman from Tennessee, Mr. Byms, the
    to create an agency of the Congress itself      late Speaker and former majority leader of
    subject to the Congress, responsible to the     the House. I may mention also the gentle
    Congress; and that in case of need the in-      man from Georgia, Mr. Crisp; the gentleman
.   cumbent could be removed by the Congress.
       The purpose of the act, as I recollect it
                                                    from Alabama, Mr. Huddleston; the gentle-
                                                    man from Texas, Mr. Jones; the present
    -and I had the honor of serving in the          chairman of the Committee on Agriculture;
    Senate at that time and can remember a          the gentleman from Texas, Mr. Rayburn, the
    great deal of the discussion-was to give        present majority leader of the House; the
    to Congress better control over the appro-      gentleman from Colorado, Mr. Taylor, who
    priations which it makes from time to           in the last session of Congress was the act-
    time in the matter of seeing to it that they    ing majority leader. I could name many
    are made in accordance with the views and       others who, joining with representative Re-
    intent of the Congress; in other words, that    publicans, believed not only in the consti-
    the expenditures themselves are legally made.   tutionality of the bill but in the necessity for
      After considerable debate upon the veto       its enactment.
    message the question was laid before the           Mr. Chairman, this ended the matter in
    House as to whether the veto message            that Congress. In 1921 the agitation was re-
    should be sustained or be overridden. The       sumed and carried on in much the same
    vote upon that occasion was 178 to over-        spirit as in 1920. In the meantime Mr. Wil-
    ride the veto and 103 to sustain the veto.      son had retired from the Presidency and had
    A two-thirds vote was lacking and the veto      been succeeded by Mr. Harding. Again there
    was sustained. It is interesting to note the    was a Republican majority in the Senate
    roll call on that veto message. All party       and in the House, although of not over-
    lines were forgotten. Democrats and Re-         whelming dimensions by any means.
    publicans joined in the debate on the              The bill was introduced all over again,
    original passage of the bill through the        and, as I recollect it, Mr. Good, of Iowa,
    House urging its passage, and joined in the     had charge of it in the House. It came from
    debate incident to the reception of the veto    the so-called Budget Committee, composed
    message itself. Remember, of course, that       of both Republicans and Democrats. If my
    the Republicans had a slight majority in the    recollection is correct it came with a unani-
    House at that time, as I recollect; but the     mous report.
    Democratic Party was a powerful minority           As this bill passed the House, the Comp-
    group, many of whose members were ex-           troller General was to be appointed by the
    ceedingly prominent in this and other de-       President, by and with the advice and con-
    bates and who contributed much to this dis-     sent of the Senate, removable by the Con-
    cussion and its final solution which occurred   gress by a concurrent resolution in prac-
    a year later.                                   tically the same language as contained in the
       I t is not for the purpose of drawing any    bill of 1920. The House still clung to the
    comparisons or to bring before this commit-     life tenure or to the proposition that the
    tee at this time any partisan consideration     Comptroller General should serve until he
    that I call attention to the support given to   was 70 years of age or during good behavior.
    this proposal by the prominent members of          The Senate committee, headed by the late
    the Democratic side of the House at that        Senator Medill McCormick, of Illinois, b e
                                      ENACTMENT   OF THE BUDGET AND ACCOUNTING ACT, 1921

lieved that the Comptroller General should        and Accounting Act of 1921 represented the
serve for 7 years. I n other respects through-    greatest fiscal reform in the conduct of the
out the bill there were very, very few dif-       Government of the United States since its
ferences. The Senate passed the bill with an      foundation in 1789. I think for the first time
amendment changing the tenure of office of        it struck at a huge and admitted evil; that
the Comptroller General.                          is, the wasteful expenditure of the people’s
   The bill went to conference, and the con-      money. For the first time i t set u p a system
ferees of the two Houses compromised and          by which it would he possible for the Con-
provided that the term of the Comptroller         gress, as well as the public, to get a clear
General should be 15 years, but that he           understanding, if they are willing to study
should be ineligible for reappointment. The       the Budget figures, of the structure of the
conference report submitted to the two            Government of the United States and the
Houses emphasizes the fact that by this de-       manner in which it spends its money.
vice the Comptroller General would still be          Mr. Chairman, the Budget system has con-
kept completely independent of executive          tinued to the present day. The Comptroller
control or influence. Being ineligible for re-    General has performed his function. The
appointment, he cares not what any execu-         first 15-year term has come to an end and
tive officer thinks of him; he cannot be          the incumbent has left office, not being eli-
moved by ambition to succeed himself, and,        gible for reappointment. At the moment an
not being removable by an Executive order         Assistant or Acting Comptroller General is
but only by the Congress, his responsibility      performing the functions of that Office. I t
to the Congress and his independence from         has fallen under criticism, and especially
executive control persists.                       criticism from a committee of gentlemen ap-
   This bill came before the House in 1921        pointed by the President of the United
and the House had a very enlightening de-         States, who, examining into the structure of
bate upon it; more so, perhaps, than upon         our Government and looking toward a better
the veto message of Mr. Wilson. Those who         management of the executive departments,
spoke included the Honorable John Nance           have recommended the abolition of the office
Garner, of Texas, who insisted that the           of Comptroller General and of the General
Comptroller General should be completely          Accounting Office. The President himself
independent; Mr. Byrns, of Tennessee, who         made that recommendation, his very own, in
did the same; Mr. Bankhead, of Alabama,           his message to the Congress relating to the
who did the same; Mr. Good, of Iowa. and          reorganization of the executive departments.
many others.                                         I am not sure that every Member of the
   So in 1921 there was no partisan division.     House will agree with me about this, and
The leaders on both sides saw the great           as I express my views I beg of you to believe
necessity for establishing a Budget system        I am not expressing them as a partisan, but,
in the Federal Government, and the further        rather, as one endeavoring to view the future.
great necessity of establishing a s an integral   Presidents come and go. Congresses come and
part of the Budget system an independent          go. But the bureaucracy goes on forever. We
auditor responsible only to the Congress. The     may feel perfectly safe with respect to the
act was passed and was signed by President        legal and proper expenditure of the funds
Harding. The roll call on final passage           which we appropriate under the guidance of
showed-yeas 335, nays 3. You can thus see         the present occupant of the White House.
the practical unanimity of the action of the      W e may feel perfectly safe with respect to
 Congress at that time.                           the proper expenditure of the funds under
   Of course, I do not know how the present       the guidance of the next occupant of the
 Members of the Congress feel about the           White House. But who can tell in the muta-
passage of that act. I happened to be here at     tions of politics, the swinging back and forth
the time, as many of you were. I got the          of public opinion in times of stress, confu-
impression at that time-and I have had it         sion, and hysteria, what the future holds
ever since-that    the passage of the Budget      with respect to this great problem? And in


the future what shall be the function, the       yield 10 additional minutes to the gentleman
standing, and the power of the legislative       from New York.
branch, and especially of the House of R e p        Mr. WADSWORTH. Contrary to the con-
resentatives, in which, according to custom,     ception entertained by a good many people,
all appropriation bills of major importance      the Comptroller General and the Accounting
originate and in which, in accordance with       Office today do not possess, as the result of
the Constitution, all revenue measures must      the Budget Act of 1921, the absolute power
originate?                                       of preaudit. Many people seem to think that
   In 1921 the Congress, glancing toward the     before a disbursing cfficer of one of the
future, made up its mind that in the interest    executive departments can disburse money,
of economy and orderly progress it should        he must get the audit or permission of the
have an agent of its own to audit the ex-        Comptroller General. That is not true. When
penditures a s made in this vast bureaucracy.    the Congress makes an appropriation for a
To secure the assistance of such an auditor      certain purpose, and the appropriation or
they created this office. They took care to      the bill has been signed by the President,
make him absolutely independent of the offi-     the department chief involved begins to
cials whose expenditures he was to audit.        study, or perhaps he has already studied, the
   To my mind, there is a very, very deep        method and program for spending the money
and fundamental issue involved in this situa-    for the purpose intended. Let us say he is
tion. It is involved not only to those who are   the Secretary of Agriculture. When the
concerned about the immediate present but        Secretary of Agriculture has his plans made,
to those who look along the vista of the         he notifies the Treasury Department that the
future. I t is proposed now that the office be   Department of Agriculture is ready to pro-
abolished. It is proposed also that the Gen-     ceed under this appropriation. The Treasury
eral Accounting Office be abolished and that     looks up the appropriation and sets out on
there be substituted, if it may be called a      the books of the Treasury the item of ap-
substitution, a general auditor, how inde-       propriation to the credit of the disbursing of-
pendent of the several executive departments     ficer of the Department of Agriculture; at
it is difficult to state, but completely de-     the same time the General Accounting Office
pendent upon the Chief Executive; that he        is notified of the readiness of the Secretary of
shall conduct what might be called a post-       Agriculture to proceed under the appro-
audit of expenditures made by the disbursing     priation and that office also sets up upon its
officers of this huge bureaucracy and make       books this credit to the disbursing officer
a later report to the Congress. He shall not     of the Department of Agriculture.
be the agent of the Congress or its repre-          The disbursing officer of the Department
sentative and shall not be responsible to it     of Agriculture, unless I am very much mis-
in any fashion whatsoever.                       taken, is under bond, and he operates under
   Criticisms have been cast at the Office of    what is known as a system of accountable
the Comptroller General, ssparially hy this      warrants. If he disburses money illegally,
committee of three, who have charged that        under this accountable warrant system, he
the interposition of his functions in what       can be held responsible. His bondsmen may
they are pleased to call the executive de-       be called upon to reimburse the Government
partment of the Government has caused            for the illegal expenditure and, of course,
delay and confusion.                             the system extends out into the field where
   Perhaps you will bear with me if I at-        local disbursing officers are established and
tempt to give in a somewhat sketchy manner,      they, too, may be held accountable.
and subject always to correction and elabo-         With the Comptroller's Office in existence
ration by those who know more about it           as it has been during the last 15 years, an
than I do, some description of just how this     overwhelming majority of the disbursing offi-
thing has been working.                          cers of the executive departments, and espe-
 [Here the gavel fell.]                          cially the good disbursing officers, have taken
   Mr. WIGGLESWORTH. Mr. Chairman, I             every possible means to ascertain in ad-
                                         ENACTMENT OF THE BUDGET AND ACCOUNTING ACT, 1921

    v-nce whether the disbursement they are             Mr. WADSWORTH. Yes. Now, I must
    about to make is legal under the act of the      conclude in a few moments. Members of the
    Congress which made the appropriation. So        Committee, it is now apparent, whether we
    what do they do? They ask the Comptroller        like it or not, that the expenditures of the
    General to give them an opinion, and the         Government of the United States for many
    Comptroller General examines the statutes,       years to come will not fall below $7,000,-
    estimates the intent of the Congress, and        000,000 a year. When this Budget and Ac-
    then informs the disbursing officer that he      counting Act was passed in 1921, the annual
    may or may not disburse the money in the         expenses of the Government of the United
    method suggested by the officer.                 States were three and one-half billion dol-
       Of course, this has occasionally given rise   lars, on an average.
    to delay, but I want to impress upon you the        Already we have doubled that sum, and it
    fact that it has always been the result of the   is apparent that, in accordance with the
    voluntary requests of the disbursing officers    views of those now in power, there is to be
    addressed to the General Accounting Office       no cessation, no substantial reduction in ex-
    to find out whether they can disburse money      penditures for years to come. Moreover, it
'   in a certain fashion or not.                     is now apparent that the functions of the
                                                     Federal Government, already multiplied most
              *     *     *     *    *               substantially through this depression, are
       Mr. COLDEN. Mr. Chairman, will the            not to be reduced in number. Many erner-
    gentleman yield?                                 gency departments or bureaus are to become
       Mr. WADSWORTH. I yield.                       permanent, if the recommendations of this
       Mr. COLDEN. May I ask the gentleman           reorganization committee prevail. The prob-
    from New York whether it is his belief that      lem becomes more and more immense. A
    the Comptroller General has functioned as a      larger percentage of the people's money is
    representative of the Congress rather than       being taken out of their pockets and brought
    an independent agency? I understood the          to Washington in the form of taxes and then
    gentleman to say that the spirit and purpose     spent. Bureaucracy is growing by leaps and
    of the original act was to have a represen-      bounds, and when it grows by leaps and
    tative of the Congress to pass on these bills.   bounds and escapes auditing control, man-
    Has he actually functioned in that respect?      aged and governed by the legislative branch,
       Mr. WADSWORTH. I believe so; yes.             then the legislative branch, just as sure as
    The Comptroller General in making these          we are sitting here, becomes a rubber stamp.
    rulings upon the request of the disbursing        There is no other end to it.
    ofFsers has done so as an agent of Con-              If the Congress is to surrender its right to
    gress in protecting the funds. He certainly      audit, through its representative, the expendi-
    has not been an agent of the executive de-       tures of the money which it appropriates
    partment.                                        with certain purposes in view, then the Con-
       The strength of his position is increased      gress has lost once and for all its control of
                                                     the purse strings. Gentlemen know as well
    by the fact that he is completely inde-
                                                      as I do that Anglo-Saxon liberty has been
    pendent of the executive department. He is
                                                      built from the beginning upon the theory
    not independent of Congress; he is our
                                                      that unless the representatives of the people
    servant, our agent. We can remove him any
                                                      control the purse strings, liberty will not sur-
    time by concurrent resolution or impeach
                                                      vive. I am not talking about 1936 or 1938 or
                                                      1940, if you please. We might get along for
       I am not now saying that his performance
                                                      a while, but inevitably, in the long run, the
    has heen 100-percent perfect. It has been a
                                                     legislative branch and especially this House
    tremendous task, and he has had to move
                                                      of Representatives must lose caste, lose
    slowly because it was all new. In performing
                                                      power, and become subservient, not I ven-
    his functions he has protected the funds.
                                                      ture to say, to a single Chief Executive, but
               *    *     *    *     e                to a vast ever-growing bureaucracy, with its

                                                               From Library of Congress collections

Joseph (W.
         Byrns, Representative from Tennessee, 1909-36.

tentacles stretching out into every township     become abject subjects of a bureaucracy
in the land, clothed with power from time        lies in maintaining in our system of govern-
to time-at its own demand generally-to           ment an auditor named by the Congress and
control the daily life of the citizen and to     responsible to the Congress.     [Applause.]
be free in the exercise of that power. The
hope of control lies right here on this floor.
The hope of the future in keeping our GOV-       Joseph Wetlington Byrns
ernment orderly, in conserving the wealth
of the Nation, in seeing to it that we do not      Worthy of rereading today is the

                                              ENACTMENT OF THE BUDGET AND ACCOUNTING ACT. 1921

following summation by Mr. Byrns of                    career in national politics began in
the importance of the budget system.                   1909 with his election as a Democratic
   * * * it will not be contended by any               Member of the House in the 61st Con-
member of the Special Budget Committee                 gress. Defeating a Socialist, James L.
that the bill proposed is perfect in all of            Hardway, by receiving 18,240 votes to
its details. Perfection can come only by the           506 for Hardway, he served for 13
process of evolution. It is expected that it
                                                       succeeding terms until his death. He
will be improved by amendment in the
future in such manner as experience may                was majority leader during the 73d
demonstrate to be wise and proper. It is,              Congress and the Speaker of the House
however, confidently offered as a great im-            in the 74th Congress. He was Chair-
provement over the present system and in               man of the Democratic National Con-
the earnest belief that, if enacted, it will
bring about greater economy and better
                                                       gressional Campaign Committee from
efficiency in the Government service. As has           1928 to 1930.
been well said, its adoption will not re-                 When Mr. Byrns died in 1936 his
quire the surrender of power by either                 funeral service was conducted in the
branch of the Government, but it will en-              Hall of the House of Representatives.
able both the executive and legislative
branches to understand each other and the
public to understand both. New Federal ac-              William Brockman Bankhead
tivities, the constant drmand for the creation
of others, and the enormous expenses made                 William B. Bankhead was a member
necessary by the war make the importance
of a budget far greater to-day than ever be-
                                                        of the illustrious Bankhead family of
fore. Our expenses to-day are far greater               Alabama which included the actress,
than our revenues, and the people demand                Tallulah. He was the son of John Hol-
 that the most rigid economy shall be prac-             lis Bankhead, a Representative and
ticed. A budget system makes it possible                Senator; the brother of Senator John
to closely consider and study both the rev-
enues and expenditures of the Government                Hollis Bankhead 11; and the uncle of
 at one and the same time, and in this way              Representative Walter Will Bankhead.
only can we hope to bring about that econ-                 Mr. Bankhead was born in Moscow,
 omy which the people demand and have the               Lamar County, Ala., on April 12,
 right to expect of their public servants?              1874. He graduated from the Univer-
  Joseph Wellington Byrns was born                      sity of Alabama and later from
July 20, 1869, near Cedar Hill, Robert-                 Georgetown University Law School in
son County, Tenn. He graduated from                     1895. He was active in State politics
Vanderbilt University law department                    and was elected to the 65th and 11
in 1890 and was admitted to the bar                     succeeding Congresses, serving from
                                                        March 4, 1917, until his death in 1940,
that same year.
                                                        at which time he was serving as
   He served as a member of the State
                                                        Speaker of the House.
house of representatives and during
                                                           Mr. Bankhead like Mr. Byrns was
his third term in 1899 as the speaker.
                                                        honored at his death with funeral serv-
He also served in the State senate. His                 ices in the Hall of the House of Repre-
  ' Congressional   Record. Vol. 58 (1919). p. 7088.    sentatives.

             General Accounting Off ice Officials
                                      February 15. 1922

             The following list is from .the OficiaE Register of the United
             States. 1921 Directory.

      Name ond office                                Tztle                         salary

Office of Comptroller General
J . Raymond McCarl                   Comptroller General of the United $10,000.00
Lurtin R . Ginn                      Assistant Comptroller General of             7,500.00
                                       the United States.
J . L. Baity . . . . . . . . . . .   Assistant to Comptroller General . .         6,000.00
John M . Lewis . . . . . . . . .     Assistant to Comptroller General . .         6,000.00
Rudolph L . Golze . . . . . . . .    Solicitor . . . . . . . . . . . . . . . . .  6,000.00
F. B. Kitterman . . . . . . .        Chief clerk . . . . . . . . . . . . . . . .  2,500.00
Carl Collier . . . . . . . . . . .   Disbursing clerk . . . . . . . . . . . .     3,000.00
E. F Inbody . . . . . . . . .        Chief. appointment division . . . . .        2,500.00
Mary G. Gilbert . . . . . . . .      Private secretary to Comptroller             1,800.00
                                       General .
Samuel T. Browne . . . . . .         Attorney     .................               4,000.00
Charles M . Foree . . . . . .        Attorney     .................               4,000.00
John C. McFarland . . . . .          Attorney . . . . . . . . . . . . . . . . . . 4,000.00
Noble Moore . . . . . . . . . .      Attorney . . . . . . . . . . . . . . . . . . 4,000.00
Harvey A . Harding . . . . .         Attorney . . . . . . . . . . . . . . . . . . 3,100.00
Z Lewis Dalby . . . . . . . . .      Attorney . . . . . . . . . . . . . . . . . . 3,000.00
Miss Clara Greacen . . . . . .       Attorney . . . . . . . . . . . . . . . . . . 3,000.00
R . H . Hartshorn . . . . . . . .    Attorney . . . . . . . . . . . . . . . . . . 3,000.00
Frank H . Bogardus . . . . . .       Special investigator . . . . . . . . . .     3,000.00

Treasury Department Division
W. M . Geddes . . . . . . . . . .    Chief of division . . . . . . . . . . .      3,000.00
C C. Van Leer . . . . . . . .        Assistant to chief of division . . . .       2,250.00
Owen P. Kellar . . . . . . . .       Law clerk . . . . . . . . . . . . . . . .    2,000.00
W . D . Fales . . . . . . . . . .    Chief of section . . . . . . . . . . . . .   2,000.00
C C. Tyler . . . . . . . . . . . .   Chief of section . . . . . . . . . . . . .   2,000.00
L. T. Zbinden . . . . . . . .        Chief of section . . . . . . . . . . . . .   2,000.00
W . W . Matthews . . . . . . . .     Chief of section . . . . . . . . . . . .     2,000.00

                                                          GAO OFFICIALSFEBRUARY 15. 1922

War Department Division
W. H. Barksdale . . . . . . . .       Chief of division . . . . . . . . . . . .       $2,500.00
Byron Richards . . . . . . . .        Assistant to chief of division . . . .           2,250.00
 . .
S B Tulloss . . . . . . . . . . .     Chief. law board . . . . . . . . . . . .         2,500.00
E. V Crittenden . . . . . . . .       Chief of section . . . . . . . . . . . . .       2,500.00
J . L Anderson . . . . . . . . .      Chief of section . . . . . . . . . . . . .       2,500.00
 . .
F A Seaman . . . . . . . . . .        Chief of section . . . . . . . . . . . . .       2,500.00
E. W. Moore . . . . . . . . .         Chief of section . . . . . . . . . . . . .       2,500.00
W. E. Gordon . . . . . . . . .        Chief of section . . . . . . . . . . . . .       2,500.00
C K. Leffel . . . . . . . . . . . .   Chief of section . . . . . . . . . . . . .       2,250.00
H. D Kizer . . . . . . . . . . .      Chief of section . . . . . . . . . . . . .       2,250.00

Navy Department Division
George McInturff . . . . . . .        Chief of division . . . . . . . . . . . . .      2,500.00
Frank F. Conway . . . . . . .         Assistant to chief of division . . . .           2,250.00
  . .
F W Alexander . . . . . . . .         Chief of section . . . . . . . . . . . . . .     2,000.00
Roy F Heck . . . . . . . . .          Chief of section . . . . . . . . . . . . . .     2,000.00
Ashley T Hill . . . . . . . . .       Chief of section . . . . . . . . . . . . . .     2,000.00
S S. Pletcher . . . . . . . . .       Chief of section . . . . . . . . . . . . . .     2,000.00
  . .
W S Shaull . . . . . . . . . .        Law clerk . . . . . . . . . . . . . . . . . .    2,000.00

State and Other Departments
W . S. Dewhirst . . . . . . .         Chief of division . . . . . . . . . . . . .      2,500.00
w. w. Scott . . . . . . . . . .       Assistant to chief of division . . . .           2,250.00
L. 0. Robbins        ........         Chief of section . . . . . . . . . . . . .       2,000.00
Melvin A Wertz . . . . . . .          Chief of section . . . . . . . . . . . . .       2,000.00
  . .
T W Gilmer . . . . . . . . .          Chief of section . . . . . . . . . . . . .       2,000.00

Interior Department Division
John K WilIis . . . . . . . . .       Chief of division . . . . . . . . . . . .        2,500.00
  . .
C L Brockway . . . . . . .            Chief of section . . . . . . . . . . . . . .     2,250.00
  . .
P E Northrup . . . . . . . .          Chief of section . . . . . . . . . . . . . .     2,000.00

Post Office Department
               . .
Charles T M Cutcheon . . .            Chief of division . . . . . . . . . . . .        2,500.00
Charles H. Cooper . . . . . .         Chief of section . . . . . . . . . . . . .       2,250.00
W. T Murphy . . . . . . . . .         Chief of section . . . . . . . . . . . . .       2,000.00
W M. Murray . . . . . . . . .         Chief of section . . . . . . . . . . . . . .     2,000.00


             The First Field Audits by GAO

             This article describes the circumstances under which the
             original field audits of the General Accounhng Ofice
             were instituted and recounts some of the history connected
             with the very early field audit ofices. Most of the information
             is based on p e r s o d recollections. The information concerning
             the establishment of the first field audit ofice and the names of
             the GAO staff were furnished by John T. Burns, associate
             general counsel.

  The emergency spending programs                effect of the preaudit was to relieve the
of the depression period of the 1930’s           disbursing officer of liability for the
provided the impetus for the first field         payment, if made in accordance with
audits of the General Accounting                 the preaudit certification.
Office. In the early 1930’s all the au-             Keep in mind that the preaudit pro-
dits were performed in Washington                cedure was used prior to the passage
and the investigators were the only              of the act of December 29, 1941,
employees who worked in the field.               which provided for bonded authorized
  At that time there were two types of           certifying officers in the civil agencies
audits: one a postaudit and the other a          and relieved the disbursing officers of
preaudit. The postaudit was an audit             responsibility for payments made in
after payment of the vouchers submit-            accordance with the certifying officers’
ted in the accounts of the disbursing            certifications. Prior to that time the
officers. The preaudit was an audit be-          disbursing officer had been responsible
fore payment of vouchers approved                for ascertaining that the voucher rep.
and submitted to the GAO by the ad-              resented a legal claim against the Gov-
ministrative agencies. The vouchers              ernment and he was not relieved of
found proper were certified for pay-             liability by the certification of the
ment in the name of the Comptroller              voucher by the administrative agency.
General and forwarded directly to the               The “New Deal” programs of the
disbursing officer for payment. The              early 1930’s resulted in manyfold in-

   Mr. Horan is an assistant regional manager in the Denver Regional Office. He has
   been with the General Accounting Office since 1935. He was a reviewer in the Raleigh,
   N.C., field audit office of the Cotton Price Adjustment Payment Section in 1936, as-
   sistant chief of the Washington field office from 1936 to 1940, and chief of field offices
   at Jackson, Miss., and Lansing, Mich., in 1941 and 1942.


                                                                     THE FIRST FIELD AUDITS

creases in the volume of payments                William H. Dewey, and Wilbur B.
made by Government disbursing                    Ness.1
officers. They also presented new risks             Allen Thurman, Proctor Reed, War-
to the disbursing officer. Payments              ren J . Moore, Evamonde Armstrong,
were being rushed, regulations under             James Felts, Arthur P . Fenton, Albert
which payments were being made were              J . Hendley, Elihu H. Moore, Clem
frequently not clear, and the rapidly            Huntoon, Carlisle T . Spiker, and EL
expanding organizations of the Gov-              Ziott T . Wooten were subsequent addi-
ernment were being staffed with inex-            tions from the Washington Office to
perienced personnel. While the likeli-           the staff. Clerical employees and comp-
hood of erroneous payments was thus              tometer operators were recruited lo-
greatly increased, the probability of re-        cally. The work was completed and the
covery of overpayments from the pay-             office was closed at the end of January
ees was very poor because of their fi-           1935.
nancial condition.

                                                 Preaudit of Cotton Price
Preaudit of Tobacco Payments                     Adjustment Payments
   Probably with these thoughts in            The following year the Secretary of
mind the Secretary of Agriculture re- Agriculture again requested that field
quested the General Accounting Office offices be set up, this time to preaudit
to set up a field audit office for the payments to be made at 10 locations
purpose of preauditing rental and ben- throughout the cotton farming areas of
efit payments to be made to farmers the South under the Cotton Price Ad-
under the Tobacco Production Adjust- justment Program. The nucleus of the
ment Program of the Agricultural Ad- staff was sent to each location in the
justment Administration (AAA) . Lex- fall of 1935. Probably because the field
ington, Ky., was the place where the work of the GAO had normally been
AAA had its office for the audit and done by the investigators from the
approval of the tobacco payment Office of Investigations, many of the
vouchers.                                chiefs and assistant chiefs of the field
   The General Accounting Office parties were investigators. The Audit
agreed and established the first field Division was given responsibility for
audit office October 1, 1934, in the the audit, however, and a new section
basement of the Federal Building, Lex- known as the Cotton Price Adjustment
ington, Ky. Gary Campbell was the Payment Section was created to direct
chief, and John T. Burns (now asso-          The Comptroller General’s order directing travel
ciate general counsel) was the assistant for this assignment provided: “While absent from your
                                         official headquarters. Washington, D.C.. pursuant t o
chief of the field audit party. Other this order you will each he allowed incidental trans-
members of the original group were portation expenses including reimbursement of actual
                                         operating expenses, not exceeding the cost by common
Charles K . Leffel, John T . Connolly, carrier, i f travel directed is performed by automobile
Frederic B. Hobson, Harold G . Stepler, and   a per diem of $5 in accordance with the Standard-
                                         ized Government Travel Regulations.”


the field offices. Gary Campbell, who      cated in the North Central, Southern,
had headed the field party at Lexing-      and Western Regions of the Adminis-
ton, was appointed chief of the section.   tration, and for payments to be made
Albert W . Perry was subsequently ap-      from Washington to the farmers in the
pointed assistant chief of the section.    Northeast and East Central Regions.
   Shortly after the offices were set up      Again GAO was asked to participate
and before operations had really           by establishing field offices to preaudit
begun the programs of the AAA were         the program payments. The coopera-
attacked in the courts. The funds for      tive arrangements under which the
payments to be made to the farmers         field offices operated on the Cotton
were to come from processing taxes to      Price Adjustment Program were again
be collected under the Agricultural Ad-    followed and in the summer of 1936
justment Act of 1933. On January 6,        the initial staffs were sent to the field
 1936, the Supreme Court, in the case      offices. John E . Thornton, now the
of United States v. Butler, declared un-   Director, Field Operations Division,
constitutional the portion of the act      was a chief of field party on this pro-
having to do with the collection of the    gram.
taxes. This delayed the payments, but         The Cotton Price Adjustment Pay-
only briefly. The Congress quickly         ment Section was redesignated the Soil
passed appropriations, meeting the re-     Conservation Section. Gary Campbell
quirements of the Court, to make the       and A . W . Perry were continued as
payments and GAO sent to the offices       chief and assistant chief, and John T .
the additional supervisory personnel       Burns, Frederic C . Burgan, William 0.
required for the preaudit. The AAA         Hill, and Warren J . Moore were desig-
detailed the auditors and clerical per-    nated as regional unit heads. Edward
sonnel to the GAO and all of the ex-       T . Carr was the first administrative as-
penses of the'offices were paid from       sistant in the section.
AAA appropriations. Most of the pay-          A Washington field office was estab-
ments under the program had been           lished to preaudit the payments to be
made by early summer and the major-        made in Washington, D.C., to the
ity of the GAO personnel were re-          farmers of the Northeast and East
turned to Washington.                      Central Regions, and also those of
                                           Alaska, Hawaii, and Puerto Rico. It
The Soil Conservation Section              was the largest of the field offices, and
                                           at its peak there were approximately 30
   The Soil Conservation and Domestic      GAO employees and 120 AAA employ-
Allotment Act of 1936, providing for       ees in the office.
an even more extensive program of             The field offices continued in opera-
farm payments than had been made           tion into the 1940's. As the emphasis
under the earlier legislation, was         of the program shifted from crop
passed in February 1936. Plans were        acreage limitations to maximum pro-
made by the AAA for payments to be         duction to meet the war needs the
made from about 26 State offices lo-       basis for payment was simplified. Field

                                                                 THE FIRST FIELD AUDITS

offices were consolidated and a portion       early days are still with the GAO.
of the GAO personnel shifted to the           In addition to John E . Thornton and
field offices of the War Contract Proj-       John T. Burns, Myer Wolfson, regional
ect Audit Section. The remaining field        manager, Chicago, was an early mem-
offices of the Soil Conservation Section      ber of the GAO staff, and Charles E .
were transferred to the Agency Audit          Williams, International Division, was
Section in about 1946 and by the time         an AAA employee detailed to GAO in
that section was consolidated with the        the Washington Field Office. Ralph T.
Field Audit Section in the summer of          Carpenter recently retired from the
1950 all preaudit work had ceased.            Office of the General Counsel was one
   As is to be expected, very few who         of the first GAO employees in the
were in the field organizations in those      Washington Field Office.

            The organization of the General Accounting Office originally adopted
         to carry on its functions and duties did not vary greatly from the
         organization of the old Auditors’ Offices under the Comptroller of the
         Treasury. This was prohably the result of lack of time to plan the
         organization, as the Budget and Accounting Act became effective July
         1,’ 1921, 20 days after its enactment. In any event, the primary func-
         tions were performed by divisions corresponding to the respective
         offices of the auditors. Each division audited the vouchers and settled
         the claims and accounts relating to the respective departments of the
         Government with which it was concerned. The organization was strictly
         departmental in character.

                                   Annual Report of the Comptroller
                                     General of the United States, 1947,
                                     p. 2.


                            COMPTROLLLR G E N R I U OF THE UNITLD STATIS

                                                            June 50, 1936,

     To the Officials and Rnployees
            of the Oeneral Accounting Officr.

            As we arrive at the first milestone in what I hope will prove

     to be the never-ending life of the Government's centralized and

     independent accounting system, now fifteen years of age, I leave

     you with a feeling of complete confidence in your ability, capacity,

     and purpose not only to fully maintain the high level of efficiency

     and effectiveness you have attained by your united and tireless ef-

     forts, but to move constantly forward. Your opportunitiee to render
     beneficial service, while many, will ever increase ne your readiness

     to serve, ability, and high purposes become better known.

            An effective system for accounting control over the uses of the

     public money8 is utterly essential to the success of our form of

     government   - is essential to the success of any form of popular
     government   -   and while ours is far from complete aa now prescribed

     by law, yet it is outstanding among the accounting systems so far

     devised.    Yerit its improvement through so discharging your respon-

     sibilities as to fully justify the Congrees in its completion, and
     thus in affording your additional oppoftunities for beneficial serv-


                                    COMPTROLLER GENERAL MC CARL'S FAREWELL MESSAGE

     While the blind and selfish resistance to law enforcement in

connection with uses of the public moneys which was               80   widely en-

countered during the organization period of the independent ac-

counting syetem has in large measure subsided, the efforts appear-

ing now to be directed upon the Congress, for broader administra-

tive discretion and wider latitude in the spending of the public

moneys    -   and, unfortunately, to have been meeting with considerable

euccees,      - when the time comes, as       it must, that a Congress will

determine to resist such importuning8 and to resume control and

direction of usee of the public moneys, it must look to and depend

upon the independent accounting system as its only means of exact-

ing obedience to its laws. Be ready for that d a y .              Don't fail that

Congress. And to that end it is of first importance that you do
your full part toward maintaining and safeguarding the independence

of the accounting eystem       -   independence from both Executive branch

and partisan-political domination         -   ae either would work its utter


     You must expect periods of discouragement as the forces you

must constantly combat are powerful and resourceful, and it may

appear at times that even the Congress has deserted you, but don't
give Up    - don't    even be downhearted     - just keep fighting on for law
observance and honesty in government. Fortunately, such diamal

periode usually induce beneficial reactions so always remember that
a resolute and purposeful Congress will seriously need an efficiently

functioning accounting Bpetem.

     I know no       words that will convey to you the extent of my gratitude

for your helpfulnrss to me during the years of our service together.
It has been an experience I shall never forget and shall always cherieh.

     With all good wishes,

                                              COrdia1lY   YOWE,

                                                   troller General


            Capsule History of the
            Denver Regional Off ice

            GAO has 15 regional offices, each with a background of
            evolution peculiar to its geographical urea und Federal
            agency structure. The following sketch about the Denver
            Regional o f i c e appeared in that o‘ffice’s local newsletter
            Mile Highlights in September 1970.

   The editor, under the false impres-       which included Colorado, Montana,
sion that I predate anything else            New Mexico, Utah, Wyoming, and
around here, asked me to prepare a           part of Idaho.
history of the Denver Regional Office.          On July 1, 1956, the Office of Inves-
I found this difficult to do since fact      tigations was abolished and the investi-
and fiction have merged, records are         gative function was integrated with the
nonexistent, and I’m not really that old     accounting and auditing functions.
nor am I one of the pioneers.                 (Incidentally, at an earlier time
   After asking around and contacting        accounting and auditing functions
some of the original members of the          were carried out by separate groups
Denver staff, I have learned that the        and ultimately merged.) At the time of
Denver Regional Office was officially        the integration of the investigative
designated as such in April 1952 by          function, the personnel of the abol-
the Office of Field Operations, Division     ished division were transferred to
of Audits. There were predecessor            CAAD, DAAD, and FOD, and the
audit groups which operated in the           Denver office gained about 13 staff
Denver area in the forties. They in-         members.
cluded a civilian payroll audit group           The Air Force Accounting and Fi-
and a Denver Area Office of the War          nance Center (AFAFC) was estab-
Contract Project Audit Section of the        lished in 1951 and shortly thereafter
Audit Division. In 1954, GAO regional        a unit of the General Accounting Office,
field offices in Albuquerque, Salt Lake      designated as the Air Force Audit Sub-
City, and Billings were merged with          division, was established for the pur-
the Denver office to form a region           pose of performing centralized audits

   M i . Emm is a supervisory auditor in the Denver Regional Office. He is a graduate
   of Syracuse University (B.S. in accounting) and has been with GAO since 1955. He
   is a CPA in the State of New York.

                                                       THE DENVER REGIONAL OFFICE

of the accounts of Air Force finance       operation and now GAO’s largest geo-
officers. This GAO unit maintained         graphical region with approximately
vouchers and contractual documents,        815,000 square miles within its bor-
performed settlement of accounts, and      ders.
conducted surveys of fiscal operations        It is difficult to describe the changes
of the Air Force, In January 1952, the     over the years in personnel and the
office was placed under the jurisdic-      work performed by them. From heavy
tion of the Director of Audits, Wash-      workloads in the fields of payroll au-
ington, DK., and was called the Air        dits and detailed voucher examina-
Force Audit Branch. Similar organiza-      tion, we have progressed through
tions in Indianapolis and Cleveland        phases of broad installation examina-
served the Army and Navy finance           tions, contractor surveys, and reviews
offices.                                   directed toward developing reports on
   In June 1962, the records receipt       individual deficiencies to broad world-
and maintenance function was trans-        wide reviews under lead region con-
ferred to the Air Force and the em-        cepts. While the basic functions of the
ployees associated with that function      region remain essentially the same, the
were also transferred. On October 1,       methods, techniques, tools, approaches,
1962, the office was transferred from      and backgrounds of the audit staff are
DAAD to Field Operations Division          strikingly different from earlier days.
and consolidated with the Denver Re-       The changes parallel those experienced
gional Office. It is now called the Air    in the entire GAO organization for a
Force Audit Staff. At its peak the func-   period in which we were front runners
tions of this Air Force audit group        in the expansion of the audit concept
required 165 employees. Changes in         -from a voucher-checking operation
functions and in audit approach have       to comprehensive auditing, and, cur-
resulted in a steady decrease of person-   rently, to broad-based management re-
nel since 1955 to the point where          views. This change, and its impact
about 38 employees are presently as-       upon the entire accounting profession,
signed to AFAS.                            is worthy of a discussion all its own,
   In its 16 years of operation since      and perhaps at some later date we will
consolidation in 1954, the geographic      attempt a writing which does justice to
boundaries of the regional office have     this change. It is sufficient for now to
changed several times. The latest          state that we have come a long way.
change, effective July 1, 1970, added      We can still see ahead a long way and
New Mexico and 10 western counties         need only this backward look to know
of Texas to the Denver Region, mak-        that the improbable and the impossible
ing it once more a border to border        are really just new challenges.

            The Seattle Regional Office

            Under the title “We’re Half a Century Old,” the SRO
            Newsletter for April 1971 published the following historical
            re‘sum6 of the Seattle Regional Ofice.

    Although GAO dates back to the           Seattle. The investigators had separate
Budget and Accounting Act of 1921,           offices and operated independently of
the Seattle Regional Office is much          the War Contract Project Audit Office.
younger. It came into existence in           Bill Davies was a member of that
1952 as the Seattle Regional Audit           group.
Office, but had its beginning in resi-           In February 1947, still another inde-
dent GAO auditors who were assigned          pendent group of GAO auditors, with
to Seattle as early as August 1942. At       Gus Stroh as chief of party, arrived to
that time Paul Goshorn, auditor-in-          open a resident Civilian Pay Audit
charge, opened a War Contract Project        Office in Seattle. Harry Ball was a
Audit Office under the supervision of a      charter member of this four-man staff.
Western Zone office located in Los An-           In January 1950, the War Contract
geles, where Charles Bailey (the pres-       Project Audit Office and the Civilian
ent director of our Defense Division         Pay Audit Office were merged into a
in Washington) was in charge. John           field office of the Division of Audits
Thornton, who has been director of           and were placed under the manager-
 Field Operations Division office since       ship of G. Ray Bandy. In 1956, the
it was created in about 1956, was in         regional audit office absorbed the
charge of the project office in Los An-       Office of Investigations and all the resi-
geles. In April 1943, G. Ray Bandy            dent GAO staff were finally located in
transferred from Edmonton, Alberta,           one office. Appropriately enough, re-
 and took over the Seattle War Contract      gional audit offices were then termed
Project Audit Office. Jack Elrey, who         regional offices.
started with GAO in Washington, D.C.,
                                                 Bill Conrardy was transferred from
 in 1940, joined this office in 1944 and,
                                              Europe to become regional manager in
 other than for a 5-year tour of duty in
                                              1959, and in May 1960, the 38 staff
 Paris, France, has been a member of
 SRO ever since. Bob Robeson, who             members in Seattle merged with the 26
 started with GAO in Washington, D.C.,        staff members in Portland to form a
 in 1942, joined the Seattle staff in late   single region covering the entire
 1949.                                        Pacific Northwest and Alaska. Of these
    In April 1945, the GAO Office of          64 staff members, 26 are still with us
 Investigations opened a field office in      today, yet our average age is 33 years.

                                                    THE SEATTLE REGIONAL OFFICE

The bulk of our regional family joined     The 26 m e e e r s (out of the current
GAO in the Pacific Northwest after       regional family of 1M) still with us
1960. We have grown younger while        who were here when the Portland and
as an organization we have matured.      Seattle regions merged are:

  Bill Conrardy                            Bill Henderson
  Harry Ball                               Joan Johns
  Bob Blackstone                           Dick Long
  Howard Boock                             Gary McGill
  Doug Cameron                             Lyle Nelson
  Walt Choruby                             Chuck Perry
  Dan Cowen                                Bob Robeson
  Irwin D’Addario                          Neil Rutherford
  Bill Davies                              Bob Sawyer
  Jack Elrey                               Sy Simon
  Redmond Everard                          John Sisson
  Al Finegold                              Helmer Tellhed
  Ray Hausler                              Carl Weber

           GAO Honor and Service Awards

  The fifth annual GAO honor awards ceremony was held in the GAO audito-
rium on June 11, 1971. The Comptroller General, Elmer B. Staats, the Assistant
Comptroller GeneraI, Robert I;. Keller, and the Director, Office of Personnel
Management, Leo Herbert, presented the following awards:
     GAO Award for Public Service
     Comptroller General’s Award
     Career Development Award
     Distinguished Service Award
     Meritorious Service Award
     GAO Award for the Best Article Published in The GAO Review
     Special Educational Award
   The presentations were preceded by an address by the Honorable Chet Holi-
field, chairman, Committee on Government Operations of the House of Repre-
sentatives. Mr. Holifield’s address was printed in the Congressional Record for
June 14,1971.

  Recipients of awards and related citations follow.

                     GAO Award for Public Service
  To recognize a private individual who has made a distinguished contribution
to furthering the mission   of the General Accounting Office.

                             DR. JOSEPH POIS
                      Professor of Public Administration
               Graduate School of Public and International Affairs
                           University of Pittsburgh

   Over the past 40 years Dr. Pois has made a unique contribution to better
management, both in the public service and in private enterprise, as top execu-
tive, as expert consultant, and as eminent educator.

                                                                               GAO AWARDS

   His public service includes high posts both in the Bureau of the Budget and in
the State of Illinois where he served as Director of Finance. While with the
Bureau of the Budget he had the leading role in developing Executive Order
8512, a precursor of today’s Joint Financial Management Improvement Program.
   Since 1967 Dr. Pois has provided invaluable counsel to managers of the
General Accounting Office, bringing to bear his versatile talents in law, finance,
education, and management. We look forward to his continued wise guidance as
we face the challenges of the future.

                        Comptroller General’s Award
  To recognize employees whose exceptional contributions to the mission of the
General Accounting Office warrant acknowledgment of the highest order.

                           MARGARET L. MACFARLANE
                           Chief, Legal Reference Services
                            Office of the General Counsel

                                                                           GI0 Watchdog Photo
Comptroller General‘s Award: Mrs. Margaret L. Macfarlane, Chief, Legal Reference Services,
Office of the General Counsel, honored for “demonstrated excellence during many years of
dedicated service.” From the l e f t : Dr. Leo Herbert, Director, Office of Personnel Manage-
ment; Representative Chet Holifield, Chairman, Committee on Government Operations; Mrs.
Macfarlane; and Elmer d. Staats, Comptroller General, before the Awards Ceremonies


   For her demonstrated excellence during many years of dedicated service and
her outstanding contributions to the accomplishment of the mission of the
General Accounting Office through her direction of the Legal Reference Services
of the Office of the General Counsel.
   Mrs. Macfarlane’s unstinting efforts and her innovative talent for the continual
improvement of this nerve center for the management of information vital to the
proper consideration of the many legal and policy matters pertinent to our
Government’s activities, her resourceful handling of many congressional and
other requests for specialized legislative information, and her highly successful
program for the professional orientation of new attorneys in the Office have won
her the esteem of the legal profession, top officials within the General Accounting
Office, and throughout the Government.

                                  A. T. SAMUELSON
                                      Civil Division

  For his distinguished and sustained service to the General Accounting Office
and his leadership as Director of its Civil Division.

                                                                           GAO Watchdog Photo
 Comptroller General's Award: A . T. Samuetson, Director, Civil Division, is honored “for his
 distinguished and sustained services to GAO.” Taking part in the ceremony were, from the
 left: Dr. Leo Herbert, Director, O f f c e of Personnel Management; Representative Chet Holi-
 field, Chairman, Committee on Government Operations; Elmer B. Staats, Comptroller Gen-
 eral; and Mr. Samuelson.

                                                                     GAO AWARDS

   A. T. Samuelson has earned this recognition by his outstanding qualities of
leadership, by his sustained high-level performance, and by his unswerving
devotion to the General Accounting Office. He has contributed immeasurably to
improving financial management and program effectiveness in the conduct of
myriad functions of the civil departments and agencies of the U S . Government
and has earned recognition in the Congress and in the executive branch for his
objectivity and creative professional approach.
   Most importantly, Mr. Samuelson’s determined dedication to the work before
him has served as an outstanding inspiration to the staff of the Civil Division.

                      Career Development Award
   To recognize employees who by their efforts in developing their careers have
contributed so significantly to the public service as to warrant special recogni-

                             MARVIN I. BROWN
                             Supervisory Auditor
                              Defense Division

  In recognition of his career marked by outstanding dedication to accomplish-
ing the mission of the General Accounting Office, superior competence in per-
forming defense manpower audits, and continued concern for personal self-devel-
opment and the development of others.

                               HAROLD R. FINE
                            Supervisory Accountant
                        Office of Personnel Management

   In recognition of a career marked by notable and innovative contributions to
the General Accounting Office in the development of a wide range of programs to
further the professional development of the staff through in-house training, and
in special commendation for his outstanding personal efforts to broaden his own
background to insure the attainment of his goals.


                                                                          GAO Watchdog Photo

Carem Development Award: Seated, from the l e f t : Charles W . Moore, Jr., Supervisory
Auditor, Civil Division; Roy J . Kirk, Supervisory Auditor, Civil Division; Mitchell E.
McLaughlin, Jr., Supervisory Auditor, Atlanta Regional Ofice; and Daniel F. Stanton,
Assistant Director, Civil Division. Standing, from the left: Clarence L. Forbes, Supervisory
Management Analyst, Defense Division; Donald J . Vande Sand, Supervisory Auditor, Civil
Division; Marvin I. Brown, Supervisory Auditor, Defense Division : Robert W . Hanlon,
Assistant Regional Manager, Washington Regional Ofice; Harold R. Fine, Supervisory
Accountant, Ofice of Personnel Management; and William J . McCormick, Jr., supervisory
Auditor, Los Angeles Regional Ofice.

                              CLARENCE L. FORBES
                           Supervisory Management Analyst
                                   Defense Division

  I n recognition of superior dedication to a career in the General Accounting
Office distinguished by notable contributions to supply management reviews
conducted by oiir Defense Division and, in particular, for outstanding efforts
toward the planning and execution of our continuing management reviews of the
phasedown of U S . military activities in Vietnam.

                                ROBERT W. HANLON
                       Assistant Regional Manager-Washington
                               Field Operations Division

   I n .recognition of his outstanding dedication to a career in the General
 Accounting Office that has been distinguished by superior competence, enthusias-

                                                                       GAO AWARDS

tic participation in recruiting and training activities, and outstanding leadership
in the professional development and motivation of the staff.

                                  ROY J. KIRK
                               Supervisory Auditor
                                  Civil Division

  In recognition of rapid career development with the General Accounting Office
marked by notable contributions to the development and conduct of reviews of
the Office of Economic Opportunity and by active involvement in the recruit-
ment, training, and development of professional staff.

                        WILLIAM J. MC CORMICK, JR.
                       Supervisory Auditor-Los Angeles
                           Field Operations Division

   In recognition of superior dedication to developing a career marked by excep-
tional competence in a variety of diverse assignments, by selfless devotion to the
development of professional staff, and by an active involvement in civic action
programs to provide other young men with leadership training through commu-
nity development.

                      MITCHELL E. MC LAUGHLIN, JR.
                          Supervisory Auditor-Atlanta
                            Field Operations Division

   In recognition of sustained personal efforts and dedication to his career in the
public service that has contributed notably to GAO defense audit effort in the
field and, in particular, to the supply management activities of the Department of
the Air Force relating to major aircraft and weapons systems at the Warner
Robbins suboffice, Atlanta Regional Office.


                         CHARLES W. MOORE, JR.
                           Supervisory Auditor
                              Civil Division

  In recognition of his thorough dedication to a career exemplified by creative
group leadership and superior competence in a variety of diverse assignments
and by energetic participation in the recruitment, training, and development of
professional staff.

                            DANIEL F. STANTON
                               Assistant Director
                                Civil Division

  In recognition of outstanding contributions to the General Accounting Office
and the Government at large in the course of a progressive career marked by
superior organizational, administrative, and supervisory ability in the develop
ment and execution of numerous highly technical reviews in the field of atomic
energy programs.

                          DONALD J. VANDE SAND
                              Supervisory Auditor
                                 Civil Division

  In recognition of superior career attainment with the General Accounting
Office marked by notable dedication and achievement in the conduct of reviews
of the Office of Economic Opportunity and particularly in the development of
new techniques for evaluating and reporting on the effectiveness of antipoverty

                                                                            GAO AWARDS

                        Distinguished Service Award

  To recognize employees for their long and distinguished service with the
General Accounting Office marked by their sustained high-quality performance
and exceptional efficiency.

            JOSEPH EDER                                 VICTOR L. LOWE
      Regional Manager, Boston                          Associate Director
      Field Operations Division                           Civil Division

      STEPHEN P. HAYCOCK                           STEWART D. MC ELYEA
      Associate General Counsel                    Regional Manager, Denver
     Office of the General Counsel                 Field Operations Division

                                  FRED J. SHAFER
                                  Deputy Director
                               Transportation Division

                                                                       GAO Watchdog Photo
Distinguished Service Award: Seated, from the left: Joseph Eder, Regional Manager,
Boston Regional Ofice; Stephen P . Haycock, Associate General Counsel, Of-
fice of the General Counsel; and Stewart D. McElyea, Regional Manager, Denver Regional
Ofice. Standing, from the left: Fred J. Shafer, Deputy Director, Transportation Division;
and Victor L. Lowe, Associate Director, Civil Division.


                          Meritorious Service Award

   To recognize individual employees or groups for their superior performance,
 far above that ordinarily expected.

 Ofice of Policy and Special Studies            Ofice of Administrative Services
     Josephine M. Clark                           Theodora L. Brandy

 Civil Division                                 International Division
     Bernard A. Brady                              Alfred G. Mueller
     Benedetto Quattrociocchi                      Lawrence J. Sabatino

Defense Division                                Field Operations Division
     Raymond Dunham                               Kenneth Dobbs-Los Angeles
     Leon F. Hartley                              George D. Gearino-Atlanta
     John M. Hoover                               David A. Gray-Norfolk
     Curtis U. MacDonald                          Walter Ratzlaf-Seattle
                                                  Paul S. Trapani-New York
Ofice ofPersonnel Management
  Frank T. Davis

                                                                          GAO Watchdog Photo
Meritorious Sem'ce Award: First row, from the left: Bernard A. Brady, Civil Division;
 Theodora L. Brandy, Ofice of Administrutive Services; Josephine M. Clark, Ofice of Policy
and Special Studies; Frank T. Davis, Ofice of Personnel Manugemnt; and Kenneth Dobbs,
Los Angeles Regional Ofice. Second row, from the left: Raymond Dunham, Defense Divi-
sion; George D. Gearino, Atlanta Regional Ofice; David A. Gray, Norfolk R e g h n d Ofice;
Leon F. Hartley, Defense Division; a d Curtis U. MacDonald, Defense Division. Third TOW,
from the left: Alfred G. Mueller, Intemtionul Division; Benedetto Quattrociocchi, Civil
Division; Walter Ratzlaf, Seattle Regional Ofice; Lawrence J . Sabatino, lnternutional Divi-
sion; and P a d S. Trapani, New York Regional Ofice. John M . Hoover, Defense Division,
was not present when the photograph was taken.

                                                                     GAO AWARDS

                              GROUP AWARDS

              Field Operations Division-Norfolk     Regional Ofice

   In recognition of their meritorious service with the General Accounting Office
marked by superior performance throughout the course of a review of the
Bureau of Mines’ implementation of the Federal Coal Mine Health and Safety
Act of 1969. Their final report on this congressional request study was of the
highest quality despite an unusually restrictive reporting-time schedule and ex-
ceptionally difficult obstacles encountered in the study.

                               George J. Anthony
                                 John C. Payne
                               Ivan L. Higgerson
                               Hugh E. Brady, Jr.
                                Janet B. Kellett
                               William R. Powell


   In recognition of their meritorious service with the General Accounting Office
marked by notable performance throughout the conduct of a review of grant
approval procedures under the Emergency School Assistance Program. Their
final report reflected high technical competence and outstanding coordination of

                                 Civil Division
                              Harold L. Stugart
                               James E. Kelly
                              J. Kevin Donohue
                               Norman F. Hey1
                             Thomas J. Jurkiewicz

                           Field Operations Division
                            Atlanta Regional Ofice
                                Kyle E. Hamm
                                William M. Ball
                                Talmage E. Cox
                               Richard G. Hebert
                               Ramon A. Looney


                                Billy C. Bowles
                                Robert J. Lane
                               James C. Primm
                              Athena B. Bradish
                             Claude M. McGinnis
                              Richard H. Swift
                              John G. Thrasher

                            Dallas Regional Ofice
                               Donald G. White
                            Herschel1 M. James, Jr.
                               Neely W. Tipton
                              Mark J. Ables, Jr.
                             James R. Hargrove
                               Harry L. Holley
                             William E. Bradley

                         Kansas City Regional Ofice
                              Donald D. Whelan
                              Marshall S. Picow

                         Philadelphia Regwmml Ofice
                               James E. Caldwell
                                 Frank Parmet
                              Robert G. Kleigleng
                             Charles B. Marten, Jr.

                        Sun Francisco Regional Ofice
                              Richard A. Sheldon
                               David V. Peltier
                                Joseph D. Biesi


  In recognition of their meritorious service with the General Accounting Office
marked by unusual analytic skills, independence, and tact in the conduct of an
independent organization and management survey of the Fiscal Management
Branch, Transportation Division.

                            Transportation Division
                               Ronald C . Mattlin
                               Theodore N. Rose

                                                                            GAO AWARDS


                                                                        GAO Uatehdog Photo

Receiving group auards [or Meritorious Seroice: From the left, seated: Theodore N . Rose,
Transportation Division (Fiscal Management Branch Reorganization Study), and James C.
Waters, Washington Regional Office (Oceanographic and Survey Ships Utilization Review).
Standing: Harry F. Coffmm, C uil Division (Meat Consumer Protection Review) ; Harold
L. Stugart, Civil Division (Emergency School Assistance Program Review) ; and George J.
Anthony, Nor:olk Regional Office (Coal Mine Health and Safety Act Implementation


   In recognition of their meritorious service with the General Accounting Office
marked by excellence in the pursuit of GAO audit objectives in connection with
a study of the enforcement of Federal sanitation standards of meat-packing
plants under the control of the Consumer and Marketing Service of the Depart-
ment of Agriculture. Their precedent-setting report exhibited outstanding inde-
pendent judgment and analysis and notable achievement in the establishment and
effective utilization of agency contacts.

                                    Civil Division
                                  Harry F. Coffman

              Field Operations Division-Kansas       City Regional Ofice
                                  Danny L. Statler
                                 Albert T. Wolters
                                William A. Buschling
                                Virgil N. Schroeder



  In recognition of their meritorious service with the General Accounting Office
marked by outstanding contribut:ons to the development, execution, and imple-
mentation of conclusions in a review of the utilization of oceanographic research
and survey ships in the Environmental Science Services Administration.

             Field Operations Division-Washington       Regional Ofice
                                James C. Waters
                                Joseph F. Brown

     Award for the Best Article Published in The GAO Review

  To recognize staff members, by cash awards, for the best articles published in
The GAO Review during the calendar year 1970.
  Best article by an author 31 years of age or under:
                 ‘“The Versatility of a Computer in Auditing”
                          (The GAO Review, Fall 1970)
                            WARREN G . NOGLE
                             Supervisory Auditor
                   Field Operations Division-San Francisco

  Best article by an author over 31 years of age:

                       “The Role of Professional Activities
                            in Career Development”

                          (The GAO Review, Fall 1970)

                         WILLIAM D. MARTIN, JR.
                               Assistant Director
                 Organization and Management Planning Staff
                       Office of the Comptroller General

                              J. DEXTER PEACH
                                Assistant Director
                                 Civil Division

                                                                              GAO AWARDS

                                                                          C.40 Watchdog Photo

Award for the Best Article Published in The GAO Review: From the l e f t : I . Dexter Peach,
Assistant Director, Civil Division ; Warren G . Nogle, Supervisory Auditor. San Francisco
Regional O f i c e ; and Villiam D. Martin, Jr., Assistant Director, Organization and Man-
agement Planning Staff.

                          Special Educational Award

   To recognize exceptionally qualified staff members who have been selected to
participate in special educational programs designed to prepare them for posi-
tions of significant responsibility at policymaking levels.


  An interdisciplinary program conducted through several leading universities
intended to broaden the outlook and deepen the understanding of capable young
careerists in the public service who have potential for high-level policy and
management positions.

                                 FRANK BORKOVIC
                                  Supervisory Auditor
                                 International Division



   A program for Federal career personnel designed to develop a systems analy-
sis capability applicable to public program analysis.

                            HERBERT R. MARTINSON
                               Supervisory Auditor
                       Field Operations Division, Los Angeles

                            CHARLES W. THOMPSON
                                Supervisory Auditor
                      Field Operations Division, San Francisco

                                                                         GAO   Watchdog Photd

Special Educational Award: From the left: Edwin C. Eads, Assistant Director, Defense
Division ; Frank Borkouic, Supervisory Auditor, lnternational Divlsion ; and Frank Chemery,
Assistant Director, Defense Division. Herbert R . Martinson, Supervisory Auditor, Los
Angeles Regional Ofice, and Charles P. Thompson, Supervisory Auditor, San Francisco
Regional Ofice, were not present when the photograph was taken.

                                                                       GAO AWARDS


   This program plays an essential role in preparing selected military officers and
civilian Government officials for high command and management positions in the
increasingly complex field of national security.

                                EDWIN C. EADS
                                Assistant Director
                                Defense Division

                          NATIONAL WAR COLLEGE

   A top-level interservice school for highly selected senior military officers and
civilian career officials.

                             FRANK P. CHEMERY
                                Assistant Director
                                Defense Division

             National Association of Accountants
             Conference Report

   The 52d annual international confer-     freely from Shakespeare’s “Julius
ence of the National Association of         Caesar,” he illustrated five persuasive
Accountants was held in Honolulu, Ha-       tactics used by Mark Antony to turn a
waii, from June 20 to 24, 1971. The         hostile and angry Roman crowd to his
following GAO staff members at-             favor and have them overthrow Cas-
tended :                                    sius, Brutus, and the other conspira-
      A . T . Samuelson, director, Civil    tors.
        Division                               The first persuasive tactic is to listen
      Max A . Neuwirth, associate direc-    before speaking. He stated that in
        tor, Civil Division                 order to communicate with our asso-
      William D . Martin, Jr., assistant    ciates we must develop the capability
        director, Office of the Comptrol-   to listen without interruption. This
        ler General                         tactic enables us to understand the sub-
      Frank M . Zappacosta, assistant       ject matter of the discussion and pre-
        director, International Division    pare appropriate comments. The
      Jack L. Mertz, special assistant to   second tactic is to acknowledge the
        the director, Civil Division        truth of the other person’s statement or
      Donald M. Mutzabaugh, special         argument. Through the use of this
        assistant to the director, Civil    tactic, we can neutralize the individu-
        Division                            al’s emotional attitudes and appeal to
      Gerard J . Wilker, supervisory        his sense of logic. By then employing
        auditor, Civil Division             the third tactic of adding to the other
                                            person’s argument and agreeing with
  Some items of interest follow.            some of his arguments, we can further
                                            disarm the individual’s emotional atti-
How To Persuade                             tudes and create a picture of ourselves
                                            as fair and reasonable individuals.
   Jay L. Beecroft, Director of Educa-         Mr. Beecroft stated that once we un-
tion and Training, 3M Company, St.          derstand the individual’s argument and
Paul, Minn., gave the opening address       have neutralized his emotions and cre-
entitled “The Second Greatest Sales         ated a favorable picture of ourselves,        .
Presentation of All Time.” Mr. Bee-         we must then turn the individual to
croft stressed the importance of per-       our favor. We must first tell stories of
suasion in communicating with and           things that happened in the past and
motivating associates. By quoting           create a picture. People do not think in

                                                          NAA CONFERENCE REPORT

terms of words, but in terms of pic-      straints on exports can help preserve
tures and pictures enable the individ-    trade liberalism for a long time to
ual to relate to our point of view. Fi-   come. He said that Japan is imposing
nally, Mr. Beecroft stated that we must   voluntary restraint on steel exports to
introduce the key evidence. By build-     the United States and expects to im-
ing our theme gradually and then in-      pose similar restraint on textile expopts
troducing the key piece of evidence we    in an attempt to soften the impact tem-
will turn the individual to our favor.    porarily and to help reduce the burden
   Mr. Beecroft concluded his address     of adjustment on import-competing in-
by noting that we are all salesmen to     dustries. While importing countries are
the extent that we must sell ourselves,   obliged to bring about industrial
our ideas, and our services. He be-       shifts, he continued, exporting coun-
lieves that we can be more persuasive     tries are urged to fulfill their responsi-
in our dealings with our associates by    bilities to use restraint in the cases
employing these tactics.                  where flooding the market with a for-
                                          eign product would cause severe fric-
                                          tion in the industrial life of the im-
Tokyo Banker Urges Restraints             porting country. This would enable
                                          trade liberalism to survive a long, long
   Speaking on “World Trade in the        time.
Seventies,” Sumio Hara, President of         Mr. Hara cited the need for another
the Bank of Tokyo, stated that the        international round of large-scale tariff
mainstays of trade policy are, without    reductions on the order of the so-called
doubt, liberalism and free competition.   “Kennedy Round” achieved in the
Mr. Hara believes that liberalism needs   1960’s. He said that trade restrictions
to be upheld, reevaluated and acceler-    went hand in hand with the depression
ated more and more. He blamed the         of the 1930’s and that the postwar era
recent foreign exchange crisis in Eu-     of freer trade has been prosperous.
rope on massive international move-       Consequently, Mr. Hara believes free
ments of volatile short-term funds        trade should be propelled forward so
from country to country mainly            that the nations of the world may
through the Euro-dollar market and        enjoy stronger competitiveness and re-
called on the major industrial nations    sultant higher prosperity.
to regulate the Euro-dollar market in a
concerted effort to restrain that move-
ment of funds. Mr. Hara stated that       Cost Accounting Standards for
the United States should endeavor to      Governrnent Contracts
correct its balance of payments and
improve its trade balance by strength-      Alan Peterson, Partner, Arthur An-
ening the competitive position of ex-     dersen & Co., Chicago, Ill., urged
ports by containing domestic inflation-   members attending the session on Cost
ary pressures and restraining invest-     Accounting Standards for Government
ments abroad.                             Contracts to become involved in the
   Mr. Hara believes that voluntary re-   activities and regulations to be devel-


 oped by the Cost Accounting Stand-             In conclusion, Mr. Peterson stated
 ards Board.                                 that the Cost Accounting Standards
    Mr. Peterson stated that the man-        Board has a modest staff for the job
 date from Congress to develop the first     ahead, and the Board is relying on
 set of cost accounting standards for        help from the various accounting or-
 defense contracts is an enormous task,      ganizations throughout our country.
 and the Cost Accounting Standar,ds          All professional and industrywide or-
 Board faces a tremendous challenge.         ganizations should develop their views
 He stated that the cost standards must      of cost accounting standards and each
 be for the future. The Board members        organization should present its ideas
 and the top-level staff must develop a      and its standards to the Board.
 judicial attitude toward their task, lay      James 0. White, Jr., Director of
 aside past personal experiences, and        Government Finance Relations, Lock-
 rise to the opportunity for significant     heed Aircraft Corporation, adopted a
 improvement in cost accounting. Mr.         more controversial stand on the Board
 Peterson believes that preoccupation        and its definitions of cost standards.
 with the past, at the expense of the        He said that industry had not been
 future, has been one of the main rea-       consulted in the formation of the
sons the Accounting Principles Board         Board and consequently the cost stand-
 of the AICPA has had so little success     ards M-ill not be representative of in-
in developing principles for overall re.    dustry’s point of view.
porting.                                       Mr. White stated that the Board
    Mr. Peterson believes cost standards    should consolidate what has already
must begin with broadly based princi-       been written on the subject of cost
ples and must not try to be uniform         accounting and should use this as a
cost accounting systems. Uniform sys-       basis for its standards. The Armed
tems cannot be developed because of         Services Procurement Regulation has
the wide variety of industries provid-      set forth the cost standards of most
ing the goods and services necessary        Government contracts and industry has
for the national defense.                   spent much time and money in the in-
                                            terpretation and understanding of
    Mr. Peterson also stated that the
                                            these regulations. If the Cost Account-
cost accounting standards developed
                                            ing Standards Board now formulates
must be fair to the contractor, the Gov-
                                            new standards, this will result in more
ernment, creditors, and the public.
                                            costs to industry.
There must be a mechanism for timely
change of cost standards to insure that
fossil-like rules are not permitted to      Financial Reporting by Segments
remain. In addition, he believes that       to Shareholders and
cost standards must be appealable to        the Public
courts or administrative boards in
order to provide a relief valve for           Under the chairmanship of Dr.
standards which prove to be inequita-       Alfred   Rappaport,  Professor   of
ble.                                        Accounting and Information Systems,

                                                            NAA CONFERENCE REPORT

Northwestern      University;     Stanley       Mr. Parker stated that he was in
Rosch, Senior Vice President and Con-       favor of financial reporting by seg-
troller, Castle and Cook, Inc., Hono-       ments because it presented more de-
lulu, Hawaii; and C. Reed Parker,           tailed financial information to the
Vice President, Duff, Anderson and          investor and the investment analyst.
Clark, Inc., Chicago, Ill., discussed the   The investor is looking for maximum
merits of financial reporting by seg-       performance with minimum risk, in-
ments to shareholders and the public.       creased dividends and interest, and
   Mr. Rosch stated that it is no longer    capital appreciation. Detailed financial
a question whether financial reporting      reporting by segments will enable the
should be by segments, since many           investor to determine which segments
companies now do so as required by          of his investments are producing re-
the Securities and Exchange Commis-         sults and meeting his investment objec-
sion. However, Mr. Rosch had some           tives.
reservations about segment reporting.           Mr. Parker stated that the invest-
He stated that there appear to be no        ment analyst correlates the individual
restrictions as to who would use this       company results with economic devel-
information after it is published. Such     opment, and, like the individual inves-
a situation could create problems since
                                            tor, relies on segmented financial re-
projections in statements may not al-
                                            porting to inform him of the contribu-
ways prove true. In addition, disclo-
                                            tion of various product lines to the
sure of detailed data could mislead
readers because this type of data does      growth of the economy. Segmented fi-
not have the same accuracy as pub-          nancial reporting facilitates the correla-
lished financial statements. Segmented      tion of past performance with current
and detailed financial reports have         economic conditions, determines the
been accurate enough for internal           profitability of product lines, and as-
 usage in the past but they may be mis-      sists in the evaluation of the risk in-
 leading to outsiders.                       volved.

                           in August
 nt of the Cost Accountine Standards
                                         Law 91-370) was passed by the Con-
                                         gress following an 18-month study by
                                         the General Accountina OIfce under-
                                                                                   Chairman of the Board, announced

                                                                                   h u t as Executivesecretary.     1
                                                                                   the Board had selected Arthur Scho

                                                                                                   ince 1950. Until 1

  -~~~ -.m e
        ~    ~~   ~

  accounting profession; one is to be    amendments to the Defense Production      Since 1967 he has been Deputy Co
               of industry: and one      Act, approved August 15, 1970. Funds      troller of the Atomic Energy Co
              Federal department or      for the establishment of the Board were   sion.
                                         aonroved recently bv the Coneress.           MI. Schoenhaut received his B.B

Organizational Changes in GAO                                   3. The Division of Financial and
                                                                   General Management Studies
   The    following   organizational                               was created to carry on the re-
changes uere made in GAO as of July                                maining functions of the former
1, 1971.                                                           Office of Policy and Special
  1. The Office of Policy and Pro-                                 Studies, as follows:
     gram Planning was formed to:                                  Financial management improve-
     -Advise and assist the Comp-                                     ment
        troller General and the Deputy                             ADP studies
        Comptroller General in ( 1 )                               Systems analysis
        policy formulation, guidance,                              Actuarial work
        and review with respect to all                             Statistical sampling advisory
        GAO functions, (2) establish-                                 services
        ing long-range objectives and                              Intergovernmental relations
        direction-of-effort   planning,                         4. The Office of Policy and Special
         and ( 3 ) formulating the an-                             Studies (originally established in
        nual budget.                                               1956 as the Accounting and Au-
     -Conduct internal reviews of all                              diting Policy Staff) and the Pro-
        GAO operations.                                            gram Planning Staff (established
     -Coordinate the preparation of                                in 1966) were superseded by the
         GAO publications as assigned                              new organizations.
        by the Comptroller General,                             5. To head up the new organiza-
         including the Comptroller                                 tions, the Comptroller General
         General’s annual report and                               designated :
         The GAO Review.                                           E . H . Morse, Jr., director, Office
  2. The audit policy functions of the                                 of Policy and Program Plan-
      former Office of Policy and Spe-                                ning.
     cial Studies and the functions of                             Donald L. Scantlebury, director,
      the former Program Planning                                      and
      Staff were transferred to the                                Frederic H . Smith, deputy direc-
      Office of Policy and Program                                    tor, Division of Financial and
      Planning.                                                       General Management Studies.

                                                                                    NEWS A N D NOTES

Deputy Comptroller General                     capsuled in handouts. They are deliberately
                                               low-keyed, unaccompanied by press releases
   On July 9, 1971, as authorized in           and full of technical details. The facts are
                                               there hut they have to be dug out. Con-
the Legislative Branch Appropriation
                                               gressional investigators esteem them, noting
Act, 1972 (Public Law 92-51), the              that they never have to worry about errors
title of the number two position in the        which may boomerang.
General      Accounting    Office   was
changed from Assistant Comptroller
                                               GAO Reports on
General to Deputy Comptroller Gen-
                                               Foreign Assistance Programs
eral of the United States.
   This position is currently held by             The Senate Committee on Foreign
Robert F. Keller.                              Relations has printed’ a compilation
   The change was proposed by the              of summaries of GAO reports on re-
Comptroller General during hearings            views of various aspects of U S . eco-
on GAO’s 1972 budget before the Sub-           nomic, military, and related foreign as-
committee on Legislative Branch Ap-            sistance programs. The compilation re-
propriations of the House Appropria-           lates to reports issued from 1965
tions Committee. Mr. Staats stated:            through 1970 and is a useful reference
  What we would like to do would he to         document pertaining to independent re-
redesignate Mr. Keller’s title as Deputy       vieus of t5is comp!ex area of Federal
Comptroller General of the United States.
                                               Government operations.
This title I think is in general use in Gov-
ernment in different agencies and would also      In a forejrord to the compilation,
remove some slight confusion that exists       the chairman of the committee, Sena-
today where we have an assistant to the        tor J. W. Fulbright of Arkansas,
Comptroller General and that sometimes is      stated:
not differentiated from the post Mr. Keller
holds, which is the deputy in our office.         Taken together, these findings and recom-
                                               mendations tell a tale of bureaucratic woe,
   In approving the change, the com-           mismanagement, and inefficiency-feebly at-
mittee noted that “The change in title         tempting to promote a sort of up-dated ver-
                                               sion of “dollar diplomacy.” More than this,
does not create a new position nor
                                               the GAO’s compilation tells a tale of dis-
does it abolish an existing one and it         regard for congressional intent and of the
involves no change in salary.” ( H .           use of foreign aid funds as a kind of diplo-
Rept. 92-236 1                                 matic pork-barrel.
                                                  This compilation is, in short, a catalog
                                               of our foreign aid ills-some   of which have
Characterization of                            been self-inflicted, others of which have
                                               been contracted with the help of some of our
GAO Reports
                                               staunchest “allies.”
                                                  He also stated:
  Writing about GAO and its 50th an-
niversary in the June 29, 1971, issue            As a final word, I wish to express, on he-
                                               half of the Foreign Relations Committee, our
of the Chicago Tribune, Willard Ed-
wards observed:                                    “United    States    Economic     and      Mditary   Foreign
                                               Assislance Programs-Compdation of General Aceount-
  GAO reports irritate those members of        ing Office R c p m Findings and Recommendatrons.”
the Washington press who I’ke their news       Committee- P r i n t . 92d Conk., 1st sesc.,    March 29, 1971.


confidence in the competent and professional    While absolute denial of access to a docu-
manner in which the General Accounting          ment is quite rare, our reviews are ham-
Office has fulfilled the committee’s many       pered and delayed by the time-consuming
requests. The Comptroller General, Mr.          tactics employed by the various organiza-
Elmer Staats, exemplifies this competence       tional elements within and between these
and professionalism and the committee is        departments. These delays occur in the
deeply indebted to him and to his staff.        screening of records and in making deci-
                                                sions as to whether such records are re-
                                                leasable to the General Accounting Office.
Executive Privilege                             It is not unusual for our auditors to re-
and GAO Access to Records                       quest access to a document at an overseas
                                                location and be required to wait several
                                                weeks while such documents are screened
   S. 1125 was introduced in the 92d
                                                up the channels from the overseas posts and
Congress to amend title 5 of the U.S.           through the hierarchy of those departments.
Code to provide that no employee of                       e    *     +    +     *
the executive branch summoned or re-
quested to testify or produce docu-                Although the Departments of State and
ments before the Congress or its com-           Defense indicate in their directives that it
mittees shall refuse to do so on the            is their policy to provide maximum cooper-
                                                ation and assistance to the General Account-
grounds that he intends to assert exec-         ing Office, we have found it quite diflicult
utive privilege, and no such employee           to obtain the information which we need to
shall assert the privilege unless at the        conduct our reviews relating to foreign as-
time it is asserted he presents a state-        sistance activities.
ment signed personally by the Presi-
dent requiring that executive privilege         Policy of Obtaining Advance
be asserted as to the testimony or doc-         Comments on GAO Reports
ument sought.
   In testifying on this bill on July 28,          The GAO policy of seeking com-
1971, before the Subcommittee on Sep-           ments on its report drafts from Fed-
aration of Powers of the Senate Com-            eral agencies or others concerned be-
mittee on the Judiciary, the Deputy             fore the reports are placed in final
Comptroller General, Robert      F . Keller,    form for transmission to the Congress
commented on GAO problems on                    became the subject of public discus-
access to Federal agency records as             sion and some criticism earlier this
follows:                                        year. The discussion was stimulated by
   For the most part, refusals by the execu-    the Comptroller General’s report on
tive branch to grant us access to records       the GAO defense industry profit study
have been premised upon departmental de-         (B-159896, Mar. 17, 1971). Drafts of
cisions that grant of access would not be
in the public interest rather than a formal     this report were made available to the
claim of executive privilege.                   Department of Defense and other Fed-
   In recent years we generally have had        eral agencies and to a number of in-
good cooperat on in obtaining access to         dustry associations. Differences be-
the records of the executive departments ex-    theen the final official report and the
cept for the Department of State and the
Department of Defense in those areas which      advance drafts exposed for comment
involve our relations with foreign countries.   led to charges of acceding to Pentagon

                                                                               NEWS AND NOTES

and industry. “pressure”
               -         and a “soften-             nificance, it is essential that all the relevant
ing” of the final report-all of which              facts be ascertained and that they be prop-
                                                    erly evaluated. In our opinion, it is prema-
were groundless.
                                                   ture to report to the Congress our findings,
   The House Government Operations                 conclusions, and recommendations on the
Committee held a hearing on the mat-               basis of information gathered at various
ter on March 26, 1971. The Comptrol-                agency or contractor operating levels with-
ler General, Elmer B. Stauts, testified            out considering any additional pertinent in-
                                                   formation which may only be secured from
at some length on the handling of the              top agency or contractor officials.
defense industry profit study report.
                                                      The practice of obtaining advance com-
Of particular interest was the follow-             ments on drafts of our reports before is-
ing lucid explanation of GAO’s general             suance as final reports and giving objective
policy of seeking comments on report               consideration to those comments provides
drafts.                                            additional assurance that our reports are
    The practice of obtaining comments from        fair, complete and objective.
 affected parties on proposed audit reports           Another very important consideration, it
 is one of long standing within the GAO and        seems to me, is the fact that obtaining com-
 it goes even further back in the public ac-       ments and reactions in advance enables us
 counting profession, just how far I do not        to present to the Congress in one document
 know. It is interesting to note that as early     the whole package-the        facts as we found
 as 1935 the Congress, in an amendment to          them, our conclusions from those facts, our
 the Tennessee Valley Authority Act, specifi-      recommendations for corrective action and
 cally prohibited issuance of reports on GAO       the head of the agency’s position on the
 audits required in the Act until TVA “shall       matter. If a disagreement exists between
 have had reasonable opportunity to examine        the Comptroller General and the agency
 the exceptions and criticisms* * *, to point      head, the report reflects it, and the Com-
 out errors therein, explain or answer the        mittee or Member is then in position to
 same, and to file a statement which shall be      evaluate the issues from a study of the
submitted by the Comptroller General with          document in hand.
 his report.” The practice became written             From time to time we will have excep-
policy of the Office when it was incorpo-         tional situations in which we find it ap-
rated into internal instructions to the Ac-       propriate to proceed without awaiting for-
 counting and Auditing staff in 1954. This        mal agency comment when formal com-
policy became applicable to contract audit        ments are unreasonably delayed. However,
reports in 1955. Prior to that time it was        the substance of a proposed report would
fairly common practice to obtain oral and
                                                  in all cases be discussed with top agency
sometimes written comments from agency
                                                  officials. In the unusual cases, when we
officials and contractors on specific matters
as the individual audit manager may have          proceed without formal comment, we at-
felt it was desirable.                            tempt to give the agency advance notice and
   Although I can claim no responsibility         indicate in the report why comments have
for instituting such a policy, I examined         not been received.
this policy carefully when I became Comp-
troller General in 1966. I endorsed the policy       At the conclusion of the hearing, the
and have retained it.                             chairman of the committee, Chet Holi-
   A review of the auditors’ findings and         field, stated his “complete support for
conclusions by the person or organization         the Comptroller General and the proce-
on whose records and operations we are
                                                  dures used in handling this report and
reporting is desirable for a number of rea-
sons. Since our reports deal with highly          the findings and recommendations he
important matters, frequently of national s i g   made.”


New Newsletter                                      does not conform with what the text-
on Management Improvement                           book writers picture as ideal for the
                                                    motivation of human effort,” he cites
   The Office of Management and                     the following as “positive and substan-
Budget has inaugurated a Management                 tial satisfactions that hold men and
Improvement Newsletter. The letter is               women in the Federal service and mo-
to be issued from time to time “to                  tivate them.”
communicate informally with the man-
                                                      -First, these men and women exhibit an
agement staff of other Government                        innate desire to achieve; they were born
agencies and exchange information                        with a desire to get ahead.
that will help reduce costs and increase              --Second, some substantial proportion of
efficiency in the Federal Government.”                   the men and women who reach the
                                                         top levels of the Federal civil service
   The ,first issue was released in May
                                                         place relatively high value on security.
1971. It should be a useful way to                    -Third, a more positive stimulus is the
exchange ideas and improve communi-                      opportunity for professional accomp-
cations on the never-ending job of cut-                  lishment.
ting costs and increasing the efficiency              -Fourth, a large proportion of the t o p
                                                         level civil servants are motivated by a
of Government operations.
                                                         commitment born of a deep faith in
                                                         what they are doing.
                                                      -Finally, many of these men and women
Motivation                                               get satisfaction, even thrill, out of the
of Federal Employees                                    opportunity to serve the public interest.

   Writing in the May-June 1971 issue               Mr. Corson concludes :
of Personnel Administration, John J.                If political leaders are to discharge the
Corson of Fry Consultants, Inc., in-                                   . .
                                                    responsibility that . is theirs, they must
quires into the apparent failure of                 understand the motivational forces that are
                                                    at hand and supply the stimuli that will
Government leaders to motivate t o p                turn on these able, top-level, career people,
level civil servants. In his article “A             not turn them off. These forces are real and
Neglected Element of Political Leader-              substantial, but they cannot be applied as
ship,” he a t t r i b u t e s this failure to un-   readily as the cash bonuses and stock op-
                                                    tions available to many in industry. The
familiarity with the environment of
                                                    kindling of the motivational forces that ob-
Government service. Noting that “The                tain in the Federal government requires
environment within the Federal service              thought and subtlety.

                               By   JUDITH   HATTER
   Assistant Chief, Legislative Lligest Section, Ofice of the General Counsel

Rural Telephone Bank                         for commodities and services on the
                                             procurement list among qualified non-
   To provide an additional source of        profit agencies for the blind or such
financing for the rural telephone pro-       agencies for other severely handi-
gram, Public Law 92-12, May 7, 1971,         capped. The Comptroller General is
85 Stat. 29, establishes the Rural Tele-     provided access to the records of each
phone Bank. The Bank is to be a              agency so designated by the Committee
wholly owned Government corporation          and of the Committee itself for pur-
until 51 percent of the class A stock        poses of audit and examination.
has been retired and thereafter a
mixed-ownership Government corpora-
tion subject to audit by the General         Government Procurement
Accounting Office under the provisions       Commission
of the Government Corporation Con-
trol Act.                                       Public Law 91-129, November 26,
                                             1969, was amended to provide for an
                                             extension to December 31, 1972, of the
Committee for the Purchase of                date on which the Government Pro-
Products and Services of the                 curement Commission is to submit its
Blind and Other Severely                     final report (Public Law 9 2 4 7 , July
Handicapped                                  9, 1971, 85 Stat. 102). The Comptrol-
                                             ler General, a statutory member of the
  Public Law 92-28, June 23, 1971,
                                             Commission, in stating his views on
85 Stat. 77, amends the Wagner-O’Day
                                             the pending legislation said, “* * * it
Act to establish the Committee for the
                                             is my opinion that the broad and
Purchase of Products and Services of
the Blind and Other Severely Handi-          searching inquiry into nearly every
capped. The Committee, among other           aspect of Government procurement
things, designates a central nonprofit       necessary to achieve the enumerated
agency or agencies to facilitate the dis-    policy justifies the extension provided
tribution of orders of the Government        for in the bill.”


Defense Industry Profit                    Committee on Congressional Opera-
Study                                      tions since its establishment by the
                                           Legislative Reorganization Act of
   On March 26, 1971, Elmer B.
                                           1970, the Comptroller General testified
Staats,  Comptroller General of the
                                           on June 21, 1971, regarding proposals
United States, appeared before the
                                           to change the fiscal year to parallel the
Subcommittee on Legislation and Mili-
                                           calendar year. Mr. Staats suggested a
tary Operations of the House Govern-
                                           limitation on the period during which
ment Operations Committee to discuss
                                           authorizing legislation may be consid-
critical comments and allegations of
                                           ered in order to insure ample time for
pressure from defense contractors and
                                           consideration of appropriation bills.
the defense agencies relative to the
                                           (Other participants: Messrs. Maycock
GAO report of March 17, 1971, on the
                                           and Thom,pson.)
defense industry profit study. (Other
participants: Messrs. Keller, Dembling,
Morse, Bailey, and Flynn.)                 President’s Departmental
                                           Reorganization Program
Defense Procurement and                       Paul G. Dembling, general counsel,
Government Contracting                     appeared before the Subcommittee on
Practices                                  Legislation and Military Operations of
   At the request of the Subcommittee      the House Government Operations
 on Priorities and Economy in Govern-      Committee on July 8, 1971, at hear-
ment of the Joint Economic Commit-         ings on the President’s Departmental
tee, the Comptroller General discussed     Reorganization Program to present
GAO reports concerning the acquisi-        views on the administrative provisions
tion of major weapons systems, the         of four bills introduced to carry out
feasibility of making “should cost” re-    the program. Milton J . Socolar, deputy
views in the auditing and pricing of       general counsel, appeared before the
negotiated contracts, a congressionally    subcommittee on July 22, 1971, to con-
directed study of profits earned on de-    tinue the discussion (Other partici-
fense contracts, and a related GAO-hi-     pants : Messrs. Ahart, Higgins, and
tiated study of the return on capital of   Thompson.)
a selected group of individual con-
tracts, at a hearing on April 29, 1971.    Postal Service Facilities
 (Other participants: Messrs. KeZler,      Leasing and Construction
Dembling, Bailey, Bell, Gutmann,
                                              At the request of the Subcommittee
Hammond, Flynn, Rothwell, Stolarow,
                                           on Investigations and Oversight of the
Marvin, Gentile, Wolen, Pines, Ritchie,
                                           House Committee on Public Works,
and Fitzgerald.)
                                           the Comptroller General appeared on
                                           July 14, 1971, to discuss the policies
Calendar Year as Fiscal Year
                                           and practices followed by the Postal
for Government
                                           Service in leasing and constructing fa-
  At the first hearing held by the Joint   cilities, and the relationship between

                                                             HEARINGS AND LEGISLATION

                                             gram in Vietnam based on initial sur-
Vietnam Pacification and
                                             vey work performed by GAO staff in
Development Program
                                             Vietnam. (Other participants: Messrs.
  On July 16, 1971, Oye V . StovaEZ,         Duff and Thompson.)

                                 Internal Audit
          As mentioned in previous Reports, I am particularly interested in
        the proper development and efficient operation of internal audit in
        departments and authorities. Due cognisance is taken by my Office of
        the adequacy and effectiveness of internal audit when planning ap-
        praisals of the overall system of financial control.  . . . I have ex-
        pressed concern that there are some instances in which the effectiveness
        of internal audit is below the standard that might be reasonably ex-

                                  From the Report of the Auditor-
                                    General of Australia, 1969-70.

Savings on Maintenance cif               contract for computer equipment main-
Computer Equipment                       tenance to the Comma Corporation of
                                         New York City. The Administrator re-
   On April 3, 1968, the Comptroller ported that the contract will result in
General issued a report to the Con- an estimated savings of $97,000 during
gress on “Maintenance of Automatic the period from June 1971 through
Data Processing Equipment in the June 1974.
Federal Government”        (B-115369).      The Administrator also reported that
This report was based on a review con- the contract is a significant break-
ducted by the ADP group of the Office through since this is the first instance
of Policy and Special Studies and the where general purpose computer
San Francisco Regional Office.            equipment owned by the Veterans Ad-
   The report emphasized the monetary ministration will be maintained by a
and operational advantages that are contractor other than the manufac-
being realized by a few computer in- turer.
stallations which have adopted a policy
of in-house maintenance for their
equipment. The report also discussed Views on Computer Management
the major factors to be considered in
making maintenance decisions and rec-       Following hearings by the Govern-
ommended that each Federal agency         ment   Activities Subcommittee of the
establish procedures for arriving at the  House    Government Operations Com-
most advantageous decisions for main-     mittee  in May 1971, Congressman Jack
tenance of its ADP equipment.             Brooks,   chairman,  stated:
    On January 7, 1970, Donald E.           The United States is the world’s leader
Johnson, Administrator of Veterans in computer technology and use. Broad
                                          segments of our economy and most of the
 Affairs, informed the Comptroller Gen- nation’s new weapons systems rely upon
 eral that the Veterans Administration computers. Furthermore, computer tech-
 (VA) was exploring all possibilities niques offer vast potential in the solution of
 for computer equipment maintenance. many of the extremely difficult social prob-
                                          lems presently confronting the nation.
    On June 10, 1971, Mr. Johnson noti-
                                            If the nation loses its leadership in com-
 fied the Comptroller General that the puter technology-if we become a second-
 VA has awarded a competitively bid rate computer power-we will become a sec-

                                                                AUTOMATIC DATA    PROCESSING

wid-rate nation, both economically and mili-       Our hearings today indicate significant
tarily. Yet, despite the vital importance of     improvements in most areas coming within
computers to Our society, there is no d k c -    the coordinated management system we es.
tive policymaking structure in the Federal
                                                 tablished in 1965. Yet, as most of the
Government to guide the nation in the
                                                 witnesses agreed, there are difficult prob-
optimum exploitation of these techniques.
                                                 lem areas and much remains to be done if
  On management   Of computers in the            the taxpayers’ multibillion dollar investment
           Government, Mr* Brooks                in the Federal Government’s computers is
stated:                                          to be managed efficiently.

                         Full and Objective Disclosure
              No purpose is served in not making a full accounting of the facts to
           the public even though at the moment knowledge of all the facts may
           be distasteful to that public. This is the newer look of accounting
           reports. Neither the government and its representatives nor corpora-
           tions or other institutions should be permitted to slant internal account-
           ing reports on the effectiveness of management. To do so is to ignite
           a time bomb that will explode at a later date.

                                      Leonard Spacek
                                      Senior Partner, Arthur Andersen & Co.
                                      Speaking on “Util’zing What Is New in
                                        Accounting” in the GAO 50th Anniversary
                                        lecture series on July 15, 1971.

The Congress                               objectives are being defined and chal-
and Systems Analysis                       lenged. If we are to minimize error in
                                           this and avoid “bandwagon” tactics,
   This subject was discussed by Keith     the rational processes for analyzing
Marvin, associate director, Office of      and disseminating information about
Policy and Special Studies, during the     the potential effects of our objectives
orientation phase of the Civil Service     and resource allocations must be
Commission’s educational program in        efficient, timely, and responsive.
systems analysis on May 20, 1971. Ex-         When we talk about priorities, we
cerpts from Mr. Marvin’s discussion        are talking about budgetary and legis-
follow.                                    lative decisions and the reasoning on
   Any statement about the need for        which these decisions are based. For
systems analysis by the Congress as a      example, balancing our objectives of
whole, without considering the views       price stability and full employment
of each of its 536 individual Members,     must enter into the budget decisions.
is open to many challenges. Perhaps        The impact on business budgets, on
the one word which best describes the       the number of jobs, and on capital
challenge facing the Congress is the        spending plans must enter into legisla-
word “change.” I am not talking just       tive decisions regarding a change in
about the scaling down in Vietnam, or       the basic minimum wage and how far
revenue sharing, or the new postal          we extend coverage.
service, or electoral reforms, or drugs,       Consider for a moment the subject
or space exploration, or pollution, or      of housing, a matter of vital concern
any of the specific topics of current       to all Americans. Currently, we are de-
interest and concern to legislators. By     voting only about 2.5 percent ($25 bil-
“change” I mean the whole gamut of          lion) of the gross national product to
“happenings” and events which appro-        new housing. Some authorities believe
priately characterize the two decades       that, if this amount were increased to
-the sixties and so far the seventies       4 percent ($40 billion), the 10-year
-as a period of analytical questioning      goal of 26 million new and renovated
of priorities, objectives, and resource     dwellings set by the Congress in 1968
allocations.                                could be met. A difficulty here has
   As a nation it appears that we           been stated as, “when 90 percent of
cannot continue to avoid the definition     the people are comfortable and 10 per-
 of objectives. Implied priorities and      cent uncomfortable “ ’+” it’s hard to

                                                                  SYSTEMS ANALYSIS

get the 90 percent to do something               alternative courses of action and
about the 10 percent.” Although a                feasible alternative programs.
more enlightened debate over the
                                             A brief review of the recent history
priority that should be placed on con-
                                           of congressional interest in analysis
structing new housing may help, mere
                                           may be helpful. Particularly since the
knowledge of the Nation’s needs does
                                           advent of       planningprogramming-
not bring any inherent guarantee of
                                           budgeting (PPB) in 1945 there has
action. The question of how we can
                                           been much discussion and debate of
obtain needed information and more
                                           how this information could be of use
enlightened public debate and concern
                                           to the Congress and whether or not it
about major bugetary programs and
                                           should be made available to the Con-
priorities should be a concern of Fed-
                                           gress. Even prior to that there was rec-
eral agencies and particularly of the
                                           ognition in the Congress of the innova-
analytical cadre within the agencies.
                                           tions in the Department of Defense
   More complex issues are being
                                           under Secretary McNamara; eg.,
brought into focus, or at least into
                                           chairman Mahon of the House Appro-
congressional discussions, than ever
                                           priations Committee recognized the
before, thus making more apparent the
                                           need for improved information of this
need for analytical information by the
                                           nature as early as 1961. The more
Congress in its deliberations.
                                           widely publicized negative attitudes in
   It seems to me that the pressures for
                                           the Congress toward PPB and systems
change have and will increasingly de-
                                           analysis in the Department of Defense
mand systems analysis for the Con-
                                           developed later, mainly in the Armed
gress. Many of the elements and prob-
                                           Services Committees and to some ex-
lems of systems analysis in which ana-
                                           tent in the Government Operations
lysts are interested are also the ele-
ments of program analysis and under-
standing in which the Congress has an         After 1965 there were many propos-
obvious interest. Some of these ele-       als for joint committees, new offices,
ments of analysis are:                     new research institutes and even a
                                           fourth branch of the Government to
  1. The clear definition of goals and     provide the Congress with something
                                           comparable to what PPB was intended
  2. The search for criteria for judg-
                                           to provide on the executive side. There
     ing whether programs achieve
                                           was concrete action on legislative re-
     their objectives.
  3. The finding of causal relation-        organization in the Joint Committee on
     ships between program inputs          Reorganization of the Congress which
     and outputs.                          resulted as early as 1967 in passage of
  4. The description of processes           a Legislative Reorganization Bill in the
     which are effective and efficient      Senate. It was not until 1970 that such
     in the use of resources.               a bill was passed in the House and
  5. Consideration of benefits vs. re-     quickly approved in the Senate. The
     source costs or disadvantages of      Legislative Reorganization Act of 1970


became law last October. This act pro-         grams funded under the act including
vides, under Title 11, fiscal controls for     the extent to which they were achiev-
assistance to the Congress by the Gen-         ing their objectives. This statutory re-
eral Accounting Office. It provides spe-       quirement for what amounted to a cost
cifically that :                               benefit analysis led to the involvement
   The Comptroller General shall review        of the GAO in some of the most diffi-
and analyze the results of Government pro-     cult benefit measurement problems in
grams and activities carried on under ex-      the Government. We were aided in this
isting law, including the making of cost       work by a number of expert consult-
benefit studies, when ordered by either
House of Congress, or upon his own initia-
                                                ants, and we also placed a considerable
tive, or when requested by any committee       amount of technical work under con-
of the House of Representatives or the         tract.      5

Senate, or any joint committee of the two          GAO has continued to perform re-
Houses, having jurisdiction over such pro-
 grams and activities.                         views of program results in response
   It also provides that:                       to the indicated interests of committees
                                                or as a result of new legislation which
  The Comptroller General shall have avail-
                                                is intended to provide Congress with
able in the General Accounting Office em.
ployees who are expert in analyzing and         better information. For example, the
conducting cost benefit studies of Govern-      Senate Labor and Public Welfare
ment programs. Upon request of any com-         Committee requested that the GAO
mittee of either House or any joint com-        continue reviews of manpower training
mittee of the two Houses, the Comptroller
General shall assist such committee or joint
                                                programs similar to those conducted
committee, or the staff of such committee       under the 1967 amendments. In the
or joint committee-(1)     in analyzing cost    education area the appropriations act
benefit studies furnished by any Federal        has included specially earmarked
agency to such committee or joint com-
                                                amounts for evaluation and it requires
mittee; or (2) in conducting cost benefit
studies of programs under the jurisdiction      that the Office of Education submit an
of such committee or joint committee.            annual report to the Congress on the
                                                 results of this evaluation. Specific
   Although this section of the new act
                                                 congressional mandates such as these
may have some impact on the demand
                                                 receive careful consideration in allocat-
for this capability in the GAO, the
                                                 ing GAO resources.
GAO has contended that its original
                                                    The GAO was likewise injected into
authorizing legislation in 1921 in effect
                                                 questions about military spending at
provided for this kind of work with its
                                                 the time of the Senate debates in 1969
reference to responsibility for review-          over such issues as the ABM and the
ing the application of public funds. In          C-SA aircraft. At that time a number
fact, the Congress and its committees            of amendments to the Defense Pro-
have seen fit in recent years to obtain          curement Act were proposed, some of
such assistance from the GAO. In 1967            which the GAO considered to be be-
the amendments to the Economic Op-               yond its capability or authorization.
portunity Act required that the Comp-            However, some of this resulted in GAO
troller General review all of the pro-           work on such things as the alternatives

                                                                        SYSTEMS ANALYSIS

for the main battle tank and a study of       proved by better planning and schedul-
air-to-ground missiles. These have re-        ing of the placement of the plants.
sulted in classified reports to the             There is clearly a growing interest on
Armed Services Committee.                     the part of various congressional com-
   Other examples of work undertaken          mittees in national priorities and
at our own initiative during this same
                                              objectives for such important pro-
time are a survey of the status of PPB
                                              grams as education and health and
in the executive agencies, a survey of
                                              such issues as national energy re-
the use of discounting by Federal
agencies, and specific reviews of pro-        sources, the economy, and the environ-
gram results such as water pollution.         ment. We in the GAO can expect a
In the case of pollution, a model was         growing demand for the capability
developed under contract to show that         which we can provide to assist the
the benefits of municipal treatment           Congress in its deliberations regarding
plants on a specific river could be im-       such matters.

                    Auditors and Quality Evaluation
            While unit costs are basic and invaluable in evaluating perform-
         ance, they do not in any way reflect the quality of the service being
         produced by the agency audited. In quality evaluation, we as auditors
         get into unfamiliar surroundings where we must deal with intangibles
         by forming opinions on the basis of personal observations which we
         many not be able to document. Nevertheless, quality evaluation is no
         less important than cost data, and the auditor must train himself to
         substantiate his evaluation by logical and objective reasons supporting
         his conclusions.

                                   J . B. Lancaster
                                   Legislative Auditor, State of Louisiana.
                                   At annual meeting of the National Associa-
                                     tion of State Auditors, Comptrollers, and
                                     Treasurers, Louisville, Ky., November 16,


          Lawrence J. Powers

   Lawrence J. Powers, Assistant to the Comptroller General, retired on May 28,
 1971, after more than 37 years of Federal service.
   Mr. Powers began his Federal service in the Treasury Department in 1935 and
moved to the Department of Agriculture in 1939 as accountant and budget
officer of the Farm Security Administration. From 1946 to 1951, he was assistant
and deputy director in the Fiscal Branch of the Production and Marketing
Administration and also served as assistant treasurer of the Commodity Credit
Corporation in 1947.
   Mr. Powers came to GAO in 1952 as assistant director in the Accounting
Systems Division. He held positions as associate and deputy director of that
division until 1956 when he became director of the newly created Defense
Accounting and Auditing Division. On January 10, 1960, Mr. Powers was
appointed Assistant to the Comptroller General by Comptroller General Joseph
Campbell, and he served in that capacity until his retirement.
   Mr. Powers received a Bachelor of Science degree from the University of
Maryland in 1934 and attended Georgetown University School of Law from 1935
to 1936. He also attended the Advanced Management Program at the Harvard
Business School in 1960.
   During World War 11, Mr. Powers served as chief of the Central Accounts
Branch of the War Department (1942-46), attaining the rank of lieutenant
colonel. In 1951 and 1952, during the Korean Emergency, he was chief of the
Industrial Facilities Branch of the Office of the Comptroller of the Army. Mr.
Powers is now a colonel, USAR (retired).
   Mr. Powers received the Army Commendation Award-World             War I1 in
1946, the Career Service Award of the National Civil Service League in 1957,
and GAO’s Distinguished Service Award in 1970.

                                                              GAO STAFF CHANGES

                                               William A. Newman, Jr.

  William A. Newman, Jr., Special Assistant to the Comptroller General, retired
on May 28,1971, after 29 years of Federal service.
  Mr. Newman received a Bachelor of Science degree from Syracuse University
in 1929. Before entering the Federal service, he had 12 years of public account-
ing experience. He was also comptroller and chief contract negotiator on Govern-
ment contracts for an aircraft parts manufacturing company.
  Mr. Newman began his Federal civilian service in 1942 as assistant district
auditor of the Eastern Audit District, Army Air Force. He served in the Army
Air Force from 1943 to 1946 as district auditor for Los Angeles and as assistant
chief, Contract Audit Division, at the Headquarters, Army Air Force, attaining
the rank of lieutenant colonel.
  Mr. Newman joined the General Accounting Office as an accountant in the
Corporation Audits Division in 1946. In 1956, he became deputy director of the
Defense Accounting and Auditing Division and director in 1959. On July 15,
1968, he was designated as Special Assistant to the Comptroller General to head
the GAO study on the feasibility of developing and applying uniform cost
accounting standards for defense contracts.
   Mr. Newman received the Meritorious Service Award in 1959 and in June
1970 he was the head of the group that received the Meritorious Service Award
for its conduct of the uniform cost accounting standards feasibility study. He is
a CPA (New York) and a member of the the American Institute of CPAs, the
New York State Society of CPAs, the American Accounting Association, and the
Federal Government Accountants Association in which he served as national
president in 1957-58.


             Daniel Borth

   Daniel Borth, deputy director for financial management, Division of Financial
and General Management Studies, retired from active service on August 27,
1971. He was associated with the GAO for 5 years, first as associate director of
the Defense Division in charge of its Management Control Systems Staff, and
since October 1969 in charge of all GAO financial management improvement
   Before joining GAO, Mr. Borth was with the Louisiana State University, where
he served in various capacities including Dean of Administration and Executive
Vice President. During his career, he also held appointments at the University of
Illinois, Washington State University, Lehigh University, West Virginia Univer-
sity, and the University of Chicago.
   In addition to GAO, Mr. Borth also served the Federal Government in the War
Assets Administration, the Bureau of the Budget, and the Department of De-
fense. From July l, 1962, to June 30, 1964, he served as Deputy Assistant
Secretary of Defense (Accounting and Audit Policy). During World War 11, Mr.
Borth served in the Office of the Quartermaster General with the rank of colonel.
He is a holder of the Legion of Merit.
   Mr. Borth attended the University of Kansas and the University of Illinois. He
holds the degrees of Bachelor of Science and Master of Science in accountancy,
and Ph. D. in economics.
   He is a member of the American Institute of CPAs, the American Economic
Association, the Society for Public Administration, the National Accounting
Association, the Louisiana Society of CPAs, the American Society of Military
Comptrollers, the Southwestern Social Science Association, and the Federal Gov-
ernment Accountants Association. He is also a member of Beta Gamma Sigma,
Beta Alpha Psi, Phi Kappa Phi, and Omicron Delta Kappa honorary fraternities.

                                                              GAO STAFF CHANGES

                                                Ellsworth H. Morse, Jr.

   Ellsworth H. Morse, Jr., was designated director of the newly created Office of
Policy and Program Planning, effective July 1, 1971 (see p. 104).
   Mr. Morse has been in the GAO since July 1946 when he joined the staff of
the former Corporation Audits Division. In 1956 he became director of the
Division of Audits and later in that same year he became director of the newly
formed Accounting and Auditing Policy Staff, which was redesignated in 1966
as the Office of Policy and Special Studies. He received the Comptroller Gener-
al’s Award in 1967 and the National Civil Service League Career Service Award
in 1968.
   Mr. Morse is a member of the American Institute of CPAs, the District of
Columbia Institute of CPAs, the American Accounting Association, and the
Federal Government Accountants Association of which he is the immediate past
president. He is also a member of the Committee on Professional Recognition
and Regulation of the American Institute of CPAs, the American Accounting
Association Committee on Concepts of Accounting Applicable to the Public
Sector, and the Advisory Council for the Institute of Professional Accounting of
the Graduate School of Business, University of Chicago.
   Mr. Morse holds a B.A. degree from Oberlin College, an M.B.A. degree from
the University of Michigan, and is a CPA (Michigan). He was associated with
the public accounting firm of Arthur Andersen & Co. from 1937 to 1942. He
 served in the US. Naval Reserve from 1942 to 1946 and was discharged as a
lieutenant commander.


        Donald L. Scantlebury

   Donald L. Scantlebury was designated director of the newly created Division
of Financial and General Management Studies, effective July 1,1971.
  Mr. Scantlebury joined the General Accounting Office on October 1, 1956,
after several years in public accounting. He served with the Defense Division
until October 1964 and with the Field Operations Division as manager of the
Washington Regional Office from October 1964 until assuming the duties of his
new position.
  Mr. Scantlebury attended Antioch College, Yellow Springs, Ohio, from which
he received a Bachelor of Arts degree in business administration, and the
Executive Development Program at the University of Michigan. He is a CPA
(Iowa and Wisconsin) and a member of the American Institute of CPAs and the
Federal Government Accountants Association.
  He is the author of several articles on auditing which have appeared in
various professional publications. He has received the Career Development
Award and two Meritorious Service Awards.

                                                                GAO STAFF CHANGES

                                                     Milton J. Socolar

  Milton J. Socolar was appointed deputy general counsel, effective April 4,
1971. In this position he assists the general counsel in the supervision of all legal
activities within the General Accounting Office.
  Mr. Socolar served in the US. Navy from 1943 to 1946. He joined the
General Accounting Office in 1952 as an auditor and transferred to the Office of
the General Counsel in 1956. He served in the Paris Office of the European
Branch from 1954 to 1959 and 1963 to 1964. During 1962 he served as assistant
general counsel for the Bureau of Public Roads, Department of Commerce. In
1968 he was designated as a special assistant to the general counsel, and in 1970
he was appointed assistant general counsel for civilian personnel.
   I n 1950 he received a Bachelor of Science degree in business and public
administration from the University of Maryland and an LL.B. degree from The
George Washington University in 1954. He is a certified public accountant and
is admitted to practice before the District of Columbia Bar, the District Court of
Appeals of the District of Columbia, and the Bar of the Supreme Court of the
United States.


           John G. Barmby

  John G. Barmby was appointed an assistant director of the Defense Division.
  Dr. Barmby, who has a broad academic background and much experience
in systems analysis and business management, will head a staff of systems
analysts who will apply their particular expertise to projects of various operating
groups in the Defense Division.
   Dr. Barmby holds a Ph. D. in public administration from The American
University, an M.B.A. from The George Washington University, and graduated
from M.I.T. with an undergraduate degree in aeronautical engineering. He
comes to us after 7 years with the Washington-based Illinois Institute of Tech-
nology Research Institute (IITRI). Before serving as a project engineer with the
Navy for 11 years, Dr. Barmby was with NASA for 4 years at Langley Labora-
tories, near Norfolk, Va.

                                                           GAO STAFF CHANGES

                                                 Thomas R. Brogan

  Thomas R. Brogan was designated an assistant director in the International
Division in September 1971 after completing 2 years as manager of the Saigon
Office, Far East Branch.
  Mr. Brogan served in the U.S. Navy from 1951 to 1955 and received a
Bachelor of Science degree from Pennsylvania State University in 1957. Upon
joining the GAO in 1957, he was assigned to the Defense Accounting and
Auditing Division, transferring to the Far East Branch in 1962 where he served
until August 1971.


          Forrest R. Browne

   Forrest R. Browne was designated associate director for manpower in the
Defense Division, effective May 2, 1971. He replaced James L. DiGuiseppi who
transferred to the staff of the Cost Accounting Standards Board.
  Mr. Browne joined the General Accounting Office in 1953 in the Kansas City
Regional Office. He was appointed regional manager of that office in 1954 and in
1966 was appointed deputy director of the Field Operations Division.
  Mr. Browne received a Bachelor of Science degree from New York University
in 1944. He is a certified public accountant (Oklahoma and New Mexico) and a
member of the American Institute of CPAs and the Federal Government Account-
ants Association. In 1962 he completed the Executive Development Program at
Stanford University Graduate School of Business.

                                                            GAO STAFF CHANGES

                                                 Robert   H. Drakert

   Robert H. Drakert, upon nomination by Manlio Brosio, Secretary General of
the North Atlantic Treaty Organization, was appointed Chairman of the Interna-
tional Board of Auditors of that organization, for the period August l, 1971, to
August 1, 1972. He has served as a member of the five-member board, chosen
from 15 member states, since July 1970.
  Mr. Drakert joined the New York Regional O5ce in 1951 after a varied
career in private industry, including public accounting and book publishing. He
was appointed regional manager of the New York Office in 1954. From 1959 to
1961 he was assistant director of the GAO European Branch, returning from that
post to New York to resume the duties of regional manager.
  Mr. Drakert served in the US. Army from 1942 to 1945. He is a certified
public accountant in New York and a member of the American Institute of CPAs
and the Federal Government Accountants Association.


           Willis L. Elmore

   Willis L. Elmore was designated an assistant director in the Civil Division,
effective March 22, 1971. In this position he is responsible for GAO audit work
at the Health Services and Mental Health Administration, Department of Health,
Education, and Welfare.
   Mr. Elmore served in the U.S. Army from 1958 to 1960. He graduated from
Concord College in 1957 with a Bachelor of Science degree with a major in
accounting and passed the CPA examination in the State of Virginia (1965). He
received the Meritorious Service Award in 1965 and attended the Brookings
Institution Intergovernmental Affairs Fellowship Program from December 1969
to March 1970.

                                                              GAO STAFF CHANGES

                                                      Carl P. Friend

   Carl P. Friend was designated assistant general counsel for civilian personnel,
effective April 4, 1971.
  Mr. Friend attended The George Washington University and received an LL.B.
degree from the Washington College of Law (now merged with the law school of
The American University) in 1937. He has also taken postgraduate work in
accounting at The American University.
   Mr. Friend entered the General Accounting Office as a clerk in 1934 and
worked as a claims examiner in the Claims Division from 1936 to 1946 when he
transferred to the Office of the General Counsel. He served 2 years on active duty
in the U.S. Navy during World War 11. He is a retired lieutenant commander in
the US.Naval Reserve and a member of the District of Columbia Bar.


         Stephen    P. Haycock

   Stephen P. Haycock was designated as associate general counsel, effective
April 4, 1971. In this position he is responsible for the overall supervision of
activities within the O5ce of the General Counsel relating to Government con-
  Mr. Haycock attended Bowdoin College, The George Washington University,
and received his LL.B. degree in 1934 from Columbus University Law School
which later merged with Catholic University’s law school. He is a member of the
Bar of the District of Columbia and served as an Assistant U.S. Attorney in the
District of Columbia from 1938 to 1940. He joined the General Accounting
Office in 1941 and in 1959 was appointed assistant general counsel for contracts.

                                                            GAO STAFF CHANGES

                                               Walter C. Herrmann, Jr.

  Walter C. Herrmann, Jr., was designated assistant regional manager of the
Cincinnati Regional Office, effective March 22,1971.
   Mr. Herrmann served in the US.Air Force from 1952 to 1956. He graduated
with honors from the University of Louisville in 1959, where he majored in
accounting. He completed the Management Program for Executives at the Gradu-
ate School of Business of the University of Pittsburgh in 1968 and is currently
attending the graduate school at Xavier University.
  Mr. Herrmann is a CPA (California) and a member of the Cincinnati Chapter
of the Ohio Society of CPAs and the Cincinnati Federal Business Association
He is currently the vice president of the Cincinnati Chapter of the Federal
Government Accountants Association.
  Since joining the General Accounting Office in 1959, Mr. Herrmann has
served in the Los Angeles and Cincinnati Regional Offices. He received the
Meritorious Service Award in 1961.


          Kenneth W. Hunter

  Kenneth W. Hunter was designated assistant director for automatic data proc-
essing in the Office of Policy and Special Studies, effective March 22, 1971.
  Mr. Hunter joined the General Accounting Office in the Los Angeles Regional
Office in 1959 upon graduation from Golden Gate College where he received a
B.B.A. degree with a major in accounting. He served in the San Francisco
Regional Office from 1961 to 1964 and 1966 to 1968, and in the European
Branch from 1964 to 1966. Since 1968, he has been assigned to the ADP staff of
the Office of Policy and Special Studies. This staff became a part of the Division
of Financial and General Management Studies as of July 1, 1971. Mr. Hunter’s
work is primarily concerned with the systems and data processing needs of the
   He is a CPA (California) and a member of the American Institute of CPAs,
the California Society of CPAs, the Federal Government Accountants Associa-
tion, and the American Accounting Association. He is also active in the World
Future Society and is a member of the American Academy of Political and
Social Sciences, the Association for Systems Management, and the Association
for Computing Machinery.

                                                            GAO STAFF CHANGES

                                                 Stanley W. Johnson

  Stanley W. Johnson, a deputy assistant general counsel in the Office of the
General Counsel, retired from active service on May 28, 1971, after more than
27 years of Government service.
  Mr. Johnson was an attorney-adviser on the military pay and allowance legal
work for a number of years before his promotion to deputy assistant general
counsel in 1967.
   Prior to his employment in the General Accounting Office in 1944, Mr.
Johnson practiced law for 13 years in Utah and taught school for several years
before going into private practice. He served as city attorney in his home town
of Ephraim, Utah, for 10 years and as county attorney for 2 years.
  Mr. Johnson attended the University of Utah and The George Washington
University before studying law at the University of Chicago where he earned his
Bachelor of Laws degree in 1931. He is a member of the Bars of Utah and
California and received the GAO Meritorious Service Award in 1961, 1963, and


           Joseph W. Kegel

   Joseph W. Kegel was designated an assistant director of the Civil Division,
effective June 13,1971.
  Mr. Kegel is assigned to the audit of the Department of Transportation and is
responsible for the planning of the auditing work for the Department of Trans-
portation audit group.
   Mr.Kegel served in the U.S. Navy from 1952 to 1956. He received a Bachelor
of Science degree with a major in accounting from King’s College, Wilkes-Barre,
Pa., in 1960. He received the Meritorious Service Award in 1967.

                                                            GAO STAFF CHANGES

                                                  Charles W. Keller

   Charles W. Keller was designated an assistant director of the International
Division, effective June 13, 1971. In thiz position he will be responsible for
directing reviews of the Department of State and related agencies.
  Mr. Keller received a Bachelor of Science degree in business administration
with a major in accounting from Loyola University in 1943. He served as a
commissioned officer in the U.S. Navy from 1943 to 1946.
   Prior to joining the GAO in 1950, he was a staff member with a national
firm of certified public accountants for 3 year:. Mr. Keller has had extensive
experience in the Civil and Defense Divisions and joined the International
Division in July 1967.
   He is a CPA (District of Columbia) and a member of the American Institute
of CPAs.


             John Landicho

   John Landicho was designated an assistant director in the Defense Division,
effective June 13, 1971. In this position he is responsible for planning, program-
ming, and directing reviews of various supply management activities of the
Department of Defense and military departments.
  Mr. Landicho joined the General Accounting Office in 1957. He served in the
U S . Army froa 1954 to 1956. He received a Bachelor of Arts degree, with a
major in accounting from San Jose State College in 1954, and he attended the
Harvard Graduate School of Business Administration Program for Management
Development in 1969.

                                                            GAO   STAFF CHANGES

                                                   Herbert F. Lock

  Herbert F. Lock was designated a deputy assistant general counsel in the
Office of the General Counsel, effective March 22, 1971.
  Mr. Lock joined the General Accounting Office in 1942 and served in the
former Accounting and Bookkeeping Division as a clerk before entering the
military service in 1943. Upon completion of his military service in 1946, he
returned to the General Accounting Office. In 1951 he moved to the Office of the
General Counsel and has served there since that date, 2 years of which were on
assignment with the European Branch in Paris.
  Mr. Lock attended Nebraska Central College and Van Zant School of Business.
He was graduated with an LL.B. degree from Columbus University Law School
(which later merged with Catholic University’s law school). Mr. Lock has been
admitted to practice before the District Court of the United States for the
District of Columbia and is a member of the Federal Bar Association.


         Stewart D. McElyea

  Stewart D. McElyea, manager of the Denver Regional Office since 1963, was
designated deputy director of the Field Operations Division.
  Mr. McElyea graduated from the University of Florida with a B.S. degree in
business administration and completed the Advanced Management Program of
the Graduate School of Business Administration, Harvard University. Mr. Mc-
Elyea served in the Army and the Air Corps during World War 11.
  Mr. McElyea joined the General Accounting Office in 1953 and in 1956 was
appointed manager of the former Dayton, Ohio, Regional Office. In 1957 he was
designated assistant director in the Defense Accounting and Auditing Division
with headquarters at Dayton, Ohio, where he directed the activities of the
General Accounting Office at the Air Force Logistics Command.
  Mr. McElyea is a certified public accountant (Florida) and a member of the
American Institute of CPAs, the Colorado Society of CPAs, the American
Accountants Association, the American Society for Public Administration, the
Florida Institute of CPAs, and the Federal Government Accountants Association.

                                                                OAO   STAFF CHANGES

                                                      John   E. Milgate

  John E. Milgate was designated an associate director in the International
Division, effective August 8, 1971. In this capacity he is responsible for directing
reviews relating to the Agency for International Development, trade expansion
programs, Food for Peace programs, foreign currency and balance-of-payments
programs, and countrywide and regional reviews of US. assistance programs in
the geographic areas of Europe, Africa, the Near East, and South Asia.
   Mr. Milgate served in the U.S. Air Force from 1943 to 1946. He graduated
from Syracuse University in 1947, receiving a B.S. degree cum Eaude with a
major in accounting. He also attended the Management Program for Executives
at the University of Pittsburgh in 1967.
   Since joining the General Accounting Office in 1952, Mr. Milgate has had
responsibilities on a wide variety of assignments in the former Division of
Audits and in the Civil and International Divisions. Before joining the General
Accounting Office, he was a staff accountant for several years with a national
public accounting firm.
   Mr. Milgate received the Meritorious Service Award in 1968. He is a member
of the American Institute of CPAs and the Maryland State Society of CPAs.


            Morton A. Myers

  Morton A. Myers was designated assistant director for systems analysis in the
Office of Policy and Special Studies, effective March 22, 1971. He was reassigned
to the Civil Division as an assistant director on April 2, 1971. In his new
position he will be responsible for directing reviews of the National Institutes of
Health and the Food and Drug Administration.
   Mr. Myers received a Bachelor of Science degree with a major in accounting
from Quinnipiac College in 1961. After joining GAO in the same year, he was
on active duty in the U S . Army until February 1962. He attended The George
Washington University Graduate School of Business and in 1969-70 he was a
graduate fellow at the University of California under the Federal Government’s
Educational Program in Systems Analysis. While in residence at the University
of California, he served as a consultant to the RAND Corporation of Santa
Monica, Calif.
   Mr. Myers is a member of the National Association of Accountants, the
Federal Government Accountants Association, the Association for Public Pro-
gram Analysis, and Phi Theta Kappa national honorary society. He is the author
of several professional articles and in 1970 he received the GAO Special Educa-
tional Award.

                                                              GAO STAFF CHANGES

                                                    Eugene L. Pahl

  Eugene L. Pahl, an assistant director in the Civil Division, transferred to the
audit policy staff of the Office of Policy and Special Studies, effective May 2,
1971. This staff became a part of the newly created Office of Policy and Program
Planning on July 1, 1971.
  Mr. Pahl served in the US. Army during World War I1 and received his
Bachelor of Arts degree with a major in accounting from the University of
  Since joining the General Accounting Office in 1950, Mr. Pahl has had varied
experience in the conduct of audits at the Atomic Energy Commission, the
Department of Agriculture, the Central Intelligence Agency, the Interstate Com-
merce Commission, the National Aeronautics and Space Administration, the
Department of the Interior, and the Department of the Treasury.
 Mr. Pahl is a CPA (Maryland) and a member of the National Association of
Accountants and the Federal Government Accountants Association.


           Robert H. Rumizen

   Robert H. Rumizen was designated assistant general counsel for contracts in
the Office of the General Counsel, effective February 2, 1971. In this capacity he
is responsible for the legal work of the Office of the General Counsel pertaining
to Government contracts.
  Mr. Rumizen joined GAO in the Office of the General Counsel in 1942 and,
except for a short period of service with the former Office of Investigations, has
served with this ofice since that date.
   He received his prelegal training at the University of Buffalo and his LL.B.
degree from Southeastern University. He is a member of the District of Colum-
bia Bar, the Bar of the District Court of Appeals for the District of Columbia,
the Bar of the State of New York, and the Bar of the Supreme Court of the
United States.

                                                             GAO STAFF CHANGES

                                                    B. William Sewell

  B. William Sewell was designated an assistant director for the Special Projects
Group of the Defense Division, effective June 13, 1971.
  From 1941 to 1946, Mr. Sewell served on active duty with the US. Army and
the US.Air Force.
  He graduated cum Zaude with a Bachelor of Science degree in business
administration in 1948 and received a Master of Business Administration degree
in 1958 from Xavier University, Cincinnati, Ohio. In 1948, Mr. Sewell was
elected to Alpha Sigma Nu, the national honor society of Jesuit University
students. He is a CPA (Ohio) and a member of the American Institute of CPAs
and the American Accounting Association.
   Prior to joining the General Accounting Office, Mr. Sewell was associated with
a firm of public accountants. He has also had experience in industrial accounting
and has taught accounting at a number of universities in Ohio and Kentucky.
   Mr. Sewell joined GAO at the Dayton Regional Office in 1957. He was
transferred in 1958 to that section of the Air Force Group of the Defense
Division which was located at Wright-Patterson Air Force Base, Ohio, and
subsequently moved to Washington, D.C., in 1963. He received the Meritorious
Service Award in 1962.


        Albert R. Shanefelter, Jr.

  Albert R. Shanefelter, Jr., was designated assistant director for personnel
development in the Office of Personnel Management, effective March 22, 1971.
He is responsible for all GAO personnel training and development.
   Mr. Shanefelter served in the US. Army from 1954 to 1957. He received his
Bachelor of Science degree from St. Vincent College in 1961. While in his
undergraduate years, Mr. Shanefelter served as a junior accountant with a CPA
firm. He has done postgraduate work in the field of data processing and public
administration at The American and The George Washington Universities.
   Mr. Shanefelter joined the Defense Division in June 1961 and served with the
Defense Contracts, Navy, and Management Control Systems Groups. He was
assigned to the Office of Personnel Management in March 1969 and assumed the
responsibilities of acting assistant director for personnel development in October
   Mr. Shanefelter is a CPA (District of Columbia) and a member of the
American Institute of CPAs and the Federal Government Accountants Associa-
tion. He served as vice chairman of the National Education Committee (FGAA)
in 1970-71 and is working on urban problems with the National Institute of
Public Affairs. He received the Meritorious Service Award in 1963 and a Letter
of Commendation from the Comptroller General for his superior work in 1967.

                                                                GAO STAFF CHANGES

                                                    Gilbert   F. Stromvall

  Gilbert F. Stromvall was designated assistant director of the Far East Branch,
International Division, in July 1971.
   Mr. Stromvall served     in the US. Army from 1946 to 1949. He was graduated
with high honors from       the University of Idaho in 1954, where he majored in
accounting. He studied      international economics at the State Department’s For-
eign Service Institute in   1968.
  Since joining the General Accounting Office in 1954, Mr. Stromvall has had a
wide variety of assignments and responsibilities in the Los Angeles Regional
Office, the Far East Branch in Tokyo, and in Washington, D.C. He has been
associated with the International Division since it was formed in 1963.
  Mr. Stromvall received the Meritorious Service Award in 1967 and the Career
Development Award in 1970. He is a member of the Federal Government
Accountants Association, the American Economic Association, and the Royal
Economic Society.


                                                                              ,       ,
                                                                        - .       .
          Ernest W. Taylor

  Ernest W. Taylor was designated assistant regional manager of the Norfolk
Regional Office, effective June 13,1971.
   From 1950 to 1953, Mr. Taylor served in the US. Air Force. He joined the
Norfolk Regional Office in 1957 after graduating from East Carolina University
with a Bachelor of Arts degree, majoring in accounting. He attended the Execu-
tive Development Program at the University of Michigan Graduate School of
Business Administration in 1971.
 Mr. Taylor is a CPA (Virginia) and a member of the American Institute of

                                                            GAO STAFF CHANGES

                                                 Hugh J. Wessinger

  Hugh J. Wessinger was designated an assistant director of the Civil Division,
effective June 13, 1971.
   Mr. Wessinger is responsible for audit work at the Atomic Energy Commis-
sion in the national defense and research and financial management activities
areas. His experience with the Office includes assignments at the Department of
Agriculture, the Department of the Treasury (Coast Guard), the Post Office
Department, the Federal Housing Administration, the Department of Commerce
 (Maritime Administration), the Senate Committee on Foreign Relations, the
Department of the Interior, the House Select Committee on Small Business, and
the Veterans Administration.
   Mr. Wessinger served in the U.S. Navy from 1952 to 1956. He received a
Bachelor of Science degree with a major in accounting from the University of
South Carolina in 1959. Mr. Wessinger is a certified public accountant in the
State of Virginia and a member of the American Institute of CPAs. He received
the Meritorious Service Award in 1969 for his work at the Veterans Ailministra-


             David P. Wilton

   David P. Wilton of the Cincinnati Regional Office was designated manager of
the International Division’s Saigon Office, Far East Branch, effective August 8,
1971. In this position he will be responsible to the director, Far East Branch, for
the administrative and technical control of all GAO audit activities and staff
assigned to the Saigon Office.
   Mr. Wilton received a Bachelor of Business Administration degree from Cor-
ne11 University in 1952. He served as a commissioned officer in the U.S. Navy
from 1952 to 1954, and then continued his academic work at the University of
Pennsylvania where he received the degree of Master of Business Administration
in 1956. He then served 2 years as a staff accountant of a national firm of
certified public accountants.
   With the exception of an overseas tour with the European Branch, Interna-
tional Division, from 1964 to 1968, Mr. Wilton has been with the Cincinnati
Regional Office since joining GAO in 1958. He is a CPA (Ohio) and a member
of the American Institute of CPAs.

Office of the Comptroller General           The National Graduate University
                                          Conference, Washington, D.C., on
  The Comptroller General, Elmer B.       “Changing Role of the General
Staats, addressed the following groups:   Accounting Office,” April 13.
     The Purchasing Management As-          The Chamber of Commerce of the
  sociation of Pittsburgh on “What        United States, Washington, D.C., on
  Does the Decade Ahead Hold for          the Procurement Ccmmission, April
  Business-Government      Relations?”    15.
  March 16.                                  The Northeast Regional Group of
                                          the American Accounting Associa-
     The National Association of Manu-
                                          tion, University of m o d e Island,
  facturers’ Defense Committee, Wash-
                                          Kingston, R.I., on “Improving Fi-
  ington, D.C., on “Cost Accounting
                                          nancial Management and Auditing
  Standards Board,” March 25.
                                          for Governmental Programs,” April
     The Regional Conference of
  Alpha Kappa Psi Business Frater-
                                             The American Society for Public
  nity, The George Washington Uni-
                                          Administration 1971 National Con-
  versity, Washington, D.C., on “Role
                                          ference on Public Administration,
  of Business in Dealing with Eco-        Denver, Colo., on “New Problems of
  nomic and Social Problems,” March
                                          Accountability for Federal Pro-
  27.                                     grams,” April 21.
    The Industrial College of the            The Symposium of the National
 Armed Forces, Washington, D.C.,          Academy of Engineering, Washing-
 on “Policies and Practices of GAO        ton, D.C., on “Government Perform-
 as They Apply to DOD,” March 29.         ance as Develcper, Manufacturer,
    The Washington Industrial Round       and Customer: How Well Has It
 Table, Washington, D.C., on the          Worked?” April 29.
 activities and responsibilities of the      The Monday Meeting of the
 Comptroller General and his respon-      Cosmos Club, Washington, D.C., on
 sibilities as Chairman of the Cost       “The Cost of Government,” May 10.
 Accounting Standards Board, March           The Governor’s Conference on
 31.                                      Manpower and Economic Education,
    The New Jersey Society of CPAs,       Las Vegas, Nev., on “Where the Na-
 Newark, N.J., on “Recent Develop-        tion Stands Today,” May 12.
 ments in Federal Financial Manage-          The Interdepartmental Budget Of-
 ment,” April 7.                          ficers Conference, Washington, D.C.,


   on “Changing Role of the General        Mr. Staats were: E . H . Morse, Jr.,
   Accounting Office,” May 20.             director, Office of Policy and Program
      The 18th Annual Institute on         Planning; Oye V . Stowall, director, In-
   Government Contracts (cosponsored       ternational Division; Roland J. Saw-
   by The George Washington Univer-        yer, information officer; and Edward
   sity and the Federal Bar Associa-       F. Tennant, AID Auditor General.
   tion), Washington, D.C., on “The           The Deputy Comptroller General,
   Role of GAO with Particular Empha-      Robert F. Keller:
   sis on the New Bid Protest Proce-            Participated in the Industry-Gov-
   dures,” May 25.                            ernment Seminar on “The Elements
      The commencement address at             of National Security in the Coming
   Elizabethtown College, Elizabeth-          Decade,” spcnsored by the National
   town, Pa., on “Individual Action for       Institute of Public Affairs, March 3.
   Social Change,” May 30.                       Participated in a Joint Program
      The Municipal Finance Officers          of the Government Contracts Com-
   Association Conference, New York,          mittees of the District of Columbia,
   N.Y., on “Increasing the Capability        the Federal Bar Association, and the
   of Auditors To Help Managers and           American Bar Association on ‘‘The
   Legislatures,’’ June 2.                    Role of GAO in Bid Protest Cases:
      The commencement address at the         Should It Be Abolished?” March
   School of Government and Business         24.
   Administration, The George Wash-             Spoke on “Controlling Agency
   ington University,       Washington,      Policy and Programs,” before the
   D.C., on “The Private Sector and          U.S. Civil Service Commission
   Public Responsibility,” June 6.           Training Program, March 24.
      The 20th Annual Symposium of              Addressed the National Sympos-
   Federal Government Accountants            ium of the National Contract Man-
   Association, Washington, D.C., on         agement Association on the GAO
   “Creative Thinking in Financial           study of “Profits of Defense Con-
   Management,” June 28.                     tractors,” April 23.
   Mr. Staats wa3 a delegate to the             Participated in the Industry-Gov-
VIIth International Congress of Su-          ernment Seminar on “National
preme Audit Institutions in Montreal,        Health Insurance-A     Step Forward
Canada, September 7-16, at which             or Backward?” sponsored by the
comptrollers and auditors general of         National Institute of Public Affairs,
more than 75 nations were repre-             May 5.
sented. He chaired the session on
                                                Moderated at the American Bar
“Management or Operational Auditing
-An Extension of the Scope of the            Association, Section of Public Con-
Work of the Supreme Audit Institu-           tract Law, National Institute, on
tions”-one    of four principal subjects     “The National Industrial Base for
discussed by the International Con-          Government Procurement-Public
gress. Codelegates who accompanied           Contract in Transition,” May 13.

                                                                 PROFESSIONAL ACTIVITIES

The first plenary session of the 20th Annual National Symposium of the Federal Government
Accountants Association was concerned with a 20-year perspective of Federal financial m n -
agement. The leadofl speaker was the Comptroller General, Elmer B. Staats. Shown just
before the address, from the left: Karney A. Brasfield, partner, Touche Ross & Co., who
presided at the session; Mr. Staats; and E. H. Morse, Jr., Director, Ofice of Policy and
Special Studies, and national president of the FGAA.

    Gave the commencement address                Branches in the Procurement Proc-
  at Benjamin Franklin University,               ess,” Washington, D.C., May 13-14.
  Washington, D.C., June 24.                        Spoke on “Judicial and GAO Re-
                                                 view of Bid Protest Cases’’ before a
Office of the General Counsel                    Joint Meeting of the Federal Bar As-
                                                 sociation, the National Contract
  Paul G. Dembling, general counsel:             Management Association, and the
     Participated in the MIT Working             Federal Government Accountants
  Group on Philosophy, Science and               Association, Wright-Patterson Air
  Technology at the Massachusetts In-
                                                 Force Base, Dayton, Ohio, May 20.
  stitute of Technology, Cambridge,
  Mass.,May 7.                                     Spoke on “United States Govern-
     Participated as a panelist in the           ment Contract Formation” before
  Annual National Institute of the Sec-          Public Contract Section at the 94th
  tion of Public Contract Law, Ameri-            Annual Meeting of the American
  can Bar Association, on “Roles of              Bar Association, London, England,
  the Legislative and Executive                  July 14.


  Milton J. Socolar, deputy general        tests,” Minneapolis, Minn., April
counsel :                                  21-22.
     Spoke at a briefing conference on        Spoke before the Government
   Government contracts jointly spon-      Contract Claims Course cosponsored
  sored by The University of Texas         by Federal Publications, Inc., and
   School of Law and the Dallas Chap-      The George Washington University,
  ter of the Federal Bar Association       on “Presenting the Claim to the
  on “Cost Accounting Standards,”          Comptroller General,” San Fran-
  Dallas, Tex., May 21.                    cisco, Calif., May 18-20.
  Melvin E . Miller, assistant general        Spoke before the Boston Chapter
counsel :                                  of the National Contract Manage-
     Spoke before the Defense Pro-         ment Association on “GAO Bid Pro-
  curement Management Course on            test Jurisdiction Under the Scanwell
  “The Role of the GAO in Defense          Doctrine,” Boston, Mass., June 8-9.
  Procurement,”      Huntsville, Ala.,     Seymour Efros, deputy assistant
  April 19-20.                          general counsel:
     Spoke before the AEC Symposium           Participated in the Government
  on Procurement Management on             Contracts Today Conference on
  “Handling of Bid Protests by Disap-      “GAO-Survey         of Recent Deci-
  pointed Bidders,” Denver, Colo.,         sions,” Dallas, Tex., May 19-21.
  May 13-14.                               Martin L. Glass, attorney-adviser
     Spoke before the Defense Pro- (contract) :
  curement Management Course on               Participated in a seminar spon-
  “The Role of the GAO in Defense          sored by the Federal Bar Associa-
  Procurement,” Fort Lee, Va., June       tion and the Chicago Bar Associa-
  8.                                       tion entitled “Government Contracts,
  Paul Shnitzer, assistant general         Claims, Warrantees, and Funds,” St.
counsel :                                  Louis, Mo., Detroit, Mich., and
     Participated in a number of train-    Chicago, Ill., April 4 9 .
  ing sessions in contract administra-        Served as moderator at a briefing
  tion conducted by the Bonneville         conference   sponsored by the Federal
  Power Administration of the De-          Bar   Association in cooperation with
  partment of the Interior, Portland,     The    University  of  Texas School of
  Oreg., March 23-26.                     Law on “Government Contracting,”
     Spoke to the North Texas Chapter      Dallas, Tex., May 20-21.
  of the NCMA on “GAO Bid Protest
  Jurisdiction Under the Scanwell Office of Policy and
  Doctrine,” Dallas, Tex., April Program Planning
     Spoke before the National Con-       E. H . Morse, Jr., director, addressed
  tract Management Association-         the following groups:
  SBA Seminar on “GAO Bid Pro-                The American Management Asso-

                                                                 PROFESSIONAL ACTIVITIES

 ciation Seminar on operational au-              April 28, on “Are Accountants Im-
 diting, Chicago, Ill., April 14.                portant in Gdvernment Operations?”
    A panel session on “Accounta-                  The 23d Annual Meeting of the
 bility in International and Intergov-           Southeast Regional Group of the
 ernmental Programs” at the 1971                 American Accounting Association at
 National Conference of the Ameri-               the University of Alabama at Tusca-
 can Society of Public Administra-               loosa, April 30, on “The Role of
 tion¶ Denver, Colo., April 21.                  Accountants in Governmental Pro-
    The University of Hartford So-               grams.”
 ciety of Accounting Students 1971                 A panel session on “Accounting
 Awards Dinner, Hartford, Conn.,                 Needs of the Public Sector” at the

The 20th Annual National Symposium of the Federal Government Accountants Association
was held at the Sheraton-Park Hotel, Washington, D.C., June 28-30. The final feature of
the symposium was the Awards Banquet at the conclusion of which national president E. H.
Morse, Jr., turned the Association’s gavel over to incoming president Sidney Baurmash,
Director of Audits, Department of Commerce. Shown above, from the left: Mr. Baurmash,
Mr. Morse, and L. J. Andolsek, Civil Service Commissioner, who was present to bestow
the $Association’s honor awards.
Awards were presented to Arthur Seideman of the Defense Contract Audit Agency for
distinguished service and to Larry A. Jobe, Assistant Secretary of Commerce for Admin-
istration, Leslie Surgner of the Rural Electrification Administration, and Mildred Tyssowski
of the Social Security Administration for distinguished leadership. The Robert 1.King
Memorial Award was made to Donald IB. Bacon, Assistant Commissioner, Internal Revenue


    Annual Meeting of the American             “Performance and Operational
    Association of Collegiate Schools of     Auditing,” Journal of Accountancy,
    Business, Denver, Colo., May 6.          June 1971.
       The Fifth Annual Symposium of            “Report of the President’s Com-
    the Quad Cities Chapter of the Fed-      mission on Budget Concepts in Ret-
    eral Government Accountants Asso-        rospect,” Public Administration Re-
    ciation, Davenport, Iowa, May 7, on      view, July/August 1971.
    “The Accountant’s Role in Public
    Management.”                           Division of Financial and
       The Los Angeles and San Fran-       General Management Studies
    cisco Chapters of the Federal Gov-
    ernment Accountants Association,
    May 18-19, on “What Accountants           DonaEd L. Scantlebury, director, was
    Can Do About More Efficient Gov-       elected vice president of the Capitol
    ernment Operations.”                   Region of the Federal Government
       The Joint Meeting of the Harris-    Accountants Association for fiscal year
    burg Chapter of the Federal Govern-    1972.
    ment Accountants Association and          Frederic H. Smith, deputy director,
    the East Central Pennsylvania Chap-    was appointed chairman of the Meet-
    ter of the National Contract Man-      ings and Programs Committee of the
    agement Association, New Cumber-       D.C. Institute of CPAs for 1971-72.
    land, Pa., May 24, on “GAO, De-        Mr. Smith was also reappointed to
    fense Contractors, and the Depart-     serve on the AICPA Committee on
    ment of Defense.”                      State Legislation for 1971-72.
       The Central States Conference of       Daniel Borth, deputy director, as
    Certified     Public    Accountants,   leader, and Richard W . Maycock and
    Omaha, Nebr., June 14, on “Role of     Irving Zuckerman, assistant directors,
    the CPA in Federal Programs.”          as resource counselors, conducted a
                                           workshop at the 1971 National Sym-
    Mr. Morse, as president of the
                                           posium of the Federal Government
  FGAA, moderated the President’s          Accountants Association on the subject
 Panel on “Development of Accounting
                                           “A New Look at Accrual Accounting.”
 and Auditing Standards” at the 1971
                                              Edward 1. Mahoney, deputy direc-
..National Symposium of the FGAA.
                                           tor, was elected to the Board of Direc-
 Other participants were: Eltore Barbi-
                                           tors of the Washington Chapter,
 telli, president, NAA; John H.
                                           FGAA. He will serve this year as
 Poelker, president, MFOA; Philip L.       director of the Meetings Committee.
  Defliese, chairman, AICPA Accounting        William L. Campfield, associate
 Principles Board; and Prof. Martin        director, served as visiting professor of
  Black of Duke University, representing   business administration at the Univer-
 the president, AhA.                       sity of California, Berkeley, during the
    Articles by Mr. Morse published re-    spring quarter 1971. He also addressed
 cently are:                               the following groups:

                                                            PROFESSIONAL ACTIVITIES

     The Berkeley-Stanford     Account-    tems (Man and Society) at the First
   ing Colloquium, April 8.                General Assembly of the World Future
    A Joint Meeting of the Peninsula,      Society held in Washington, D.C., May
  Sacramento, and San Francisco            12-15. He also addressed the Annual
  Chapters, FGAA, April 20.                Conference of the Association for Com-
    A Beta Alpha Psi Meeting, Uni-         puting Machinery, Chicago, Ill., August
  versity of California, Berkeley, May     3. His paper was entitled “Toward
  20.                                      Better Information and Analysis Sup-
     The     Professional Accounting       port Services for the Congress.”
   Workshop, University of California,        Earl M . Wysong, Jr., supervisory
   Berkeley, May 20.                       systems accountant, and Ronald KO-
     The Faculty-Student      Business     zura, computer systems analyst, are
   School Seminar, California State        listed in Who’s Who in Computers and
  College at Hayward, May 28.              Datu Processing 1971, a joint publica-
     The Oakland-East Bay Chapter,         tion of The New York Times and
  California Society of CPAs, June 15.     Computers and Automation.
     The American Management Asso-           James P . Wright, operations research
  ciation Operational Auditing Work-       analyst, was one of the panelists in a
  shop, July 19.                           discussion on discounting at the Inter-
     The American Accounting Asso-         national Cost-Effectiveness Conference
                                           held in Washington, D.C., April 12-
  ciation Panel on Measure of Effec-
  tiveness for Social Programs, Lex-
                                           15, under the auspices of the Inter-
                                           national Federation of Operational Re-
  ington, Ky., August 25.
                                           search Societies.
  Mr. Campfield published the follow-
ing papers:
     “Auditing Management Perform-         Civil Division
  ance,,’ The Financial Executive, Jan-
  uary 1971.                                  At the National Association of
     “Controversies and Opportunities      Accountants Annual International Con-
  in the New Management Auditing,”         ference which was held in Honolulu,
  The Internal Auditor, March/April        Hawaii, June 20-24, A . T . Samuelson,
  1971.                                    director, Civil Division, was elected to
   Keith E . Marvin, associate director,   the position of national vice president.
and Joseph D. Comtois, assistant direc.    This is the first time in the history of
tor, Systems Analysis Group, partici-      the NAA that a government employee
pated as panelists in a seminar on         has filled such a high post in the asso-
“Accountants, Auditors, and Systems        ciation.
Analysis” at the Federal Government          DonaEd C. Pulkn, assistant director,
Accountants Association National Sym-      participated in the Executive Manage-
posium, June 29.                           ment Program at the Pennsylvania
   Kenneth W . Hunter, assistant direc-    State University, June 27-July 24.
tor, chaired a panel on Political Sys-       George D. Peck and Richard I .


 Woods, assistant directors, participated    The GAO staff at the National Insti-
 in the Conference on the Evaluation of tutes of Health (NIH) sponsored a
the Impact of Manpower Programs health coordination seminar, June 3,
 sponsored by the Department of Labor for GAO staff members involved in
 and the Center for Human Resource health-related reviews. Guest speakers
 Research, Ohio State University, June at the seminar were Dr. John A. D.
 15-17. Mr. Woods also participated in Cooper, president of the Association of
the Residential Program in Executive American Medical Colleges, and Dr.
 Education at the Federal Executive In- Robert Q. Marston, Director of NIH.
 stitute, Charlottesville, Va., August 29-
 October 22.                               Defense Division
    Donald M. Mutzabaugh, special as-
 sistant to the director, was elected        Charles M . BaiZey, director, gave a
 president of the NAA Washington presentation on “should cost” concepts
 Chapter for 1971-72. Max A . Neu- before the American Institute of In-
 wirth, associate director, was elected dustrial Engineers conference in Wash-
 vice president. Harold L. Stugart, as- ington, D.C., on April 23. Mr. Bailey
 sistant director, Jack L. Mertz, special also spoke at the Defense Economic
.assistant to the director, and Stephen Analysis Council Symposium, May 21,
 J. YarhoZy, supervisory auditor, were on the subject “The Relevance of Eco-
 elected as directors of manuscripts, nomic Analysis to Decisionmaking in
 membership, and educational activi- the Department of Defense.” On June
 ties, respectively.                       7 he again addressed the professional
    Robert A . Peterson, supervisory military comptroller course, Air Uni-
 auditor, lectured on the topic “GAO versity, Maxwell Air Force Base, Ala.
 Requirements for Internal Auditing,”        Hassell B. Bell, associate director,
 at the Department of Commerce Inter- spoke at the Defense Weapon Systems
 governmental Training Center, Be- Management Center at the -4ir Force
 thesda, Md., April 14.                    Institute of Technology, Wrigh’ Patter-
    Joseph R . Daigle, Francis X . Fee, son AFB, Ohio, April 22. His subject
 James E . Kelly, and Harry J . Sanger, was “GAO and the Project Office.” Mr.
 supervisory auditors, participated in Bell also gave a briefing at the Navy
 the Urban Affairs Conference for Fed- Logistics         Management       School’s
 eral Officials conducted by the Na- Weapon System Acquisition Manage-
 tional Institute of Public Affairs, ment Baseline Course, Naval Materiel
  Chicago, Ill., May 2-8.                  Command, May 6. His subject was the
    David D. CahaZen, Lester lV. Gar- role of the Director of Defense Re-
  ton, and Arnold G . Rifle, supervisory search and Engineering in weapon sys-
  auditors, participated in the Federal tems acquisition.
  Action and the People of Our Cities        Harold H. Rubin, associate director,
  Program conducted by the National participated with Department of D e
  Institute of Public Affairs, Boston, fense representatives in a Civil Service
  Mass., June 27-July 2.                   Commission session at the Executive

                                                             PROFESSIONAL ACTIVITIES

Institute for Management of Scientific     ization and Functions of the General
and Engineering Organizations held in      Accounting Office and Their Relation.
April.                                     ship to Defense Logistics.”
   J . Kenneth Fasick, associate direc-       An article by Timothy D. Desmond,
tor, attended the Conference for Fed-      supervisory management analyst, ap.
eral Executives on Business Operations     pears in the Spring 1971 issue of Na-
sponsored by the Brookings Institution,    tional Contract Management Journal.
held in Chicago, Ill., May 16-21.          The article entitled “Needed: More
   Forrest R. Browne, associate direc-     Flexibility in Major Weapons R&D,”
tor, addressed the participants of the     was awarded honorable mention in the
Administration of Public Policy course     annual technical writing contest con-
sponsored by the US. Civil Service         ducted by the Journal.
Commission,      Executive     Seminar
Center, Oak Ridge, Tenn., August 2.
His subject was “Congressional Over-       Field Operations Division
sight and the Role of the GAO.”
                                             Anthony L. Komac, audit manager,
   Jerome H . Stolurow, associate direc-
                                           Atlanta, was elected to the board of
tor, spoke before the San Francisco
                                           directcrs of the Atlanta Chapter of
Chapter of the National Contract Man-
                                           FGAA for fiscal year 1972.
agement Association, July 13. His sub-
ject was “Should Cost Methods of             Donley E . Johnson, audit manager,
Pricing Government Contracts.”             and Leonard J . Yoerger, supervisory
                                           auditor, St. Paul, were elected president
   William F. Coogan, assistant direc-
                                           and director, respectively, of the Min-
tor, addressed the faculty colloquium
                                           neapolis-St.    Paul Chapter of FGAA
at the Cornel1 University Center for
                                           for fiscal year 1972.
International Studies, April 29, on the
aspects of weapons procurement and           David P. Sorando, rkgional man-
defense policy covered by GAO’s stud-      ager, Cincinnati, addressed the Cleve-
ies.                                       land Chapter of FGAA on April 21.
   Felix E . Asby, assistant director,     His topic was “GAO Trends-Past and
was a guest lecturer, July 20, at the      Present.”
U.S. Army Logistics Management               Daniel L. McCafierty, supervisory
Center, Fort Lee, Va. He spoke before      auditor, Cincinnati, spoke before the
a group of U S . Army Reserve officers     Accounting Society of Murray State
enrolled in the Logistics Career Pro-      University, April 7, on “The Challeng-
gram on the role and responsibilities      ing World of GAO.”
of the U S . General Accounting Office.      Deon H . Dekker and James J.
   Mathew Gradet, assistant director,      Jodon, assistant regional managers,
was a guest lecturer, August 3, at the     and Daniel C. V h i t e , supervisory audi-
Logistics    Executive     Development     tor, were elected directors, and Ronald
Course at the US. Army Logistics           D. Kelso, supervisory auditor, Dallas,
Management Center, Fort Lee, Va. The       was elected president of the Dallas
subject of his lecture was “The Organ-     Chapter of FGAA for fiscal year 1972.


   Joe D. Quicksall, supervisory audi-    Association’s February 1971 Newslet-
tor, Dallas, served as moderator of a     ter.
panel discussion of “What Is a Profes-       Dominic F. Ruggiero, assistant re-
sional Accountant” at the March meet-     gional manager, Los Angeles, was ap-
ing of the San Antonio Chapter of         pointed to the Advisory Committee of
FGAA.                                     the Accounting and Business Informa-
   Stewart D. McElyea, regional man-      tion Systems Department, California
ager, Denver, addressed the Albuquer-     State College at Los Angeles. He will
que Chapter of the National Contract      serve for the 2-year period beginning
Management Association, May 12. His       January 1, 1971.
subject was “GAO and the Contrac-            Richard J . Gannon, audit manager,
tor.” Also, Mr. McElyea has been ap-      Los Angeles, spoke before the Orange
pointed to the Social Responsibility      County Chapter of the National Con-
Committee of the Colorado Society of      tract Management Association, Janu-
CPAs.                                     ary 13. He spoke on the “Should Cost”
   Other members of the Denver region     concept.
who have been appointed to commit-           William J. McCormick, Jr., audit
tees of the Colorado Society are:         manager, Los Angeles, spcke before
      John E . Murphy, assistant re-      the San Gabriel Chapter of the Na-
        gional manager-General Meet-      tional Contract Management Associa-
        ings                              tion, January 12, on the profit study
     Burdell 0. Buerger, audit manag-     work of GAO. Also, Mr. McCormick
        er-Cooperation    with Colleges   has been elected State Director of the
     James E. Mansheim, audit manag-      East Whittier Junior Chamber of Com-
        er-Governmental      Accounting   merce for 1971.
     Billie J. North-Social Responsi-        On March 23, John D. Zylks, super-
        bility                            visory auditor, Los Angeles, spoke to
     Eva S. Copland-Social Responsi-      the Rotary Club, Arlington, Calif., on
        bility                            the role of GAO in reviewing the re-
     Kathryn E . McNurZin-Social Re-      sults of Federal programs.
        sponsibility                         L. Neil Rutherford, audit manager,
   Donald C. Ingram, audit manager,       Seattle, addressed a joint meeting of
Denver, was elected director of pro-      the Tri-Cities Chapters of the National
grams of the Denver Chapter, FGAA,        Association of Accountants and the
for fiscal year 1972.                     National Contract Management Asso-
   Hyrnan L. Krieger, regional man-       ciation in Richland, Wash., April 13.
ager, Los Angeles, spoke before the       The subject of his address was “Uni-
South Bay Chapter of the National         form Cost Accounting Standards and
Contract Management Association,          Government Procurement.”
February 12, on the subject “An              Douglas E. Cameron, audit man-
Objective View of the Prime Contrac-      ager, Portland, was elected vice presi-
tor.’, His article on “Observations on    dent of the FGAA Portland Chapter
‘Should Cost”, was published in the       for fiscal year 1972.

                                                           PROFESSIONAL ACTIVITIES

   Joanne M . Elmslie and Curl E.          Institution and the Legislature” and
Weber, supervisory auditors, Seattle,      “Administrative Techniques for Chal-
were elected treasurer and director, re-   lenging the Award of Government
spectively, of the FGAA Seattle Chap-      Contracts.”
ter for fiscal year 1972.                     On May 12 William B. Bernsdorf,
     Donald A . Praast, supervisory        supervisory auditor, Far East Branch,
auditor, Seattle, was elected president    addressed the FGAA Guam Chapter
of the Institute of Internal Auditors      concerning the organization, functions,
Puget Sound Chapter for fiscal year        and operations of the GAO.
1972.                                         Harold E. Lewis, supervisory audi-
   James B. Deemer, supervisory audi-      tor, Far East Branch, and president of
tor, Washington, D.C., spoke before        the FGAA Hawaii Chapter for 1971,
the Accounting Club of Virginia Com-       served on a panel at the University of
monwealth University, Richmond, Va.,       HauFaii Accounting Club, March 18.
March 17. His subject was “The GAO         The subject of Mr. Lewis’ remarks was
and Management Auditing.”                  “Career Opportunities with the Gen-
   Washington supervisory staff mem-       eral Accounting 05ce.” On April 7 he
bers will hold the following offices in    participated in the Business Night ’71
the Northern Virginia Chapter of           special awards ceremony of the Uni-
FGAA for fiscal year 1972: John P.         versity of Hawaii, presenting Govern-
Carroll, director; Richard E . Nygaard,    mental Accounting Education Awards
treasurer; and Gretchen C. Schwarz,        on behalf of the FGAA Hawaii Chap-
vice president.                            ter to the two outstanding University of
                                           Hawaii students in governmental
International Division

   Joseph P . Normile, director, Euro-     Office of Personnel Management
pean Branch was elected director of
meetings at the March 29 charter meet-        During the 25th Annual Conference
ing of the Frankfurt (Germany) Inter-      of Accountants, April 27-29, Tulsa,
national Chapter of the International      Okla., Leo Herbert, director, spoke on
Association of Accountants. Mr. Nor-       “Challenges to Creativity.” He also
mile was the U.S. delegate to the In-      participated as a panelist in a work-
terregional Seminar on Government          shop on Interface of Business Schools
Auditing held in Baden, near Vienna,       with Business and Government at the
Austria, May 3-14, under the joint         American Association of Collegiate
sponsorship of the United Nations and      Schools of Business Meeting and at the
the International Organization of Su-      American Association of Collegiate
preme Audit Institutions. He delivered     Schools of Business Assembly Meeting
two papers on the subjects: “The Rela-     in Denver, Colo., on May 4-7. He ad-
tionship Between the Supreme Audit         dressed the AACSB on “The Business-


Government-Education Interface.” Mr.                        Western Regional Meeting of the
Herbert also spoke on “Education and                        American Accounting Association in
Training of Accountants” before the                         Las Vegas, Nev., May 7-9.

                               I DO NOT CHOOSE
                          TO BE A COMMON MAN
      Jt i d my right to be u n c o m m o n . . . ;P J c a n e J                                   deek    8

      o p p o r t u n i t y . . . n o t decurity. J d o n o t w i d t o be u                       kept

      c i t i z e n , l l u m L t e d und d u t f e d      by      Auuing tlle S t u t e l o o k

      u h e r me.      J    wunt t o t u L e t l l e cuPcuPuted r i d : t o d r e u m u n d
      to Lied, to f u i t u n d          t o ducceed.       J      refude to h u r t e r incentive
      for u d o t e . J p r e h r t l l e CllaPPenged              o!hb     to tlle guurunteed

      exi3tence: t L e          tLrit! !o         fu@!!ment          to t h e d t u l e              of
      utopia       J       w i t t n o t t r u d e F e e d o m /Lr        Lenejcence nor           my
      dignity for          u llundout.        J    w i l t neuer cower before uny m u d t e r
      nor b e n d to u n ytllrecct. Jt i d my l l e r i t u g e to dtund erect,
      p r o u d und unulruid: to tLinL und u c t f o r m y h e 4 e n j o y t l l e
      b e n e / h o l m y creutionc,              und to fuce         tlle w o r l d L o l d l y   und
      Juy, t l l i 3   J    l l u u e done.   A t l t l l i d is   what    it   meund to be un

      A m er i c u n .

                                                           From a leaflet diltrihuted by the Colorado Shaver
                                                           Center. Denver. Colo.

  The following new professional staff members reported for work during the
period March 16, 1971, through August 15, 1971

Organization and        Pin, Clerio P.               US. Atomic Energy Com-
Management Planning                                    mission

Office of the           Berger, Ronald               U.S. Air Force
General Counsel         Buckles, Galen M.            Sperry Rand Space Support
                        Shrensky, Lewis F.           Department of Commerce

Civil Division          Antonio, Robert M.           Mount St. Mary’s College
                        Barrett, Roland G.           University of Minneapolis
                        Bowers, Frank                Savannah State College
                        Bridgett, Charles H.         Benjamin Franklin University
                        Butler, John J.              Pennsylvania State Universky
                        Cannon, Peter M.             Husson College
                        Coberly, Marian K. (Miss)    Glenville State College
                        Collard, George W.           Bryant College
                        Collis, Thomas E.            Virginia Polytechnic Institute
                        Connor, Joseph M.            Mount St. Mary’s College
                        Dee, Robert D.               University of Rhode Island
                        Doby, J a p e L. (Miss)      Morgan State College
                        Guido, Frank M.              Geneva College
                        Halbe, Neal F.               Pennsylvania State University
                        Hawkes, Sidney G.            The Mead Corporation
                        Kruslicky, Mary A. (Miss)    Virginia Polytecbn’c Institute
                        Lawler, John E.              St. John’s University
                        Lightner, Kenneth E., Jr.    Pennsylvania State University
                        Malacavage, Joseph P., Jr.   King’s College
                        Manzi, Anthony G.            Pennsylvania State University
                        Matteotti, Dennis A.         Thiel College
                        Miller, Steven P.            University of Utah
                        Miller, Texyn L.             West Liberty State College
                        Murray, Edward T.            Clarion State College
                        Parsons, Robert E.           Fairmont State College
                        Peters, Edmund R.            Columbia Union College
                        Phill’ps, David H.           University of Iowa
                        Rogers, Ronald R.            Moravian College


                      Sample, Leon D.               Shippensburg State College
                      Sgobba, Victor J.             University of Scranton
                      Shea, Ronald F.               Quinnipiac College
                      Sheard, Robert 0.             Susquehanna University
                      Shreffler, Peter B.           Clarion State College
                      Sombar, Seth T.               Tusculum College
                      Strange, James W.             Savannah State College
                      Taft, Richard H.              Kansas State College
                      Tdrman, Larry D.              Tusculum College
                      Wagner, David H.              Morris Harvey College
                      Wagoner, Joe E.               Pfeiffer College

Defense Division      Barmby, John G.               IIT Research Institute
                      Bowling, Steven K.            Carson-Newman College
                      Hill, William A.              Carson-Newman College
                      Holmes, Dennis R.             Carson-Newman Ccllege
                      Keema, Alexander W. III       San D:ego State College
                      Keppel, Michael R.            Pennsylvania State University
                      Lopez, John F.                University of Marylagd
                      Mead, Eric A.                 Adams State College
                      Miller, Virgil K.             Tennessee Technological
                      Truitt, Robert N.             Milligan College

Division of           Stewart, Jimmy D.             University of Idaho
Financial and
General Management

international         Fauntleroy, Helen D. (Mrs.)   Virginia State College

Transportation        Dodson, James E.              American University
Division              Roemer, Steven M.             State Un’versity of
                                                      New York


Atlanta               Berry, James D., Jr.          Troy State University
                      Denney, Larry E.              Troy State University
                      Lowery, David S.              Florence State University

Chicago               Xodapp, Ronald J.             Mankato State College
                      Seeley, Dale W.               Drake University

Cincinnati            Bricking, William H.          Xavier University
                      D a m , Edward A.             Indiana State University
                      Hazard, Michael J.            Thomas More College
                      Hovey, Walter T.              Department of Agriculture

                                                  NEW STAFF MEMBERS

Denver          Lorenzen, George L.       US. Air Force
                Pickering, Robert P.      u.3. Army
                Trapp, Arthur D.          University of Colorado

Los Angels      Gauthier, Royal D., Jr.   University of Arizona
                Luter, James T.           University of Ariiona
                McGraw, Ambrose A.        California State College at
                Marcus, Charles F.        California State College at
                                            Long Beach
                Mikami, Robert M.         California State College at
                                           Long Beach

New York        Cutler, Dennis E.         Grumman Aerospace
                Hartwig, John E.          University of Illinois
                Hefferon, Edward F.       Notre Dame of Staten Island
                Najberg, John M.          New York University

Norfolk         Payne, Richard G.         Catawba College
                Philips, Johnnie M.       Old Dominion University
                Wecht, John E., Jr.       Old Dominion University

Philadelphia    Brady, Robert B.          Pennsylvania State University

San Francisco   Bailey, Earl A.           University of Puget Sound
                Cotton, Ralph A.          San Francisco State College
                Covington, Wilfred A.     San Jose State College
                Jefferson, David W.       US. Air Force
                Lang, William J.          Stanislaus State College
                Staal, Donald E.          Thrift Stores

Seattle         Edmonson, Kenneth W.      Department of Health, Edu-
                                           cation, and Welfare

            The reviews of books, articles, and other documents in
            this section represent the views and opinions of the individuai
            reviewers, and their publication shouZd not be construed
            as an endorsement by GAO of either the reviewers’ comments
            or the books, articles, and other documents reviewed.

Bibliography on Federal                       cludes the items from the earlier study,
Accounting, Auditing,                         except when the original publications
Budgeting, and Reporting,                     were superseded by other publications,
1900-1970-Annotated                           plus similar kinds of material pub-
                                              lished from 1952 through 1970.
Published by the Federal Government              The material listed refers to books,
Accountants Association, Arlington,           pamphlets, and articles published in
Va., 1971; $5.00.                            the United States, plus a few refer-
                                             ences to articles from English language
   This     comprehensive,     annotated     periodicals published in other coun-
 guide to the literature on Federal finan-   tries.
cial management subjects will provide            The compendium is imposing in its
 a helpful single source reference for       size and content. Its 229 pages include
interested personnel of the Federal          132 pages of main entry items ar-
Government, State, and local govern-         ranged under 46 broad descriptors
ments; independent researchers; and          covering such diversity as Account-
students and teachers of public admin-       ing-Federal,      Accounting-General,
istration and related disciplines.           Budgeting, Eflective Communication,
   The bibliography represents the up-       Fiscal Policy, Long Range Planning,
dating of an earlier work put together       Procurement, and Public Administra-
by the Research Committee of the Fed-        tion. Each item in the main entry is
eral Government Accountants Associa-         annotated to describe the listing be-
tion (FGAA) and published by the             yond the identification of content fur-
FGAA in 1952. The current book in-           nished by the title of the item and the

                                                                READINGS OF INTEREST

descriptor title under which the item is    for financial management in the Fed-
categorized.                                eral Government as well as by teach-
    The bibliography is further subdi-      ers, students, and others interested in
vided into (1) a subject index (62          management in the public sector.
pp.) which identifies each item with an          W . L. Campfield,
appropriate descriptor category and              Associate Director,
also indicates the location of the anno-         Division of Financial and
tation in the main entry section and               General Management Studies.
 (2) an author index (35 pp.) which
contains conventional identification of
items by author and title and provides             NOTE:
cross-reference by descriptor code to
                                              GAO staff members played an important
the annotation in the main entry sec-       part in the preparation of this bibliography.
tion.                                       In the foreword signed by E. El. Morse, Jr.,
    The main virtue of the bibliography     as president of the FGAA, and Mortimer
is that it brings into one data source      A. Dittenhofer, chairman of the Association’s
                                            National Research Committee, the names of
the important writings about Federal        34 individuals are listed as having actively
financial management that have been         assisted in preparjng the bibliography.
produced over the past 70 years, but        Twelve of these were GAO staff members
for which reference has been scattered      as follows:
over the many indexes prepared by             Office of Policy and Special Studies
accounting, budgeting, finance, public          Earl M . Wysong, Jr.
                                                Frankie L. Schlender
administration, personnel, and other
                                              Civil D’vision
groups and associations. The one dis-           Donald C. Pullen
advantage of the publication, which is          Frederick K . Rabel
coinmon to most bound volumes, is the           Frederick J. Rauscher
 difficulty of updating it on a more fre-       Albert B. Jojokian
quent and practical basis than has ex-        Office of Personnel Management
 isted in the past. Perhaps the sponsors        Herbert R. McLure
will find some looseleaf binder supple-       Washington Regional Office
                                                Donald L . Scantlebury
mentary way to overcome this handi-             Katherine L. Scheibelhoter
cap to potential users.                         John P . Carroll
    The publication is the effort of a        International Division
large number of FGAA project re-                John J . Filan
 searchers who are literally a blue rib-         William M . Romano
bon cross-section of Federal financial
 management expertise and insights.         Federal Evaluation Policy
    On balance, this reviewer believes
the bibliography to be a long needed        By Joseph S. Wholey, John W. Scan-
 and highly welcome addition to finan-      lon, Hugh G. Duffy, James s. Fuku-
cial management literature.           He    moto, and Leona M. Vogt; The Urban
 strongly recommends its acquisition by     Institute, Washington, D.C., 1970;
 each person who has a responsibility       $2.95.


     In the foreword to “Federal Evalua-     ships and responsibilities for evalua-
tion Policy,” William Gorman, Presi-         tion, (4) evaluation resource require-
dent of The Urban Institute, says that       ments, and (5) a summary of major
it is the Institute’s hope that the gen-     recommendations.
era1 approach to program evaluation             Each substantive chapter contains
described in this book will be useful to     the authors’ recommendations-a total
administrators and legislative bodies,        of 72, of which 34 are classified as
to State and local officials who carry        “major” recommendations by the au-
out Federal programs, and to analysts         thors. “Major” should be interpreted
both in and out of government. Now            loosely because some of the major rec-
 that’s a big hope for almost any book        ommendations are platitudes. Many,
 and particularly for one that can be         however, are noteworthy. For exam-
 read in a couple of hours or less. Nev-      ple:
 ertheless, I believe the book lives up to       1.me       OB^^ of Management and
 the expressed hope. It clearly has rel-             Budget (OMB) should require
 evance to anyone who has responsibil-               each Federal agency to submit,
 ity either for making evaluations of                as part of its annual budget jus-
 the results of programs or projects or              tification, a 2-to-3-year plan for
  for. reviewing program evaluation re-              evaluating each of its major pro-
  ports.                                             grams.
      This 1 3 4 - p ~paperback is con-          2. Through OMB the President
  cerned principally with the loci of au-             should require initiation of na-
  thority and responsibility for evalua-             tional program impact evalua-
  tion, with evaluation approaches and               tions that cross agency lines to
  difficulties, and with pitfalls to be              compare the effectiveness of re-
  avoided. While the authors make no                 lated programs in achieving
   attempt to describe or to prescribe de-            common objectives.
  tailed techniques of evaluation, chap-         3. Congress should require, every 2
  ter six entitled “Methodology” does                 to 3 years, program impact eval-
   effectively explore the methodological             uations of each major Federal
   tasks to be accomplished in carrying               program.
   Out evaluations, draws tentative con-          4. Because budget decisions can be
   clusions on the methodological feasi-              aided by knowing what program
   bility of the various types of evalua-             is better, comparative studies of
   tion for the programs examined, and                two or more programs should be
   recommends priorities among possible                given precedence over studies of
   evaluation studies, field experiments,              single programs.
    and experimental demonstration proj-          5. Because the findings of the
    ects.                                              broad-based program impact
       Other chapters in the book concern              studies can conceal the value of
    (1) why Federal evaluation is needed,              worthwhile projects and strate-
    (2) administration of an evaluation                gies, program impact evaluations
    system, (3) organizational relation-               should be supplemented by proj-

                                                             READINGS OF INTEREST

     ect rating systems and program        of various causal factors when only
     strategy evaluations.                 one project is analyzed.
  6. Since (except in the case of con-        In addition to their usually interest-
     trolled experiments) evaluation       ing discussions and recommendations,
     of the effectiveness of individual    the authors have included other tidbits
     local projects will often be be-      of interest to evaluators of programs.
     yond the present methodology or       One table (p. 88) shows a classifica-
      outside reasonable cost con-         tion of program evaluation research
     straints, single-project evalua-      designs and some of the characteristics
     tions should be steered toward        of each design. A brief discussion of
     periodic comparison of project        the use and difficulties of control and
     outputs with objectives pre-          experimental groups follows the table.
     viously stated in measurable          Another tidbit is a table (p. 109)
     terms.                                which shows the authors’ estimates of
                                           the conditions for evaluation of 18 se-
   Throughout the book the authors         lected social programs. For several
make clear that evaluations of the re-     programs, for example, Model Cities,
sults of programs are needed, but they     the authors believe that there are no
make just as clear that there has been     suitable output measures, inadequate
very little good evaluation and that for   measures of environmental variables,
some programs evaluations of effec-        no control groups, and no measures of
tiveness cannot be made at this time       appropriate input and process varia-
with present methodology, definitions      bles. In short, for such programs the
of output, and data. The Office of Eco-    authors believe it unrealistic to attempt
nomic Opportunity is given recogni-        massive program impact evaluations at
tion for being further ahead in its        this time.
evaluation effort and organization than       Another interesting tidbit in this
any other Federal agency, but it too       book is the bibliography which con-
has had difficulties.                      tains 187 references, nearly all of
   Two other conclusions are in evi-       which were published between 1963
dence throughout the book: (1) suc-        and 1970. Covering a wide variety of
cessful evaluation depends on support      program evaluation related books and
by the Congress, the President, the        periodicals, the bibliography is worth
OMB, and agency leaders and (2)            the cost of the book. It was a good
evaluations of alternative programs or     idea to have a lengthy bibliography
projects are more useful information        because some of the discussions in the
 for decisionmakers than are single pro-    book are extremely brief, perhaps too
gram and single project evaluations.        much so for a newcomer to the field.
The authors are not enthusiastic about        The reader of this book should gain
local project evaluations because they     an awareness of (1) some of the
believe that project evaluations are too   things agencies, the Congress, and
expensive and that it is generally not      OMB should do if they are to cause
possible to determine the importance       worthwhile evaluations to be made,


(2) various approaches to evaluation              Ted M.Rabun,
and why various approaches are neces-             Assistant Director,
sary, and (3) pitfalls. I believe that all        Division of Financial and General
program evaluators and agency leaders               Management Studies.
would benefit from reading this book.

                       Getting Useful Information
            Managers tend to put a premium on information that is measur-
         able, apparently accurate, and easily available. But the overall per-
         formance of the company is likely to depend much more on “soft” data
         -that is, what customers think of a product or service. Snooping
         around can get you 100 times as much useful information as looking
         through official reports.

                                  Jay Forrester
                                  Professor of Management, Alfred P. Sloan
                                    School of Management, Massachusetts
                                    Institute of Technology.
                                  Quoted in Think Magazine, March-April

        Annual Awards for Articles Published in The GAO Review

   Cash awards are available each year         The awards are based on recommen-
for the best articles written by GAO        dations of a panel of judges designated
staff members and published originally      by the Comptroller General. The
in The GAO Review. Each award is            judges will evaluate articles from the
known as the Award for the Best Arti-       standpoint of the excellence of their
cle Published in The GAO Review and         overall contribution to the knowledge
is presented during the GAO awards          and professional development of the
program held annually in June in            GAO staff, with particular concern
   One award of $250 is available to
contributing staff members 31 years of         Originality of concepts.
age or under at the date of publica-           Quality and effectiveness of written
tion. Another award of $250 is availa-          expression.
ble to staff members over 31 years of
                                               Evidence of individual research per-
age at that date.
   Staff members through grade GS-15
at the time of publication are eligible        Relevancy to GAO operations and
for these awards.                                performance.

                       Statement of Editorial Policies

1. This publication is prepared for use by the professional staff members of the
   General Accounting Office.
2. Except where otherwise indicated, the articles and other submissions gener-
   ally express the views of the authors, and they do not necessarily reflect an
   official position of the General Accounting Office.
3. Articles, technical memorandums, and other information may be submitted
   for publication by any professional staff member. Submissions may be made
   directly to liaison staff members who are responsible for representing their
   offices in obtaining and screening contributions to this publication.
4. Articles submitted for publication should be typed (double-spaced) and
   range in length between five and 14 pages. The subject matter of articles
   appropriate for publication is not restricted but should be determined on the
   basis of presumed interest to GAO professional staff members. Articles may
   be submitted on subjects that are highly technical in nature or on subjects of
   a more general nature.

                                     Q   U.S. GOVERNMENT PRINTING OFFICE : 1971 482-430/1
                           THE GAO REVIEW
                                 LIAISON STAFF

Office of Policy and Program Planning__-__---E . H. Morse, Jr., Coordinator
Office of the Comptroller General _--__-_-__---       Rodney E. Espe
Office of the General Counsel -_____________--        Milton J. Socohr
Division of Financial and
  General Management Studies _ - _ _ _ _ _ _ _ _        _ -M.
                                                      Ted   - Rabun
Civil Division ______________________-__---           Jack  L. Mertz
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                                                      Gilbert   _ _Stromvall
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