oversight

Proposed 'Legislative Branch Disclosure Act of 1977': H.R. 7401

Published by the Government Accountability Office on 1977-06-02.

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

                          DOCUSENT RBSURE
02501 - [A1732740]

Proposed "Legislative Branch DisclosIre Act of 1977n: H.R. 7401.
June 2, 1977. 10 pp. + 2 enclosures (12 pp.).

Testimony before the House Select Committee on Ethics; by BEler
B. Staats, Comptroller General.
Issue Area: Accounting and Financial Reporting (2800).
Contact: Office of the Comptroller General.
Budget Function: General Government (800).
Organization Concerned: Congress.
Congressional Relevance: House Select Committee on Ethics.
Authority: HR. 701 (9Sth Cong,),. H. Res. 287 495th Cong.).   S.
    555 (95tt Cong.). S. Res. 110 (95th Cong.).
          The proposed "Legislative Branch Disclosure Act of
1977" should include a system of enforcement, as well as the
 wtrong code of conduct and public financial disclosur.e, if the
 ...al process is to be effective. This is necessary in order to
g9in the respect and confidence of the American public and to
detl effectively with conflicts of interest.
Findings/Conclusions: The bill would require financial
disclosure statements to be filed by members of Congress,
candidates for Congress, officers of either House of Congress,
and certain individuals employed by members or committees of
either House of Congress. It would assign the enforcement
responsibility to the Department of Justice and does not put
auditing responsibility on GAO, a situation potentially
threatening to the special relationship between ",AO and
Congress. Recommendations: The entire auditing responsibility
should be placed with the Oversight Committee, assisted e!.ther
by private auditors or by staff on assignment f-om the Internal
Revenue Service or GAO. Certain privacy safeguards should be
included in the disclosure process. The term "principal
assistant to a member or officer" should be further clarified.
The Attorney General should have the authority to investigate
allegations of noncompliance on his own initiative. iSC)
                                                         FOR RELEASE ON DELIVERY
                 o appreciateyour iniExpected                     at 9:30 a.m. EST
                                                         June 2, 1977
LOI

                             STATEMENT OF ELMER B. STAATS
                       COMPTROLLER GENE)AM OF THE UNITED STATES
            &1   ~~~   .    ~BE~.~E           THE
                          HOUSE  SELECT COf-ITTEE ON ETHICS         C,
                                          ON
                            H.R. 7401 - LEGISLATIVE BRANCH
                               DISCLOSURE ACT OF 1977


      Mr.    Chairman and Members of the Cbrmmittee:
                appreciate your invitation to appear before your
      Con.m.ttee       today to discuss our views on H.R. 7401,   the "Legis-

      lative Branch Disclosure Act of 1977."          This bill would require

      financial disclosure statements to be filed by Members of Congress,
      candidates for Congress, officers of eithernouse of Congress,
      and certain individuals employed by Members, or committees of
      eit.her Souse of Cor.ress.
                 the purpose of E.R. 7401 is    to promote confidence in

      public officials through full disclosure of their personal
      financial status. The Senate and Eouse have made public dis-
      closuLe the essential ingredient in their new codes of conduct.
      We fully believe that, in addition to a strong code of conduct
       and public financial disclosure, there must be a system of
       enforcement to help insure the effectiveness of the total process.
       This is necessary to gain the respect and confidence of the
       American public and to deal effectively with conflicts of interest.
    With regard to appropriate enforcement mechanisms, we
are pleased that neither H. Res.287 nor this bill give G4O
responsibility to audit disclosure statements of Members or
employees of Congress.   As you know, other bills would place
the audit responsibilities on the General Accounting Office.
I am deeply concerned about the audit role GAO is being asked
to play under S.Res.1ll0, and under S.555 should it be en-
acted into law.
     S.Res. 110 is strictly internal in nature and not having
the force and effect of law, passed for the purpose of creating
a Code of Official Conduct for members, officers and employees
of the Senate.    Therefore should S.555 or E.R. 7401 be enacted
as a law, S. Res. 110 would in effect be repealed, modified,
or otherwise amended only to the extent it conflicts with eithe:
piece of legislation.    In the case of H.R. 7401: it does not
appear to conflict with S. Res.110 as it relates to audits
by GAO.   In our opinion, GAO would still be required to
audit Members and employees of the Senate unless language
Is provided in H.R. 7401 to exclude such audits by GAO.
     On several past occasions I have opposed giving audit
responsibility of this type to the GAO.    Even though the Senate
passed S.Res. 110 on April 1, my views have not changed.     Most
recently in my May 5, 1977, testimony on S. 555 before the Senate
Committee on Governmental Affairs, I strongly emphasized that

                                -2-
requiring GAO to audit the disclosure statements of Members
and employees oi Congress could place GAO in a most difficult
position in view of bur cay-to-day dealings with these same
Members and employees. I fully believe that giving GAO audit
responsibility over Members and employees of Congress could
sow seeds of friction and distrust, and develop an adversary
relationship with these individuals which could do great
damage to the overall effectiveness of the GAO by endangering
the close relationship which GAO must have with Members,
committees, .id staffs of the Congress.
     Our role is that of an oversight arm and an evaluator of
executive branch programs for the Congress; not an oversight
agency of the Congress.   I do not believe that audit of the
financial transactions of individual Members of Congress ir
consistent with this role.
     I am attaching to this statement copies of letters (Attach-
ment I) out:ining the reasons why I feel that this action is
unwise, particularly since good alternatives are available which
do not raise the same kind of issues which I foresee will arise
as the result of GAO's auditing of these statements.

     Audit responsibility as provided for under S.555 would
require that the Comptroller General, to the extent practical,
pattern such audits of the disclosure statements after the

                               -3-
audit of Federal income tax returns presently performed by

Inteznal Revenue Service.     Such audits as best we can deter-
mine would generally include

     -- a review of the reporting individuals Federal
       income tax return.
     -- A review of other supporting doc:umentation the
        auditor may request aftez consultation with the
       respective supervising ethics offices in the House
       or Senate.
     -- No review to clarify or certify the accuracy of
       every figure cn the statement.
     -- A review to so= check the accuracy and
       completeness of the statement but in the
       final analysis the auditor may accept the
       figure on the statement unless in his re-
       view a doubt is raised from the statement
        itself.

      Such audits are different and distinct from a review of
 a disclosure statement to determine whether the statement reveals
 possible violations of applicable conflict of interest laws or
 regulations.     It is intended thnat this latter review be performed
 by the respective supervising %th)cs office in the Bouse and Senate.

                                  - 4-
The audit contemplated for GAO is to be concerned only with the
"completeness and accuracy" of the information disclosed on the
statement and not whether the information -%ich    is disclosed in

any way indicates a coftlict.
     The committee report on S.555    defines the scope of GAO

audit expected under the bill. ". . . the Comptroller General
is directed to conduct, on a random basis, a sufficient number
of audits in order to monitor the accuracy and completeness of
the financial disclosure statements."     At the same time the

Committee directed that that ".   .   . the General Accounting

Office must be given the total independence and latitude
necessary to conduct credible, independent audits which will
have the respect of the American public." Nevertheless this
latitude is circumscribed in several ways as described in
Attachment II.
     Bowever, it seems to me that it is inevitable that there
will be allegations and charges that statements filed by a
Member are incomplete or inaccurate, in which the accuracy
and probity of the Member's statement wJll come into question
in a public way.   This could place the GAO in a difficult posi-
tion explaining why it does not investigate these charges if the
 supervising ethics office does not agree that these charges
 should be investigated.
     As you also know, the GAO does extensive work for individual
Members as well as committee chairmen at their request.     It is
essential that this relationship be one of mutual confidence

if our work is to be most effective.     The Congress itself would
be the loser if this relationship were to be endangered through

friction, distrust, and an adversary relationship between the

GAO and Members of Congress.     Potentially, it could do great
damage to our overall effectiveness.

     H.R. 7401 takes a different approach to the objective of

securing public confidence in the financial disclosure system

applicable to the legislative branch.    This bill establishes
a combination of civil and criminal penalties for the willful,

non-filing or the willful falsification of information in a

required disclosure statement.    The bill assigns the enforce-
ment responsibility to the Department of Justice.     The question
of the most appropriate sort of enforcement arrangement is one

that the Congress must ultimately determine.     However, the
approach represented by H.R. 7401 constitutes a substantial

improvement from the standpoint of the General Accounting

Office.   It excuses us from attempting to discharge faithfully

and fully a duty which would inevitably introduce stresses

into our unique relationship with the Congress.



                                 -6-
    We are not certain that t.,e degree of public confidence which
which GAO participation is apparently intended to provide would be

be worth the-price, particularly when the audit is not to be ex-
tensive--with reliance being placed on the data submitted and
no further action taken unless reasonable doubt as to the
accuracy of the information is raise6 based on the data as
reported.
     I have great difficulty understanding how as a practical
matter, we can certify as to the completeness and accuracy
of a financial statement simply by reviewing it as submitted.
Such a review would not disclose instances where financial
relationships are not disclosed or where the amounts so dis-
closed may be inaccurate.
     Under these circumstances, I suggest that the entire
responsibility be placed with the Oversi'ht Committee,
assisted either by private auditors or by staff on assignment
from the IRS or the GAO.    This would avoid the inevitable
confusion of having the responsibility divided between the
Oversight Committee and the GAO as contemplated in S.555.

BALANCING PRIVACY CONSIDERATIONS
WITH PUBLIC DISCLOSURE
     Whae:ever system the Congress may finally adopt, the Congress
 should continue to balance conflict-of-interest and public
 disclosure concerns with the rights of individuals to privacy.


                                 -7
     Obviously, this Committee faces a difficult dilemma in
seeking to accommodate the 'ublic policy considerations under-
lying requirements for public disclosure of personal financial
information and the right of personal privacy.   Here the

primary concern is promoting confidence in public officials
through a code of ethics and full disclosure of their personal
financial status.   Aside from any philosophical or ethical
objections which might be voiced against such disclosure,
there are difficult problems that need to be considered--
problems which, to our mind, are avoidable without undermining
the overall objective being pursucr
     We believe that certain safeguards need to be built into the
disclosure process. Prior to inspecting or receiving a copy of
report, we believe the requestor Shnuld be required to present
a written re-uest giving h            dr
                              name; &dress;
                              namen;          names and addresses
of the persons or organizations, if any, on whose behalf he
is making the request; and the intended use of the financial
report.
     This information would be great assistance in carrying
out certain other provisions which should be included in section
305(b) of this bill that would make it illegal for any person
to inspect or obtain a.copy of any report
     (a) for any unlawful purpose;
     (b) for any commercial purpose;

                                 -8
     (c) to determine or establish the credit rating of
         any individual; or
     (d) for use directly or indirectly in the sol.iciation
         of money for any political, charitable, o: other
         purpose.
The Attorney General should also be authorized to bring a
civil suit against any person who inspects or obtains such
reports for any of these purposes.
Other Matters
     Under section 2, persons covered by S.R. 7401 include
each 'principal assistant to a Mnembie   or officer."   However,
under section 8, no defl         is provided as to the meaning
                             .;tion
intended by this phrase.     It is conceivable that this lan-
guage could be construed to include virtually anyone employed
in a Member's office.      We believe some clarification is
necessary, particularly in view of the $25,000 threshold es-
tablished by-H.Res. 287 -and S.Res. 110.
     With respect to Section 7B, we read this provision to mean
that the Attorney General may bring a civil action in any appro-
priate U.S. District Court against any individual who falsifies
or fails to file a report and that the Attorney General may
either act on his own or on the basis of referrals from the

                                  -9
Committee on Standards of Official Conduct of the Rouse of
Representatives and the Select Committee on Ethics of the
Senate.   We believe that it is important that the Attorney
General have the authority to investigate allegations on his
own initiative.
     This concludes my statement and I will be happy to respond
to any questions.




                               - 10 -
      -*:          Attacbaent                                                   Attachmant I
      ,-      I*                CO~rPTPOLLCR GENERAL OF THC UNITMoD STATe
,:-                                         WASHINGrWTC.   DA   31.




           B-130961                                                        Sp   2.


           The Honorable Peter W. Rodino
           Chairman
           Committee on the Judiciary                                 /.
           House of Rtoresentatives

           Dear .:r.   Chairman:

                 The Subcommittee on Administrative Law and 'Governmental
           Relations of the House Committee on the Judiciary has
           reported H.R. 3249, as amended, for full Committee action.
           This legislation would establish a financial disclosure
           sys¥.em for top-level officers and employees of the three
           branches of the Federal Government.

                I am strongly opposed to certain aspects of the bill as
           reported by the Sibcomr.,ittee.    The bill would pladc the
           General Accounting Office   in  an  operational role wh;ich is
           inconsistent with our basic role of audit ane evaluation.
           I believe that the responsibility for adminisLering the
           system of financial di<slosure sL.ould not be ::aced with
           the Comptroller General or in the General Accounting Office
           but should rest with the respective branches of Government.
                The Congress has long looked to GAO to proviae objecti;ve
           information and evaluations of how well legislation is being
           implemented by the executive agencies and to provide it with
           suggestions for how these programs could be m.ore economical,
           more efficient, and more effective. Our role is that of an
           evaluator rather than being responsible for carrying out
           programs.
                My concern with respect co placing the responsibility
           in the General Accounting Office for administering the
           financial disclosure recuirements involving members of
           Congress is similar to the concern'which I-expressed when
           the Congress was considering proposals to rlace responsibility
           in GAO for administering congressional campaign financing.
           I indicated at that time that I felt that placing +his
           responsibility in GAO held in it the seeds of friction and
           distrust which could do great damage to the overall
           effectiveness of the Office.
B-130961



     We endeavor to remain completely nonpartisan and free
from any tvye -f political influence in carrying out the
functions vested in ou'r Off.:ce.  While the enactment of the
bill would..not in and of itself  involve our Office directly
in oartisan matters, we are fearful of being placed in a
position . which we could easily be criticized, however
unjustly, *f being improperly influenced by such
considerations.

     I ha,.'e attached to this letter a draft of proposed
legislative language which is similar zo B.R. 3249, as.
amended, except that it would among other things:

     -- require financial disclosures only from the top.-
        level officials of Government;

     -- place administration in the respective bran.hes
        of Government;

     -- require public disclosure only when there is a
        showing of a conflict of interest or an apparent
        conflict of interest; and

     -- require audit by the Comptroller General on a
        random basis.

     I strongly urge that consideration be given to amending
H.R. 3249, accordin:ly.

                                Sincerely yours,

                                      (Signed) =r:--   B. STA;=,
                                Comptroller General
                                of the United States
Enclosure




                            -   2 -
                             _.,;
                               Atar   t   I                                                Attachment I
         [/f/-*.*.*
                  ".-(                    W.C;OMPrROLL..F CEtNERAL OF rNE UNIT-M, STATES
(\   r            i~WA5          ..                       ,'  N1O4. .C. Z   -




                The HonorableWalter F. Mondale
                President 6Of the Senate

                Dear Mr. president:
                     Several bills have been introduced in the Congress to establish
                a code of ethics and require financial disclosure. To cite a few,
                see B.R     .     R. °,. and S. 290, of the 95:h Congress. The bills
                both in this and the last session would place the adrninist-ative
                responsibility, thee receiving of reports, and' investi:ative functiCns
                                                            .-
                relating to financial disclosure in 'te C=--':r    e: General of the
                United States. In the past I have e--ressed ?,y ccncern. an.d opro-
                sition to such pmro.osls. I now reita:er-,-y s:-n copposition to
                these aspects of .hebills and eznphasie the serious repercussions
                they would have on the General Account-n OfCfice (C-AC) if enacted.
                R=EcS.'OsrILiTT       TY,Fr              -
                                                  A:'r1_T'        '0;i
                                                                   '-

                    The bills would :lz:e the Crerer _ c:-..t-g Office in an
                oper tiornal.role rWi;c. is 2Lcon.sisten         s
                                                          i. its basic role of audit
                a-d evaluatior.- I believe that the reso-..ibiity for ad.inistering
                the s-ste= of financial disclosure sho=Ed not be placed with the
                                                 C
                Comnptroller General or in tŽ1- Generz   .c'-        CfiCe.

                    The Congress has lcn looked to -AG    -t      provide o;^jective
                infor-.atlion and evaluaticns of how well legislation is be_.ng .- le-
                mented by the executive agencies and to provide it w-i th suggesicns_
                for how 'tese prcr;.,:s cculi oe =.ore ec -cnoicl,         -.. ore elficient,
                and -ore    effective. Our  role is that of  an  evzluator   rat'er th.an
                being rtsponsible for _.-e  adinistrat:icn    of Federal   progra_-ns.

                    My concern :ih.-  respect to placing the respons4bility n the- -   ;-
                Corrmptroller General for adcinistering the fi-nancial disclosure
                requirenments involving m.embers of Ccnr'ress is similar to the
                concern which I expressed when the Ccngress was considering pro-
                posals to place responsibility in GAO for admiL-isteri.g congressio-
                nal campaign financing. I indicated at that tin e I felt that placi:ng
                this responsibility in GAO held in it the seeds of friction and dis-
                trust whicai could do great darnagz to the overall effectiveness of
                the Office.
                    We endeavor to re.air. c:Clc-te'7 nc c   a:.is an nd free fr_
                                             _--. c-_r--
                asy type of political i=uence-             cu: the f'ncticns vese'




               "77, ,'14) / .o
 in our Office. I do not believe tat oversight and investigation
 of the financial transactions of individual members of Congress
 is consistent with our role as a nonoartisan asrn of the Congress,.
 called upon for help daily by committees and =members of Con-
 grass. BRoug?-_y one-third cf our entire work now originates with
 comi..:tees-or with individual em-bers of Congress.

     I recommend most strongly', therefore, that the responsibility
 for adninistering a system of financial disclosure not be placed.
 on the Comptroller General or in the General Accounting Office.
 Moreover, as stated above, placing the responsibility for ad-
 ministering financial disclosure, particularly as it refers to
 financial disclosure problems of members of the Congress, could
 potentially do great damage to the overall effectiveness of the
 General Accoat 'ting Of'ice and endanger the close relationship
 which this Offic must have with members and com:mittees of the
 Congress.
      'We think there is much to be said for the creation by statute
  Commission on Mthics and Financial Disclosure to be res-onsiblea
· for reco==mending consistent procedures f!or implementi.g, ad-
 ministering, and investigat-z.g ei'c.l conduct and the fnrancial
  disclosure syste.n, and for rendern.2 formal advisory o-.inions
  and counsel on potential cor:lict-cf-:nterest matters. The General
 Accounting Ofice could then be given specific responsibility for
maintaining oversight of these syste=s.

     We believe +tat. if disclosure reports were f.iled Wi't such
 Co=r-ission, and a copv with indtvdur.l agencies, the objectyves
 sought could be achieved with L-.al disruption and costs and
 could be merged wit existing systems in each branch. Such a
 syste, would 'Iso enble the responsible officers of each branch
to review the reports ' determine whether apparent or       potentialJ
conflicts of I.nterest occur with the employees' official duties.
Such reviews are extrermely inportznt and are currently required
to be performed by each agency in the executive branch. It is
essential that the agency head continue to be held accountable for
any questionable interests. Agency heads, also, are in a better
position to klow and to make judg-.ents as to what specific
financial interests an employee should not have. based on his
current responsibilities.
B.ALA/NCING PRIVACY CONSImE.RATIONS
W1'TH PU3LIC D1iCJLISU.T bu-E

    Obviously, the Congress faces a difiicult dile-i-.n in see:ic   ;
to accommodate the public policy considerations   underlying

                                 -2-
requirements for public disclosure of personal financial information
and the right of personal privacy which affects all of us. This
dilemma is somewhat the same as is inhcrent in the public policy
aims of the Freedom of i;nformnation Act and the Privacy Act of
1974--the oneproxmotLng openness in Government administration
and the other carefully spelling out the basis upon which "private"
Information in the hands of the Government nmay be used and
disclosed.

    Here the primary concern is promoting confidence in public
officials through a code of ethics and full disclosure of their per-
sonal financial status. Aside from any philosophical or ethical
objections which might be voiced against such disclosure, there
are difficult problems '.that need to be considered--problems
which, to my =ind, are avoidable without undermining the overall
objective being pursued.
    Provisions should be made to require notice to the individual
involved that disclosure of his financial report has been made -
and to whom. I also believe the recuestor sho.ld be required to
state his intended use of the information in the file, and that both
the identity of the reqcuestor and his stated reason for the request
should be made available to the public. I further believe the Con-
gress might require the requestor to ma.:e a showing of a conflict
of interest or potential cornflict-of-interest situation concerning the
official whose statement has been requested before the statement
is released.

    The legislation should authorze the adiList&ering agency to
issue reguiai,!ons liitin Z access to pertinent infor.-ation in the
context of these statements to a conflict of interest or potential
conslict-cf-interest situation (e. g., interests, gifts or other
relationships of cfficials of the regulatory agencies in companies
regulated or affected by their regulations).
    -' th
       ' the above considerations in mind, there is enclosed for
your consideration a draft bill (Enclosure A) which incorporates
many features of the various legislative proposals introduced in
the Congress, but with Significant modi'ications. We are not
necessarily endorsing all of the provisions of the draft bill. fWe
believe, however, that there is merit in the concept of an in-
dependent Co=xnission on Ethics and Financial Disclosure,

    In the event Congresr should not favor the establishmnent of a
Commission on Ethics and -'ir.nncial Diclosure we would reco=-
utend that legislation be enacted to -lare the o;rinary responsibility
on eth-cs and financial disclosure of tLe three bra.ches of the


                                -3-
Federal Government in the Civil Service Commission. the Clerk of
the Rouse of Reprcsentatives, the Secretary of the Senate, Oad the
Director of the Administrative Office of the United St.tes Courts,
respectively. To accomplish this concept there is enclosed for
your conside'.ation a draft bill (Enclosure B).
                                  Sincerely yours,

                                         ..    ?.,""-        - ,
                                                        3. S.,A
                                      * '.e
                                  Comptronler General
                                  of the United States

Enclosures




                               - 4-
               ___                  \     Attachmnt I                                          Attahent I




      .·               :
                     ....
                                 s .- _'"__-               -,5-;-,'-'   -      .     ..
                                                                                              _15,   1977
                                                                                                       .tavrch   .   . .
                                                                                                                           -   .   ..   ;'-



                      ~~*                         *.                        ~~~~~~~~.-:
                                                                                     :o

      ·        *            ec       onorable Abraham A.       Ricoff                     .
                             ittdd States Senate'.

                     De              Abe:                  ,

                As you Lnow, I am deeply conccrned about the role whicn the Gcseral
           Aceotring Office is asked to pl5ay =der Senate -Resolui on 110.    I set
          .formthy
            .       contcerns in a letter to the President of the Senate on february 2
           andEob.Kelle, the Deputy Cctmoproller General, in my absence, reiterated
     *-
      "..
        ·  these concerns on Februaryt 25 in 2 letter to Smnator Gaylord Nelsoo.

                         In my opinion, the requirement that the GAO audit and ijvestigzte
                   .the              &rthia of indi;idual seznators has
                        financial stateaents                                    it the saeds
               : . of major damage in the effectiveness of GAO.   Certainly, there vill   be
                   press allega-ions and other charges  wit  respect toD thc accuracy  o' these
                 ' I 'maccial s;aein  ts. Itiis inevirtable that this Vill :ing GAO    in direct
                   confrontation vith senators as to the accuracy and integrity of their
                   statements. AnY differences resulling frc= an audit is bound sooner or


                       be charges that the GAO's actions were politically $otivated or taket
                       because of pressure fro= one _ource or another.

      . .             .. Here and more the GAO is called upon to provide direct assistance to
..                    ccrtteus and =m-btrs of Congress. About one-third of our work tod-- is
                     of this nature. GAO's effectiveness as an ir= of the Congress is heavtly
                     .dependent upon maintaiting thiss close and supporttive relati-onship. But,
           ·       .most importantly, G..O's effectiveness is dependent upon its -ntaclea      a
                                                                 part iality
                   .s* trict position of nYonpartynsanship and .--


                            The Congress established the Frederal Elections Coi-ssion to etrcr-f
                      a very similar function to that conteplated for GAO in Senate Reso'ticg
                      * ith
                          . rcspect to campaign financing. We believe that the Coiisision coud
                      logically undertake the responsibilities which have been placed upon the
                      GAO in Sedate Resolution 110.
                      C                                .terrnatively, the Secretary of the Searze
                      or the Senate Selec.  Coittee   on Ethics itself coulvd vdertake taese
                      responrivilities.
                I reco-mize that the Resolutio vwas vo:ed  -a.o.iouslly by the
         Special Co--Ittee and that the atter is scheduled for action this
         %,ee.k in the Senate. Even so, I would hope that conideraction could
         be give= to these altera:tives. Should the Resolu:io= be passed as
         reported, -Iwould apprecia:e your support i. vorLk-ng out an alternative
         arrangecnat whem the Senate and Eouse ?.esolutions &r-e enacted as a
         public la'.                    :''

              I kow of your strong support of the GAO and feel equally as I do
         as to the -- rtz-:ce of aincaining the, credibility and the nonpartisan-
         ship of the work of the GAD.
         ..,                -                                          '           , '':             ;.,S.                        -'                      .. ...

 . .      .        '.   -       .   ..
                                    .     .   .   . ·..........                                     ''                             b·-   .




                                        ...        '~-                                              Elmer B. Staats


                                                                                '.         ; '--     1   --   '       .''
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                                                   . -~           o.           .                .
                   Attachmant I .                            TH     UNuE      S                   :
: ."'      ***..                          ZRtEN£,0.
                                COMPIROLLrR       OF THE UNTI                 rTATES
                                              'WASINGTON. D.C. 2'




            02
    * 0n GlO.                                            ~APR                                          25 1977


    C-z.c.:l(  CCtti tc:             on tio   JudOicuty.
    SFuse of t.cprcse-t..:s

   Dc-r.2             C.v:+

          Zi:.   'defcrc to your rcatest^ for rc$orts ou thto bills,        H.a. 1 tzd
    ,..L  9,   5t=h CODseos.    These cz-tial::11y7 !da-tccal bills heve ben
     -o":oued fcrCS tba prs-pose of Ce.ib5ishin; ,   :.rt:Z of fit:Eir-         .dSs-
   c:s.luTro 1.ry officers- :d -p1cyeez of t}he t.ce    branc.eo of the Fedcral
   Govetr-.t -ith t;hoe int:et of ci.r=.tins cc.-licts of            .ttere;t    on the
   part of those requircd to disclose rthez inco= andc asscto an specificc
   Lo the bills.

          U.?.. 1 a=nd .?,. 9 wero ac.on bill= discussed in t.; letter datcd
   *
   Ja.ury     2S, 1977, to t:ha S?ck;c of thoe :ose  of L;pre.enzatives and
    t:e Prsidcnt of t.he Sente, copiea of w:'.ich vere oupplied to you at


        T habve.cvit-wc        r7y Jac-u:~r/ 23S £rt.a=nt in considering our respoone
   to your re:..cs.                othins h
                                          b.c occurred or becrn   t to y Sttc-t:ic
                                                             c.o':r
         4ic sc=±iv-n thoco lc:tes to c;use ;e to c;-Ue 1y Vtius on the critz
        r thS1e pFrop.calS in any way.

              ror your rc.dy re-frc.ce,            I ceclcse adJdito=al copics of                  :-y
  J&nur
  J                22, 1977, letter.

              0n Apr.l        1, 1g77, the Seria:c      iadopcad S. iecs. 110, a recoi.'-ioa
  V'.lch contiu.s, in a di.c-rt c            : .:it'. cp;c;CfLAc    ~tion Vo
                                                                   ±a;!
  te.Scsnrtc, n=y of l.c 'C1turcs w~iich %'c £±l.1 obJecto-a-le        in 1!.;. 1
  a=d H.P.. S. I strontly opposced thie recuir:carte of S.         . I10 =:In
  tJhis Office audit an% investigate£fiiarcial      stara-neuts of i=.divilual
  s=3 trz   a:n Iir,:Je tl.:t opposition ':o3:n to all vho taro in a postison

  riot t-CCE-C£Ul.

             As you will recall, I attachcEd to :v lettC                           of            2.r
          cl-.-.'t
                of.    '.'.t..:...
                             ..         r         ..    1:
                                                        --        *.z -t.-.       a=· a.
                                                                                    -.-
 sures dcsianed to cl"-i4:tc crnfl1ict: of intce::t.                                    I cal:ose copics
 of tbose dr-ft= wrth ct;i/ report as v1. .
        roe
         -'hil ext-*rste daft .tnh         nn^-a            the                         Mf-   con
 r.=:-iom on It::±cs and FL :r.        '~t Bicloua:e to ad/einiotcr a program
 <r7l~r - to te:t C         -:--j 'bLy l12. i=.rt.
                                               Zn  .     9. !is -r..ft   tas intro-
  __.-:_ *,; ;i;.; :-      iv: =Lc0-ro6e.r aS iI.'. 36i;9 ad has bc= the subJ=t
 oZ L. ri;:        h;ed by t4ca S&Lcol--ttee 0F.thics
                                                 on Lzp1oyee         znd Utilzation
 of ci/e o.uo6 Ct=itcee on Post Office and Cviil Service on 'arch 8, 22,
 ·2' -d        23.

          The othe.tr    teratiivc w=sure is a bill to plaee the pri=* y re-
 c.....iJ<.=:       fnr cthies and f.inncial diccloSurc of the three brzchxe
 of trio rece--ri     Govzr-Y:t in the Civil Scorice Commission,    the Clerk
 of the ot.- 0 o2. eercttivecs      ,    the Se:ret-ry of. tha Se--te ant the
 Dirc--tor of thae Admi-4strtti    've COffice of the United States Courts,


           'We r-..i      of the opinion that either of these alternatives would
    _
    yi;-    _',*     ,.           *        _t   !            "Ld
                                                             C:   i  , 9 Lo require
                                                                                  L'.


 .:dr-tirration           of a {fi.ancrit1 Ciclo3re systcrm by the Corptroller


      We stress, asain, cur nrong fee3.inz that the res.ult of eret-cnt
 of b-LLs such as I.R. 1i and l9
                               .     vould place the Gcncral Accountins
 Officc (C;D) ia an opr=tiorl    role vhieh is inconsiatcnt with our bcsic
'role of audit _-d=          cv7a!t. t.

         Insofar _- a d/ losare cyste. f-or ?S-ers      of Conu-css i    involived,
 I e-..htsiza, ca-ia, onur or: .t.ition to plrci.-.   the rc:,on . bility for
 ad.'.nr/s=tr5iti.a in our Cf ice. I cincercl believe trhat arsuption
 of t;hi resn-;,sfIbilty by Co,will       ft 6ctri,::tcal to t'c: c..calieut
  ror.:.Ln rcl:Ltio.hino ws ha---e establi:h.-d i ith the C--r.ress a-. will
 fc.-Cly ^_-lkcn te    ovcr-ll  cffcctivcuc.s   of this Office.

                                                       £Ix~cerely yo"r,


                                          SIGNED        F           B7ST.-TS

                                                       cf Lh      UI': ited ':tates

 _nclosurec
                          1                 GENCR.AL. OTE      UNITST              Attachment
     .         Attachmn        COMPTROLL
                                            WASKINOn. C.C.
                                                         D.C SO"
                                                          ~SY.
                                           'WA,~N1CtTON.



                                                                                Apri 2.,     1977


                                   . ibicoff '
                                  Abrah                                     .                        -.
  The =nor.able
  Urtted St,.es Senate.

  Dear Abe:
                                                                               the Senate in
           As you bnow, I have been dist=bed by the actiounof                               d-sclosure
                                                                     the   financial
  placing in the GAO the resp=sibillt:y for auditing
                               of -the Senate and the senior        staff =e=bers of the
   gstatettsC of -b.ers                    for =y  concern   in    =y   letter to you of
  Senate. I outlined the         reasons                                                                    1:
  March 15, co-e-t    -- 4    on the role the G&O could play under Senate Rcsolut.cn                    -to
                                                                               it waS    necessary
   on arch..     21, you rrote --, indicating that you felt that
                                                              and    indicating       that you -.n.ld
   retain this provision in the Senate Resolution                        tgeent      for    aUdit'ns
                                                                  arz
   be glad to work with me to see if a alternatve                      out           the    genmerai
   the fianeial disclosu=e sta.;-ensts could be vrrked
                                                                             Vwe3
                                                         zss brount up           for   legislation
   subject of financial disclosure ,tate=e-ts
   itvolving all three branches of te           Gove-rent.
                                                                              that you have irc--,
             I no; 2ote in the Cogsressiomal Eetord of April 25responsibility of te
                                                                    the
    duced an amendment to S. 555 vhnich would continue        disclosure sta:e-_o.rs or
    Cowptroller General for auditing the financial
                                                                       the President, the V7ic
   * e=bers of the House and Senate as well as those of                                               I
    President, the Civil Service Coission,            and the Ethics Co-_ 'siscnCes.      -' t
                                                    such  an   audit     reecnse      bil        cf
    continue to believe very stro,1gly that                                                    a - i s e rf
                                                                                               aSly
                       mnbers   of  the Bouse  a=   Sezate,    if   comscietdcroly
    state---nts of
                                                                   of the General Accc4ti-.gs
     could do irreparable danage to the effectiveness                      u--en confrontatio be-
     *Office over a period cf ti:e. The result could only and Senate %wahb could
 .veeen        this Office and indlvidual =-bers of .he Eouse we have attempted .o
                                                               which
" damae, if not destroy, the close relationship
      build between this Office and the Congress.
                                                                                                  on a-, 5
              I vi1I be testifying on this legislation before your Cci,,tee           I  had    hoped     .thza
                                                                        Bowever,
    :and vill outline smy vies note fully at that time.                                             ccnclu-
                                                                     your co-ing to the
      ve right= erplore an alternative with you prior to
                                                            in    the   GAO became :"doaes see-
      sion that this responsibility m=st be placed
                                                                would tot suffcr from               the sz='
                               viable alternatives which
      to me that there areconcern                        to   the    ammend=ents       which you have
      difficultics w-hich              me with  respect
                                                                value in discusing this
      introduced. Should you feel that there is any
                                                                       call.
      matter in advance of the hearing, please give me a

                es t vishes.
                                                      Sinccrely,




                                                       Elrcr B. Staate
         cc:    I&F, OC           .
                Mr. De:;bling
               /r . Fitzgerald
Attachment II                                                       Attachment II




                     CONSTRAINTS OVER GAO AUDIT AUTEORITY



      Excerpts taken from the Report of rhe Senate Committee on Governmental

Affairs to accompany S.555 - Public Offi.cials Integrity Act of 1977.

1.    Constraint over the type of audit
                                                                           with
      "However, it is alsro essential that the ComDtroller General consult

the respective supervising ethics offices in      wnr   Senate   and the House of Re-

presentatives sc that there is a clear unders.          ..ng of the type of audit to

be conducted."    (p. 137)

2.    Constraint over the number of audits of Cor~ressional staff
                                                                             to
       "The number of audits which are sufficient to accomplish this task is
                                                                        and
be determined by the respective supervising ethics office of the Senate

 the House of Representatives in consultation with the Comptroller General."

 (p. 138)

 3.   Constraint over :he issuance of subpoenas

       "The Comptroller General will want the cooperation of the supervising

 ethics offices in obtaining subpoenas, when necessary."         (p. 137)