IMPROVEMENT OF FINANCIAL MANAGEMENT IN THE FEDERAL GOVERNMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-05252A000100110003-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 53
• Document Creation Date: December 9, 2016
• Document Release Date: August 10, 2000
• Sequence Number: 3
• Publication Date: October 1, 1956
• Content Type: REGULATION

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IMPROVEMENT of
Financial Management in
The Federal Government
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
~ca~en 1956
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IMPROVEMENT of
Financial Management in
The Federal Government
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET.
For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. 0. - - - - - - - - Price 35 cents
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IMPROVEMENT OF FINANCIAL MANAGEMENT
IN THE FEDERAL GOVERNMENT
TABLE OF CONTENTS
Page
INTRODUCTION .................................................. 1
Background .................................................. 2
Current Developments ....................................... 3
Improvement Objectives ...................................... 4
Congressional Action ..... ................................... 5
PATTERN OF IMPROVEMENT EFFORT ...... . ....... ......... ......... . 6
Accounting on an Accrual and Cost Basis ..................... 7
Budgeting on a Cost Basis ................................... 8
Use of Consistent Classifications ........................... 10
Justification Data by Organization .......................... 10
Simplification of Allotment Structure ....................... 11
Other Phases of Improvement Effort .......................... 12
RESPONSIBILITIES AND ASSISTANCE ............................... 12
APPENDIX I - Recommendations of the second Commission on
Organization of the Executive Branch of the Government
on Budget and Accounting .................................... 13
APPENDIX II - Exchange of Correspondence between the
President and the Director of the Bureau of the Budget
on the budget and accounting recommendations of the
second Commission on Organization of the Executive
Branch of the Government .................................... 18
APPENDIX III - Communication from the President to the
Congress transmitting a proposed supplemental appropria-
tion for fiscal year 1957 for the Bureau of the Budget ...... 29
APPENDIX IV - Message from the President to the Congress
relating to the budget and accounting recommendations
of the second Commission on Organization of the Executive
Branch of the Government .................................... 32
APPENDIX V - Public Law 798 - 84th Congress, an Act to
simplify accounting, facilitate the payment of obli-
gations, and for other purposes 34
APPENDIX VI - Public Law 863 - 84th Congress, an Act to
improve governmental budgeting and accounting methods
and procedures, and for other purposes ...................... 38
APPENDIX VII - Statement by the'President on S. 3897, a
bill to improve governmental budgeting and accounting
methods and procedures, and for other purposes .............. 40
APPENDIX VIII - Illustrations of cost-based budget
presentations for appropriations where cost data 41
are available ...............................................
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IMPROVEMENT OF FINANCIAL MANAGEMENT IN THE FEDERAL GOVERNMENT
Introduction
In recent years, the financial management practices of the
Federal Government have been given increasing attention and study
by the executive agencies and the three central agencies -- the
General Accounting Office, the Bureau of the Budget, and the
Treasury Department --- under the Joint Program for Improving
Accounting. In addition, the recent (Hoover) Commission on
Organization of the Executive Branch of the Government conducted
a critical appraisal of existing practices that resulted in a
series of recommendations for further development of financial
management in Government.
Those recommendations were contained in the Budget and
Accounting Report submitted-to the Congress by the Commission
in June 1955. Major proposals in that Report suggested strength-
ening the managerial and budgeting functions of the Bureau of
the Budget, placing additional emphasis on the accounting func-
tions of the Bureau and the executive agencies, and broadening
the development and use of costs in the financial affairs of
Government. Other recommendations were directed toward related
improvements in budgeting, accounting, and reporting practices.
A complete list of the Commission's recommendations in the
Budget and Accounting Report is provided in the appendices.
(See Appendix I.)
The proposals of this second Hoover Commission, in effect,
represented a broad endorsement of the objectives and activities
of the Joint Accounting Program. Presented against a background
of the progress made in recent years, they identified problems
which should be given priority attention at this time. The
central agencies in the Joint Accounting Program are now taking
steps in accordance with those proposals.
Of these central agencies, the Bureau of the Budget is most
directly affected by the recommendations of the second Hoover
Commission, Since those proposals were made, the Bureau has
taken positive action toward implementation of the recommenda-
tions. It is the purpose of this pamphlet to relate these
actions to existing practices, and discuss plans for further
development and improvement as they affect agencies throughout
the Government.
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Background
Basic legislation pertaining to the Bureau of the Budget is
contained in the Budget and Accounting Act, 1921. This Act established
the Bureau and identified its basic budget and management functions.
In relation to those assigned functions, the Act of 1921 placed respon-
sibility in the Bureau, when directed by the President, for making
detailed studies of agency organization, activities, and business
methods that would enable more efficient and economical operations.
Executive Order No. 8248 of September 8, 1939, outlined the continuing
responsibilities of the Bureau of the Budget in these fields.
With the advent of the Joint Accounting Program in 1948, the
Bureau established a staff unit to carry out the responsibilities of
the Director of the Bureau of the Budget under the joint program.
This was a relatively small operation in which primary emphasis was
placed on coordinating the Bureau's budget and management activities
with developments in the improvement of accounting and financial
reporting under the Joint Accounting Program.
The Budget and Accounting Procedures Act of 1950 more specifically
identified the accounting role of the Bureau of the Budget. That Act
expressed the intent of Congress that maintenance of accounting systems
and development of financial reports were the responsibility of the
executive branch; that emphasis should be placed on effecting orderly
improvements toward more effective financial management practices; and
that the Treasury Department, the General Accounting Office, and the
Bureau of the Budget should conduct a continuous program for the
improvement of accounting and financial reporting.
It specified that "the accounting of the Government provide . . .
adequate financial information needed in . . . the formulation and
execution of the Budget"; that the accounting systems of the various
agencies should be designed to provide "reliable accounting results
to serve as the basis for preparation and support of the agency's
budget requests, for controlling the execution of its budget, and
for providing financial information required by the Bureau of the
Budget"; and that the central financial reports of the Government
to be prepared by the Treasury Department should include "such
financial data as the Director of the Bureau of the Budget may
require in connection with the preparation of the Budget or for
other purposes of the Bureau."
In addition, the Budget and Accounting Procedures Act of 1950
authorized and directed the President, through the Bureau of the
Budget, to evaluate and develop improved plans for the organization,
coordination, and management of the executive branch of the Government
with a view to efficient and economical service.
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Current Developments
The Budget and Accounting Report of the second Hoover Commission
gave recognition to the value of the Joint Accounting Program and the
improvements that had been made by the executive agencies in the con-
duct of their financial affairs. It recognized the cooperative
assistance furnished by the General Accounting Office to the agencies,
and stressed the need for greater stimulation of agency improvements
within the executive branch. In this connection, it noted the com-
paratively limited participation of the Bureau of the Budget in this
joint effort, and emphasized this need by recommending a strengthening
of the Bureau's participation and the establishment of a new staff
Office of Accounting to provide the leadership required.
The latter proposal was intended to emphasize the accounting role
of the Bureau of the Budget, to establish responsibility for accounting
improvements in close proximity to existing responsibilities for budgetary
improvements, and to give the accounting function increased stature in
the executive branch. To insure the desired results, the Commission
proposed that the new Office of Accounting be headed by an Assistant
Director for Accounting, who would be given responsibility for develop-
ing and carrying out a comprehensive plan for accounting and reporting,
and for assisting executive agencies in the introduction of modern
accounting methods and the development of competent accounting and
auditing organizations.
After extensive evaluation and consideration of the Commission's
budget and accounting proposals throughout the executive branch, the
Director of the Bureau of the Budget developed plans for putting those
recommendations into effect. As a first step, the accounting improvement
staff in the Bureau were placed in an Office of Accounting under an
Assistant Director, who was given responsibility for providing the
desired leadership in this effort. The President approved these plans,
as reflected in his correspondence with the Director of the Bureau on
this subject. (See Appendix II.)
On May 10, 1956, the President transmitted to the Speaker of the
House of Representatives a request for a supplemental appropriation to
enable the Bureau of the Budget to carry out the recommendations of
the second Hoover Commission for further improvement in executive
branch budgeting, accounting, and management generally. In recognition
of his responsibilities under section 10 of the Budget and Accounting
Procedures Act of 1950, the President stated: "Expansion of the staff
resources of the Bureau of the Budget is needed in order that the
Bureau may provide, on my behalf,., more active central leadership in
the advancement of administration in the executive agencies." (See
Appendix III.)
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With the supplemental funds appropriated, additional staff have
been obtained for the Office of Accounting, to make a start toward the
type of program visualized by the second Hoover Commission. Experience
accumulated in the initial phase of this program will be used as the
basis for further development according to the identified need.
The accounting staff of the Bureau will continue to work closely
with the staff of the Bureau of the Budget that are responsible for the
budget and management functions. This will serve to insure appropriate
coordination of related requirements and the development of properly
integrated budget and accounting systems. The additional staff facili-
ties of the Bureau of the Budget will enable increased emphasis on
working with the executive agencies in their developmental efforts.
Financial management improvement efforts will continue to be
carried out within the framework of the Joint Accounting Program.
This program was initiated originally to give recognition to the need
for joint action in the accounting field by the executive and legisla-
tive branches, and to avoid the jurisdictional conflicts that had
arisen in previous attempts to effect improvements. Considerable
progress has been made in this cooperative effort in recent years,
and the additional staff facilities in the Bureau of the Budget are
intended to provide greater executive branch participation and thus
enable more rapid accomplishment of the stated objectives of the joint
program.
Improvement Objectives
Financial management objectives have been identified and defined
as a result of cooperative efforts n recent years toward the use of
improved budgeting, accounting, and eporting practices. They are
reflected in the fundamental concepts of the Joint Accounting Program,
in the principles and standards prescribed by the Comptroller General,
and in the instructions of the Bureau of the Budget and the Treasury
Department. These principles, standards, and instructions, which may
be restated from time to time as experience indicates, will be used as
guides by the Bureau of the Budget in carrying out its assigned func-
tions.
The second Hoover Commission's Budget and Accounting Report
endorsed these objectives by presenting recommendations that were con-
sistent with current improvement efforts. The evaluation and analysis
of these proposals in the executive branch resulted in the general
acceptance of most of the recommendations or their objectives, with
the recognition, however, that complete implementation of these recom-
mendations necessitated a long-range program because of the basic
nature of mart of the changes to be made.
4
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Based on this analysis, the President recognized this Report as a
document of great public significance. In his letter to the Director
of the Bureau of the Budget on April 26, 1956 (see Appendix II), the
President expressed his desire that the executive agencies intensify
their efforts along these lines. In this and his related message to
the Congress on May 10, 1956 (see Appendix IV), the President noted
that executive branch efforts on many of these proposals would require
close coordination with the legislative branch, and urged early con-
gressional enactment of appropriate legislative proposals.
Congressional Action
The Congress gave evidence of its interest in these recommendations
by the many bills that were introduced and the full hearings that were
held on the subject of budget and accounting improvements. Early in the
second session of the 84th Congress, identical bills were introduced in
each House covering the Commission's recommendations which were con-
sidered to need legislation for effective implementation. These bills
covered 16 of the recommendations -- those on financial organization,
central accounting and reporting, accounting and budgeting on a cost
basis, allotment and accounting improvements, consistent financial and
organization classification, internal auditing., and the location of
Bureau personnel in the agencies.
The hearings made clear the need for administrative flexibility
on some of the recommendations involved, with the result that the
initial legislative proposals were superseded by revised bills which
would provide legislation consistent with the implementation plans of
the executive branch. At the hearings on one of the revised bills
(S. 3897, subsequently Public Law 863), the Comptroller General and
the Director of the Bureau of the Budget strongly endorsed the proposed
legislation in their testimony and urged its speedy enactment. They
indicated that improved financial administration could not be accom-
plished solely by legislation, but that the proposed bill would be
helpful in establishing congressional policy, and in creating a frame-
work for more rapid progress in Government-wide improvement efforts.
The Secretary of the Treasury submitted a letter that indicated his
complete support of the objectives of the Commission's recommendations,
and pointed out that the bill would enable agencies to move forward in
a vigorous improvement program.
As a result of these legislative considerations, two public laws
related to the proposals of the second Hoover Commission were enacted.
The first of these -- Public Law 798 (see Appendix V) -- was signed by
the President on July 25, 1956. As originally introduced, it would
have implemented two of the Commission's proposals -- those providing
for merger of the unliquidated obligations of appropriations made for
the same general purpose, and agency payment of claims. As enacted.,
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Public taw 798 continues the requirement of separate appropriation
accounts for two fiscal years after the fiscal year for which the
appropriation was made, but provides for improvement of the claim
procedures. Implementing regulations have been developed and issued
by the General Accounting Office to effectuate certain provisions of
this law; others will be issued subsequently by the central agencies
involved.
The second bill enacted by the 84th Congress -- Public Law 863
(see Appendix VI) -- was signed by the President on August 1, 1956.
This was the major legislative proposal on the budget and accounting
recommendations of the second Hoover Commission. As introduced, it
covered nine of those recommendations, including provisions for gradual
conversion to a procedure under which the Congress would appropriate
funds in terms of "accrued expenditures," the use of costs in account-
ing and budgeting in the executive agencies, the improvement of agency
allotment practices, and the development of consistency in financial
and organization classifications. During consideration of this bill
by the Congress the provision for appropriating funds on the "accrued
expenditure" basis was deleted. A statement issued by the President
when he signed this bill is included as Appendix VII.
Public Iaw 863 constitutes an important keystone of this financial
improvement effort. It establishes in law a basic principle for Govern-
ment budgeting and accounting -- the development and use of cost
information. It provides an expression of intent on the part of the
legislative branch, which together with the President's statement on
policies of the executive branch, provides a firm basis for moving
forward in the improvement of financial management as rapidly as
available resources permit.
Pattern of Improvement Effort
Public Law 863 provides the broad outline of the immediate objec-
tives of the Bureau of the Budget in its work with the operating
agencies under the Joint Accounting Program to improve financial
management of the executive branch. As indicated above, the various
sections of the law as enacted cover the following:
1. Accounting on an accrual and cost basis. Section 2(b) and (c).
2. Budgeting on a cost basis. Section 1.
3. Use of consistent classifications. Section 2(a), items (1) and (2).
!i.. Justification data by organization. Section 2(a), item (3).
5. Simplification of allotment structure. Section 3.
The more detailed discussion of each of these, as set forth below,
provides guides for agency use in the development of needed improvement
plans.
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Accounting on an Accrual and Cost Basis
Public Law 863 provides that the head of each executive agency
shall take steps as soon as practicable to convert the agency accounting
system to the accrual basis, including the installation of adequate
monetary property accounting records as an integral part of the system.
It further provides that such action shall be taken in accordance with
principles and standards prescribed by the Comptroller General, with a
view to facilitating the preparation of cost-based budgets.
An accrual accountin,x system is one which gives recognition to
the receipt of goods and services and the consumption or use of
re oursand lects the assets and liabilities n-addition, to
-facilitate the preparation of cost-based budgets, such a system records
these transactions on a basis that is integrated with records of obli-
gations incurred as well as disbursements made.
Thus, an accrual accounting system in a Government agency develops
information as needed on costs of goods and services used, accrued
expenditures, disbursements, and obligations. It incorporates financial
controls that are consistent with management responsibilities -- generally
providing for broad fund controls in terms of limitations on obligations
at a fairly high level of agency operations, and more detailed controls
in terms of estimates of specific costs attributable to each of the
agency programs.
In contrast to the traditional accounting system in Government, an
accrual accounting system provides additional and more useful informa-
tion, since it reflects not only the availability of funds, but also
furnishes data on resources on hand in an agency, and the actual use
of such available resources. Cost data on the use of resources are
essential to agency management for effective budgeting practices. The
costs of a given operation must be known to enable the most accurate
determination of funds needed to finance a planned program. Similarly,
in carrying out a program, cost information is needed so that these
data can be related to work accomplishments and the operating officials
may be advised of the progress actually being made on the job, in
addition to the rate at which available funds are being used.
In accordance with the principles and standards issued by the
Comptroller General, the degree to which the accrual basis will be _
applied in individual agencies will vary with the kind of operations
con uctsd. The accounting provisions of Public Lave 863 mean at a
minimum that all agency systems which currently develop only obliga-
tion and disbursement data should be refined to produce also at
appropriate time intervals information on accrued expenditures -- the
cost of goods and services received. Depending on the type of program
conducted by the agency, this change in the agency accounting system
1
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may involve further refinement to produce information on the cost of
goods and services used, the cost of items procured or produced., or
the cost of work in place. The accrual basis should be applied in
each case to the extent that the additional information obtained will'
be more useful to agency management in the conduct of operations, and
provide for more complete and accurate disclosure of financial status
and the results of agency operations. In all cases, accounting on an
accrual and cost basis must be integrated with such other accounting
records as are needed to provide for control and information on obli-
gations and to provide for information on disbursements.
Budgeting on a Cost Basis
Public Law 863 provides that agency appropriation requests sub-
mitted to the Bureau of the Budget shall be developed from cost based
budgets in such manner and at such times as may be determined by the
President, and that the Budget transmitted to the Congress shall contain
information on program costs and accomplishments at such times as may
be practicable. It also directs agencies to use such cost-based budgets
internally for administration and operation, and as the basis for making
allotments.
Budgeting practices such as these are currently in use in a number
of agencies, including four for which cost-based appropriation presen-
tations were made in the 1957 Budget Document. While Public Law 863 was
under consideration by the Congress, the Appropriations Committee of the
House of Representatives commented, in House Report No. 2638, July 7,
1956, on the further extension of this practice. The Committee said.in
part:
". . . There has been a gradual increase, over the past
five years, in the number of activities of the Government
whose accounts and/or budgets are on a cost basis. It was
testified that the current recommendation Cf the second
Hoover Commission7 does not require implementing legislation,
and can be accomplished without any basic change in the pres-
ent method of appropriating funds. Continuation of this
evolution, as to significant appropriation items, is recom-
mended and approved by the Committee."
Accordingly, additional cost-based appropriation presentations will be
made in the 1958 budget, and this expansion will continue in future
years consistent with agency progress in improving existing budget and
accounting systems in accordance with Public Law 863. The four pre-
sentations of this type in the 1957 budget, and illustrations of the.
different forms of cost-based appropriation presentations as shown in
Bureau of the Budget Circular No. A-11, are furnished in the appendices.
(See Appendix VIII.)
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As indicated by the Circular No. A-11 illustrations, a cost-based
budget relates accomplishments and future work plans to costs in terms
of resources consumed, work in place, or, in the case of a procurement
program, items procured or produced. Such a budget also identifies the
resources on hand which are available for application to the program
financed by the appropriation, the value of goods and services that
have been ordered but have not been received, and the total obligations
required to finance the program.
An effective budget system depends on the accurate forecasting of
requirements for a planned program. The estimates should be based on
past experience as recorded in the accounts and should take into con-
sideration all factors that have a bearing on the financing and conduct
of the program under consideration. In the final analysis, despite the
other pertinent considerations, an estimate of requirements can only be
as good as the basis used. A budget developed through use of cost data
obtained from an accrual accounting system provides the most accurate
measure of past experience and brings into consideration the use of
obligating authority and other pertinent financing factors. It there-
fore furnishes the most complete disclosure and is of major benefit
for review and analysis of a budget request.
The significance of a cost-based budget varies with the t
e of
yp
program conducted by the agency. When inventories and long lead-time '11
programs are involved, the cost-based budget provides its greatest
benefit because of the identification of carryovers of available
resources from one year to another. In addition, the evaluation of
long-range programs can more effectively be made because the accrual
basis of accounting identifies the use of resources in relation to the
time period involved. In agencies where the carryover of resources is
not substantial, the change in presentation resulting from use of a
cost-based budget may be relatively minor. In such cases, however,
benefits are derived in terms of the more precise budget. and accounting
practices required for this purpose.
In view of the benefits to be derived, cost-based budgets will be
used throughout the Government to the fullest extent practicable. This
will be accomplished on a gradual basis in accordance with the pertinent
provisions in Bureau of the Budget Circular No. A-11, i.e., at such
time as the agency involved employs an accrual accounting system that
will support such a presentation and provides data useful for its
operating purposes and for analysis of budget requirements. Plans in
each agency for improvement of financial management should therefore
include appropriate provisions for the development of cost-based
budgeting procedures, and should give priority attention to those
organizations and appropriations for which the conversion would have
the greatest significance.
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Use of Consistent Classifications
Public Law 863 also provides that each agency, in consultation
with the Bureau of the Budget, shall take whatever steps are necessary
to develop, insofar as possible, consistent budget and accounting
classifications synchronized with the agency's organization structure.
For effective integration of the budgeting and accounting func-
tions, common classifications should be employed for programing,
budgeting, accounting, and reporting purposes. In the application of
this principle, accounting classifications should be developed that
will provide accounting support for the data required for the Budget
Document.
Efforts toward development of the desired relationship between the
agency budget and accounting classifications should be consistent with
the pertinent provisions of Bureau of the Budget Circular No. A-11.
For example, the accounts should, to the extent practicable, be cor-
related with the activity classification used in the Budget Document
to provide a firm accounting basis for the activity presentation.
Similarly, the accounting system used by the agency should enable
development of (a) information for certain uniform classifications of
the sources of amounts available, and categories of balances needed
for statements in the Budget Document; (b) classifications of data
for special analyses in the Budget, such as public works, research
and development, investment expenditures; and (c) information for the
uniform classification of transactions by object as required in the
Budget Document.
With respect to synchronization with the agency's organization
structure, this provision does not mean that the budget activity
classification and the organizational structure have to be identical,
but does require at a minimum that they be systematically related to
one another. For example, a single activity classification may be
used to cover two or more organization units, provided the basic
accounting classifications are susceptible to combination either by
activity or by organization.
Justification Data by Organization
In connection with the provision for synchronization between
accounting and budget classifications and the organization structure,
Public Law 863 also provides that each agency, in consultation with
the Bureau of the Budget, shall take whatever action may be necessary
to--achieves insofar as possible, support of the budget justification
by information on performance and program costs by organizational units.
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Where budget activities and organizational units coincide, no
special effort is necessary to comply with this requirement. Where
they do not coincide, the budget justifications should contain infor-
mation by organizational units. Generally, this will require by
analysis a breakdown by organization unit of financial data for each
activity, to enable appropriate disclosure in the justification
materials. Similarly, the justifications should break down data on
accomplishments, including work measurement information, by organiza-
tion unit insofar as possible. These justification materials should
be presented on a basis consistent with the type of presentation made
in the Budget Document. When an agencyeco~lrts the aueostibasedn budget,
in accordance with Public Law 863,
material also should be changed to a cost basis.
Simplification of Allotment Structure
The Antideficiency Act is amended by Public Law 863 to provide
that agencies shall work toward the objective of financing each
operating unit, at the highest practical level, by a single allotment
from each appropriation or fund involved.
The allotment structure normally represents an administrative
subdivision of available appropriations or funds, within the limits of
apportionments made by the Bureau of the Budget. The agency regula-
tions that prescribe the system of administrative control required by
the Antideficiency Act are subject to the approval of the Director of
the Bureau of the Budget.
To conform to Public Law 863, allotments of funds should be made
at t high .st practicable level, consistent with the requ _ ements
agency management for control of obligations, and any limitations on
the use of funds imposed by the executive and legislative branches.
4aount na n ~sses other than allotments should be employed to
ement data through use of cost
a
g
man
develop necessary operat g or
classifications.
The lack of such cost classifications in the traditional accounting
system in Government in mart/ cases has led to use of a complex allotment
structure that was developed primarily to satisfy a management need for
operating information as opposed to being used solely for the intended r
purpose of controlling available funds. This provision in Public Law
863 is intended to focus agency attention on existing allotment prac-
tices and to stimulate improvement action.
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Other Phases of Improvement Effort
In addition to the improvements necessary to conform to the
provisions of Public Law 863, attention will also be given to arw
action needed to attain, within the provisions of existing law, the
objectives of other recommendations of the second Hoover Commission,
and to meet the requirements of the Budget and Accounting Procedures
Act of 1950.
To illustrate, the complexities of financial management in
Government require close coordination of the budget and accounting
functions in an agency. As part of its expanded improvement effort
in this field, the Bureau of the Budget will give attention to the
existing organization for financial management in the agencie,e to
insure in each case that it is appropriate to the needs of the agency
and provides for adequate coordination of budgeting and accounting.
The subject of financial organization in the agencies was highlighted
in one of the Commission's recommendations that is not covered by
Public Law 863. As a result of that recommendation, the budget and
accounting legislation initially considered by the Congress provided
for the use of comptrollers in executive agencies. This provision
was deleted, however, on the basis that a set pattern of organization
for this purpose was not applicable in all agencies, and that steps
to provide the most appropriate organization for financial management
in each agency should and could more effectively be taken by adminis-
trative action in the executive branch.
Responsibilities and Assistance
The initiative and the primary responsibility for accomplishment
of financial improvements rests upon the head of each agency. The
objectives have been set forth in legislation, in Presidential state-
ments, and in the other materials referred to above. The pattern of
desired improvements is therefore well defined. The basic problem is
essentially one of obtaining effective results as soon as possible.
Efforts toward the improvement of financial management on a
Government-wide basis will be coordinated under the Joint Accounting
Program. While the initiative and responsibility for accomplishment
rests with the individual agencies, staff of the Bureau of the Budget,
the General Accounting Office, and the Treasury Department will provide
guidance and assistance in the development of necessary improvements
to the extent of the resources available for this purpose.
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APPENDIX I
RECOMMENDATIONS
OF COMMISSION ON ORGANIZATION OF THE
EXECUTIVE BRANCH OF THE GOVERNMENT
ON
BUDGET AND ACCOUNTING
Recommendation No. 1
(a) That the Bureau of the Budget expand and make more effective the
discharge of its managerial and budgeting functions;
(b) That in order to do this, among other things, it should place in
important agencies one or more well qualified employees whose duties
should include continuous year-round review, at the site of the agency,
of agency budget preparation and administration and other facets of the
Bureau's managerial responsibilities; and
(c) If necessary, the Congress should increase the resources of the
Bureau of the Budget for that purpose.
Recommendation No. 2
That the executive agencies report annually to the Bureau of the Budget
on the conduct of their operations. On the basis of the agencies' reports
and other available information, the Bureau should prepare for the Presi-
dent an annual report on performance for the executive branch as a whole.
Recommendation No. 3
That for management purposes, cost based operating budgets be used to
determine fund allocations within the agencies, such budgets to be
supplemented by periodic reports on performance.
Recommendation No. 4
That the executive budget continue to be based upon functions, activities,
and projects adequately supported by information on program costs and
accomplishment, and by a review of performance by organizational units where
these do not coincide with performance budget classification.
Recommendation No. 5
That the agencies take further steps to synchronize their organization
structures, budget classifications, and accounting systems.
Recommendation No. 6
That executive agency budgets be formulated and administered on a cost
basis.
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Recommendation No. 7
That the executive budget and congressional appropriations be in terms
of estimated annual accrued expenditures, namely, charges for the cost of
goods and services estimated to be received.
Recommendation No. 8
That legislation committing the Government to continuing expenditures
for special programs which are not susceptible to the usual budgetary
control ordinarily be enacted for a limited term in order to require
periodic congressional review of their usefulness.
Recommendation No. 9
That the Bureau of the Budget keep such programs under continuing review,
and the President's budget contemplate amendments to them when their
operation conflicts with current budgetary policy.
Recommendation No. 10
That there be established under the Director of the Bureau of the Budget
a new Staff Office of Accounting headed by an Assistant Director for
Accounting, with powers and duties as follows:
(a) To develop and promulgate an overall plan for accounting and report-
ing, consistent with broad policies and standards prescribed by the
Comptroller General. These broad policies and standards should continue
to be developed in cooperation with the executive branch.
(b) To expedite, guide, and assist in the introduction of modern account-
ing methods in the executive agencies consistent with the overall plan.
(c) To set reasonable but definite time schedules for performance and to
watch progress.
(d) To stimulate the building of competent accounting and auditing or-
ganizations in the executive agencies and to assist actively in the
selection, training, and retention of capable personnel.
(e) To report at least annually to the Budget Director with respect to
the status of accounting in each of the executive agencies.
Recommendation No. 11
That as an aid to financial management the position of comptroller be
established in the principal agencies and major subdivisions thereof em-
bracing the following duties and functions:
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(a) To direct the setting up and maintenance throughout his agency of
adequate accounting and auditing systems and procedures in conformity with
the provisions of the Budget and Accounting Procedures Act of 1950.
(b) To direct the recruitment, training, and development of qualified
accounting personnel.
(c) To develop and be responsible for reliable and informative financial
reports for (1) internal management purposes and (2) for issue to the
Congress and other executive departments or agencies.
(d) To interpret and advise upon significant aspects of the financial
reports.
(e) To direct the preparation, and review execution of budgets pre-
pared at operating levels for the information of top management which is
responsible for budget policies.
Recommendation No. 12
That the selection of agency comptrollers and the building of compe-
tent accounting organizations in the executive agencies through the
selection, training, and retention of capable personnel be an important
phase of the guidance and help to be given by the Assistant Director for
Accounting in the Bureau of the Budget.
Recommendation No. 13
That the allotment system be greatly simplified. As an objective each
operating unit should be financed from a single allotment for each
appropriation involved in its operations.
Recommendation No. 14
That Government accounts be kept on the accrual basis to show currently,
completely and clearly all resources and liabilities, and the costs of
operations. Furthermore, agency budgeting and financial reporting should
be developed from such accrual accounting.
Recommendation No. 15
That after appropriate accrual and cost accounting techniques have been
established by the Government agencies, the creation or continuation of
revolving funds should be reviewed to determine whether they will add to
efficient management.
Recommendation No. 16
That the executive agencies accelerate the installation of adequate
monetary property accounting records as an integral part of their
accounting systems.
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Recommendation No. 17
That each department and agency be authorized to maintain a single
account under each appropriation title or fund for controlling the
amount available for the liquidation of valid obligations.
Recommendation No. 18
That vouchers which are otherwise valid but as to which appropriations
have lapsed should not be referred as "claims" to the General Accounting
Office, but should be settled within the agencies.
Recommendation No. 19
That the Comptroller General be given the authority to relieve account-
able officers of financial liability except where losses result from their
gross negligence or fraud.
Recommendation No. 20
That the Bureau of the Budget and General Accounting office make a study
to determine what can be done to eliminate (a) duplicate accounts within
the Treasury Department, and (b) duplicate accounting as between the
Treasury Department and the various departments and agencies.
Recommendation No. 21
That increased and continuing emphasis be placed upon the review and
modernization of central fiscal reports by the Treasury Department to
the end that they may meet the changing requirements of the executive
branch, the Congress, and the public. These fiscal reports should show
the Government's cash position and related cash transactions.
Recommendation No. 22
That Congress consider amending the Budget and Accounting Procedures
Act of 1950 to make the Bureau of the Budget responsible for developing
comprehensive reports (other than purely fiscal reports) showing the
financial results of the activities of the Government as a whole and of
its major component activities.
Recommendation No. 23
That in selecting individuals for comptrollership, civilians with
broad management and accounting experience and competence be appointed.
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Recommendation No. 2I
That the comptrollers in the military departments be responsible only
to the Secretary of their respective services, and that concurrent re-
sponsibility to a Chief of Staff or equivalent be discontinued.
Recommendation No. 2
That the Bureau of the Budget and the General Accounting Office be
requested to make an intensive study to determine the adequacy of
internal auditing in Government agencies and what steps should be
taken to improve it.
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EXCHANGE OF CORRESPONDENCE ON
BUDGET AND ACCOUNTING RECC iENDATIONS
APPENDIX II
THE WHITE HOUSE
(April 29, 1956)
The White House released today an exchange of correspondence between
the President and Percival F. Brundage, Director of the Bureau of the
Budget, with respect to the Hoover Commission recommendations on budget
and accounting. Steps have already been taken to put part of these
recommendations into effect.
The first recommendab ion of the Commission report on Budget and
Accounting called for an expansion of the Bureau of the Budget in order
to make more effective the discharge of its managerial and budgeting
functions.
Recommendation No. 10 proposed that there be established under the
Director of the Bureau of the Budget a new Staff Office of Accounting
headed by an Assistant Director for Accounting with power and duties as
follows:
"a. To develop and promulgate an overall plan for accounting and
reporting, consistent with broad policies and standards prescribed by the
Comptroller General. These broad policies and standards should continue
to be developed in cooperation with the executive branch.
"b. To expedite, guide, and assist in the introduction of modern
accounting methods in the executive agencies consistent with the overall
plan.
"c. To set reasonable but definite time schedules for performance
and to watch progress.
"d. To stimulate the building of competent accounting and auditing
organizations in the executive agencies and to assist actively in the
selection, training, and retention of capable personnel.
"e. To report at least annually to the Budget Director with respect
to the status of accounting in each of the executive agencies."
These recommendations have been accepted 100 percent. Assistant
Director Percy Rappaport has been placed in charge of a new Staff Office
of Accounting and, in collaboration with representatives of the General
Accounting Office and the Treasury Department, will strengthen the Joint
Accounting Program in order to bring about more rapidly desirable im-
provements in budget and accounting and management generally. Many of the
other proposals of the Budget and Accounting report are also being adopted
at once and others are being discussed with the Congress and the other
departments of the executive branch.
The letters and accompanying memorandum are attached hereto.
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON 25, D.C.
COPY
APRIL 23, 1956
The Bureau of the Budget has substantially completed its analysis
of the recommendations in the Budget and Accounting Report of the
Commission on Organization of the Executive Branch of the Government,
submitted to the Congress on June 20, 1955. In making that analysis
we have had helpful comments from the departments and agencies of the
executive branch, your Advisory Committee on Government Organization,
and your personal assistant for the Hoover Commission studies, Mr. Meyer
Xestnbaum. Transmitted with this letter is a report setting forth the
status of our review and outlining the actions that are being taken to
carry out many of the Commission's recommendations.
The Commissionts Budget and Accounting Report highlights signif-
icant problems of financial administration in the Government and sets
important and desirable objectives. The Commission is to be commended
for its excellent job.
Many of the recommendations endorse constructive efforts which
were started following the reports of the first Hoover Commission. The
report also supports to a marked degree the current efforts of the
Joint Accounting Program conducted by the General Accounting Office,
the Treasury Department, and the Bureau of the Budget, with the parti-
cipation of the executive departments and agencies. While approving
the objectives of our work, the Commission suggested additional emphasis
and greater concentration of effort in order to bring about more rapidly
desirable improvements in budgeting, accounting, and management generally.
In considering the adoption of the Commission's proposals, it must
be recognized that they involve the functions and interests of the
Congress to a considerable degree because of the Constitutional role
of the Congress in the creation and financing of Government programs.
Action in the executive branch to carry out some of the Commission's
proposals will require the closest coordination with the legislative
branch to insure full satisfaction of all of the interests involved.
With the support which the Commission has given, greater progress
can be made toward the attainment of many generally accepted objectives.
On the report as a whole, we can assure you that the Bureau's work on
implementation will proceed as rapidly as its resources permit.
Sincerely yours,
(Signed) Percival F. Brundage
Director
The President
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THE WHITE HOUSE C 0 P Y
WASHINGTON
April 26, 1956
Dear Mr. Brundage:
I have reviewed your analysis of the Hoover Commission's Report on Budget
and Accounting, transmitted with your letter of April 23, 1956. Your plans
for carrying out the Commission's recommendations represent a constructive
approach toward realizing the Commission's objective of strengthening the
budget and accounting processes of the Federal Government.
The Hoover Commission's Report on Federal budgeting and accounting is a
document of great public significance. I join the citizens of the Nation
in thanking the Commission for this as well as for the other important
studies which it has made. Moreover, because the formulation and adminis-
tration of the Federal Budget are vital responsibilities of the Chief Execu-
tive,, I am especially and personally appreciative of the contribution which
Mr. Hoover and his distinguished associates have made in proposing improve-
ments in budget and accounting systems which will enable more effective
management and control of the programs administered by the executive branch.
I consider it desirable and necessary that the executive departments and
agencies intensify their efforts, along the lines indicated in your analysis,
to establish budget and accounting systems that will provide better financial
information and enable both the improvement of our budget presentations and
the strengthening of our budget controls. In addition, I approve of your
plans to have the Bureau of the Budget give greater emphasis in its work to
the evaluation and advancement of administration in the executive agencies,
as a means of more rapidly bringing about improvement in organization and
management, including more effective budgeting and accounting practices,
throughout the executive branch.
I commend to the Congress its consideration of those Hoover Commission budget
and accounting proposals which are particularly pertinent to the role and
functions of the Congress, with the assurance that the executive branch will
cooperate fully in actions to strengthen the appropriation and financial con-
trol processes of the legislative branch.
Sincerely,
(Signed) DWIGHT D. EISENHOWZR
The Honorable Percival F. Brundage
Director, Bureau of the Budget
Washington 25, D. C.
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0 EXECUTIVE OFFICE OF THE PRESIDENT
P BUREAU OF THE BUDGET
Y
Analysis of the Budget and Accounting Report of the
Commission on Organization of the Executive Branch of the Government
The Budget and Accounting Report of the Commission on Organization
of the Executive Branch of the Government offers constructive proposals
for improving the financial processes of the Government. Consideration
of the recommendations in that report by the executive branch has provided
an opportunity for the reexamination of many present practices and
objectives. It also has led to the development of actions for
accelerating efforts to provide budget and accounting systems that will
make a more effective contribution to the management of the Federal
Government.
The Budget and Accounting Report includes 25 recommendations
pertaining to budgeting, accounting and auditing practices., financial and
performance reports., financial organization,, and related matters. Those
recommendations, in general, urge additional emphasis and greater
concentration of effort on actions to provide accounting systems throughout
the Government that will produce better financial information and on the
improvements in budget presentations and controls which better accounting
information and systems will make possible. The report also proposes
expansion of the Bureau of the Budget in order to enable the more
effective discharge of the Bureau's managerial and budgeting functions.,
with recognition that the strengthening of the Bureau of the Budget has
a direct bearing on executive branch leadership toward fulfillment of
the Commission's recommendations.
In setting forth the current status of this analysis by the
Bureau of the Budget of the several categories of recommendations included
in the Commission's report and outlining the actions that are being taken
to carry out many of them,, this statement makes clear that most of the
recommendations or their objectives have the endorsement of the executive
branch. Full implementation of many of the basic recommendations will.
not be accomplished overnight because,, as the Commission recognized,, the
changes needed in agency accounting systems are essentially of a
long-range nature. Furthermore,, action on a number of the recommendations
is primarily dependent upon acceptance by the Congress.
Budgeting
With respect to Federal budgetary practices,, the Commission's
principal recommendations call for (a continued use of performance
budgeting., (b) formulation and administration of agency budgets on a
cost basis, (c) appropriations based on accrued expenditures,, and (d)
authorization for limited periods of continuing Government programs not
susceptible to the usual budget controls.
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Performance bum. The first Hoover Commission recommended the
adoption o a performance budget, defining it as a budget based upon
functions, activities, and projects and contrasting it with former
budgets which had focused attention main]y upon such things as personal
services, supplies, and equipment. The second Hoover Commission and
its Task Force both noted that considerable progress has been made
toward achieving a performance budget and recommended further steps to
establish such classifications as are necessary to present the budget
on a performance basis.
There has been continuous effort for several years to refine
budget and accounting classifications in the interest of synchronizing
organization structures, budgets, and accounting systems and to
encourage the use of performance budgets and reports in agency operations.
We are in full agreement with these suggestions of the Commission and
propose to intensify our efforts to carry them out.
Agency budgets based on cost. In recommending a cost basis for
agency budgets, the Commission wanted these budgets to show the actual
and estimated costs of goods and services consumed each year in carrying
out budgeted programs rather than be limited to the actual and estimated
obligations that are now shown, which take into account but fail to
disclose the use of carryovers of inventory and working capital resulting
from obligations of prior years. Thus, agency budgets would more readily
enable all concerned to relate budget figures for a given year to the
cost of work or services performed during that year.
Cost-type budgeting is now used by Government corporations. A
few other agencies also present cost-type budgets to the Congress, in
instances where the Appropriations Committees have indicated that such
presentations are acceptable to them. Those include the Atomic Energy
Commission and the Bureau of the Mint whose accounting systems now produce
data on the costs of goods and services consumed. A number of other
agencies are able to formulate cost-type budgets and have submitted their
budgets on that basis for review by the Bureau of the Budget.
We agree with the Commission that the installation of accounting
systems which will produce cost information should be expedited; and, as
pointed out later in this report, actions are being initiated to strengthen
executive branch leadership for improvement of accounting, including steps
to stimulate and assist agencies in establishing such accounting systems.
Agency accounting systems are not, of course, overhauled overnight but as
soon as accounting systems are producing the necessary data on a fully
reliable basis proposals for incorporating cost data in the Budget
Document can and will be made to the Appropriations Committees.
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Appropriations based on accrued expenditures. The Hoover
Commission's recommendation that accrued expenditures be used as a basis
for appropriations calls for significant changes in present executive
branch and congressional practices. Appropriations are now made in terms
of obligations, with amounts appropriated serving as a limit on goods
and services to be ordered; whereas the Commission favored appropriation
of amounts covering goods and services to be received each year, with
supplementary congressional authorization and limitation for long
lead-time programs as required.
Those agencies able to formulate their budgets on a cost basis
now have accounting systems which furnish, at successive stages of their
operations, data showing the costs of goods and services ordered,
received, and consumed. Such agencies can operate on a basis of accrued
expenditure appropriations, and other agencies will be able to do so as
soon as accounting systems which can produce information for cost
budgeting are installed.
We believe that a change to appropriations on an accrued
expenditure basis would be beneficial -- in terms of improving
management and strengthening budget controls of both the executive branch
and the Congress. There is, however, considerable difference of opinion
within the Congress and the executive branch both as to the advantages
and disadvantages of accrued expenditure appropriations and as to the
methods that would be needed for the financing and control of obligations
in advance of appropriations, primarily for long lead-time programs. For
this reason we urge that the Congress and the executive branch this
as an objective, recognizing that it win implemented on an evolutionary basis over a considerable period of time.
The Hoover Commission recognized the long-range character of
its recommendation when it pointed out that "adoption of this proposal
will require administrative changes in the Government's budgeting and
accounting procedures, particularly in the Department of Defense, and
will require education of those concerned with the budgetary procedures
and the working out of the precise mechanics." These procedures and
mechanics are among the goals of the Bureau of-the Budget and of the
Joint Accounting Program. The number of agencies with accounting systems
which will furnish the necessary data is increasing each year as progress
is made under the Joint Accounting Program,, and acceleration of that
program should speed the installation of such systems in other agencies.
With a basic authorization to proceed with accrued expenditure
appropriations, the executive
i the ultimate theeCoi ress will be able to
proceed more rapidly
Limited authorization for cones prograns. The Hoover
Commission suggested that legislation committing the Government
controls
continuing programs not susceptible to the usual budgetary
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ordinarily be eiacted for a limited term in order to require periodic
congressional reviews of their usefulness. The need for periodic review
of such programs by the legislative and executive branches is recognized,,
and the Bureau will., as the Commission suggested., continue to keep such
programs under continuing review, proposing legislative amendments whenever
necessary to assure their conformity with budget policies.
AccountiM and Auditing Practices
As already indicated., fulfillment of the Hoover Commission's
recommendations for strengthening Federal budgetary practices is largely
dependent upon an intensification of efforts to install improved
accounting systems throughout the Government. Significant among the
Commission's recommendations for improving accounting and auditing practices
is a proposal for acceleration of efforts to install adequate monetary
property accounting records and maintenance of Government accounts on the
accrual basis. The Commission also made proposals dealing with
simplification of allotments., use of a single account in each agency for
liquidation of obligations and other practices in the settlement of claims,
relief of accountable officers in certain instances,, and the need for
examination of revolving fund and internal audit practices.
Accrual accounting. The Commission's recommendations that
Government accounting systems be kept on the accrual basis and that adequate
monetary property accounts be included as an integral part of such systems
focused attention on the need for a method of accounting which can best
assure the development of accurate information on the cost of work or
services performed. The accrual method of accounting will disclose the
value of resources actually applied to operations performed during a
specified period (which is not true of obligation accounts that disclose
only the value of goods ordered) and at the same time will provide needed
information on the value of resources available for future operations.
We are in agreement with the Commission's proposals. The
installation of accrual accounting systems has been a major objective of
the Joint Accounting Program, which has made considerable progress in
advancing the installation and use of such systems. A sizeable job still
remains? but the development of accrual accounting throughout the
Government will be given special and increased enphasis by the Bureau
of the Budget and the Joint Accounting Program. Such systems are
recognized as essential to the efforts that will be made to carry out the
Hoover Commission's proposal for developing budgets on a cost basis.
Allotment structure. The goal recommended by the Commission of
financing each operating unit from a single allotment for each appropriation
involved in its operations is a desirable one. The simplification of
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agency allotment structure through the establishment of allotments at
highest practicable organizational levels consistent with management
responsibility has been a matter of continuing concerns and considerable
progress has been made. Further attention in a number of agencies is
still needed and will be provided.
Payment of obligations and claims. The Commission's proposal
that agencies consolidate their appropriation accounts at the end of a
fiscal year in order to reduce the number of accounts from which payments
to close out unliquidated obligations are made and its recommendation
that the agencies rather than the General Accounting Office settle
claims against lapsed appropriations would bring about desirable
simplifications. We look with favor upon the Commission's objectives.
After several years of works legislation to accomplish these objectives
has been developed by staff of the Joint Accounting Program and is now
being considered by the Congress.
Liability of accountable officers. The Commission's
recommendation that the Comptroller General be authorized to relieve
accountable officers of financial liability except where losses result
from their own negligence or from fraud was aimed at eliminating red
tape resulting from overcautious practices designed to assure compliance
with many prohibitory statutes. Legislation on this subjects somewhat
different from the exact proposal of the Commissions was enacted after
the Commission's studies had been completed. This legislations
developed by the Joint Accounting Program with our supports is expected.,
for practical purposess to attain the results sought by the Commission
and at the same time assure ample protection to both the Government and
its accountable officers.
Review of revolving funds and internal auditing* The review of
agency revolving funds proposed by the Commission as a means of assuring
that they are created and continued only where they will contribute to
efficient managements has been and will continue to be carried on as a
part of the budget process. The Commission's recommendation that a
study be made to determine the adequacy of internal auditing in
Government agencies will be considered for initiation by the Joint
Accounting Program. That program has actively promoted and assisted
agencies in the-development of internal audit systems., and the General
Accounting Office regularly examines agency internal auditing praccs
as a part of its comprehensive audits. The proposed study may provide
a helpful evaluation of the results being achieved by such systems.
Central Financial and Performance Reporting
The Hoover Commission made several recommendations aimed at
developing and providing more comprehensive reports on both the financial
results and the performance of Government programs. Its recommendations
included proposals for increased and continuing emphasis upon the
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improvement of Treasury's central fiscal reports, for a special study
to eliminate duplicate accounting within the Treasury Department and
between that department and other agencies, and also for the development
by the Bureau of the Budget of Government wide reports on executive
branch performance and on the financial results of Government operations,
The improvement of central financial reporting is a major
continuing activity of the Joint Accounting Program, and work is
currently under way on installation of a system designed to eliminate
duplicate accounts within the Treasury Department. A working group of the
Joint Accounting Program has also developed a new central accounting
system, installed last year by the Treasury Departments, which will enable
action to eliminate certain detailed accounts in the Treasury Department
as soon as agency accounts demonstrate that they can supply data needed
for essential central financial reports. Intensified efforts to improve
agency accounting systems will result in the more rapid elimination of
duplicate accounts in the Treasury Department, thus achieving the
objective sought by this recommendation of the Commission.
The proposal that the Bureau of the Budget develop central
performance reports raises a number of questions on the needs to be
served and the specific kinds of reports required to meet the purposes
underlying the recommendation. Our prior experience with performance
reports suggests several alternative approaches to the Commission's
apparent objectives, which may or may not require additions to the reports
which are furnished to the President informally throughout the year and
more formally when the annual budget is being formulated. Any additions
to such reports should be accomplished with a minimum of new demands on
the agencies.
We shall continue our review of these matters, including
consultation with Treasury officials as appropriates, and will make specific
proposals for consideration at a later date. The development of central
reports on the financial results of Government operations would constitute
a new function for the Bureau, and one that would parallel the central
fiscal reporting functions of the Treasury Department.
Financial Organization
The Hoover Commission's Budget and Accounting Report proposed
the establishment of comptroller organizations in the principal agencies
and recommended that the Bureau of the Budget establish an Office of
Accounting that would include among its duties the rendering of assistance
to agency comptrollers.
The proposal for agency comptrollers., if interpreted to mean the
imposition of a fixed pattern of organization upon all agencies, would
conflict with the guiding principles of organization which were laid down
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by the first Hoover Commission and which have since won wide acceptance
in both the executive branch and the Congress.. In order that agency
heads may be held accountable for agency operations., they must have
authority to control the internal organization of their agencies. We
believe that there should be effective coordination of agency budget and
accounting functions but that the principle of agency head accountability
should be maintained and the imposition of a fixed pattern of organization
on all agencies should be avoided. We do not believe that the Commission
intended that a comptrollership organization such as it described should
be made mandatory for all agencies., either by a statutory or Presidential
mandate., but rather that the Commission was directing its recommendation
to the responsible heads of the agencies for their consideration.
The recommendations regarding the accounting organization and
functions of the Bureau of the Budget were designed to strengthen the
Bureau's role in the improvement of Government accounting. Until recently
the Bureau of the Budget had a small Accounting Group in the Office of
Management and Organization., the staff of which acted as the Bureau's
representatives in the Joint Accounting Program. We agree that the
executive branch should assume greater leadership in the accounting field
and believe this would be an important factor in improving coordination
of budgeting and accounting in the Government. We also concur that the
Bureau's capacity to assist agencies in improving their fAcilities for
financial management should be further developed. As a first step
toward these objectives., an Assistant Director of the Bureau of the
Budget with many years of experience in public accounting practice has
been given the job of developing and supervising an expanded accounting
program for the Bureau and of providing leadership on behalf of the Bureau
in increasing the impetus to accounting reforms throughout the Government.
Strengthening the Mana erial and Budgeting Ffunctions of the
bureau of the Budget
The first recommendation in the Hoover Commission's Budget and
Accounting Report proposed that the managerial and budgeting functions
of the Bureau of the Budget be strengthened and made more effective.
In this connection., it suggested that., if necessary., increased resources
should be provided for the Bureau and that some of the Bureau's staff
should be physically located throughout the year in the offices of the
major agencies.
The Commission's proposal for expansion and strengthening of
the Bureau of the Budget is one of major importance to other objectives
of the Commission. It has a direct bearing on how fast and howmll the
executive branch carries out many of the recommendations cited above and.,
in addition$ governs the ability of the Bureau to take appropriate action
on recommendations contained in other reports of the Commission -- notably
those dealing with paperwork management and general services matters.
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The resources currently available in the Bureau do not permit a
satisfactory level of accomplishment in its presently assigned functions,,
much less permitting the expansion called for by the Commission.
The suggestion that Bureau personnel be located in the major
agencies must be evaluated in terms of its impact upon Bureau-agency
relationships. For best results., the Bureau has found that
relationships with the agencies must be based on cooperation and
mutual understanding of the basic factors underlying the submission
and presentation of agency budgets. Because most agencies believe
that the placement of Bureau staff in the agencies would result in a
diffusion of agency budget and management responsibilities, adoption
of the proposal probably would not contribute to better or more
effective relationships between the Bureau and the agencies. Limited
attempts which the Bureau has made in the past toward the type of
arrangement proposed have met with little success.
We believe that the objective sought by the Commission will
be achieved if the Bureau's staff is enlarged and if measures are
invoked to increase substantially the proportion of staff time spent
in on-site reviews of agency operations. There has been a steady
reduction in the staff of the Bureau for the past seven or eight years
in the face of a very great increase in work. As one of the results of
those conflicting trends the Bureau's staff members have been forced
to do more and pore of their work behind their desks,' with marq
undesirable results. It is our firm intention to take all possible
measures to bring Bureau staff into closer contact with agency
operations and employees and thus to correct the undesirable situation
that has developed.
The steady reduction in the size of the Bureau's staff has
been felt in all of the Bureau's activities, but its most adverse
effects have been upon the management functions assigned to the Bureau
by the Budget and Accounting Act of 1921, the Budget and Accounting
Procedures Act of 1950s and several Executive Orders, The Commission
suggested that the Bureau's job of reviewing and promoting improved
management and organization throughout the executive agencies should
be strengthened. We are in agreement with that suggestion and fully
recognize how important it is that the Bureau of the Budget provide,
on behalf of the President, continuing attention to the evaluation,
development, and promotion of improved organization,., coordination,
and management in the executive branch.
Additional staff resources for the Bureau will be needed to
enable the Bureau to put additional emphasis on its management functions,
including the improvement of executive branch budgeting and accounting
methods and procedures. Favorable action by the Congress on a proposal
by the President for enlargement of the Bureau's staff will enable the
Bureau to provide greater help to the President by extending his
leadership in improvement of Federal administration and in obtaining
better and more economical performance of Government programs.
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APPENDIX III
PROPOSED SUPPLEMENTAL APPROPRIATION FOR THE
BUREAU OF THE BUDGET, EXECUTIVE OFFICE OF THE PRESIDENT
CCI4MUNICATION
From
THE PRESIDENT OF THE UNITED STATES
Transmitting
A PROPOSED SUPPLEMENTAL APPROPRIATION FOR THE FISCAL
YEAR 1957, IN THE AMOUNT OF $405,000, FOR THE BUREAU OF
THE BUDGET, EXECUTIVE OFFICE OF THE PRESIDENT
THE ATE HOUSE,
Washington, May 10, 1956
THE SPEAKER OF THE HOUSE'OF REPRESENTATIVES.
Sir: I have the honor to transmit herewith for the consideration
of the Congress a proposed supplemental appropriation for the fiscal
year 1957, in the amount of $405,000,for the Bureau of the Budget,
Executive Office of the President.
As explained in my message to the Congress of May 10, 1956, the
proposed appropriation represents a necessary step in carrying out
the recommendations for further improvement in executive branch
budgeting, accounting, and management generally which were made by
the Commission on Organization of the Executive Branch of the
Government, chaired by former President Herbert Hoover. Expansion
of the staff resources of the Bureau of the Budget is needed in
order that the Bureau may provide, on my behalf, more active central
leadership in the advancement of administration in the executive
agencies.
Details of this proposed appropriation and the reasons for its
submission at this time are set forth in the attached letter from
the Director of the Bureau of the Budget.
Respectfully yours,
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
Washington, D. C., May 7, 1956
THE PRESIDENT,
The White House.
Sir: I have the honor to submit herewith for your consideration a
proposed supplemental appropriation for the fiscal year 1957, in the
amount of $405,000, for the Bureau of the Budget, Executive Office of
the President, as follows:
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
SALARIES AND EXPENSES
For an additional amount for "Salaries and expenses", $405,000:
Provided, That the limitation under this head in the General Government
Matters Appropriation Act, 1957, on the amount available for expenses
of travel is increased from "$70,000" to "$110,000", the limitation
thereunder on the amount available for services as authorized by the
Act of August 2, 1946, is increased from "$20,000" to "$25,000",
and the maximum per diem rate for individuals serving pursuant to
said Act is increased from "$50" to "$75".
This proposed supplemental appropriation for the Bureau of the
Budget is necessary to carry out the decision of the President, based
on recommendations of the Commission on Organization of the Executive
Branch of the Government (Hoover Commission), to strengthen and make
more effective the Bureau's management review and budgeting functions.
Approval of the proposed appropriation by the Congress will permit the
Bureau of the Budget to accelerate its efforts to bring about desirable
improvements in executive branch budgeting, accounting, and management
generally, as proposed in the Commission's report on budget and account-
ing. Through these efforts, the Bureau will increase its activities
in the field of management review, and also expand its participation
with the General Accounting Office and the Treasury Department in the
joint accounting program to improve further accounting practices in
the executive agencies in accordance with the objectives of that program.
As provided by section 104 of the Budget and Accounting Procedures
Act of 1950, the President, through the Director of the Bureau of the
Budget, is "authorized and directed to evaluate and develop improved
plans for the organization, coordination, and management of the execu-
tive branch of the Government with a view to efficient and economical
service." Strengthening of the management review and budgeting functions
of the Bureau of the Budget will make it possible to bring about more
rapidly desirable improvements in the organization and management in
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the executive branch and to obtain better and more economical per-
formance of Government programs. The proposed appropriation will
permit employment of specially qualified personnel needed for this
purpose. The increases in limitations are needed to permit effective
utilization of the additional appropriation.
This proposed appropriation was not included in the budget because
a determination as to its necessity and nature was not made until
after the executive branch had completed its analysis of the budget
and accounting recommendations of the Commission on Organization of
the Executive Branch of the Government, which occurred after the
budget had been prepared.
I recommend that the foregoing proposed supplemental appropriation
be transmitted to the Congress.
Respectfully yours,
PERCIVAL BRUNDAGE,
Director of the Bureau of the Budget.
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APPENDIX IV
FEDERAL BUDGETING AND ACCOUNTING PRACTICES BY THE COMMISSION
ON ORGANIZATION OF THE EXECUTIVE BRANCH OF THE GOVERNMENT
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
RECOMMENDATIONS RELATIVE TO A REPORT ON FEDERAL BUDGETING AND ACCOUNTING
PRACTICES BY THE COMMISSION ON ORGANIZATION OF THE EXECUTIVE BRANCH
OF THE GOVERNMENT
To the Congress of the United States:
The Commission on Organization of the Executive Branch of the
Government, headed by former President Herbert Hoover, has set
important and desirable objectives for the improvement of Federal
administration and for providing more effective methods in the
financing and control of Government services. Cooperative action
on the part of the legislative and executive branches is required
in order to bring about more rapidly the fulfillment of those
objectives.
The Commission's report on Federal budgeting and accounting
practices is an important contribution toward the attainment of
more effective and economical governmental services. It includes
significant recommendations showing how the Federal Government can
bring about improvements in budgeting, accounting and management
practices generally. Because these recommendations pertain to vital
responsibilities of the Chief Executive, I am especially and per-
sonally appreciative of the contribution which Mr. Hoover and his
distinguished associates have made.
These recommendations of the Commission have been studied
extensively by the executive branch with a view toward identifying
all possible actions that can be taken to strengthen the adminis-
tration of the executive agencies. I have already approved plans
developed by the Director of the Bureau of the Budget to intensify
efforts of the executive branch toward that objective. These plans
include actions to accelerate the establishment and use of modern
accounting methods and improved budget presentations and controls.
I consider it desirable and necessary that the executive departments
and agencies actively and fully participate in carrying out these
plans.
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The actions being taken by the executive branch to put many of
the Commission's proposals into effect will require close coordination
with the legislative branch and merit the support which the Congress
should and can provide. I urge that the Congress seek the early
enactment of appropriate legislative provisions to support the major
objectives of the Commission's recommendations.
The initial recommendation of the Commission's report on budget
and accounting calls for the strengthening of the management review
and budgeting functions of the Bureau of the Budget. This is of
signal importance to the attainment of the Commission's objectives
in this field. It has a direct bearing on how fast and how well
the executive branch carries out the plans which I have approved.
Because the resources of the Bureau of the Budget must be increased
if it is to provide, on my behalf, strengthened leadership in the
improvement of executive branch budgeting, accounting, and other
management practices, I am proposing to the Congress a supplemental
appropriation to permit an expansion of the Bureau's staff for this
purpose.
Today's Government demands the use of the best and most economi-
cal methods that can be devised. To that end, we should take full
advantage of the constructive proposals put forth by Mr. Hoover and
his able associates.
Dwight D. Eisenhower
The White House, May 10, 1956
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Public Law 798 - 84th Congress
Chapter 727 - 2d Session
H. R. 9593
To simplify accounting, facilitate the payment of obligations, and
for other purposes
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That (a) the account
for each appropriation available for obligation for a definite
period of time shall be closed as follows:
(1) On June 30 of the second full fiscal year following the fiscal
year or years for which the appropriation is available for obligation,
the obligated balance shall be transferred to an appropriation account
of the agency or subdivision thereof responsible for the liquidation of
the obligations, in which account shall be merged the amounts so trans-
ferred from all appropriation accounts for the same general. purposes;
and
(2) Upon the expiration of the period of availability for obligation,
the unobligated balance shall be withdrawn and, if the appropriation was
derived in whole or in part from the general fund, shall revert to such
fund, but if the appropriation was derived solely from a special or
trust fund, shall revert, unless otherwise provided by law, to the fund
from which derived: Provided, That when it is determined necessary by
the head of the agency concerned that a portion of the unobligated
balance withdrawn is required to liquidate obligations and effect ad-
justments, such portion of the unobligated balance may be restored to
the appropriate accounts: Provided further, That prior thereto the
head of the agency concerned shall make such report with respect to each
such restoration as the Director of the Bureau of the Budget may require,
and shall submit such report to the Director, the Comptroller General,
the Speaker of the House of Representatives, and the President of the
Senate,
(b) The withdrawals required by subsection (a) (2) of this section
shall be made --
(1) not later than September 30 of the fiscal year
immediately following the fiscal year in which the period
of availability for obligation expires, in the case of an
appropriation available both for obligation and disbursement
on or after the date of approval of this Act; or
(2) not later than September 30 of the fiscal year
immediately following the fiscal year in which this Act
is approved, in the case of an appropriation, which, on
the date of approval of this Act, is available only for
disbursement.
314
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(c) For the purposes of this Act, the obligated balance of an
appropriation account as of the close of the fiscal year shall be
the amount of unliquidated obligations applicable to such appro-
priation less the amount collectible as repayments to the appro-
priation; the unobligated balance shall represent the difference
between the obligated balance reported pursuant to section 1311 (b)
of the Supplemental Appropriation Act, 1955 (68 Stat. 830; 31 U.S.C.
200 (b)), and the total unexpended balance. Collections authorized
to be credited to an appropriation but not received until after the
transfer of the obligated appropriation balance as required by sub-
section (a) (1) of this Act, shall, unless otherwise authorized by
law, be credited to the account into which the obligated balance
has been transferred, except that any collection made by the General
Accounting Office for other Government agencies may be deposited
into the Treasury as miscellaneous receipts.
(d) The withdrawals made pursuant to subsection (a) (2) of this
section shall be accounted for and reported as of the fiscal year in
which the appropriations concerned expire for obligation. The with-
drawals described in subsection (b) (2) of this section shall be
accounted for and reported as of the fiscal year in which this Act
is approved.
Sec. 2. Each appropriation account established pursuant to this
Act shall be accounted for as one fund and shall be available without
fiscal year limitation for payment of obligations chargeable against
any of the appropriations from which such account was derived. Subject
to regulations to be prescribed by the Comptroller General of the
United States, payment of such obligations may be made without prior
action by the General Accounting Office, but nothing contained in this
Act shall be construed to relieve the Comptroller General of the United
States of his duty to render decisions upon requests made pursuant to
law or to abridge the existing authority of the General Accounting
Office to settle and adjust claims, demands, and accounts.
Sec. 3. (a) Appropriation accounts established pursuant to this
Act shall be reviewed periodically, but at least once each fiscal year,
by each agency concerned. If the undisbursed balance in any account
exceeds the obligated balance pertaining thereto, the amount of the
excess shall be withdrawn in the manner provided by section 1 (a) (2)
of this Act; but if the obligated balance exceeds the undisbursed
balance, the amount of the excess, not to exceed the remaining unobli-
gated balances of the appropriations available for the same general
purposes, may be restored to such account. A review shall be made as
of the close of each fiscal year and the restorations or withdrawals
required or authorized by this section accomplished not later than
September 30 of the following fiscal year, but the transactions shall
be accounted for and reported as of the close of the fiscal year to
which such review pertains. A review made as of any other date for
which restorations or withdrawals are accomplished after September 30
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in any fiscal year shall be accounted for and reported as transactions
of the fiscal year in which accomplished: Provided, That prior to any
restoration under this subsection the head of the agency concerned shall
make such report with respect thereto as the Director of the Bureau of
the Budget may require.
(b) In connection with his audit responsibilities, the Comptroller
General of the United States shall report to the head of the agency
concerned, to the Secretary of the Treasury, and to the Director of
the Bureau of the Budget, respecting operations under this Act,
including an appraisal of the unliquidated obligations under the appro-
priation accounts established by this Act. Within thirty days after
receipt of such report, the agency concerned shall accomplish any
actions required by subsection (a) of this section which such report
shows to be necessary.
Sec. i. During the fiscal year in which this Act becomes effective,
and under rules and regulations to be prescribed by the Comptroller
General of the United States, the obligated balance of the appropria-
tion account for payment of certified claims established pursuant to
section 2 of the Act of July 6, 199 (63 Stat. 407; 31 U.S.C. 712b),
shall be transferred to the related appropriation accounts established
pursuant to this Act and the unobligated balance shall be withdrawn.
Sec. ,. The obligated balances of appropriations made available
for obligation for definite periods of time under discontinued appro-
priation heads may, upon the expiration of the second full fiscal year
following the fiscal year or years for which such appropriations are
available for obligation, be merged in the appropriation accounts pro-
vided for by section 1 hereof, or in one or more other accounts to be
established pursuant to this Act for discontinued appropriations of
the agency or subdivision thereof currently responsible for the liquidation
of the obligations.
Sec. 6. The unobligated balances of appropriations which are not
limited to a definite period of time shall be withdrawn in the manner
provided in section 1 (a) (2) of this Act whenever the head of the
agency concerned shall determine that the purposes for which the appro-
priation was made has been fulfilled; or in any event, whenever dis-
bursements have not been made against the appropriation for two full
consecutive fiscal years: Provided, That amounts of appropriations not
limited to a definite period of time which are withdrawn pursuant to
this section or were heretofore withdrawn from the appropriations account
by administrative action may be restored to the applicable appropriation
account for the payment of obligations and for the settlement of accounts.
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Sec. 7. The following provisions of law are hereby repealed:
(a) The proviso under the heading "PAYMENT OF CERTIFIED CLAIMS"
in the Act of April 25, 1945 (59 Stat. 90; 31 U.S.C. 690);
(b) Section 2 of the Act of July 6, 1949 (63 Stat. 407; 31 U.S.C.
712b), but the repeal of this section shall not be effective until
June 30, 1957;
(c) The paragraph under the heading "PAYMENT OF CERTIFIED CLAIMS"
in the Act of June 30, 1949 (63 Stat. 358; 31 U.S.C. 712?);
(d) Section 5 of the Act of March 3, 1875 (18 Stat. 418; 31 U.S.C.
713a); and
(e) Section 3691 of the Revised Statutes, as amended (31 U.S.C. 715).
(f) Any provisions (except those contained in appropriation Acts for
the fiscal years 1956 and 1957) permitting an appropriation which is limited
for obligation to a definite period of time to remain available for expen-
diture for more than the two succeeding full fiscal years, but this subsec-
tion shall not be effective until June 30, 1957.
Sec. 8. The provisions of this Act shall not apply to the appropria-
tions for the District of Columbia or appropriations to be disbursed by
the Secretary of the Senate or the Clerk of the House of Representatives.
Sec. 9. The inclusion in appropriation Acts of provisions excepting
any appropriation or appropriations from the operation of the provisions
of this Act and fixing the period for which such appropriation or appro-
priations shall remain available for expenditures is hereby authorized.
Approved July 25, 1956.
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APPENDIX VI
Public Law 863 - 811th Congress
Chapter 814 - 2d Session
S. 3897
To improve governmental budgeting and accounting methods and procedures,
and for other purposes
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
AMENDMENTS TO THE BUDGET AND ACCOUNTING ACT, 1921
Sec. 1 (a) Section 201 of the Budget and Accounting Act, 1921,
as amended (31 U. S. C. 11), is further amended by inserting "(a)"
after the words "Sec. 201,"; by changing subsection (a) to sub-
paragraph (1); by adding after subparagraph (1) a new subparagraph
"(2) at such times as may be practicable, information on program
costs and accomplishments"; by changing subsections (b) through (3)
to subparagraphs (3) through (11), respectively.
(b) Section 216 of such Act as amended (31 U. S. C. 24), is
further amended by inserting ""(a5 after the words "Sec. 216." and
by adding the following new subsections:
"(b) The requests of the departments and establishments for
appropriations shall, in such manner and at such times as may be
determined by the President, be developed from cost-based budgets.
"(c) For purposes of administration and operation, such cost-
based budgets shall be used by all departments and establishments
and their subordinate units. Administrative subdivisions of
appropriations or funds shall be made on the basis of such cost-
based budgets."
AMENDMENTS TO THE BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950
Sec. 2 (a) The Budget and Accounting Procedures Act of 1950 is
amended by inserting after section 105 thereof the following new
section:
"ACCOUNTING AND BUDGET CLASSIFICATIONS
"Sec. 106. The head of each executive agency shall, in consul-
tation with the Director of the Bureau of the Budget, take whatever
action may be necessary to achieve, insofar as is possible, (1) con-
sistency in accounting and budget classifications, (2) synchronization
between accounting and budget classifications and organizational struc-
ture, and (3) support of the budget justifications by information on
performance and program costs by organizational units."
38
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(b) Section 113 of such Act (31 U. S. C. 66a) is amended by
adding at the end thereof the following new subsection:
"(c) As soon as practicable after the date of enactment of this
subsection, the head of each executive agency shall, in accordance
with principles and standards prescribed by the Comptroller General,
cause the accounts of such agency to be maintained on an accrual
basis to show the resources, liabilities, and costs of operations
of such agency with a view to facilitating the preparation of cost-
based budgets as required by section 216 of the Budget and Accounting
Act, 1921, as amended. The accounting system required by this sub-
section shall include adequate monetary property accounting records
as an integral part of the system."
(c) Section 118 of such Act is amended by inserting "113 (c)"
after the words "section 111".
SIMPLIFICATION OF SYSTEM FOR SUBDIVIDING FUNDS
Sec. 3 Section 3679(g), Revised Statutes, as amended (31 U. S. C.
665 (g)), is further amended by adding at the end thereof the follow-
ing sentence: "In order to have a simplified system for the adminis-
trative subdivision of appropriations or funds, each agency shall
work toward the objective of financing each operating unit, at the
highest practical level, from not more than one administrative sub-
division for each appropriation or fund affecting such unit."
Approved August 1, 1956
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APPENDIX VII
THE WHITE HOUSE
(August 1, 1956)
STATEMENT BY THE PRESIDENT
I have today approved S. 3897, "To improve governmental
budgeting and accounting methods and procedures, and for other
purposes." This new legislation represents a major step forward
toward a better budgeting and accounting system throughout the
Government. Its enactment was recommended by the Commission on
Organization of the Executive Branch of the Government. As
originally introduced, however, the bill would have provided for
adoption of the accrued expenditure appropriation procedure.
Such a provision in law would be highly desirable and would have
many benefits both for the legislative and executive branches.
I shall recommend to the next Congress that further consider-
ation be given to the enactment of legislation which will permit
the use of accrued expenditure appropriations whenever such pro-
cedure is considered appropriate in relation to the improved budget
and accounting systems developed under the new law.
###
1tO
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APPENDIX VIII
ILLUSTRATIONS OF COST-BASED BUDGET
PRESENTATIONS FOR APPROPRIATIONS
WHERE COST DATA ARE AVAILABLE
41
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COST-BASED BUDGET PRESENTATIONS
USED IN THE 1957 BUDGET
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Program by setivitles:
Accrued costs:
1. Source and special nuclear ma-
terials---------------------------
2. Weapons---- ------?----------
3. Reactor development .............
4. Physical research_________________
5. Biology and medicine_____________
li. Community_____________________
7. Program direction and adminis-
tration------------------------ --
8. Security Investigations..---___._.-
9. Other costs_ .....................
Total costs____________________
10. Revenues applied________________
Net coats--__-__._..----------
11. Relation of costs to obligations:
Increase or decrease (-) In
selected resources available for
future application to activity
costs ------ --------------- -......
Com a ative transfers from other
accounts._--..?---?-------------------
tlnobligated balance transferred Iron
"Plgnt and equipment, Atomic
Energy Commission" (69 Stat. 354,
450)--? ................................
Unohligated balance no longer available-
Appropriation--------------- ____
Beapproprlatfon------- --------------
$626, 896, 217
$878,524,000
$1,012,582,000
238,184, 541
257,189,000
282, 470,000
109,155, 473
159,927,000
284,985,000
44,648, 999
51,419,000
65,098,000
28,120, 416
29,172,000
31,527,000
18, 977, 296
20,055,000
17,950,000
83,953,408
38, 018, 000
38,327,000
9,817,431
8,807, 000
6,610,000
-10.360,343
5,270,000
6,375,000
1,099,293, 438
1,455,339,000
1, ON, 460.000
-17,167,446
-30, 225, 000
-33, 797,000
1082,125992
-?-------------
344,931, 344,931,727
1,095, 962,300
74,661,382
-571,409, 000
20, 000, 000
575,000,000
344,931, 772
1,872,000,000
20,000,000
11. Relation of costa to obligations.-The year-end
balances of selected resources together with the related
changes for the years'1955, 1956, and 1957, are as follows:
SiLECTED RESOURCES
Year-end balances: 1954 aetual 1956 actu
al
1959 estimate 1957, extirpate
Inventories (goods unconsumed
by activities)_______________ 188,514,195 $103,562,9
12
$120,081,849 $138,734,607
Collateral funds (insurance col-
lateral, employee benefit, and
annuity funds) -------------23,890,000 22,890,0
00
21,290
000 21
290
000
Undelivered orders (goods and
services on order not yet re-
,
,
,
ccived)----- ___--------- _._.._ 738,090,
377 492,083,7
10 550,024,546
506,699,7!(7
Total selected resources- 980, 494,
572 618, 538, 6
22 697,396, 304
726, 724,394
Increase or decrease (-) in se-
lected resources available for
future application to activity
costs ....... _..------------------
-231,957,9
50 78,859,772
29,328,000
The estimate for 1957 includes $18.6 million to increase
the level of inventories and $10.7 million to increase the
level of undelivered orders. The inventories of various
kinds are maintained primarily by contactors to support
the operation of Commission-owned production plants
and laboratories. The increase in inventories for 1957 is
required to support expanding reactor operations. The
increase in the level of undelivered orders is related
primarily to the continued expansion of the reactor
development effort.
from pp. 126-9 of the 1957 budget
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 Approved For Release 2000/08/29 : CIA-RDP78-05252A000100110003-3
1965 actual
1956 estimate
1957 estimate
Program by activities:
1. Civic functions:
(a) Customs and immigration--.--
$410,807
$441, 700
$440, 200
(b) Postal service--------------- ---
1,073,214
1,141, 141,600
1,133, 133,400
(c) Police protection--------------
1,624,740
1,594,200
1, 568, 400
(d) Fire protection-----------------
663,130
586,000
923,600
Judtetal 8 ----------------
66,126
68,700
08, 600
Education---------------------
2,772,090
3,069,300
3,101,200
Public areas and facilities.---_-
L
b
OX
1,158, 724
75
214
1, 232,900
88
500
.1,226, 000
105 200
rary________________________
i
A)
(i) Internal security ...............
,
102,963
,
107, 600
106, 900
Oth
er
97,332
106,400
106,400
and
2. Heath
((a)) Hospitals and clinics-----------
5,133, 912
6,357,100
5, 413, 600
(6) Other public health services....
702, 917
832, 800
607,600
8. General government expenses:
h
G
g
26
432
50
700
80
700
(a) O
ee of t
e
overnor---------
(b) Other general government ex-
,
,
,
pense___ __________________
1,029,614
1808,240
1,725,000
(c) Adjustment to prior year costs.
^70,088
_
Tot alcosts .................
14,67,130
1982,800
6,76,500
Relation of costs to obligations:
Increase or decrease (-) in selected
resources available for future appli-
t
i
211
$193
900
-$46
.__..___.__.._
1)
ty cos
s--------------
cation to activ
iation included in activity
,
,
costs (-) ------------------------
_865, 872
-877,000
-$916, 500
Total obligations-----------------
13,994,469
16,058,700
15,660,000
Financing:
Unobligatedbalance nolonger available-
23,531
---------------
--------------
Appropriation---- ------------------
--T4,018, 000
14, 500, 000
15, 680, 000
Proposed supplemental due to pay
700
558
--------------
increases---- --------------------
---------------
,
Relation of costs to obligations-G'hange in selected
resources available for future application to activity costs.-
The changes in unapplied resources are derived from
account balances shown in the following table:
Balance, June 30:
Stores S (goods unconsumed by
ndel lvtS)-- orders (goods and
U
services on order, not yet
received) -------------------
Adjustment In prior years. ---
Accrued annual leave (leave
earned and not taken by em-
ployees, charged to project
costs)-----------------------
Total selected resources--_
Increase or decrease (-) In
selected resources avail-
able for future applica-
tion to activity costs-__
PROGRAM AND FINANCING
SELECTED RESOURCES
1964 actual
1966 actual
1956 eatfmate 1957 edhnate
$115,804
$111,888
$111, 868
$111, 868
103,210
120,858
73,958
73,958
-55,911
------------
------------
------------
-1,605,383
-1,481,705
-1,481,795
-1,481,795
-l, 442, 280
-1, 24b, 069
-1,295,969
-1,295,969
Depreciation included in activity costs.-Depreciation
accruals on facilities and equipment capitalized under the
capital outlay appropriation are included in activity costs.
Appropriation requirements are reduced by the amount
of such charges as funds are not required for depreciation.
- from pages 631-2 of the 1957 budget
45
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Salaries and Expenses, Bureau of the Mint
PROGRAM AND EIIPANCINO
1956 actual
1956 estimate
1957 estimate
Program by activities:
1. Manufacture of coins (domestic).....
$1,617,674
$1, 403,000
$1, 403, 000
2. Processing deposits and issue, of
monetary metals and coins ---------
833, 963
826,000
825,000
3. Protection of monetary metals and
coins---------- ------- ------------
716,324
720,000
720,000
4. Refining gold and silver bullion-.---.
538,007
475,000
475,000
5. Executive direction ..................
125,237
127,000
127,000
6. Equipment acquisitions ..............
109,196
W4,814
100,000
Total costs-------------------------
3,940,401
4,054,814
3,050,000
Relation of costs to obligations: Increase
or decrease (-) in selected resources
available for application to future ac-
tivity costs ...........................
430,677
-404,814
--------------
Total obligations ...................
4,371,078
3,650,000
3,650,000
Financing:
Appropriation (adjusted)-..........
4,371,078
3, 650, 000
3, 650, 000
Relation of costs to obligations.-The increase or decrease
(-) in selected resources available for application to
future activity costs is derived from account balances in
the table below:
Balance, June 30:
1954
actual
1965
actual
1966 1967
estimate estimate
Inventories (goods unconsumed by projects).
Undelivered orders (goods and services on
$718, 4688
$745,287
$745,287 $745,287
order not yet received)-----------------
Ad
77,946
363,975
21,475 21,475
justment in prior years----------------
Accounts receivable------------------------
Accrued annual leave (leave earned and not
taken by employees charged to project
-4,499
7,394
----------
74,265
----------
11,951 11,051
costs)------------------------------------
-523,637
-477,148
-477,148 -477,148
Total selected resources---------------- 276,702
Increase or decrease (-) in selected
resources available for future sppli.
cation to activity costs-------------------------
430,677
-404,814 ..........
The increase in selected resources for 1955 was due to
the purchase of copper contained in silver being returned
by the Netherlands Government, undelivered equipment
orders, and uncollected reimbursements. Delivery of the
equipment and collection of the reimbursements will
result in a decrease for 1956.
- from pages 922-3 of the 1957 budget
16
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Salaries and Expenses, Office of Superintendent of Documents
1955 actual
1956 estimate
1957 estimate
Program by aotirities:
B
l
ib
i
on--------------------
1.
a
es distr
ut
2. Distribution for other agencies and
$1,629,297
$1, 710,681
$1, 741,261
Members of Congress-------------
541,526
668, 826
579, 011
3. Depository =distribution....-:
427, 979
449, 245
457, 288
4. Cataloging exing-------------
227,516
238,568
242,840
Totalcostsl-----------------------
R
l
i
b
i
i
2,826,308
2,997,270
3,020,400
e
at
on of costrto o
gat
ons:
l
Increase in selected resources avail-
able for future application to ao-
tivity costs .-.-------?-------------
8,417
---------------
--------------
Total obligationa .................
2,834,725
2,967,270
3,020,400
Lessreimbursableobligations-_.__.__
31,838
30,000
30,000
Total direct obligations -----------
2,802,887
2,937,270
2, 990, 400
Financing:
Unobligated balance no longer available.
22,118
---------------
Appropriation_________________ ______
2,826,000
2,990,400
Proposed supplemental due to py
increases-------------------------
---------------
1
? ------------
- from page 35 of the 1957 budget
147
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COST-BASED BUDGET PRESENTATIONS
SHOWN IN BUREAU OF THE BUDGET
CIRCULAR NO. A-11
49
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 Approved For Relea 2000/08/29 : CIA-RDP78-05252 00100110003-3
COST-TYPE BUDGET STATEMENT
FOR CURRENT EXPENSES
PY-1 - year preceding post year
PY ? past year
CY - current year
BY - budget year
This entry represents the change
from start to end of the year in
those assets and liabilities which
enter Into obligations before they
become costs, or vice versa, such
as Inventories, undelivered orders,
and accrued annual leave. The
method of comuptotlon Is ex.
ploinsd In the schedule on "Re-
lation of Costs to Obligations."
Appropriation titles Salaries andExpenties, Bureau of Research,
Department of Oovercu ent
PROORAM AIIB PTNANCINO
1.
Market analysis ...............................
=3,104,205
2.
Product manufacture ...........................
984,026
3.
operation of facilities .......................
790,449
4.
Security ......................................
292,966
5.
Administration ................................
118.641
Total costs .................................
5,290,287
Relation of costs to obligationst
Increase or decrease (-) in selected resources
available for future application to activity
costs .........................................
-34.8o6
Total obligations ...........................
5,255,481
Pints s
Unobligated balance no longer available ...........
Appropriation .................................
Selected Resources
Balance, June 30t
Stores (goods unconsumed by projects)......
Advances (payments for goods and services
not yet received) .
..............
Undelivered order, (goods and services on
order not yet received) .................
Adjustment in prior years .............
Accrued annual leave (leave earned and not
tak- h. m,,,in o ..h..... ..
Exclude from this It,. orders on
which advance payments have been
made.
$2,728,000 $2,517,400
882,800 874,800
757,200 750,000
287,200 283,000
124.800 124 800
4,780,000 4,550,000
-20.000 -25 000
4,760,000 4,525,000
actual actual estimate estimate
$826,680 6798,123 1780,000
160,000 152,765 170,000
345,752 334,987 315,000
-6,735 ......... .........
$750,000
185,000
305,000
project costs) .......................... .605.891 -600.875 -600.000 -600000
Total selected resources .............. 719.806 685.000 665000 640000
Increase or decrease (-) in selected
resources available for future ap.
plication to activity coats ......... -34,806 -20,000 -25,000
(July 27, 1955)
Fig. 5
50
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COST-TYPE BUDGET STATEMENT
FOR MAJOR PROCUREMENT
PY-1 - year preceding past year
PY - past year
CY - current year
BY - budg+t year
Appropriation titles Procurement, Bureau of National Protection,
Department of Government
Ana
Deduct Sales"
resources and
costs
-
=obligated
1
1
balanoe,atart
actual
eatims to
estimate
of year
This entry represents the change
from start to end of the year in
these assets and liabilities which
enter into obligations before they
become costs, or vice versa, such
as inventories,undo] ivered orders,
and accrued annual leave. The
method of computatian Is ex-
plained in the schedule an "Re-
lation of costs to obligations."
1. Aircraft ..................... $220,639,826 $230,627,000
2. Real estate .................. 25,891,155 26,676,000
3. Ships ........................ 154.829.8011 159.752.000
Total coats ................ 401,360,785 417,055,000
Relation of costa to obligotionas
Tncresee or decrease (-) in se-
lected resources available for
future application to activity
costs ........................ -7.538.569 23.264.000
Total obligations .......... 393,822,216 440,319,000
aso ci
ae eo a pprop
resources and tion
unobligated required
balance, end for 19BT
of year
_
'
$321,789,000
24,561,000
,000 132.863:60D 137.257,000 180.207.000
175:8
33
446,438,000 346,913,000 r 427,032,000 526,557,000 yl~
1 000000
596,438,000
Unobligated balance brought
forward ........................ -26,276,216 -76,835,000 -95,381,000
Unobligated balance carried
forward ... 76,835,000 95,381,000 25,500,000
Unobligated balance rescinded
..........
(79 Stet. 999) ................. 12,356,000
A ro ria ................ 456,737,E 458,865,000 526,557,000
19
actual
Balance, June 30,
Stores (goods unconauumed by projects) ..........
Advances (payments for goods and services not
yet received) Undelivered order................................
(goods and serviceon
order not yet received) ....
(leave earned aand not--`-,
Accrued annual leave
Exclude from this line orders en
which advance payments have
been made,
Total selected resources ...................
Increase or decrease (-)*in selected re-
sources a silable for future application
to activity costs ........................
This amount must equal the sum
of (1) total selected resources at
June 3D, 19CY, and (2) unobllgated
balance carried forward at the end
of 19CY.
This amount most equal the sum
of (1) total selected resources at
June 30, 19BY, and (2) unobl leafed
balance carried forward of the and
of 19BY.
193T
actual estimate estimate
$24,351,205 $23,179,898 $25,850,000 $25,187,000
170,558,900 144,085,108 160,000,000 275,000,000
65,521,765 81,308,576 88,237,000 125,358,000
-24,625,301 -20,305,582 -22,555.000 -24.013.000
235,806.569 228268.000 251,532.000 401,532.000
(July 27, 1955)
Fig. 6
51
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 Approved For Relea4p 2000/08/29 : CIA-RDP78-0525b00100110003-3
14 1
4
i$$
?FV~
ay
?8~ ?8
eNl b
a; k` ! r
UR ? ? ?
n