A-4538, NOVEMBER 14, 1924, 4 COMP. GEN. 449

A-4538: Nov 14, 1924

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THERE IS NO AUTHORITY FOR THE TREASURY DEPARTMENT TO MAKE PAYMENTS TO THE FEDERAL RESERVE BOARD FOR TELEGRAPHIC SERVICE RENDERED THE DEPARTMENT OVER THE BOARD'S LEASED-WIRE SYSTEM ON OTHER THAN AN ACTUAL COST BASIS FOR THE SERVICE FURNISHED. 1924: I HAVE YOUR LETTER OF OCTOBER 20. SEGREGATED AND CHARGED UNDER ENUMERATED APPROPRIATIONS AND FUNDS ON THE BASIS OF THE ESTIMATED SERVICE PERFORMED FOR THE OBJECTS FOR WHICH SUCH APPROPRIATIONS AND FUNDS WERE MADE OR CREATED. IT WAS SAID: THE MONTHLY PAYMENTS HERE CONTEMPLATED APPEAR AS IN THE NATURE OF ADVANCES SUCH AS ARE PROHIBITED BY SECTION 3648. WHAT IS CONTEMPLATED BEING DONE. IS NOT ESSENTIALLY DIFFERENT FROM WHAT IS NOW BEING DONE BY ST.

A-4538, NOVEMBER 14, 1924, 4 COMP. GEN. 449

PAYMENT BY TREASURY DEPARTMENT FOR USE OF LEASED-WIRE SYSTEM OF FEDERAL RESERVE BOARD IN THE ABSENCE OF A SPECIFIC STATUTORY PROVISION THEREFOR, THERE IS NO AUTHORITY FOR THE TREASURY DEPARTMENT TO MAKE PAYMENTS TO THE FEDERAL RESERVE BOARD FOR TELEGRAPHIC SERVICE RENDERED THE DEPARTMENT OVER THE BOARD'S LEASED-WIRE SYSTEM ON OTHER THAN AN ACTUAL COST BASIS FOR THE SERVICE FURNISHED, DETERMINED AFTER THE SERVICE HAS BEEN RENDERED AND IN ADVANCE OF SUCH PAYMENTS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, NOVEMBER 14, 1924:

I HAVE YOUR LETTER OF OCTOBER 20, 1924, WITH REFERENCE TO DECISION OF SEPTEMBER 16, 1924, RELATIVE TO THE ARRANGEMENT BETWEEN THE TREASURY DEPARTMENT AND THE FEDERAL RESERVE BOARD FOR SETTLEMENT OF BILLS OF THE SAID BOARD FOR USE OF ITS LEASED WIRE SYSTEM IN THE TRANSACTION OF TREASURY DEPARTMENT BUSINESS, THE SAID ARRANGEMENT PROVIDING FOR THE PAYMENT OF AN ESTIMATED MONTHLY RATE, SEGREGATED AND CHARGED UNDER ENUMERATED APPROPRIATIONS AND FUNDS ON THE BASIS OF THE ESTIMATED SERVICE PERFORMED FOR THE OBJECTS FOR WHICH SUCH APPROPRIATIONS AND FUNDS WERE MADE OR CREATED, ANY EXCESS CHARGED PURSUANT TO THE ESTIMATED RATE PER MONTH FOR ONE FISCAL YEAR TO BE ADJUSTED BY A DECREASE IN THE MONTHLY RATE FOR THE SUCCEEDING FISCAL YEAR.

IN THE DECISION OF SEPTEMBER 16, 1924, IT WAS SAID:

THE MONTHLY PAYMENTS HERE CONTEMPLATED APPEAR AS IN THE NATURE OF ADVANCES SUCH AS ARE PROHIBITED BY SECTION 3648, REVISED STATUTES, IN THE ABSENCE OF LEGISLATION SPECIFICALLY AUTHORIZING ADVANCE PAYMENTS. WHAT IS CONTEMPLATED BEING DONE, AND WITHOUT SPECIFIC LEGISLATIVE AUTHORITY, IS NOT ESSENTIALLY DIFFERENT FROM WHAT IS NOW BEING DONE BY ST. ELIZABETH'S HOSPITAL, BUT BY VIRTUE OF AND PURSUANT TO SPECIFIC LEGISLATIVE AUTHORITY. SEE ACT OF JUNE 5, 1924, PUBLIC NO. 199, PAGES 43 AND 44, 43 STAT. 429.

THOUGH THE AMOUNT OVERPAID IN ONE FISCAL YEAR, BY REASON OF THE UNAUTHORIZED ADVANCES ON THE ESTIMATED COST BASIS, MAY BE RECOUPED BY A REDUCTION IN THE ESTIMATED RATE IN THE SUCCEEDING FISCAL YEAR, THE RESULT IS, AS AFFECTING THE ANNUAL APPROPRIATIONS INVOLVED, THAT THOSE OF THE LATTER FISCAL YEAR ARE AUGMENTED BY THE UNAUTHORIZED CHARGES UNDER THOSE OF THE FORMER FISCAL YEAR. THAT IS CONTRARY TO THE PROVISIONS OF SECTION 3678, REVISED STATUTES, WHICH ARE THAT "ALL SUMS APPROPRIATED FOR THE VARIOUS BRANCHES OF EXPENDITURE IN THE PUBLIC SERVICE SHALL BE APPLIED SOLELY TO THE OBJECTS FOR WHICH THEY ARE RESPECTIVELY MADE, AND FOR NO OTHERS.' SUCH OVERCHARGES AS MAY HAVE BEEN MADE UNDER THE APPROPRIATIONS FOR ONE FISCAL YEAR AND WHICH HAVE RESULTED IN AUGMENTING APPROPRIATIONS OF OTHER FISCAL YEARS ARE NOW FOR CONSIDERATION OF THIS OFFICE LOOKING TO AN ADJUSTMENT CHARGING THE LATTER WITH THE AMOUNTS OF SUCH UNDERCHARGES AND CREDITING THE FORMER WITH THE AMOUNTS OF THE OVERCHARGES.

IT WOULD APPEAR PRACTICABLE TO FORMULATE SOME PLAN WHEREBY THE CHARGES FOR THE SERVICES RENDERED BY THE FEDERAL RESERVE BOARD MIGHT BE BILLED AFTER SUCH SERVICES ARE PERFORMED, MONTHLY OR AT OTHER INTERVALS, ON THE BASIS OF THE ACTUAL COST OF SUCH SERVICES, DETERMINED AS ACCURATELY AS MAY BE POSSIBLE UNDER THE CIRCUMSTANCES, AND WITH THAT END IN VIEW A FURTHER SUBMISSION IS INVITED OF THE DETAILS OF ANY PLAN THOUGHT TO MEET THE REQUIREMENTS OF LAW HEREIN OUTLINED.

IN YOUR LETTER OF OCTOBER 20, 1924, YOU STATE:

A NEW ARRANGEMENT WAS MADE FOR THE FISCAL YEAR BEGINNING JULY 1, 1923, UNDER WHICH THE SUM OF $4,700 PER MONTH WAS TO BE PAID, CHARGEABLE TO APPROPRIATIONS AS FOLLOWS:

CHART EXPENSES OF LOANS, ACT OF SEPTEMBER 24, 1917, AS AMENDED AND EXTENDED -------------------------------------------------- $4,390.00 PUBLIC DEBT SERVICE, 1924 ---------------------------------- 139.50 CONTINGENT EXPENSES, PUBLIC MONEYS, 1924 ------------------- 170.50

4,700.00

IT WAS INTENDED THAT THE NEW MONTHLY RATE WOULD BE SUFFICIENT TO MAKE UP THE DEFICIENCY FOR THE NINE MONTHS ENDED JUNE 30, 1923. DURING THE YEAR ENDED JUNE 30, 1924, THE AMOUNT OF BUSINESS TRANSACTED OVER THE LEASED- WIRE SYSTEM FELL OFF AT A GREAT RATE, PRINCIPALLY ON ACCOUNT OF THERE BEING FEW NEW ISSUES MADE DURING THAT YEAR, SO THAT THE PAYMENTS AMOUNTED TO $30,419.83 MORE THAN WOULD HAVE BEEN PAID ON THE BASIS OF THE ACTUAL NUMBER OF WORDS SENT AT THE ACTUAL COST PER WORD. THIS OVERPAYMENT NOT ONLY WIPED OUT THE UNDERPAYMENT UNDER THE PRECEDING ARRANGEMENT, BUT LEFT A NET OVERPAYMENT OF $9,616.32 ON JUNE 30, 1924. TAKING INTO CONSIDERATION THE OVERPAYMENT AND THE AMOUNT OF BUSINESS AS DETERMINED BY THE RECORD OF THE PAST YEAR, THE NEW RATE OF $1,700 PER MONTH WAS ESTABLISHED, CHARGEABLE TO APPROPRIATIONS AS FOLLOWS:

CHART EXPENSES OF LOANS, ACT OF SEPTEMBER 24, 1917, AS AMENDED AND

EXTENDED ------------------------------------------------ $1,365.00 PUBLIC DEBT SERVICE, 1925 ---------------------------------- 139.50 CONTINGENT EXPENSES, PUBLIC MONEYS, 1925 ------------------- 170.50 MISCELLANEOUS EXPENSES, FEDERAL FARM LOAN BOARD (SPECIAL

FUND), 1925 --------------------------------------------- 25.00

1,700.00

THE MONTHLY PAYMENTS CHARGEABLE TO "PUBLIC DEBT SERVICE" AND "CONTINGENT EXPENSES, PUBLIC MONEYS," ARE THE SAME UNDER ALL THREE ARRANGEMENTS, THE AMOUNT OF BUSINESS CHARGEABLE TO EACH APPROPRIATION HAVING BEEN PRACTICALLY THE SAME. THE LAST ARRANGEMENT PROVIDES FOR A PAYMENT OF $25 FROM THE FARM LOAN BOARD'S APPROPRIATION, AS THE BOARD IS NOW USING THE LEASED WIRE IN THE TRANSACTION OF ITS BUSINESS.

THE GREAT VARIATION HAS BEEN IN THE APPROPRIATION "EXPENSES OF LOANS, ACT OF SEPTEMBER 24, 1917, AS AMENDED AND EXTENDED," BECAUSE THERE HAVE BEEN WIDE FLUCTUATIONS IN THE AMOUNT OF BUSINESS CHARGEABLE TO THAT APPROPRIATION. AS THAT APPROPRIATION IS AN INDEFINITE APPROPRIATION, NOT PERTAINING TO ANY FISCAL YEAR, THE OBJECTIONS RAISED BY YOU THAT THE AMOUNT OVERPAID IN ONE FISCAL YEAR MAY NOT BE RECOUPED BY REDUCTION IN THE ESTIMATED RATE IN THE SUCCEEDING YEAR, BECAUSE SUCH ACTION IS CONTRARY TO THE PROVISIONS OF SECTION 3678, REVISED STATUTES, DOES NOT APPEAR TO BE IN POINT. AN ADJUSTMENT OF APPROPRIATIONS AS SUGGESTED IN YOUR LETTER WOULD SIMPLY RESULT IN TRANSFERRING MONEY OUT OF THE APPROPRIATION AND PAYING IT BACK INTO THE SAME APPROPRIATION.

THE FORM OF THE AGREEMENT BETWEEN THE DEPARTMENT AND THE FEDERAL RESERVE BOARD SEEMS TO BE THE MOST EQUITABLE IN VIEW OF ALL THE CIRCUMSTANCES AS DETAILED HEREIN. FOR THE REASONS GIVEN, AN ATTEMPT TO MAKE PAYMENT ON THE BASIS OF THE ACTUAL NUMBER OF WORDS SENT AT THE ACTUAL COST PER WORD WOULD RESULT IN MUCH DELAY AND A LARGE AMOUNT OF CLERICAL WORK, AND WOULD BE OBJECTIONABLE TO THE FEDERAL RESERVE BOARD. IT IS NOT DESIRED TO ENTER INTO AN ARRANGEMENT FOR PAYING AN ARBITRARY AMOUNT PER ANNUM FOR USE OF THE LEASED-WIRE SYSTEM, BUT THE DEPARTMENT HAS ATTEMPTED TO MAKE AN ARRANGEMENT WHEREBY THE AMOUNT OF THE MONTHLY PAYMENT SHALL BE ADJUSTED FROM TIME TO TIME IN ACCORDANCE WITH THE VARIATIONS IN THE BUSINESS. THE ADJUSTMENT IS ALL MADE IN THE INDEFINITE APPROPRIATION, WHICH DOES NOT PERTAIN TO ANY FISCAL YEAR, IT WOULD SEEM THAT THE PRESENT ARRANGEMENT COULD BE CONTINUED WITHOUT DOING ANY VIOLENCE TO GOOD ACCOUNTING PRACTICE.

WHILE THE ARRANGEMENT AS NOW EXPLAINED MAY NOT BE IN CONTRAVENTION OF THE PROVISIONS OF SECTION 3678, REVISED STATUTES, NEVERTHELESS IT APPEARS TO INVOLVE A PAYMENT IN ADVANCE OF OR IN EXCESS OF SERVICES RENDERED AND THEREFORE IS PROHIBITED BY THE PROVISIONS OF SECTION 3468, REVISED STATUTES.

ACCORDINGLY, NOTWITHSTANDING THE MATTERS SUBMITTED, I HAVE NO ALTERNATIVE BUT TO ADVISE THAT ANY PLAN OF MAKING THE PAYMENTS ON OTHER THAN THE BASIS OF THE ACTUAL COST OF THE SERVICE FURNISHED, DETERMINED AFTER THE SERVICE IS RENDERED AND IN ADVANCE OF SUCH PAYMENTS, IS NOT AUTHORIZED IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY THEREFOR.