B-130151, JUL. 1, 1958

B-130151: Jul 1, 1958

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THE REASONS FOR REQUESTING RECONSIDERATION ARE BASED ON THE FOLLOWING POINTS: 1. THE PROPOSED PROCEDURE IS INCONSISTENT WITH THE CONGRESSIONAL INTENT TO REVIEW RESTORATIONS PROPOSED BY AN AGENCY HEAD BEFORE THE BALANCE TO BE RESTORED BECOMES AVAILABLE FOR DISBURSEMENT. 2. AUTHORIZING RESTORATIONS IS MANDATORY WHEN SUCH RESTORATION IS NEEDED TO ENABLE A DISBURSEMENT OR ADJUSTMENT. 3. PROVIDED THAT SUCH DEFICIENCY IS NOT IN EXCESS OF THE PREVIOUSLY WITHDRAWN UNOBLIGATED BALANCE. THE REASON FOR THIS RECOMMENDATION WAS TO ACCOMPLISH THE PURPOSE OF THE ACT WHICH WAS TO FACILITATE THE PROMPT PAYMENT OF THE GOVERNMENT'S OBLIGATIONS AND PREVENT NEEDLESS PAPER WORK. RESPONSIBLE OFFICIALS OF EACH AGENCY HAVE THE RESPONSIBILITY TO DETERMINE AND CERTIFY AS TO THE OBLIGATED AND UNOBLIGATED AMOUNTS UNDER THEIR JURISDICTION AND TO DETERMINE THE AMOUNTS TO BE WITHDRAWN OR TO BE RESTORED.

B-130151, JUL. 1, 1958

TO THE SECRETARY OF THE TREASURY:

LETTER OF APRIL 18, 1958, FROM THE ACTING SECRETARY REQUESTS THAT WE RECONSIDER PROPOSED AMENDMENTS TO TITLE 7 OF THE GENERAL ACCOUNTING OFFICE MANUAL, SPECIFICALLY 7 GAO 2075.20 (C) AND 7 GAO 2075.30, WHICH WOULD ENCOURAGE AGENCIES TO DEFER RESTORATION ACTION UNTIL THE END OF THE FISCAL YEAR EVEN THOUGH FAILURE TO RESTORE CURRENTLY WOULD RESULT IN OVERDRAWING THE APPROPRIATION ACCOUNT BY DISBURSEMENT DURING THE FISCAL YEAR WITHIN THE LIMIT OF THE AVAILABLE UNOBLIGATED BALANCE.

THE REASONS FOR REQUESTING RECONSIDERATION ARE BASED ON THE FOLLOWING POINTS:

1. THE PROPOSED PROCEDURE IS INCONSISTENT WITH THE CONGRESSIONAL INTENT TO REVIEW RESTORATIONS PROPOSED BY AN AGENCY HEAD BEFORE THE BALANCE TO BE RESTORED BECOMES AVAILABLE FOR DISBURSEMENT.

2. THE TREASURY DEPARTMENT HAS SERIOUS DOUBTS AS TO THE PROPRIETY OF A PROCEDURE WHICH PERMITS DISBURSEMENTS TO EXCEED THE BALANCE AVAILABLE FOR DISBURSEMENT IN AN APPROPRIATION ACCOUNT AS IT FEELS THAT THE PROVISO IN SUBSECTION (A) (2) OF PUBLIC LAW 798, APPROVED JULY 25, 1956, 70 STAT. 648, AUTHORIZING RESTORATIONS IS MANDATORY WHEN SUCH RESTORATION IS NEEDED TO ENABLE A DISBURSEMENT OR ADJUSTMENT.

3. THE UNOBLIGATED BALANCES WITHDRAWN WHICH REVERTED TO THE GENERAL FUND OF THE TREASURY UNDER THE PROVISIONS OF PUBLIC LAW 798 MAY THEREAFTER BE WITHDRAWN ONLY PURSUANT TO AN APPROPRIATION SINCE THE CONSTITUTION PROVIDES THAT NO MONEY SHALL BE DRAWN FROM THE TREASURY BUT IN CONSEQUENCE OF APPROPRIATIONS MADE BY LAW.

THE PROPOSED PROCEDURE IN QUESTION RECOMMENDS TO THE HEAD OF THE AGENCIES CONCERNED THAT THE PROMPT PAYMENT OF BILLS DUE FOR OBLIGATIONS LEGALLY INCURRED SHOULD NOT BE POSTPONED FOR THE REASON THAT A DEFICIENCY MAY OCCUR IN THE APPROPRIATION ACCOUNT MAINTAINED FOR OBLIGATED BALANCES, PROVIDED THAT SUCH DEFICIENCY IS NOT IN EXCESS OF THE PREVIOUSLY WITHDRAWN UNOBLIGATED BALANCE. THE REASON FOR THIS RECOMMENDATION WAS TO ACCOMPLISH THE PURPOSE OF THE ACT WHICH WAS TO FACILITATE THE PROMPT PAYMENT OF THE GOVERNMENT'S OBLIGATIONS AND PREVENT NEEDLESS PAPER WORK, WASTED TIME AND EFFORT IN THE AGENCY, THE TREASURY DEPARTMENT, THE BUREAU OF THE BUDGET, THE GENERAL ACCOUNTING OFFICE, AND THE CONGRESS.

THE TREASURY DEPARTMENT'S CONCERN REGARDING THE PROPRIETY OF A PROCEDURE WHICH PERMITS DISBURSEMENTS TO EXCEED THE "BALANCE AVAILABLE FOR DISBURSEMENT IN AN APPROPRIATION ACCOUNT" NO DOUBT STEMS FROM THE PHILOSOPHY THAT BALANCES IDENTIFIED IN THE TREASURY DEPARTMENT WITH APPROPRIATION ACTION BY CONGRESS REPRESENT THE CONTROL POINT OF AVAILABILITY FOR AN AGENCY TO LIQUIDATE LEGALLY INCURRED OBLIGATIONS. BASED ON THE PROVISIONS OF PUBLIC LAW 798, REFERRED TO ABOVE, AND SECTION 1311 OF PUBLIC LAW 663, APPROVED AUGUST 26, 1954, 68 STAT. 830, RESPONSIBLE OFFICIALS OF EACH AGENCY HAVE THE RESPONSIBILITY TO DETERMINE AND CERTIFY AS TO THE OBLIGATED AND UNOBLIGATED AMOUNTS UNDER THEIR JURISDICTION AND TO DETERMINE THE AMOUNTS TO BE WITHDRAWN OR TO BE RESTORED. THEIR DETERMINATIONS STAND UNLESS THE GENERAL ACCOUNTING OFFICE IN CONNECTION WITH ITS AUDIT RESPONSIBILITIES DETERMINES THAT ADJUSTMENTS ARE NECESSARY.

WE CONCEDE THAT A STRICT LEGAL INTERPRETATION OF SECTION 1 (A) (2) OF PUBLIC LAW 798 WOULD REQUIRE THAT FUNDS BE RESTORED PRIOR TO MAKING EACH DISBURSEMENT WHEN SUCH RESTORATION ACTION WAS DETERMINED NECESSARY BY THE HEAD OF THE AGENCY CONCERNED. HOWEVER, IT WAS FELT AT THE TIME THE SUBSECTION WAS BEING CONSIDERED THAT THE AUTHORITY TO MAKE RESTORATIONS WOULD BE USED RARELY, IF AT ALL. SEE TESTIMONY OF A REPRESENTATIVE OF OUR OFFICE APPEARING AT PAGES 24 AND 33 OF THE HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS, HOUSE OF REPRESENTATIVES, ON H.R. 9593, WHICH BECAME PUBLIC LAW 798. THUS, ACTUALLY THERE WAS NOT CONTEMPLATED ANY CONGRESSIONAL REVIEW OF RESTORATIONS. HOWEVER, CONTRARY TO THE BELIEF THAT THERE WOULD BE NO NEED TO EXERCISE THE RESTORATION AUTHORITY, SUBSEQUENT EXPERIENCE SHOWS THAT NUMEROUS OCCASIONS HAVE ARISEN REQUIRING THE USE OF WITHDRAWN BALANCES AND IN MANY CASES INVOLVING RELATIVELY INSIGNIFICANT AMOUNTS. IT HARDLY CAN BE SAID THAT THE CONGRESS DESIRED TO REVIEW EACH AND EVERY ONE OF SUCH MINOR TRANSACTIONS. THE PROCESSING OF THESE DISBURSEMENTS WITHIN THE LIMIT OF THE AVAILABLE UNOBLIGATED BALANCE OF EACH APPROPRIATION AND THE PREPARATION OF ONE CONSOLIDATED RESTORATION DOCUMENT UNDER EACH APPROPRIATION AT THE END OF THE FISCAL YEAR WOULD EFFECT CONSIDERABLE SAVINGS AND, IN OUR OPINION, WOULD NOT DO ANY VIOLENCE TO THE SPIRIT OR INTENT OF PUBLIC LAW 798. THE PROPOSAL MERELY POSTPONES THE TIME WHEN THE BOOKKEEPING ENTRY TO RECORD THE RESTORATION ACTION IS MADE.

NEITHER WOULD THE PROPOSED PROCEDURE VIOLATE THE PROVISION IN THE CONSTITUTION THAT NO MONEY SHALL BE DRAWN FROM THE TREASURY BUT IN CONSEQUENCE OF APPROPRIATIONS MADE BY LAW. THE AUTHORITY TO RESTORE THESE BALANCES FROM THE GENERAL FUND OF THE TREASURY TO LIQUIDATE OBLIGATIONS AND EFFECT ADJUSTMENTS WHEN DETERMINED NECESSARY BY THE HEAD OF THE AGENCY CONCERNED CONTAINED IN PUBLIC LAW 798 IS AN "APPROPRIATION MADE BY LAW" AS THAT TERM IS USED IN THE CONSTITUTION. PROVISIONS OF LAW DIRECTING THE PAYMENT OF MONEYS OUT OF THE GENERAL FUND OF THE TREASURY HAVE LONG BEEN CONSTRUED TO CONSTITUTE APPROPRIATIONS. SEE 13 COMP. GEN. 80.

THE PROPOSED PROCEDURE WHEREBY THE PROMPT PAYMENT OF OBLIGATIONS IS NOT CONTINGENT ON UNNECESSARY PAPER WORK OF TRANSFERRING PREVIOUSLY WITHDRAWN UNOBLIGATED BALANCES BEFORE EACH DISBURSEMENT ACTION HAS THE WHOLEHEARTED SUPPORT OF THE STAFF MEMBERS OF THE HOUSE AND SENATE GOVERNMENT OPERATIONS COMMITTEES AND APPROPRIATIONS COMMITTEES.

IN VIEW OF THE ABOVE, WE HOPE THAT YOU WILL AGREE WITH THE PROPOSED PROCEDURES IN PROMOTING FURTHER SIMPLIFICATION AND IN REPRESENTING ANOTHER STEP IN OUR JOINT AND COOPERATIVE EFFORT TO IMPROVE ACCOUNTING AND EFFICIENCY IN THE OPERATIONS OF THE GOVERNMENT.