B-201377.OM, NOV 17, 1981

B-201377.OM, NOV 17, 1981

SUBJECT: REPORTING ON "UNVOUCHERED" EXPENDITURE AUDITS (CODE 905055; B-201377 O.M.)

ACTING DIRECTOR, AFMD:

THE GENERAL ACCOUNTING OFFICE ACT OF 1980 PROVIDES FOR GAO AUDITS OF "UNVOUCHERED" EXPENDITURES, BUT STATES THAT GAO MAY NOT REPORT ON SUCH AUDITS EXCEPT TO THE PRESIDENT, THE HEAD OF THE AGENCY MAKING THE EXPENDITURE, "OR, IN THE CASE OF UNRESOLVED DISCREPANCIES," TO SPECIFIED CONGRESSIONAL COMMITTEES. QUESTIONS HAVE BEEN RAISED CONCERNING THE SCOPE OF GAO'S REPORTING AUTHORITY IN VIEW OF THIS RESTRICTION. THE SPECIFIC QUESTIONS RAISED, AND OUR ANSWERS, ARE AS FOLLOWS:

1. CAN GAO REPORT TO CONGRESS ANY INFORMATION OBTAINED THROUGH ITS UNVOUCHERED EXPENDITURE AUDITS WHICH DOES NOT INVOLVE "UNRESOLVED DISCREPANCIES"? FOR EXAMPLE, COULD GAO REPORT IN A GENERAL WAY THE CATEGORIES OF EXPENDITURES BEING MADE SO LONG AS THE DETAILS OF INDIVIDUAL EXPENDITURES ARE NOT REVEALED?

ANSWER: NO; GAO CANNOT REPORT TO CONGRESSIONAL SOURCES IN ANY MANNER ANY INFORMATION OBTAINED THROUGH AN UNVOUCHERED EXPENDITURE AUDIT UNLESS THE INFORMATION DEALS WITH AN UNRESOLVED DISCREPANCY.

2. WHAT DOES THE LAW MEAN IN REFERRING TO "UNRESOLVED DISCREPANCIES" THAT CAN BE REPORTED?

ANSWER:BASICALLY, THE LAW PERMITS GAO TO REPORT TO THE SPECIFIED CONGRESSIONAL COMMITTEES DISCREPANCIES IDENTIFIED IN ITS UNVOUCHERED EXPENDITURE AUDITS THAT HAVE NOT BEEN RESOLVED, TO GAO'S SATISFACTION, WITH THE AGENCY. CERTAINLY THESE WOULD INCLUDE ANY DISAGREEMENT BETWEEN GAO AND THE AGENCY OVER THE FACTUAL OR LEGAL CORRECTNESS OF AN EXPENDITURE. BEYOND THIS, GAO MUST BE ACCORDED SOME DISCRETION IN DECIDING WHEN A DISCREPANCY HAS BEEN ADEQUATELY "RESOLVED," AND SUCH DECISIONS WILL HAVE TO BE MADE ON A CASE-BY-CASE BASIS.

ATTACHED IS A DETAILED ANALYSIS OF THE STATUTORY PROVISIONS, AS WELL AS THE QUESTIONS RAISED AND OUR ANSWERS.

ATTACHMENT

DIGEST:

SECTION 117(F) OF BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950, AS AMENDED, 31 U.S.C. 67(F), AUTHORIZES GAO AUDITS OF "UNVOUCHERED" EXPENDITURES, BUT PERMITS GAO TO REPORT ON SUCH AUDITS TO SPECIFIED CONGRESSIONAL COMMITTEES ONLY "IN THE CASE OF UNRESOLVED DISCREPANCIES." THIS PRECLUDES GAO FROM REPORTING TO COMMITTEE ANY INFORMATION OBTAINED FROM UNVOUCHERED EXPENDITURE AUDITS (INCLUDING GENERAL OR AGGREGATED INFORMATION) UNLESS IT RELATES TO "UNRESOLVED DISCREPANCIES." "UNRESOLVED DISCREPANCIES" INCLUDE ANY FACTUAL OR LEGAL DISAGREEMENT BETWEEN GAO AND AGENCY OR ANY OTHER MATTER THAT IS NOT RESOLVED TO GAO'S SATISFACTION.

DISCUSSION AND ANALYSIS:

SECTION 101 OF THE GENERAL ACCOUNTING OFFICE ACT OF 1980, PUBLIC LAW NO. 96-226 (APRIL 3, 1980), 84 STAT. 311, ADDED A NEW SUBSECTION 117(F) TO THE BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950, 31 U.S.C. SEC. 67(F), WHICH AUTHORIZES LIMITED GAO AUDITS OF CERTAIN SO-CALLED "UNVOUCHERED" EXPENDITURES AS FOLLOWS:

"(1) NOTWITHSTANDING ANY PROVISION OF LAW WHICH PERMITS AN EXPENDITURE TO BE ACCOUNTED FOR SOLELY ON THE APPROVAL, AUTHORIZATION, OR CERTIFICATE OF THE PRESIDENT OF THE UNITED STATES OR AN OFFICIAL OF AN EXECUTIVE AGENCY, THE COMPTROLLER GENERAL SHALL HAVE ACCESS TO SUCH BOOKS, DOCUMENTS, PAPERS, RECORDS, AND OTHER INFORMATION RELATING TO ANY SUCH EXPENDITURE AS MAY BE NECESSARY TO ENABLE HIM TO DETERMINE WHETHER THE EXPENDITURE WAS, IN FACT, ACTUALLY MADE AND WHETHER SUCH EXPENDITURE WAS AUTHORIZED BY LAW. ***" FN1

SECTION 117(F)(2) ADDRESSES GAO'S DISCLOSURE OF INFORMATION OBTAINED FROM THESE UNVOUCHERED EXPENDITURE AUDITS. IT PROVIDES IN PART THAT -

"*** NO OFFICER OR EMPLOYEE OF THE GENERAL ACCOUNTING OFFICE MAY RELEASE THE FINDINGS OF ITS AUDIT OF SUCH EXPENDITURE OR DISCLOSE ANY BOOKS, DOCUMENTS, PAPERS, RECORDS, OR OTHER INFORMATION CONCERNING SUCH EXPENDITURE TO ANYONE NOT AN OFFICER OR EMPLOYEE OF THE GENERAL ACCOUNTING OFFICE, EXCEPT TO THE PRESIDENT OR THE HEAD OF THE AGENCY CONCERNED OR, IN THE CASE OF UNRESOLVED DISCREPANCIES, TO THE COMMITTEE ON GOVERNMENTAL AFFAIRS OF THE SENATE, THE COMMITTEE ON GOVERNMENT OPERATIONS OF THE HOUSE OF REPRESENTATIVES AND TO THE COMMITTEES OF THE HOUSE AND THE SENATE HAVING LEGISLATIVE OR APPROPRIATIONS OVERSIGHT WITH RESPECT TO THE EXPENDITURE IN QUESTION."

PARAGRAPH 117(F)(2) DOES NOT LIMIT GAO'S REPORTING OF INFORMATION TO THE PRESIDENT OR THE HEAD OF THE AGENCY HAVING THE UNVOUCHERED ACCOUNT. BY CONTRAST, IT EXPRESSLY LIMITS OUR CONGRESSIONAL REPORTING TO "CASES OF UNRESOLVED DISCREPANCIES" AND, EVEN THEN, TO SPECIFIED CONGRESSIONAL COMMITTEES.

IT IS CLEAR THAT THE SEVERE LIMITATIONS ON OUR CONGRESSIONAL REPORTING UNDER THE EXPRESS TERMS OF THE LAW FULLY REFLECT THE CONGRESSIONAL INTENT. THE HOUSE GOVERNMENT OPERATIONS COMMITTEE REPORT ON ITS VERSION OF THE LEGISLATION STATES WITH REGARD TO THE UNVOUCHERED EXPENDITURE AUDITS:

"SINCE H.R. 24 WAS INTRODUCED EARLIER THIS YEAR, MANY DISCUSSIONS HAVE TAKEN PLACE WITH OFFICIALS FROM THE GAO AND OMB ABOUT THESE UNVOUCHERED EXPENDITURES. FROM THESE DISCUSSIONS IT WAS AGREED THAT THERE WAS A NEED TO ESTABLISH PROCEDURES TO GUARD AGAINST UNNECESSARY DISCLOSURE OF SENSITIVE INFORMATION ***. AS A RESULT, H.R. 24 WAS AMENDED TO INCLUDE THE PROVISION IN SECTION 101 WHICH PROHIBITS THE GAO FROM RELEASING INFORMATION IT OBTAINS FROM ITS AUDIT OF UNVOUCHERED EXPENDITURES TO ANYONE EXCEPT THE PRESIDENT OR THE HEAD OF THE AGENCY CONCERNED OR, IN THE CASE OF UNRESOLVED DISCREPANCIES, TO A DULY ESTABLISHED COMMITTEE OR SUBCOMMITTEE OF CONGRESS."

H.R.REP. NO. 96-425, AT 3-4 (1979).

THE SENATE COMMITTEE ON GOVERNMENTAL AFFAIRS REPORT ON ITS VERSION OF THE LEGISLATION CONFIRMS THE SAME INTENT. IN FACT, THE SENATE COMMITTEE ADDED LANGUAGE LIMITING THE NUMBER OF CONGRESSIONAL COMMITTEES THAT COULD RECEIVE REPORTS OF UNRESOLVED DISCREPANCIES. SEE S.REP. NO. 96-570, AT 3 (1980).

FINALLY, THE RESTRICTIONS ON CONGRESSIONAL REPORTING WERE RECOGNIZED DURING SENATE HEARINGS ON THE LEGISLATION. SEE HEARINGS BEFORE THE SUBCOMMITTEE ON ENERGY, NUCLEAR PROLIFERATION, AND FEDERAL SERVICES OF THE SENATE COMMITTEE ON GOVERNMENTAL AFFAIRS, ON S. 1878 AND S. 1879, 96TH CONG., 1ST SESS., WHICH CONTAIN THE FOLLOWING COLLOQUY AT PAGE 6:

"MR. STAATS. I MIGHT POINT OUT, WITH RESPECT TO THE UNVOUCHERED EXPENDITURES, THAT SECTION 101 OF S. 1878 REPRESENTS BASICALLY THE SAME PRINCIPLE THAT WAS ADOPTED LAST YEAR BY THE CONGRESS, HAVING GAO AUDIT THE UNVOUCHERED EXPENSES OF THE PRESIDENT AND THE VICE PRESIDENT AND THE MAINTENANCE EXPENDITURES INVOLVED WITH THE WHITE HOUSE. SO THE PRINCIPLE IS THE SAME. SHOULD POINT OUT THAT THIS DOES NOT PERMIT THE GAO TO TAKE EXCEPTION TO PAYMENTS. WE ARE NOT ALLOWED TO DIVULGE INFORMATION TO ANYONE OUTSIDE THE GAO, AND WE DO NOT REPORT TO THE COMMITTEES OF CONGRESS IF WE FIND PROBLEMS UNLESS WE CANNOT RESOLVE THEM WITH THE AGENCY. SO I BELIEVE THAT THE BILL THAT YOU HAVE INTRODUCED HERE PROVIDES ADEQUATE SAFEGUARDS WITH RESPECT TO CONFIDENTIALITY OF THESE EXPENDITURES.

"SENATOR GLENN. BUT WOULDN'T THE REPORTS BE AVAILABLE ON REQUEST TO THE APPROPRIATE CONGRESSIONAL COMMITTEES?

"MR. SOCOLAR. THE BILL PROHIBITS US FROM REPORTING TO A CONGRESSIONAL COMMITTEE EXCEPT IN THE CASE WHERE WE HAVE UNRESOLVABLE PROBLEMS WITH THE AGENCY. THE BILL LANGUAGE WAS DELIBERATELY DRAWN LIKE THAT.

"MR. STAATS. AND I THINK THAT IS NOT A BAD APPROACH TO IT BECAUSE IF THERE ARE PROBLEMS - WELL, THEN, WE WILL WANT TO GET THEM RESOLVED AND IT WOULD BE AT THAT POINT THAT WE WOULD BRING IT TO CONGRESS IF WE COULD NOT RESOLVE THEM."

IT IS THUS APPARENT FROM THE STATUTORY LANGUAGE AND LEGISLATIVE HISTORY THAT GAO CANNOT REPORT TO THE SPECIFIED CONGRESSIONAL COMMITTEES ANY INFORMATION OBTAINED THROUGH ITS UNVOUCHERED EXPENDITURE AUDITS UNLESS THAT INFORMATION RELATES TO "UNRESOLVED DISCREPANCIES." THEREFORE, GAO CANNOT REPORT GENERAL INFORMATION ABOUT UNVOUCHERED EXPENDITURES, EVEN ON AN AGGREGATE BASIS OR IN ANY OTHER MANNER THAT WOULD NOT REVEAL THE DETAILS OF PARTICULAR EXPENDITURES. NOT ONLY IS THIS TYPE OF REPORTING PRECLUDED BY THE STATUTORY LANGUAGE, BUT IT IS ALSO CLEAR THAT THE PURPOSE OF GAO UNVOUCHERED EXPENDITURE AUDITS IS NOT TO PROVIDE GENERAL INFORMATION. RATHER, THE AUDITS MERELY SERVE AS A LIMITED CHECK UPON THE EXECUTIVE'S USE OF UNVOUCHERED ACCOUNTS. THE ONLY PURPOSE OF THESE AUDITS IS TO ASCERTAIN WHETHER THE EXPENDITURES WERE ACTUALLY MADE FOR AUTHORIZED PURPOSES. SEE S.REP. NO. 96-570, AT PAGE 4.

AS NOTED ABOVE, GAO MAY REPORT TO THE SPECIFIED COMMITTEES "IN THE CASE OF UNRESOLVED DISCREPANCIES." THE TERM "UNRESOLVED DISCREPANCIES" IS NOT DEFINED IN THE LAW; NOR DO THE COMMITTEE REPORTS ELABORATE ON IT. NEVERTHELESS, THE BASIC PURPOSE AND CONTEXT OF THE STATUTE PROVIDES A GENERAL SENSE OF WHAT IS INTENDED. CONGRESS SOUGHT THROUGH THE PROVISION FOR LIMITED GAO AUDITS SOME ASSURANCE THAT UNVOUCHERED EXPENDITURE ACCOUNTS WERE NOT BEING ABUSED. THE REPORTING PROVISION THUS FOCUSES ON SITUATIONS IN WHICH THE ACCOUNTS ARE BEING ABUSED, I.E., WHERE "DISCREPANCIES" EXIST. BUT IT IS EVEN MORE RESTRICTIVE IN THAT ONLY THOSE "DISCREPANCIES" WHICH ARE "UNRESOLVED" MAY BE REPORTED.

IN THIS CONTEXT, THE BASIC MEANING OF THE REPORTING PROVISION IS AS STATED BY THE GAO WITNESSES IN THEIR TESTIMONY BEFORE THE SENATE - WE ARE TO REPORT ONLY WHERE WE HAVE PROBLEMS WITH AN AGENCY THAT CANNOT BE RESOLVED. THEREFORE, WE CAN REPORT ON ANY FACTUAL OR LEGAL ISSUE ABOUT AN EXPENDITURE ON WHICH WE DISAGREE WITH THE AGENCY. FOR EXAMPLE, IF WE BELIEVE THAT AN EXPENDITURE WAS UNAUTHORIZED BUT THE AGENCY DOES NOT CONCEDE THE POINT, OBVIOUSLY WE COULD REPORT THE MATTER.

THE REPORTING PROVISION NECESSARILY GRANTS GAO SOME DISCRETION IN DETERMINING WHEN A MATTER IS "UNRESOLVED." FOR EXAMPLE, THE MERE ACKNOWLEDGMENT BY AN AGENCY THAT A PARTICULAR EXPENDITURE WAS UNAUTHORIZED AND WOULD NOT BE MADE AGAIN MAY NOT BE SUFFICIENT TO RESOLVE THE MATTER FROM GAO'S VIEWPOINT. WE MIGHT INSIST THAT SOME ADDITIONAL ACTION (E.G., RESTITUTION) BE TAKEN. LIKEWISE A PARTICULAR TRANSACTION MIGHT BE SO EGREGIOUS (E.G., A CASE OF EMBEZZLEMENT FROM AN UNVOUCHERED ACCOUNT) THAT EVEN RESTITUTION MIGHT NOT BE SUFFICIENT TO RESOLVE THE DISCREPANCY IN GAO'S VIEW. IN ANY EVENT, IT WOULD NOT BE PRACTICAL TO ATTEMPT TO IDENTIFY IN THE ABSTRACT ALL POSSIBLE INSTANCES OF "UNRESOLVED DISCREPANCIES." WHETHER DISCREPANCIES HAVE BEEN SUFFICIENTLY RESOLVED MUST BE DETERMINED ON A CASE-BY-CASE BASIS.

FN1 THIS AUDIT AUTHORITY DOES NOT SUPERSEDE GAO'S EXISTING AUTHORITY TO AUDIT CERTAIN WHITE HOUSE "UNVOUCHERED" ACCOUNTS; NOR DOES IT AFFECT THE AUTHORITY OF THE DIRECTOR OF THE CENTRAL INTELLIGENCE AGENCY TO "CERTIFY" CERTAIN EXPENDITURES. SEE 31 U.S.C. SEC. 67(F)(1) (LAST SENTENCE) AND (F)(3)(A), RESPECTIVELY.