B-34706, B-34570, JULY 3, 1945, 25 COMP. GEN. 7

B-34570,B-34706: Jul 3, 1945

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REQUIRING AN AUDIT BY THE GENERAL ACCOUNTING OFFICE OF THE FINANCIAL TRANSACTIONS OF "ALL GOVERNMENT CORPORATIONS" ARE APPLICABLE NOT ONLY TO WHOLLY-OWNED GOVERNMENT CORPORATIONS BUT. 1945: I HAVE A LETTER OF JUNE 19. IN WHICH REFERENCE IS MADE TO THE GEORGE ACT. THE QUESTION IS RAISED WHETHER THE ACT IS APPLICABLE TO MIXED-OWNERSHIP GOVERNMENT CORPORATIONS AS DISTINGUISHED FROM WHOLLY-OWNED GOVERNMENT CORPORATIONS. AN AUTHORITATIVE OPINION IS SAID TO BE PARTICULARLY DESIRABLE IN VIEW OF THE EFFECT OF THAT QUESTION UPON THE CONTINUANCE OF THE PRIVATE AUDIT OF THE FDIC TRANSACTIONS FOR THE FISCAL YEAR 1945. THE PERTINENT LANGUAGE OF THE ACT CITED IS FOUND IN THE FIRST LINES OF SECTION 5 (A.

B-34706, B-34570, JULY 3, 1945, 25 COMP. GEN. 7

GOVERNMENT CORPORATIONS - G.A.O. AUDIT OF FINANCIAL TRANSACTIONS OF MIXED -OWNERSHIP CORPORATIONS THE PROVISIONS OF SECTION 5 (A) OF THE ACT OF FEBRUARY 24, 1945, REQUIRING AN AUDIT BY THE GENERAL ACCOUNTING OFFICE OF THE FINANCIAL TRANSACTIONS OF "ALL GOVERNMENT CORPORATIONS" ARE APPLICABLE NOT ONLY TO WHOLLY-OWNED GOVERNMENT CORPORATIONS BUT, ALSO, TO MIXED-OWNERSHIP CORPORATIONS SUCH AS THE FEDERAL DEPOSIT INSURANCE CORPORATION.

COMPTROLLER GENERAL WARREN TO THE CHAIRMAN, FEDERAL DEPOSIT INSURANCE CORPORATION, JULY 3, 1945:

I HAVE A LETTER OF JUNE 19, 1945, SIGNED BY YOUR GENERAL COUNSEL, IN WHICH REFERENCE IS MADE TO THE GEORGE ACT, PUBLIC LAW 4, APPROVED FEBRUARY 24, 1945, AND THE QUESTION IS RAISED WHETHER THE ACT IS APPLICABLE TO MIXED-OWNERSHIP GOVERNMENT CORPORATIONS AS DISTINGUISHED FROM WHOLLY-OWNED GOVERNMENT CORPORATIONS. THE LETTER INDICATES THAT A CERTAIN DOUBT UPON THE QUESTION HAS ARISEN BECAUSE OF THE DIVERSE VIEWS EXPRESSED DURING THE COURSE OF THE CONGRESSIONAL DEBATES, AND AN AUTHORITATIVE OPINION IS SAID TO BE PARTICULARLY DESIRABLE IN VIEW OF THE EFFECT OF THAT QUESTION UPON THE CONTINUANCE OF THE PRIVATE AUDIT OF THE FDIC TRANSACTIONS FOR THE FISCAL YEAR 1945, THE WORK UPON WHICH, BEGUN SOMETIME AGO, HAS BEEN SUSPENDED FOR THE TIME BEING.

THE PERTINENT LANGUAGE OF THE ACT CITED IS FOUND IN THE FIRST LINES OF SECTION 5 (A,) 59 STAT. 6, WHICH READ:

THE FINANCIAL TRANSACTIONS OF ALL GOVERNMENT CORPORATIONS SHALL BE AUDITED BY THE GENERAL ACCOUNTING OFFICE * * * THERE IS NOT SUGGESTED ANY DOUBT BUT THAT THE FEDERAL DEPOSIT INSURANCE CORPORATION IS A GOVERNMENT CORPORATION--- AND THAT IT WOULD APPEAR TO BE BEYOND QUESTION IN VIEW OF THE REPORT OF THE JOINT COMMITTEE ON REDUCTION OF NONESSENTIAL FEDERAL EXPENDITURES (1944, SENATE DOCUMENT NO. 227, 78TH CONGRESS) AND OF THE OPINIONS IN SMITH V. KANSAS CITY TITLE AND TRUST COMPANY, 255 U.S. 180, 208-213; FEDERAL LAND BANK V. PRIDDY, 295 U.S. 229; DOHERTY V. UNITED STATES, 94 F.2D 495. WITH THAT PREMISE, THE UNCOMPROMISING GENERALITY OF THE STATUTE'S TERMS,"ALL GOVERNMENT CORPORATIONS," MIGHT BE THOUGHT TO LEAVE NO ROOM FOR DOUBT OR FURTHER INQUIRY. BUT, AS YOU INDICATE, THERE WAS RAISED IN THE DEBATES A QUESTION AS TO THE MIXED-OWNERSHIP GROUP OF GOVERNMENT CORPORATIONS; HENCE, IT IS THOUGHT WELL TO REVIEW THE LEGISLATIVE HISTORY.

I BELIEVE THE DOUBTS AND DIVERSITY OF VIEWS TO WHICH YOUR GENERAL COUNSEL REFERS MAY BE EXPLAINED BY THE ERROR IN THE LANGUAGE OF THE STATUTORY PROVISION AS IT APPEARED IN THE CONGRESSIONAL RECORD AT THE TIME OF ITS INTRODUCTION. IT WILL BE RECALLED THAT THE SECTION FROM WHICH THE ABOVE- QUOTED LANGUAGE IS TAKEN ORIGINATED IN AN AMENDMENT PROPOSED ON THE FLOOR OF THE SENATE TO THE GEORGE BILL, S. 375. AS APPEARING AT PAGE 714, RECORD OF FEBRUARY 1, 1945 (1SEMI-MO. ED ,) THE CORRESPONDING LANGUAGE READS:

THE FINANCIAL TRANSACTIONS OF WHOLLY-OWNED GOVERNMENT CORPORATIONS * * * . HOWEVER, THE BILL WHICH ACTUALLY WAS CONSIDERED AND PASSED BY THE SENATE USES THE LANGUAGE "OF ALL GOVERNMENT CORPORATIONS.' NO CHANGE WAS MADE BY THE HOUSE COMMITTEE, OR BY THE HOUSE OF REPRESENTATIVES, AND THAT IS THE LANGUAGE OF THE LAW AS APPROVED. I AM INFORMED THAT A CORRECTION HAS BEEN MADE IN THE CONGRESSIONAL RECORD AND WILL BE REFLECTED IN THE PERMANENT VOLUME 91 AT PAGE 687.

REFERENCE TO THE DEBATE REPORTED IN THE CONGRESSIONAL RECORD FOR FEBRUARY 1 WILL AFFIRM THAT THERE WAS NO DOUBT IN THE SENATE AS TO THE LEGISLATION WHICH ACTUALLY WAS CONSIDERED AND ADOPTED ON THAT DATE. THE SPONSOR OF THE AMENDMENT, SENATOR BYRD, LISTED BY NAME THE FIFTY SIX GOVERNMENT CORPORATIONS WHICH WERE EXPECTED TO BE COVERED BY THE AUDIT REQUIRED BY THE AMENDMENT AND INCLUDED THE FEDERAL DEPOSIT INSURANCE CORPORATION, AS WELL AS A NUMBER OF OTHER CORPORATIONS OF THE MIXED- OWNERSHIP GROUP (PAGE 715.) THEREAFTER, IT WAS OBSERVED AT LEAST TWICE THAT ALL THE CORPORATIONS WERE TO BE COVERED BY THE ACT AND THE SAME QUESTION WAS RAISED, JUST BEFORE THE VOTE, BY SENATOR MCKELLAR, WHO ASKED,"DOES THE SENATOR'S AMENDMENT REQUIRE ALL CORPORATIONS OF THE GOVERNMENT TO BE AUDITED? " HE WAS ANSWERED BY SENATOR BYRD,"YES; JUST AS OTHER AGENCIES OF THE GOVERNMENT ARE AUDITED.'

AFTER ITS APPROVAL BY THE SENATE, THE BILL (INCLUDING THE LANGUAGE "ALL GOVERNMENT ORPORATIONS") WAS INTRODUCED IN THE HOUSE, REFERRED TO A COMMITTEE, AND RETURNED TO THE HOUSE WITH A COMMITTEE REPORT WHICH AT LEAST TWICE REITERATES THAT ALL GOVERNMENT CORPORATIONS ARE TO BE AUDITED AND CONTAINS NO HINT THAT THE MIXED-OWNERSHIP GROUP ARE NOT INCLUDED ( HOUSE REP. NO. 60, 79TH CONGRESS.) ON THE FLOOR (IN COMMITTEE OF THE WHOLE), IN ANSWER TO A SPECIFIC QUESTION, THE VIEW DEFINITELY WAS INDICATED BY THE MEMBER IN CHARGE OF THE BILL THAT THE AUDIT PROVISIONS APPLIED TO THE CORPORATIONS WHOLLY OWNED BY THE UNITED STATES, BUT IT WILL BE NOTED (PAGE 1180, CONGRESSIONAL RECORD FOR FEBRUARY 15, 1945) THAT SUCH CONCLUSION WAS STATED IN ANSWER TO A QUESTION WHICH MISQUOTED THE LANGUAGE OF THE BILL THEN UNDER CONSIDERATION. UPON THE FOLLOWING DAY, AN AMENDMENT WAS DISCUSSED TO MAKE THE PROVISION READ:

GOVERNMENT OWNED OR CONTROLLED CORPORATIONS. WHILE THE AMENDMENT FINALLY WAS RULED OUT ON A POINT OF ORDER (PAGE 1220,) ITS EFFECT IS NOT CLEAR SINCE THERE WAS A MISUNDERSTANDING WHETHER THE RESULT WOULD BE TO EXTEND OR TO LIMIT THE SCOPE OF THE BILL. THUS, AS SHOWN ON PAGE 1220, THE FEDERAL DEPOSIT INSURANCE CORPORATION WAS REFERRED TO BY NAME AND WAS SAID TO HAVE BEEN BROUGHT UNDER THE AUDIT OF THE GENERAL ACCOUNTING OFFICE. UPON THE FOLLOWING PAGE OF THE RECORD APPEARS A LETTER OF THE SAME DAY FROM THIS OFFICE LISTING THE ENTIRE GROUP OF FIFTY-SIX CORPORATIONS, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION, WHICH THIS OFFICE WOULD FEEL CALLED UPON TO AUDIT UNDER THE LANGUAGE "ALL GOVERNMENT CORPORATIONS," IF THE BILL WERE ENACTED WITHOUT CHANGE. IT IS TRUE, HOWEVER, THAT (IF THE DEBATE WAS CORRECTLY REPORTED) THAT LETTER WAS NOT FULLY DESCRIBED AT THE TIME AND IT DID NOT, OF COURSE, ACTUALLY APPEAR IN THE RECORD UNTIL AFTER THE VOTE HAD BEEN TAKEN.

I BELIEVE THAT THE REFERENCES NOTED IN CONNECTION WITH THE DEBATES IN THE HOUSE WHERE SOME DOUBT OR LIMIT WAS EXPRESSED AS TO THE CORPORATIONS TO BE COVERED BY THE BILL CAN BE EXPLAINED BY THE ERROR ABOVE NOTED IN THE PRINT OF THE CONGRESSIONAL RECORD WHICH FIRST PURPORTED TO CONTAIN THE LANGUAGE OF THE BILL AS INTRODUCED AND PASSED IN THE SENATE. IT WAS IN THE EFFORT TO ELIMINATE ANY POSSIBLE DOUBT THAT THE LETTER FROM THIS OFFICE NOW APPEARING ON PAGE 1221 OF THE CONGRESSIONAL RECORD SPECIFICALLY LISTED THE CORPORATIONS, INCLUDING THE MIXED-OWNERSHIP GROUP, WHICH THE BILL WAS UNDERSTOOD TO COVER. AFTER THAT LETTER APPEARED, THERE REMAINED, OF COURSE, AMPLE TIME TO CORRECT THE BILL PRIOR TO ITS ENROLLMENT THREE DAYS LATER (1RECORD, PAGE 1254). HOWEVER, AS ENROLLED AND APPROVED, THE LAW READS,"ALL GOVERNMENT CORPORATIONS," AND IN VIEW OF THE FOREGOING, I FEEL NOT ONLY JUSTIFIED BUT REQUIRED TO INTERPRET THE LANGUAGE AS MEANING EXACTLY WHAT IT SAYS, WITHOUT THE INFERENCE OF A LIMITATION WHICH THE MEMBERSHIP OF NEITHER HOUSE OF CONGRESS EITHER EXPRESSED OR IMPLIED.

ALSO, IT IS PERTINENT TO OBSERVE THAT THE IDENTICAL LANGUAGE "ALL GOVERNMENT CORPORATIONS" WAS USED SUBSEQUENTLY BY THE CONGRESS IN PROVIDING CERTAIN ADMINISTRATIVE PROVISIONS TO FACILITATE THE AUDIT REQUIRED. SEE PUBLIC LAW 40, APPROVED APRIL 25, 1945, 59 STAT. 81, AND HOUSE REPORT NO. 221 THEREON. FURTHER, THE CONCLUSION AS ABOVE STATED HAS BEEN REITERATED IN A NUMBER OF LETTERS AND REPORTS ON THE CURRENT BYRD- BUTLER BILL, S. 469, AND ITS COMPANION BILLS IN THE HOUSE OF REPRESENTATIVES, H.R. 2051 AND H.R. 2177.

ACCORDINGLY, IT IS MY VIEW THAT THE LAW REQUIRES AN AUDIT TO BE MADE BY THE GENERAL ACCOUNTING OFFICE OF ALL TRUE GOVERNMENT CORPORATIONS, INCLUDING THE MIXED-OWNERSHIP GROUP OF WHICH THE FEDERAL DEPOSIT INSURANCE CORPORATION IS ONE, AND SUCH AN AUDIT WILL BE UNDERTAKEN.

I DO NOT UNDERSTAND YOUR LETTER TO CONTAIN A REQUEST FOR A DECISION UPON THE CONTINUANCE OF THE PRIVATE AUDIT WHICH HAS BEEN UNDERTAKEN, BUT I ASSUME YOU ARE FAMILIAR WITH THE LANGUAGE OF PUBLIC LAW 40, APPROVED APRIL 25, 1945, TO THE EFFECT THAT,

* * * UNLESS OTHERWISE EXPRESSLY PROVIDED BY LAW, NO FUNDS OF ANY GOVERNMENT CORPORATION SHALL BE USED TO PAY THE COST OF ANY PRIVATE AUDIT OF THE FINANCIAL RECORDS OF THE OFFICES OF SUCH CORPORATION EXCEPT THE COST OF SUCH AUDITS CONTRACTED FOR AND UNDERTAKEN PRIOR TO THE DATE OF APPROVAL OF THIS ACT.