B-53575, JAN 16, 1946

B-53575: Jan 16, 1946

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THE SECRETARY OF WAR: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 29. AS FOLLOWS: "YOUR ATTENTION IS INVITED TO A NOTICE OF EXCEPTION RAISED BY THE AUDIT DIVISION OF THE GENERAL ACCOUNTING OFFICE ON D.O. PAYMENT WAS MADE FROM THE FOLLOWING APPROPRIATION: 210/11405 NG 15431 P 59-3059 A 1405-01. THE PROCEDURE IS CONTRARY TO THAT PROVIDED FOR IN GR-78. "DURING THE PERIOD PRECEDING THE DECLARATION OF WAR BY THE UNITED STATES IT WAS NECESSARY TO MINIMIZE OFFICE DETAIL IN THE INTEREST OF AVOIDING DETRIMENTAL DELAYS IN THE DELIVERY OF CRITICAL SUPPLIES AND TO THIS END A MUTUAL AGREEMENT WAS REACHED BETWEEN THE NATIONAL GUARD BUREAU AND ARMY AIR FORCES WHEREBY A MONEY CREDIT WAS ESTABLISHED BY THE NATIONAL GUARD BUREAU WITH THE ARMY AIR FORCES TO FINANCE THE COST OF SUPPLIES AND EQUIPMENT TO BE FURNISHED BY THE ARMY AIR FORCES TO THE NATIONAL GUARD ORGANIZATIONS ON INTER-AGENCY REQUISITION.

B-53575, JAN 16, 1946

PRECIS-UNAVAILABLE

THE HONORABLE, THE SECRETARY OF WAR:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 29, 1945, AS FOLLOWS:

"YOUR ATTENTION IS INVITED TO A NOTICE OF EXCEPTION RAISED BY THE AUDIT DIVISION OF THE GENERAL ACCOUNTING OFFICE ON D.O. VOUCHER 5658 SEPTEMBER 1941 ACCOUNTS OF F. E. COYNE IN THE AMOUNT OF THIRTEEN THOUSAND FIVE HUNDRED THIRTY DOLLARS AND ONE CENT ($13,530.01) ON CONTRACT W-535-AC- 19851 WITH THE SHARPSVILLE STEEL FABRICATORS, INCORPORATED.

"THE VOUCHER COVERED PAYMENT FOR CYLINDRICAL TANKS OF TWENTY FIVE THOUSAND (25,000) GALLON CAPACITY PURCHASED AT A COST OF ONE THOUSAND FORTY-SIX DOLLARS ($1,046.00) PER TANK FROM THE CITED CONTRACTOR. PAYMENT WAS MADE FROM THE FOLLOWING APPROPRIATION: 210/11405 NG 15431 P 59-3059 A 1405-01.

"ACCORDING TO THE NOTICE OF EXCEPTION, CREDIT HAS BEEN WITHHELD FROM THE DISBURSING OFFICER'S ACCOUNT FOR THE FOLLOWING REASON:

"'PARAGRAPH 2C, AR 35-860, CITED AS AUTHORITY, DOES NOT APPEAR TO AUTHORIZE THE REIMBURSEMENT TO ARMY AIR FORCES FOR SUPPLIES OR SERVICES FURNISHED BY THAT ORGANIZATION TO THE NATIONAL GUARD BY CHARGING NATIONAL GUARD FUNDS DIRECTLY WITH PURCHASES FOR ARMY AIR FORCES. IN ANY EVENT, THE PROCEDURE IS CONTRARY TO THAT PROVIDED FOR IN GR-78, REVISED, NOW COVERED BY GR-98. ADJUSTMENT SHOULD BE MADE OR THERE SHOULD BE FURNISHED AN ITEMIZATION SHOWING THAT THE AMOUNT CHARGED ON THE PRESENT VOUCHER REPRESENTS THE VALUE OF SUPPLIES OR SERVICED FURNISHED THE NATIONAL GUARD BY THE ARMY AIR FORCES.'

"DURING THE PERIOD PRECEDING THE DECLARATION OF WAR BY THE UNITED STATES IT WAS NECESSARY TO MINIMIZE OFFICE DETAIL IN THE INTEREST OF AVOIDING DETRIMENTAL DELAYS IN THE DELIVERY OF CRITICAL SUPPLIES AND TO THIS END A MUTUAL AGREEMENT WAS REACHED BETWEEN THE NATIONAL GUARD BUREAU AND ARMY AIR FORCES WHEREBY A MONEY CREDIT WAS ESTABLISHED BY THE NATIONAL GUARD BUREAU WITH THE ARMY AIR FORCES TO FINANCE THE COST OF SUPPLIES AND EQUIPMENT TO BE FURNISHED BY THE ARMY AIR FORCES TO THE NATIONAL GUARD ORGANIZATIONS ON INTER-AGENCY REQUISITION.

"SUPPLIES TO THE EXTENT OF THE MONEY CREDIT WERE FURNISHED TO THE NATIONAL GUARD, EITHER AS SHIPMENTS FROM ARMY AIR FORCES STOCK OR BY DIRECT PURCHASE FROM ARMY AIR FORCES FUNDS, AND IN ACCORDANCE WITH AGREEMENT, THE ENTIRE AMOUNT ALLOTED BY THE NATIONAL GUARD BUREAU TO ARMY AIR FORCES WAS OBLIGATED AT DIFFERENT TIMES IN THE FISCAL YEAR 1941 FOR ARMY AIR FORCES STOCK AND FUND REPLACEMENT.

"PROPERTY OBTAINED FOR THE NATIONAL GUARD, WHETHER PURCHASED OUT OF NATIONAL GUARD APPROPRIATIONS OR ISSUED IN KIND ORIGINALLY PURCHASED OUT OF OTHER MILITARY APPROPRIATIONS SUCH AS QUARTERMASTER, ORDNANCE, SIGNAL, ETC., REMAINED THE PROPERTY OF THE UNITED STATES. MOREOVER, IN VIEW OF THE FACT THAT ALL NATIONAL GUARD SUPPLIES AND EQUIPMENT, IRRESPECTIVE OF THEIR LOCATION, WERE BROUGHT INTO FEDERAL SERVICE UPON THE INDUCTION OF THE NATIONAL GUARD IT IS BELIEVED THAT SUCH PROPERTY CAN BE CONSIDERED AS HAVING LOST ITS IDENTITY AS NATIONAL GUARD PROPERTY AND ITS SUBSEQUENT USE OF THE ARMY AIR FORCES OR ANY OTHER BRANCH IS IN ACCORDANCE WITH LAW AND REGULATION.

"IN VIEW OF THE FACTS AS STATED HEREIN, IT APPEARS THAT AN APPROPRIATION ADJUSTMENT TRANSFERRING THE AMOUNT OF THE SUBJECT VOUCHER FROM ARMY AIR FORCE TO NATIONAL GUARD FUNDS, AS REQUESTED IN THE NOTICE OF EXCEPTION WOULD CLEARLY RESULT IN A DOUBLE CHARGE OF THE AMOUNT OF VOUCHER TO THE APPROPRIATION AFA 1942-45. THE ALTERNATIVE PROCEDURE, SET FORTH IN LAST SENTENCE OF THE NOTICE OF EXCEPTION OF FURNISHING AN ITEMIZATION TO SHOW THAT AMOUNTS CHARGED ON THE CITED VOUCHER REPRESENTED THE VALUE OF SUPPLIES OR SERVICES FURNISHED THE NATIONAL GUARD WOULD REQUIRE A COSTLY AUDIT OF MANY HUNDREDS OF TRANSACTIONS ON RECORDS NOW MORE THAN FOUR (4) YEARS OLD. THE TASK WOULD BE FURTHER COMPLICATED BY THE FACT THAT DURING THIS PERIOD A LARGE TURNOVER HAS OCCURRED IN PERSONNEL WHO WERE FAMILIAR WITH THE TRANSACTIONS.

"SINCE PROCUREMENT PROCEDURES OF THE ARMY AIR FORCES WERE CHANGED TO CONFORM TO GENERAL REGULATIONS NO. 98 AND IN THE ABSENCE OF ANY EVIDENCE OF FRAUD IN THIS CASE, YOUR OFFICE IS RESPECTFULLY REQUESTED TO REVIEW THE FACTS SET FORTH WITH A VIEW OF REMOVING THE EXCEPTION FROM THE DISBURSING OFFICER'S ACCOUNT."

IN THE AUDIT OF THE VOUCHER IN QUESTION, EXCEPTION WAS TAKEN FOR THE REASON THAT THE APPROPRIATION "NATIONAL GUARD, 1940-1941," DID NOT APPEAR TO BE AVAILABLE FOR THE PURCHASE OF CYLINDRICAL TANKS FOR DELIVERY TO ACTIVITIES OF THE REGULAR ARMY. IN RESPONSE TO A REPLY BY THE DISBURSING OFFICER, THE EXCEPTION WAS REVISED SUBSTANTIALLY AS QUOTED IN YOUR LETTER. WITH A REPLY TO THE REVISED EXCEPTION, THERE WAS SUBMITTED A FILE OF CORRESPONDENCE WHICH INDICATES THAT THERE HAS BEEN FOLLOWED FOR SEVERAL YEARS A PRACTICE DESCRIBED BY THE BUDGET AND FISCAL OFFICER, HEADQUARTERS, AIR TECHNICAL SERVICE COMMAND, IN LETTER OF APRIL 12, 1945, TO THE COMMANDING GENERAL, ARMY AIR FORCES, AS FOLLOWS:

"3. FOLLOWING IS A BRIEF STATEMENT AS TO MANNER IN WHICH FUNDS ALLOTED TO THE AAF FOR REPAIR OF NATIONAL GUARD EQUIPMENT WERE EXPENDED. THE ENTIRE AMOUNT ALLOTED WAS APPLIED TO ITEMS BEING PROCURED FOR AAF STOCK, AND A CORRESPONDING CREDIT WAS ESTABLISHED IN FAVOR OF THE NATIONAL GUARD. REQUISITIONS FOR SUPPLIES RECEIVED FROM NATIONAL GUARD ACTIVITIES WERE FILLED EITHER FROM AAF STOCK OR BY DIRECT PROCUREMENT FROM AAF FUNDS, AND WERE CHARGED AS OFF-SETS TO THE NATIONAL GUARD CREDIT ON THE BASIS OF SHIPPING TICKETS. THEREFORE, ALTHOUGH DIRECT PROCUREMENT FOR THE NATIONAL GUARD WERE NOT CHARGED TO THE NG APPROPRIATION, THE NG DID RECEIVE SUPPLIES AND SERVICES OF AN EQUIVALENT MONEY VALUE."

IN FIRST INDORSEMENT DATED APRIL 17, 1945, TO THE SAID LETTER OF APRIL 12, 1945, THE DEPUTY CHIEF, BUDGET AND FISCAL OFFICE, HEADQUARTERS, ARMY AIR FORCES, STATES THAT:

"THE PURPOSE OF THIS AGREEMENT AND ARRANGEMENT WAS TO AVOID DETRIMENTAL DELAYS IN DELIVERY AND A LARGE AMOUNT OF PAPER WORK, WHICH WOULD HAVE BEEN ENTAILED IF EACH INDIVIDUAL REQUISITION WERE TO BE FUNDED AND SETTLED SEPARATELY."

HE STATES FURTHER THAT TO COMPLY WITH THE ALTERNATIVE CHOICE INDICATED IN THE LAST SENTENCE OF THE NOTICE OF EXCEPTION WOULD NECESSITATE THE PREPARATION OF AN ELABORATE STATEMENT ITEMIZING ISSUES FROM ARMY AIR FORCES STOCK AND DIRECT PURCHASES FROM ARMY AIR FORCES FUNDS, AND RELATED VOUCHER DISBURSEMENTS FROM NATIONAL GUARD FUNDS FOR ARMY AIR FORCES STOCK REPLENISHMENT AND ARMY AIR FORCES FUND DEPLETIONS.

IN DECISION OF AUGUST 8, 1943, 14 COMP.GEN. 103, IT WAS STATED AT PAGE 105, WITH RESPECT TO A PRACTICE OF CHARGING THE WRONG APPROPRIATION ON A VOUCHER WITH THE INTENTION TO SECURE THEREAFTER AN ADJUSTMENT OF APPROPRIATIONS:

"THE ADMINISTRATIVE EXPEDIENCY AND/OR ADVANTAGES ALLUDED TO IN THE LETTER HAVE NOT BEEN FULLY DISCLOSED. WHATEVER BE THE UNDERLYING BASIS FOR THE PROCEDURE REFERRED TO, IT IS FUNDAMENTAL IN GOVERNMENTAL ACCOUNTING THAT VOUCHERS SUBMITTED IN SUPPORT OF DISBURSING OFFICERS' ACCOUNTS MUST SHOW THE ACTUAL APPROPRIATION OR APPROPRIATION PROPERLY CHARGEABLE WITH THE EXPENDITURE REPRESENTED BY THE VOUCHERS. IF THE WRONG APPROPRIATION HAS BEEN CHARGED ON A VOUCHER IT IS THE DUTY OF THIS OFFICE IN AUDITING ACCOUNTS, AS REQUIRED BY LAW, TO QUESTION THE EXPENDITURE AND REQUIRE A SATISFACTORY EXPLANATION OR ADJUSTMENT OF THE MATTER BEFORE CREDIT MAY BE ALLOWED THEREFORE IN THE DISBURSING OFFICERS' ACCOUNTS. WHILE THIS OFFICE MAY EFFECT ADJUSTMENTS BETWEEN APPROPRIATIONS, IN PARTICULAR CASES WHERE, UNDER A MISTAKE OF LAW OR FACT, A VOUCHER HAS BEEN CHARGED TO THE WRONG APPROPRIATION, AND IT IS CLEARLY APPARENT THAT ANOTHER APPROPRIATION IS AVAILABLE TO COVER THE OBLIGATION, THAT SHOULD NOT BE TAKEN AS A BASIS FOR AUTHORIZING OR JUSTIFYING AN ADMINISTRATIVE OFFICER DELIBERATELY CHARGING AN APPROPRIATION NOT AVAILABLE FOR THE PAYMENT OF A PARTICULAR EXPENSE IN THE FIRST INSTANCE, AND LATER EXPECT AN ADJUSTMENT THEREOF BY TRANSFER OF APPLICABLE APPROPRIATION. SUCH PRACTICE RESULTS IN THE RENDITION OF FALSE ACCOUNTS AND OBVIOUSLY SHOULD NOT BE INDULGED IN MERELY ON THE BASIS OF ALLEGED ADMINISTRATIVE EXPEDIENCIES. FURTHERMORE, THE RENDITION OF ACCOUNTS IN THE MANNER STATED IS IN CONTRAVENTION OF SECTION 3678, REVISED STATUTES, WHICH PROVIDES THAT ALL SUMS BE APPLIED SOLELY TO THE OBJECTS FOR WHICH THEY ARE RESPECTIVELY MADE, AND FOR NO OTHER."

WHILE IT IS STATED IN YOUR LETTER THAT A MONEY CREDIT WAS ESTABLISHED BY THE NATIONAL GUARD BUREAU WITH THE ARMY AIR FORCES TO MINIMIZE OFFICE DETAIL IN THE INTEREST OF AVOIDING DETRIMENTAL DELAYS IN THE DELIVERY OF CRITICAL SUPPLIES, IT IS OBVIOUS THAT THE PRACTICE HERE IN QUESTION WAS CONTRARY TO THE RULE ENUNCIATED IN THE AFOREMENTIONED DECISION OF THIS OFFICE AND IN CONTRAVENTION OF SECTION 3678, REVISED STATUTES. MOREOVER, IN VIEW OF THE DETAILED PROCEDURE PRESCRIBED IN ARMY REGULATIONS 35-860, DATED SEPTEMBER, 21, 1933, FOR THE PROCUREMENT OF SUPPLIES OR SERVICES BY ONE BRANCH OF THE WAR DEPARTMENT FROM ANOTHER, IT IS NOT READILY APPARENT HOW THE MATTER OR FURNISHING THE CHIEF OF FINANCE WITH THE COPIES OF SHIPPING TICKETS-- IN ORDER THAT SUCH OFFICER COULD HAVE HAD THE APPLICABLE PROCUREMENT AUTHORITIES PROPERLY DEBITED AND CREDITED, AS REQUIRED BY PARAGRAPH 3(B)2 OF THE REGULATIONS-- WOULD HAVE INCREASED OFFICE DETAIL TO THE EXTENT OF CAUSING DETRIMENTAL DELAYS IN THE DELIVERY OF CRITICAL SUPPLIES. FURTHERMORE, EVEN IF SOME ACCOUNTING EXPENSE WAS SAVED BY THE PROCEDURE HERE INVOLVED, SUCH SAVING IS FAR OUTWEIGHED BY THE IMPROPER PRACTICE OF HAVING THE GOVERNMENT CONTRACTS SUPPORTED BY STATEMENTS THAT APPARENTLY WERE KNOWN TO BE INCORRECT BY THE OFFICERS MAKING THEM. IN THIS CONNECTION THE FACE SHEET OF THE INSTANT CONTRACT BEARS THE STATEMENT THAT "THE SUPPLIES AND SERVICES TO BE OBTAINED BY THIS INSTRUMENT ARE AUTHORIZED BY, ARE FOR THE PURPOSE SET FORTH IN, AND ARE CHARGEABLE TO PROCUREMENT AUTHORITY NG 15431 P 59 3059 A 1405 01, $100,000.00" WHEREAS IT IS STATED BY THE BUDGET AND FISCAL OFFICER, HEADQUARTERS, AIR TECHNICAL SERVICE COMMAND, WRIGHT FIELD, DAYTON, OHIO, IN FIRST INDORSEMENT DATED OCTOBER 17, 1944, THAT "NONE OF THE EQUIPMENT COVERED BY SUBJECT CONTRACT WAS INTENDED FOR DELIVERY TO NATIONAL GUARD ACTIVITIES."

HOWEVER, SINCE IT IS STATED IN YOUR LETTER THAT AN APPROPRIATION ADJUSTMENT TRANSFERRING THE AMOUNT OF THE SUBJECT VOUCHER FROM THE ARMY AIR FORCES APPROPRIATION TO THE NATIONAL GUARD APPROPRIATION WOULD RESULT IN A DOUBLE CHARGE TO THE ARMY AIR FORCES APPROPRIATION; THAT IT WOULD REQUIRE A COSTLY AUDIT OF MANY HUNDREDS OF TRANSACTIONS TO FURNISH AN ITEMIZATION OF THE SUPPLIES AND/OR SERVICES FURNISHED TO THE NATIONAL GUARD; AND THAT THE PROCUREMENT PROCEDURES OF THE ARMY AIR FORCES HAVE BEEN CHANGED TO CONFORM TO GENERAL REGULATIONS NO. 98 OF THE GENERAL ACCOUNTING OFFICE, YOU ARE ADVISED THAT NO FURTHER QUESTION WILL BE RAISED AS TO THE APPROPRIATION CHARGED IN THIS AND SIMILAR CASES COVERING PAYMENTS HERETOFORE MADE, IF SUCH PAYMENTS OTHERWISE ARE CORRECT.