B-146820, JUN. 2, 1967

B-146820, JUN. 2, 1967

TO THE HONORABLE PAUL FINDLEY:

YOUR LETTER OF FEBRUARY 21, 1967, REFERS TO OUR DECISION OF FEBRUARY 2, 1967, B-146820, IN WHICH WE CONSIDERED THE FOLLOWING PROVISO IN TITLE III OF THE DEPARTMENT OF AGRICULTURE AND RELATED AGENCIES APPROPRIATION ACT, 1967, PUB.L. 89-556, 80 STAT. 702:

"PROVIDED, THAT NO FUNDS APPROPRIATED BY THIS ACT SHALL BE USED TO FORMULATE OR ADMINISTER PROGRAMS FOR THE SALE OF AGRICULTURAL COMMODITIES PURSUANT TO TITLES I OR IV OF PUBLIC LAW 480, 83RD CONGRESS, AS AMENDED, TO ANY NATION WHICH SELLS OR FURNISHES OR WHICH PERMITS SHIPS OR AIRCRAFT UNDER ITS REGISTRY TO TRANSPORT TO NORTH VIETNAM ANY EQUIPMENT, MATERIALS OR COMMODITIES, SO LONG AS NORTH VIETNAM IS GOVERNED BY A COMMUNIST REGIME.'

IN OUR DECISION WE HELD THAT:

"IN VIEW OF THE AMBIGUITY OF THE LANGUAGE USED IN THE PROVISO, IT IS OUR OPINION THAT FUNDS CONTAINED IN THE DEPARTMENT OF AGRICULTURE AND RELATED AGENCIES APPROPRIATION ACT, 1967, SHOULD NOT BE USED TO FORMULATE OR ADMINISTER PROGRAMS FOR THE SALE OF AGRICULTURE COMMODITIES TO YUGOSLAVIA, UNDER TITLE IV OF PUBLIC LAW 480 UNTIL LEGISLATIVE CLARIFICATION OF THE PROVISO IS OBTAINED.'

YOU ADVISE THAT NOTWITHSTANDING OUR DECISION OF FEBRUARY 2, 1967, B 146820, THE DEPARTMENT OF AGRICULTURE HAS ISSUED A PURCHASE AUTHORIZATION (NUMBER 11-433) INCIDENT TO THE SALE AND SHIPMENT OF VEGETABLE OIL TO YUGOSLAVIA UNDER TITLE IV OF PUBLIC LAW 480. ACCORDINGLY, YOU REQUEST THAT WE TAKE APPROPRIATE ACTION WHICH YOU INDICATE WOULD INCLUDE (1) TAKING EXCEPTION TO THIS TRANSACTION TO THE EXTENT APPROPRIATED FUNDS ARE USED DIRECTLY OR INDIRECTLY, WHETHER IN THE FORM OF SERVICES BY SALARIED EMPLOYEES, USE OF CONSUMABLE SUPPLIES, OR OTHER; (2) TAKING EXCEPTION TO THIS TRANSACTION TO THE EXTENT THAT FUNDS AND OTHER RESOURCES OF THE COMMODITY CREDIT CORPORATION (CCC) ARE USED; (3) MAKING A DETAILED REPORT TO THE CONGRESS.

CONCERNING THE FUNDS USED TO FORMULATE AND ADMINISTER THE RECENT SALE OF VEGETABLE OIL TO YUGOSLAVIA UNDER TITLE IV OF PUBLIC 480, WE HAVE BEEN ADVISED BY THE DEPARTMENT OF AGRICULTURE AS FOLLOWS:

"WE ASSUME YOUR INQUIRY RELATES TO ADMINISTRATIVE EXPENSES. MOST OF THE COSTS INCURRED IN THE FISCAL YEAR ENDING JUNE 30, 1967, FOR FORMULATING AND ADMINISTERING THIS SALE HAVE BEEN OR WILL BE PAID, WITHIN THE LIMITATION ON ADMINISTRATIVE EXPENSES OF $34,300,000 CONTAINED IN THE APPROPRIATION ACT, FROM FUNDS OF THE COMMODITY CREDIT CORPORATION. SUCH FUNDS ARE OBTAINED FROM BORROWINGS BY COMMODITY CREDIT CORPORATION UNDER SECTION 4 OF THE ACT OF MARCH 8, 1938, AS AMENDED (15 U.S.C. 713A-4) AND NOT FROM APPROPRIATIONS PROVIDED IN THE 1967 APPROPRIATION ACT.

"THE TOTAL AMOUNT OF ADMINISTRATIVE EXPENSES EXPECTED TO BE INCURRED IN FISCAL YEAR 1967 FROM THE FUNDS DESCRIBED ABOVE IS ESTIMATED AT $960 OF WHICH $460 IS TO BE EXPENDED BY THE FOREIGN AGRICULTURAL SERVICE AND $500 BY THE AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE.

"THERE ARE, IN ADDITION, ADMINISTRATIVE EXPENSES EXPECTED TO BE INCURRED FROM FUNDS APPROPRIATED BY THE ACT. THESE ARE AN AMOUNT ESTIMATED AT A MAXIMUM OF $350 FROM APPROPRIATIONS FOR SALARIES AND EXPENSES OF THE FOREIGN AGRICULTURAL SERVICE. IT IS NOT KNOWN WHETHER THIS EXPENSE WILL BE INCURRED IN FISCAL YEAR 1967 OR LATER. REPORTS ON THE ARRIVAL OF THE COMMODITY AND RELATED MATTERS ARE OBTAINED BY THE OFFICE OF THE AGRICULTURAL ATTACHE FROM THE GOVERNMENT CONCERNED. THE ATTACHE IS FINANCED FROM THE SALARY AND EXPENSE APPROPRIATION.'

SINCE THE CCC FUNDS USED FOR FORMULATING AND ADMINISTERING THE SALE OF VEGETABLE OIL TO YUGOSLAVIA WERE NOT APPROPRIATED IN THE DEPARTMENT OF AGRICULTURE AND RELATED AGENCIES APPROPRIATION ACT, 1967, PUB.L. 89 556, 80 STAT. 689, 702, THE PROVISO IN QUESTION WOULD NOT BE FOR APPLICATION THERETO. FURTHER, EVEN IF THE CCC FUNDS USED WERE APPROPRIATED IN THE CITED APPROPRIATION ACT WE WOULD NOT BE AUTHORIZED TO TAKE EXCEPTION TO, OR DISALLOW, SUCH EXPENDITURES.

THE CCC IS A WHOLLY OWNED GOVERNMENT CORPORATION AND IS SUBJECT TO THE PROVISIONS OF THE GOVERNMENT CORPORATION CONTROL ACT, AS AMENDED, 31 U.S.C. 841-871. SECTION 105 OF THE ACT, 31 U.S.C. 850, PROVIDES, IN PERTINENT PART THAT:

"THE FINANCIAL TRANSACTIONS OF WHOLLY OWNED GOVERNMENT CORPORATIONS SHALL BE AUDITED BY THE GENERAL ACCOUNTING OFFICE IN ACCORDANCE WITH THE PRINCIPLES AND PROCEDURES APPLICABLE TO COMMERCIAL CORPORATE TRANSACTIONS AND UNDER SUCH RULES AND REGULATIONS AS MAY BE PRESCRIBED BY THE COMPTROLLER GENERAL OF THE UNITED STATES * * *.'

SECTION 106 OF THE SAME ACT, AS AMENDED, 31 U.S.C. 851, READS AS FOLLOWS:

"A REPORT OF EACH SUCH AUDIT FOR A FISCAL YEAR SHALL BE MADE BY THE COMPTROLLER GENERAL TO THE CONGRESS NOT LATER THAN JANUARY 15 FOLLOWING THE CLOSE OF SUCH FISCAL YEAR (AND A REPORT OF EACH SUCH AUDIT FOR A CALENDAR YEAR SHALL BE MADE BY THE COMPTROLLER GENERAL TO THE CONGRESS NOT LATER THAN JULY 15 FOLLOWING THE CLOSE OF SUCH CALENDAR YEAR). THE REPORT SHALL SET FORTH THE SCOPE OF THE AUDIT AND SHALL INCLUDE A STATEMENT (SHOWING INTERCORPORATE RELATIONS) OF ASSETS AND LIABILITIES, CAPITAL AND SURPLUS OR DEFICIT; A STATEMENT OF SURPLUS OR DEFICIT ANALYSIS; A STATEMENT OF INCOME AND EXPENSE; A STATEMENT OF SOURCES AND APPLICATION OF FUNDS; AND SUCH COMMENTS AND INFORMATION AS MAY BE DEEMED NECESSARY TO KEEP CONGRESS INFORMED OF THE OPERATIONS AND FINANCIAL CONDITION OF THE SEVERAL CORPORATIONS, TOGETHER WITH SUCH RECOMMENDATIONS WITH RESPECT THERETO AS THE COMPTROLLER GENERAL MAY DEEM ADVISABLE, INCLUDING A REPORT OF ANY IMPAIRMENT OF CAPITAL NOTED IN THE AUDIT AND RECOMMENDATIONS FOR THE RETURN OF SUCH GOVERNMENT CAPITAL OR THE PAYMENT OF SUCH DIVIDENDS AS, IN HIS JUDGMENT, SHOULD BE ACCOMPLISHED. THE REPORT SHALL ALSO SHOW SPECIFICALLY ANY PROGRAM, EXPENDITURE, OR OTHER FINANCIAL TRANSACTION OR UNDERTAKING OBSERVED IN THE COURSE OF THE AUDIT, WHICH, IN THE OPINION OF THE COMPTROLLER GENERAL, HAS BEEN CARRIED ON OR MADE WITHOUT AUTHORITY OF LAW. A COPY OF EACH REPORT SHALL BE FURNISHED TO THE PRESIDENT, TO THE SECRETARY OF THE TREASURY, AND TO THE CORPORATION CONCERNED AT THE TIME SUBMITTED TO THE CONGRESS.'

WE HAVE CONSTRUED THESE LAST QUOTED PROVISIONS OF LAW AS PRECLUDING US FROM TAKING EXCEPTION TO EXPENDITURES MADE BY GOVERNMENT CORPORATIONS AND AS AUTHORIZING US ONLY TO MAKE REPORTS TO THE CONGRESS WHERE WE DEEM IT APPROPRIATE IN CONNECTION WITH TRANSACTIONS OF THE CORPORATION. ACCORDINGLY, WE WILL INCLUDE THE TRANSACTION IN OUR NEXT REPORT TO THE CONGRESS ON OUR AUDIT OF CCC ACTIVITIES.

CONCERNING THE ADMINISTRATIVE EXPENSES TO BE PAID FROM FUNDS APPROPRIATED FOR THE FOREIGN AGRICULTURAL SERVICE BY THE ABOVE-CITED APPROPRIATION ACT OR A SUBSEQUENT FISCAL YEAR APPROPRIATION ACT, IF A SIMILAR LIMITATION IS INCLUDED THEREIN, SUCH EXPENDITURES WOULD BE SUBJECT TO DISALLOWANCE BY OUR OFFICE. THERE IS ENCLOSED FOR YOUR INFORMATION A COPY OF OUR LETTER OF TODAY TO THE SECRETARY OF AGRICULTURE CONCERNING THE MATTER WHICH IS SELF-EXPLANATORY.