B-147293-O.M. February 21, 1962

B-147293-O.M. February 21, 1962

Director, Accounting and Auditing Policy Staff

Reference is made to your memorandum of September 22, 1961, enclosing a list of questions for our study with references to clarifying the responsibility of the General Accounting Office under existing law for settling accounts of accountable officers. You say that primary concer, at this time, relates to certifying officers under the act of December 29, 1941, as amended.

Section 2 of the act of December 29, 1941, 55 Stat. 875, 31 U.S.C. 82c, prescribed a definite limit of responsibility for certifying officers with respect to disbursements made under the executive branch of the Government. By the terms of the section and hte bond required of certifying officers, the officer or employee certifying a voucher for payment holds himself responsible for the existence and correctness of the facts recited in the certificates or otherwise stated on vouchers or their supporting papers, and for the legality of proposed payments under the appropriations of funds involved. This includes the correctness of the computations of certified vouchers. 31 U.S.C. 82f. Also, he holds himself accountable for and is required to make good to the United States the amount of any illegal, improper or incorrect payment resulting from any false, inaccurate, or misleading certificate made by him, as well as those prohibited by law or which did not represent a legal obligation under the appropriations or funds involved.

Section 3 of the cited act of December 29, 1941, provides, in pertinent part, as follows:

"The liability of certifying officers or employees shall be enforced in the same manner and to the same extent as now provided by law with respect to enforcement of the liability of disursing and other accountable officers ***."

The expressed purpose of the act of December 29, 1941, is to make authorized certifying officers responsible and accountable to the United States under their bonds for the legality and correctness of payments made by disbursing officers on vouchers signed by such certifying officers. Responsibility for enforcement of the certifying officers' liability or accountability, as in the case of disbursing and other accountable officers, is therein made a function and duty of the General Accounting Office.

The act of July 31, 1894, 28 Stat. 206, as amended by the Budget and Accounting Act, 1921, 31 U.S.C. 71, 72, requires that the General Accounting Office examine and settle the accounts of all accountable officers, to certify the balance accordingly, and to send a copy of each certificate of settlement to the head of the department or establishment concerned. The evident purpose of the copies of certificates of settlement is to inform the officer and his department or establishment of the state of the accountable officer's account at the end of the account period concerned.

With reference to the rendering of accounts to the General Accounting Office, 31 U.S.C. 496, 497, define those who are required to do so, namely, every officer or agent of the United States who receives public money which he is not otherwise authorized to retain, and all disbursing officers of the United States; and 31 U.S.C. 78 stipulates the periods of time for which accounts must be rendered. While certifying officers render no "accounts" of the vouchers certified by them for payment, within the meaning of that term as used in 31 U.S.C. 72, 78, the disbursing officers who pay such vouchers and render their accounts therefor afford a practical means of enforcing the certifying officers' liability or accountability.

There is nothing in the Budget and Accounting act, 1921, or in prior legislation relating to the accountability of disbursing and other accountable officers which prescribed any specific time within which the accounts of such officers must be examined and settled. See 5 Comp. Dec. 444, 448. The act of May 19, 1947, 61 Stat. 101, disbursing, accountable, or certifying officer of the Government shall be settled by the General Accounting Office within a period of not to exceed three years from the date of the receipt of the account by the General Accounting Office. also, it provides that a copy of the certificate of settlement in each case shall be sent to the officer involved and that such settlement shall be final and conclusive on the General Accounting Office after the expiration of three years from the date of receipt of the account to the extent that no further charges or debts may be thereafter raised except for fraud or criminality on the part of said officers.

It seems clear that this act makes it mandatory upon the General Accounting Office to audit and settle the accounts of all accountable officers within a period of three years from the date of receipt of the account by the Office and to issue a certificate of settlement covering the accounting period involved. This view of the statute was recognized in our letter to the Chairman of the Senate Committee on Expenditures in the Executive Department of March 19, 1951, B-9180. Also, there is observed the statement contained in House Report No. 92, 80th Congress, on H.R. 2076 which is substantially identical with S. 273 of the same Congress enacted as the act of May 19, 1947, that "There is no valid reason why the accounts of fiscal agents of the Government with the General Accounting Office should not be settled within a reasonable time. Three years appears to be a reasonable time." This was one of the stated purposes of the act and the language specifically provides that the accounts shall be settled within the three year period.

Moreover, the fact that the statute requires the General Accounting Office to pass for credit all charges or payments by accountable officers, which are included in their accounts not audited and settled within the three year limitation period, merely serves to exempt them from personal liability for otherwise illegal payments without imputing approval by the Office of such payments; and does not operate to lessen teh statutory responsibility imposed onthe Office to audit and settle the accounts within the prescribed limitation period.

In this letter connection, it was stated in B-84964-O.M., of May 29, 1950, to the effect that until a certifying officer makes an improper payment, based upon an inaccurate certificate, there is n pecuniary liability on his part nor "account" requiring settlement by this Office, and that, consequently, where for a given accounting period no exceptions are stated against a certifying accounting period no exceptions are stated against a certifying officer, no certificate of settlement is required to be issued for such period by the provisions of the act of may 19, 1947. It follows that when exceptions plained, the failure to state a settlement of account establishing a bonded liability therefor, within the statutory limitation period, would be in contravention of the law.

With reference to the effect of the provisions of section 117(a) of the Budget and Accounting Procedures Act of 1950, 31 U.S.C. 67(a), upon the statutes referred to above relating to the audit and settlement of accounts of accountable officers, the said section provides:

"Except as otherwise specifically provided by law, the financial transactions of each executive, legislative, and judicial agency, including but not limited to the accounts of accountable officers, shall be audited by the General Accounting Office in accordance with such principles and procedures and under such rules and regulations as may be prescribed by the Comptroller General of the United States. In the determination of auditing procedures to be followed and the extent of examination of vouchers and other documents, the Comptroller General shall give due regard to generally accepted principles of auditing, including consideration of the effectiveness of accounting organizations and systems, internal audit and control, and related administrative practices of the respective agencies."

In explaining the purpose of this section, it is stated in the House and Senate Reports onthe bill which became the Budget and Accounting Procedures Act of 1950, that "This section provides certain clarification of authority as the basis for improvement and simplification of the audit function of the General Accounting Office on a coordinated basis with the improvement of accounting and internal control procedures in the agencies."

Unquestionably, the provisions of this section are designed to expreslly vest int he General Accounting Office discretionary authority to determine the time, place, and extent to which it will as auditor examine and settle the financial transactions of Government agencies, including the accounts of accountable officers, in light of the adequacy and effectiveness of administrative accounting and other administrative controls and practices. However, such discretionary authority is expressly made subject to the limiting words "Except as otherwise specifically provided by law" which, of course, evidences an intent that existing provisions of law relating to the matter covered in the section were not superseded thereby.

Consequently, and notwithstanding the adequacy of administrative audititng and accounting procedures and practices, we see no legal basis for interpreting the provisions of section 117(a) of the Budget and Accounting Procedures Act of 1950, or any other provision thereof, as authority to disregard the statutory responsibility imposed upon the General Accounting Office by the provisions of the act of May 19, 1947, with reference to the audit and settlement of accounts of accountable officers, including certifying officers, within the three year limitation period prescribed therein.

As a matter of information, we note that the provisions of section 23(b) of H.R. 5823, 81st Congress, entitled "A BILL To authorize the President to determine the form of the national budget and of the department estimates, to modernize and simplify accounting and auditing methods and procedures, and for other purposes," which bill was not reported out of Committee, reads as follows:

"Notwithstanding any other provison of law, the Comptroller General of the United States is authorized to audit and settle accounts on the basis merely of spot checks, sampling, and other checking processes and to settle accounts and certify balance of accounts pursuant to audits made on such basis."

Inlight of the foregoing, answers to the specific questions presented are as follows:

"1. What is a certifying officer's account?"

Considering the context of the act of may 19, 1947, 31 U.S.C. 821 and the circumstances attending the enactment, it reasonably may be construed that a "certifying officer's account," for purposes of settlement, comprise the vouchers and papers in support thereof that are signed by such officers as a prerequisite to payment by disbursing officers and which are included in the latter's accounts covering a particular accounting period. See B- 84964-O.M., March 29, 1950, referred to above.

"2. Is the Comptroller General required to take some posititve action to audit the manner in which certifying officers carry out their specified responsibilities under the act of December 29, 1941?"

The act of December 29, 1941, 31 U.S.C. 82c, having spelled out the limit of responsibility and accountability of certifying officers, it is presumed that the duties and responsibilities of such employment are covered by administrative regulation, practices and procedures not inconsistent therewith. We are not aware of any requirement on the part of the General Accounting Office for positive action to audit the manner, that is, the procedure followed by such officers, in discharging their responsibilities.

"3. Is the Comptroller General required to make some kind of "settlement" with each certifying officer based on such audit work?"

The accounts of any certifying officer which the General Accounting Office is required to settle relates tot he fiscal accountability of certifying officers. Since such settlement action must be preceded by an audit, it follows that the scope and extent of the audit should primarily relate to the propriety of payments certified by certifying officers as distinguished from the effectiveness of procedures followed by such officers in processing payments. However, since an audit and settlement of an account by the General Accounting Office has for its prime purose the protection of the interest of the agency audited and consequently the interest of the United States, questionable administrative proctices and procedures should be brought to attention of responsible officals. Concerning the necessity for statement of a settlement with each certifying officer, see the discussion above relating to B-846964-O.M., May 29, 1950.

"4. Does the act of May 19, 1947, impose a responsibility to settle "accounts" of certifying officers or can it be interpreted as merely imposing a time limit on which the Comptroller General can hold them accountable for improper transactions?"

The act of May 19, 1947, imposes a definite responsibility upon the General Accounting Office to audit and settle the accounts of the certifying officers, and that respnsibility is independent of the time limitation on which such officers may be held liable for improper transactions.

"5. Can the provision of the Accounting and Auditing Act of 1950 be interpreted as giving the Comptroller General the authority to determine the best way to make audits, including determining how frequently they need be ade in order to setttle acounts?

"6. Do we have authority under the law, particularly section 117a of the Accounting and Auditing Act of 1950, to regard our audit responsibilities re certifying officers to be a general audit responsibility or objective on a par with the other general requirement mentioned in section 117a to examine financial transactions, thus giving the Comptroller General authority to formulate such policies, procedures, rules, and regulations as will enable him to perform his total audit responsibility in the most effective manner? (Section 111(d) of the same act lends some support to this view.)"

Both of these questions are answered in the affirmative subject, of course, to the understanding that the authority granted the General Accounting Office to audit the financial transactions of the Government in the best and most effective manner not be exercised in conflict with other express requirements of law.

"7. Or, must we consider our responsibility for certifying officers' accountability to be a special or preferred aspect requiring a more through, systematic, and consecutive coverage than can possibly be provided for the much more important and broader area of financial transactions generally (which would include consideration of efficiency, economy, and effectiveness of agency operations)--even though this more general work will, in itself, provide a meaningful though highly selective check on the discharge of certifying officers' responsibilities?"

This question is answered in the negative.

"8. Can the 1950 act be interpreted as permitting the Comptroller General to schedule audits of financial transcations over cycles of time longer than the three-year period within which an accountable officer can be held under the 1947 act (it being recognized that the Government would look to the ultimate receipient for restitution of an improper payment if detected after the limitation period).

"9. If an agency has a strong and continuing internal audit program which includes examinations into the propriety and legality of financial transactions, and our reviews and tests indicate that it is operating or has operated satisfactorily, would we have any more freedom to not schedule audit reviews to be completed within any prescribed time period?"

Both of these questions are answered in the negative.

"10. If systematic coverage of all funancial transactions through performance of audit work by the General Accounting Office, including testing of agency practices and controls is a definite requirement,

"a. Would there be any legal question about carrying out the requirement on an overall agency basis rather than with respect to the agency segments for which each certifying officer has responsibility?

"b. Would there be any legal question about carrying it out on an office location basis rather than on an individual officer basis?"

Parts a and b of the question are answered in the negative.

"11. If based on part experience and other information available to us, we believe that an examination of an agency's financial transactions and accounts by us would not be productive of any significant findings or have any other positive benefit, do we have authority to decide not to do any work and to assign the manpower which would otherwise be required to work more useful in terms of findings and constructive benefit? Or must we go through the motions of auditing such transactions and acounts because of statutory requirements to "settle accounts"?

"12. If the existing laws are interpreted as prequiring work 'for settlement purposes' to be performed at all locations where accounts are held within statutory limitations periods, does the law provide any guidance as to the minimum amount of such work requiring performance in order to carry out such settlement respnsibilities?"

While the controlled accountability statutes provide a specific time within which the accounts of accountable officers must be audited and settled, we are aware of no provision of law providing any guidance as to the minimum amount of work required in order to carry out our audit and settlement responsibilities. However, section 111(d) of the Budget and Accounting Procedures Act of 1950, 31 U.S.C. 65(d) provides that our audit shall afford an affective basis for the settlement of accounts.

"13. In other words, in what specific respects are certifying officers acceptable to the Comptroller General and therefore must be systematically examined without regard tot he potential usefulness of such examination work in terms of efficiency, economy, and effectiveness?"

The law makes certifying officers financially liable and accountable to the United States for improper certifications, and the General Accounting Office is made responsible for enforcing the legal requirements governing the financial transactions of such officers. The audit and settlement of accounts of public transactions, simply stated, is but a means to determine the amoutn, if any, due the United States and to protect its interests. The Congress having seen fit to require the General Accounting Office to audit and settle the accounts of certifying officers within a specific period of time, that responsibility may not be circumvented with out a change in the law.

While we have endeavored in this reply to cover all of the points presented in the questions accompanying your memorandum, we will be pleased to discuss the matter if you so desire after you have had an opportunity to consider our comments.

R. F. KELLER General Counsel