CONGRESSIONAL RECORD -- SENATE

May 8, 1968

Page 12334

INTERGOVERNMENTAL COOPERATION ACT OF 1967 --AMENDMENT NO. 748

Mr. MUSKIE. Mr. President, I submit, for appropriate reference, amendments which I intend to propose to S. 698, the intergovernmental cooperation bill, now pending in the Subcommittee on Intergovernmental Relations, Committee on Government Operations.

The amendments I will offer are intended to encourage simplification and improved coordination of accounting, auditing, and financial reporting requirements of Federal assistance programs.

Every Federal agency administering Federal assistance programs to State and local governments is charged by the Congress and by the regulations of the Comptroller General with assuring proper legal use of Federal funds made available to State and local governments through such programs. As a result each administering agency and each major bureau engaged in grant-in-aid administration deploys a number of fiscal auditors throughout the States at various times to audit grant-in-aid accounts. The General Accounting Office has its own field operations with its "spot audit" program, which is geared to ascertaining the effectiveness of agency audits of Federal expenditures and which also involves audits of grant expenditures at the State and local levels.

Yet, Federal agency auditing and accounting activities have had to keep pace with the growth in the number and variety of Federal assistance programs. Moreover, State governments in recent years and many local governments have made strenuous efforts to improve the capability of their own accounting and auditing systems -- thanks to the rapid growth of State and local programs and expenditures.

Federal assistance programs differ in objectives, magnitude, governments, and governmental agencies involved, and the clientele served and in many other characteristics. Such programs then can hardly be expected to yield completely to uniform accounting and auditing requirements.

Nevertheless, there remains the question as to whether the existing financial reporting, accounting, and auditing requirements are reasonable in their demands. Most State and local officials feel they are not. Some Federal aid administrators feel they are not. The recent experience of the Department of Health, Education, and Welfare and the Office of Economic Opportunity in placing reliance on State and local auditing, accounting, and reporting systems suggests that a rigid adherence to the status quo is not the best way to improve intergovernmental relations in this area.

To help correct this condition, the Advisory Commission on Intergovernmental Relations in its fiscal balance report adopted a three-pronged recommendation urging enactment of general legislation by the Congress applicable to Federal grants-in-aid to States whereby: first, the Comptroller General would study and review the accounting and auditing systems of the States receiving Federal grants-in-aid and ascertain their general adequacy and integrity; second, for those States certified by the Comptroller General as meeting standards of adequacy and integrity, the results of State audits of expenditures of Federal grant funds would be accepted by the administering Federal agencies in lieu of their own fiscal audits with such acceptance to cease if the Comptroller General finds that the accounting and auditing system of a particular State no longer meets prescribed standards; and, third, this authorization would be extended at the discretion of the Comptroller General to units of local government receiving sizable grant-in-aid funds from Federal agencies.

The amendments I intend to propose are based on this recommendation. First, they would assign authority to the President to promulgate rules and regulations on a Government-wide basis for simplifying and, to the extent practicable, unifying the financial reporting requirements in Federal grant-in-aid programs. At the present time -- thanks to diverse enabling legislation, appropriation acts, departmental regulations and various other factors -- the procedures, format, frequency, and intensity of financial reporting requirements differ greatly from department to department and frequently from program to program within a department. The amendments are designed to provide the President with sufficient authority to achieve greater consistency, simplicity, and order in an area of grant-in-aid administration that thus far largely has also been ignored.

The amendments also provide the basis for acceptance of the accounting and auditing system in certain States and certain political subdivisions in lieu of Federal efforts in these fields. The Comptroller General, the Secretary of the Treasury, and the Director of the Bureau of the Budget are mandated to conduct a joint study of the principles, standards, and related requirements of executive agencies as they relate to the accounting and auditing of Federal grants-in-aid with a view to identify ways and means of developing Government-wide accounting and auditing procedures that foster greater interdepartmental coordination among financial management officials in the various Federal agencies administering grant programs. These provisions are designed then to reduce unnecessary duplication and excessive time required to perform these vital fiscal functions.

The Comptroller General is authorized to study and review the accounting and auditing systems of the States and their political subdivisions in order to determine the adequacy and effectiveness of their respective systems and what changes, if any, would be required in them to comply with the principles, standards, and related requirements prescribed by him in the area of grant-in-aid financial accountability. After consulting with the Secretary of the Treasury and the Director of the Bureau of the Budget and after assessing the statutory requirements and the administrative needs of executive agencies administering grants-in-aid, the Comptroller General is authorized to prescribe rules and regulations that would permit such agencies to substitute the accounting and auditing systems of States and local governments when their systems meet standards prescribed by him as they relate to the administration of Federal assistance programs.

The intent of these amendments is not to shortcut in any way the exercise of fiscal prudence and accountability at all levels of government. But they seek to develop new intergovernmental arrangements in the accounting and auditing field which would lead to a significant saving in time and energy and would provide the impetus for significant improvements in the whole area of intergovernmental fiscal management.

Mr. President, I ask unanimous consent that the text of the amendments I intend to propose to S.698 be printed at this point in the RECORD.

The PRESIDING OFFICER. The amendments will be received, printed, and appropriately referred; and, without objection, the amendments will be printed in the RECORD.