suggested deletion of that version of section 704 from the draft bill. S. 2479 was introduced without inclusion of section 704. We also made a deletion proposal to the House Committee on the companion bill—H.R. 7366. However, during hearings on H.R. 7366, before the House Subcommittee, a question was raised as to whether it might not be desirable to have a substitute which would provide for the issuance of auditing principles and standards for the guidance of State and local audit groups, and also expressly provide that in our work, we in the General Accounting Office would consider the implementation of such principles and standards. At the request of Chairman Fountain of the House Committee, we are cooperating with that Subcommittee staff in developing such a substitute. Our efforts in creating a substitute section 704 are currently represented by a draft, as follows: "Sec. 704. (a) The Bureau of the Budget, or such other agency as the President may designate, in cooperation with the Comptroller General, is hereby authorized to develop and issue principles and standards of auditing for the guidance of State and local government agency groups as well as outside public accountants engaged in the review and audit of Federal assistance programs and those State and local administrative processes related to Federal assistance programs. Such principles and standards shall serve the purpose of providing technical guidance to the various audit organizations but shall not be construed as relieving such audit organizations of their responsibility for the effective administration of their audit programs. "(b) The Comptroller General shall include in his audits of Federal assistance programs reviews of the extent of utilization mady by the Federal departments and agencies of audits performed by State and local government agency audit groups or outside auditors and of the implementation of the principles and standards issued pursuant to subsection (a) of this section. He shall include in his reports on such audits information on the extent of such utilization and over implementation. "(c) The Comptroller General shall from time to time make such recommendations to the Federal agencies administering Federal assistance programs as he determines desirable to assist such agencies in complying with the provisions of this title and any regulations or principles and standards of auditing prescribed pursuant thereto." As a matter of clarification and to avoid any future misunderstandings or diverse interpretations regarding the effect of the bill on the responsibilities of the General Accounting Office, we recommend that a new section 705 be added to S. 2479, reading as follows: "Nothing in this title shall be construed to diminish the authorities and responsibilities of the Comptroller General of the United States under existing law." Title IV of the bill would amend the Intergovernmental Cooperation Act of 1968 by adding to it a new title IX-Joint Funding Simplification. We fully support the general objective of simplifying and improving the administration of related grant-in-aid programs. Today's large number of individual grant-in-aid programs, each with its own set of complex special requirements, separate authorizations and appropriations, cost sharing ratios, allocation formulas, and financial procedures, make it increasingly difficult to manage and administer those programs in a comprehensive or efficient manner. It is our opinion that there is presently much, in the way of coordinating and standardizing current Federal grant-in-aid programs, which could be done on an administrative level without additional legislation. But, if administering grant programs on a consolidated basis is desirable, we believe that the real key to significantly improved administration lies in the legislative consolidation of programs into broader categories of assistance, and the placement of like programs in a single agency, rather than establishing an administrative apparatus to deal with a continuing proliferation of single narrow purpose programs. Title III of the bill would provide a most significant means for achieving constructive action in the future to consolidate those Federal assistance programs which are appropriate for such consolidation. As these consolidations occur there should be less need for implementing action under title IV of the bill. Also, the results of studies and information assembled pursuant to title VI of Public Law 90-577 (Intergovernmental Cooperation Act of 1968) as proposed for amendment by title V of the bill, should lead to congressional consideration of, and possible action on, legislative consolidation of Federal assistance programs. This action would tend to further reduce the situations where action would be needed under the joint funding simplification title. If title IV of the bill is considered favorably for enactment, we believe that it should be carefully and gradually implemented under the required Presidential guidelines with provision for thorough evaluations of results achieved, and that a specific provision should be included in the legislation for limiting its application to geographical areas or perhaps to programs. Our concern is that there could exist pressures which might force too rapid an adoption of untested concepts and procedures, and make difficult the reversal of procedures found to be unworkable. We would endorse legislation limited to its applicationas indicated above. This would not only serve to more specifically delineate the advisability of full implementation of the proposals, but would also provide valuable information relating to programs which might be more efficiently administered if consolidated as contemplated by title III of the bill. With respect to specific provisions of the bill, section 902 of the proposed title IX of the 1968 act, as it relates to intra-agency joint funds, would permit the inauguration of the program on a Government-wide basis without provision for going through an experimental and testing period. We would prefer first having a limited application to eliminate any problem areas prior to full-scale implementation. Such limited application is provided for intergovernmental projects authorized by section 903. Sections 902(d) and 903(d) would authorize the establishment of joint management funds to account for projects financed from more than one Federal program or appropriation with any excess funds therein being returned to the participating Federal agencies in accordance with a formula mutually acceptable as providing an equitable distribution, and for effecting returns accordingly to the applicable appropriations. The extent of variance between the plans and the actual results for each program in a joint project may or may not be discernible upon completion. This fact is presented as a matter of information and not necessarily as an objection to the joint funding concept. Also, section 904(a) would have the effect of permitting any appropriation that is available for technical assistance or training of personnel to be used for both technical assistance and training under any other Federal assistance program that becomes involved in joint funding, although the latter program may not have funds approved for training and technical assistance purposes. This could result in significant amounts of training and technical assistance funds being used for purposes beyond those for which they were originally authorized and appropriated. This matter is brought to your attention without a recommendation. The last sentence of section 202 of the 1968 act provides that the head of the Federal agency and the Comptroller General shall have access for the purpose of audit and examination to any books, documents, papers, and records that are pertinent to the grant-in-aid received by the States. We recommend that that sentence be amended by adding at the end thereof the words "or their political subdivisions." This will avoid the necessity of enacting specific provisions of law therefor in each Federal assistance program in which political subdivisions of the States may participate. Sincerely yours, ELMER B. STAATS, Comptroller General of the United States. GENERAL SERVICES ADMINISTRATION, Hon. EDMUND S. MUSKIE, DEAR SENATOR MUSKIE: Your letter of July 11, 1969, requested the views of the General Services Administration on S. 2479, 91st Congress, a bill "To improve the financial management of Federal assistance programs; to facilitate the consolidation of such programs; to provide temporary authority to expedite the processing of project applications drawing upon more than one Federal assistance program; to strengthen further congressional review of Federal grants-in-aid; and to extend and amend the law relating to intergovernmental cooperation." Our review indicates that the bill, if enacted, will have no significant impact upon the functions and responsibilities of the General Services Administration. Accordingly, we make no comment thereon. The Bureau of the Budget has advised that, from the standpoint of the Administration's program, there is no objection to the submission of this report to your Committee. Sincerely, ROD KREGER, Assistant Administrator. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, Hon. EDMUND S. MUSKIE, Chairman, Subcommittee on Intergovernmental Relations, Committee on Government Operations, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This is in reply to your request of March 5, 1969, for our views on S. 2479, a bill "To improve the financial management of Federal assistance programs, to facilitate the consolidation of such programs, to provide temporary authority to expedite the processing of project applications drawing upon more than one Federal assistance program, to strengthen further congressional review of Federal grants-in-aid, and to extend and amend the law relating to Intergovernmental Cooperation." S. 2479 proposes to amend the Intergovernmental Cooperation Act of 1968 (P.L. 90-577). Two of the bill's titles are revisions of proposals in the 90th Congress which were deleted from that Act before passage. These titles concern auditing and accounting, and joint funding simplification. The first title of the bill defines two terms used in the substantive titles; our comments are directed to these and other titles. TITLE II-ACCOUNTING, AUDITING, AND REPORTING OF FEDERAL ASSISTANCE FUNDS This title proposes to amend the Intergovernmental Cooperation Act of 1968 to incorporate provisions included in the original Senate bill (S. 698) but not accepted either in committee or on the Floor of the Senate. This title would authorize the President to promulgate rules and regulations for more uniform financial reporting of Federal assistance programs. It would further prescribe new procedures under which the Comptroller General and Federal agencies might accept, in lieu of their own audit, the accounting and auditing performed by States and their political subdivisions which are receiving Federal financial assistance. With respect to the provisions on accounting, auditing, and reporting of Federal assistance programs, we defer to the Bureau of the Budget, which, under the provisions of the bill, may be designated to act for the President in this matter. TITLE III-CONSOLIDATION OF FEDERAL ASSISTANCE PROGRAMS This title would authorize the President to submit to Congress plans for consolidating any two or more Federal assistance programs in the same functional area. Such consolidation plans would place responsibility for administering the consolidated program in a single Federal agency, would specify a single matching formula or, where relevant, an apportionment formula, under the consolidated program, and provide for transfer of unexpended balances of appropriations as required. Any such plan would become effective unless between the date of transmittal and the end of a period of ninety calendar days of continuous session, either House should pass a resolution disapproving the consolidation plan. While this Department favors the objectives of this title-to decrease the current multiplicity of grant programs with a view to achieving more effective and more efficient use of Federal assistance-we believe that this objective can better be accomplished by the Administration's proposal for consolidating Federal financial assistance programs, outlined in the President's message to Congress on April 30, and incorporated in the provisions of H.R. 10954. TITLE IV-JOINT FUNDING SIMPLIFICATION This title would permit an executive agecy to set up intradepartmental joint projects or programs to be funded out of two or more Federal assistance programs administered by such agency, using a joint application, developing common accounting, auditing, and financial reporting procedures, etc. It would also authorize the President, for a period of three years, to approve on a demonstration basis, combined applications for interagency projects requiring funding from two or more Federal assistance programs administered by more than one Federal department or agency. In each instance, applicants for such project funding would be States or their political subdivisions. The separate Joint Funding Simplification Bill, H.R. 6654 has a broader range of application since public or private nonprofit organizatins as well as States or their political subdivisions, would apply for such jointly funded Federal assistance. In addition, H.R. 6654 would provide for both intra- and intragency joint projects, but without the emphasis on the former or the limitation on the latter (contained in S. 2479) to demonstrations over a three year period The technical provisions for joint funding contained in H.R. 6654 are also more flexible. We are generally in favor of joint fundings implification, but prefer the broader coverage and more flexible provisions of H.R. 6654. TITLE V-CONGRESSIONAL AND EXECUTIVE OVERSIGHT OF FEDERAL ASSISTANCE PROGRAMS This title would provide for: (1) a review, by the appropriate committees of Congress, one year before the expiration thereof, of all grant-in-aid programs enacted after January, 1971, which have a duration of more than three years; (2) grant-in-aid review specialists on the staffs of the standing committees of the House and Senate responsible for the review and study of such programs—a provision on which we do not comment; and (3) detailed annual reports to the President and to Congress by heads of Federal agencies administering one or more Federal assistance programs on such programs. These reports appear to hold potential value for Executive agency oversight as well as for Congressional overview. We are advised by the Bureau of the Budget that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely, ROBERT H. FINCH, DEAR MR. CHAIRMAN: Your Committee has requested the views of this Department on S. 2479, a bill "To improve the financial management of Federal assistance programs; to facilitate the consolidation of such programs; to provide temporary authority to expedite the processing of project applications drawing upon more than one Federal assistance program; to strengthen further congressional review of Federal grants-in-aid; and to extend and amend the law relating to intergovernmental cooperation." S. 2479 is aimed at improving the financial management of Federal assistance programs by standardizing accounting and auditing policies, consolidating programs, joint-funding of projects, and by facilitating congressional and executive oversight of Federal assistance programs. This would be accomplished through additions and amendments to the Intergovernmental Cooperation Act of 1968 (Public Law 90-577). Title I defines Federal assistance consolidation plans and joint projects. Title II would add a new Title VII to the Intergovernmental Cooperation Act of 1968 which would encourage simplification and standardization of financial reporting requirements, promote accounting and auditing policies that rely on State and local financial management control systems, and authorize the Comptroller General to utilize audits by States and political subdivisions in meeting the responsibilities of the General Accounting Office. While the Bureau of the Budget has through Circulars A-73 and A-87, sought to provide some uniformity over agency accounting requirements for States participating in Federal assistance programs, this calrifying legislation is needed. Through Title II, a program of uniform and simplified State accounting can be initiated that will serve both federal and State needs. We support in the proposed bill this Title since it appears that it will assist the General Accounting Office and the Bureau of the Budget in obtaining uniform accounting and auditing work for all Federal programs at the State level. We understand that the General Accounting Office has some reservations as to the wording of the provisions relating to the acceptance of audits and defer to their recommendations for the wording of these provisions. Title III would add Title VIII, Consolidation of Federal Assistance Programs, to the Intergovernmental Cooperation Act of 1968. This Title would require the President to examine the various programs of Federal assistance and determine what consolidations are necessary or desirable. In instances where consolidations were determined to be disirable, he would prepare Federal assistance consolidation plans. These plans would be submitted to Congress for review and if no objection were received after a period of time, the consolidation plans would become operative. Consolidation of related grant programs is a most worthwhile objective, and the proposed procedure will offer both Departments and the President an opportunity to simplify and improve Federal assistance programs to State and local governments. The new Title VIII is for the same general purpose as S. 2035, the Grant Consolidation Act of 1969, which was proposed by the Administration. We prefer the provisions of S. 2035 and recommend its enactment in lieu of Title VIII of S. 2479. Title IV would add Title IX, Joint Funding Simplification, to the Intergovernmental Cooperation Act of 1968. This Title would enable States and local governments to draw upon the resources available from more than one Federal program through a single application for Federal assistance. Joint funding simplification provides administrative flexibility to both the Federal government and to State and local governments. It permits large complex projects to be funded from any program sources while guarding against duplication. It would be especially helpful in natural resource projects where funds from many agencies might be combined to enable a project to be carried out. The joint funding simplification authority would be a useful supplement to the grant consolidation authority in Title III above. Title V would amend Title VI of the Intergovernmental Cooperation Act of 1968, to direct congressional committees to review grants-in-aid programs authorized for periods of three or more years after January 3, 1971. Review would commence not later than 12 months prior to expiration of the authority and presumably would be for the purpose of determining whether the authorization should be extended. Title V would also provide for a Congressional Review Specialist to assist each standing committee of the Senate and House of Representatives which is responsible for review and study of two or more grants-in-aid programs. This Title would also require reports by Federal agencies, on their administration of grants-in-aid programs, at the end of each fiscal year. The report would cover the effectiveness of their administration and their efforts to improve administration. It would make recommendations on the necessity of changing policies or the legislation to enable the programs to meet growing and changing needs which they were designed to support. It would require the President to summarize and analyze these reports and furnish the Congress such recommendations as he deemed appropriate to make the system of Federal assistance programs more effective. We consider the objectives of Title V as worthwhile, but it should not exclude grants-in-aid programs authorized before January 3, 1971, if it is to be fully effective. All Federal assistance programs should be covered by the review process. The reports to the Congress on the administration of grants-in-aid programs would assist the substantive committees in their review of these programs, which is provided for under Title VI of the Intergovernmental Cooperation Act of 1968. Annual reports would keep Congress informed of the administering agencies views with respect to their accomplishment under the law and actions that they are taking to carry out congressional directives. We feel that the annual reports would be worthwhile even though legislative review is called for less frequently. The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely yours, RUSSELL E. TRAIN, Acting Secretary of the Interior. |
