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m unusual OI W. m
Uaahlogtoo. D. C. 20575
Statmt of
leaory Colaaloa on Intargovormeutal lalatlooa
boloro tho
Intergovemtll la latlooa Subculttaa
Ccittaa on Govern-ant Operation!
louse o! hpnaootatlvea
Jun. 11, 1969
on the propoud
"lntergovoruaautol Cooperatloo Act of 1969
Obi. 7366)
llr a man a ti o 0 too:
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the Etgggaod 'lotatmgr-ootal Mutual Act og 1&2, do age; vgth
E, It. Chair-an that "thla oaaauro tacaa a tn_l_s_tga--
Warrant-d 1!
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" m. is latloo at: certain
Rolatlooa ln lta report of two yaan ago on Raga! Riga to the
t o 3 ate. and ts urllot l96l upon
Con la a t aota-in- a o and Local
.mmg. Ua streaeg aodotaa tha loalalatloo duo Egon: _
ear
8.8. 7336 build: on tha £9"! 2 Matt 0 0.
- In" '10" m9: 592399.015 t. Okla; s- 1e_._ar- .29:th
additional tools to thosa at the oatlooal level duo ata ggappllog with
.the contour-M oot "ornagW-aggp-not of achan 91:3 attactlva
Matratloo of Yoderal ualatga 3:51;. to Stat-a no localities.
Each of the blll'a substantng no. u all? 59 an mama;
elocuw, and thla to u 1: ag a.
Run vlmd tron tho parapactlva of nearly ulna-quarto of
a canturya development. tha grant-ln-ald device haa urvad tha nation
and our todaral ayatn all. on thla Subcmtttaa ootad lo lta 30th
Report note that too yoara ago:
aro which! to Logth or to! (an to consolidato prop-o
all within tho no urtodtcttooa to! totorooto dtch
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elm-ch- to Coast-"10001 W
til-old statuo Thou ood othor tactoro thou coobtoo to hindor
Enigful grant coogoggdottooa vto tho roiulor lotolattvo routo.
m roach uhodtod 1n tltlo
ovorcac one or thooo ohotacleo. Nor 1t. tho Proudcot to oothortood
to ooh to Eggnog gooooudatioo [Ina unvova cabloattooa or too
or onto Emotion!!! rolotod aid Bron-o, oloo. Lo oach toot-no. with
o dlcloratloo todtcotlg hto oaty thot a pm 21.: will turthor
ho to tend r o
Iggh o Elan would boom ottoctivo at tho out! o! 90 calendar duo o!
oottououo t al o r
We "colone- mprovtno ammonium.
1d 91 o-o
{553ml orogI I. [omtbtug to o amlo Iodcrol £2 for
Way-I. me! I 3310 Inch: 10ml: .
a on omgumg mp-hon tho todtvtduol grog-o hotel
Quad hggg lush. m any: 513; ung botvoon tho-o tornqu .
and those of oocho o rovtoual oo oroto r rm. loch loo ouot
rovt r or rocordo r r
a Enamel or par-o (acted a tho cooooudattoo and at tho
Wooded haluoo to that marathon. a [In soy coll (or tho
probation at tho otlotro of an wagging m: thou grgr-o
hovo been trons;ng n I sum; 2 gmuluostoo. for tho
W39 prop" to insert th- vhrm___
"m or" hetero tho 3911 "won" go lo 2. no 21, Horoovor. to
(111 as to thto t1 to no or rt o tho lollovio oov
ltbooctioo at tho Eng 9 gm 11 {and tho mtgmto ram-hora. _
l ouhac t '
'92 tor go woo of ooctlooo 00) q! E of thgg
tit 12 ro 01 on all o of oithor
Wabash.
u as follow: "mot tho dooa not
avor o coooo o oo an o oro
- o no out on
Lrgt biggh lags: therein Qging filled with the uses of the
esolvin or b e erein bein
ggprggrietely filled; but does not include a_plgglu;ign____
which eggCifiel ggre than one cgggolidetion glen,"
we uelcone the Adninistreticn's endorse-ent of the "Reorganisa-
tion Plan approach" as reflected in n.3, l0956. While there are ninor
differences between this measure and Title 2;]. we are convinced the!
e il re led
Sane opponents of this "Inorganieetion Plen approach have
contended that it involves an unconstitutional delegation of
legislative authority to the executive branch. Us are convinced--
end various authorities support us--thet the issues involved in this
argument differ in no respect from those applied to the Reorganization
Act. Thus far, the letter has been voted by Congress on eight different
occasions and its renewal this year demonstrates Congressional sanction
of the constitutionality of this device.
The Advisory Coulission in its co-prehensive study of Fiscal
9.155cc in the American [eder.l §zsten recon-ended a drastic decrease
in the number of separate authorisations for Federal grants end
specifically recommended the method set forth in this title as e
neans of furthering this objective. We are aware of the tough
opposition that this title feces. At the sees tine, we are convinced-
and the Administration clearly concurs in this--thet the authority it
provides is necessary to give the President the necessary extra nergin
of initiative in e field where successful initiatives have been ell too
infrequent.
o t I 8 if
Title IV of the proposed legislation is igered to making the
xisti rent- no re fl i ls and ed table to the needs
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0 use or are actually adopting a multi-ggggtionel. "pecgggig
approach to neetig their gigging physical and ggsiel develggggntel
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£i291_seekine to ecunt a real attack on prohlsne_fecing_ur§ag_gnd_;ggg;______
ahexiu.._
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.Yet at presentI a State or local government in assembling a
cemhined program must apply separately for each of the required cgm:____
ponenta. Keeping the separate applications moving along at about the
same pace and with the same prospect of approval, frequently becomes an
exercise in administrative futility and places a high premium on playing
the expensive game of grantamanship exceptionally well. The applicant
State or local jurisdiction may find some of its components approved;
others turned down; and still others caught in a labyrinth of fiscal
and administrative doubt due to competition among grant agencies for
appropriation funds, widely varying application procedures, and
differing agency approaches to delegating approval authority to field
offices. Furthermore, even if all the components are approved and in
a timely fashion, the widely varying planning, financial reporting,
auditing, and other administrative requirements relating to each of
the individual grants coalesce to make administration of the combined
project an intricate, time consuming, and excessively troublesome
undertaking.
The Joint Funding Simplification title of the pending legisla-
_tion an 1' im lif administrative and technical re uire- _
ment e e ack in a roach to
Ehe consideration, prggessingI approvalI and administration of Federal
assistance programs. This is accomplished by authorizing at thg_
departmental andI to a lesser extentI the interdepartmental levels the
_gaiver or modification of certain statutogz procedural reguirements;
by permitting establishment of spegial joint funds for finenging gpproggd
-combined applications; hp describing wgzs in which Federal agency heads,
-vigh respecp to grants falling withig their reapegtige jggisdiggigna and
the Presideg; pith [gpgct to the entire range of these programsI can
foster joint projects; and b2 authorising the President to establish
implementing standards and procedures.
Unlike H.R. 665A (91st Congress)I which has been the subject
pf hearings before the Subcommittee on ExecutiVe and Legislative
Reorganisation, gng its predecessor legislationI h.R, 12631 90th
Congress, this title seeks to facilitate developgent of 10int
projects and loint funding arrangements at the national level by
.focusin rimari 0 those arra ements that are necessar to
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achieve an effective departmental program and by placing interdepartmental
gain; nxgjggns and fund: on a ghglly experimental and limited-demonstration
basis. A careful examination of the hearing record on 8.8. 12631 has
convinced us that this n the ag: snug £2 m. WJLm__
feasibility guestions raised during these earlier proceedings are recognised
in the changes appearing in the pending legislation.
By differentiating between interdepartmental and
interdepartmental joint projects and management funds,
this title, in our view, provides a more realistic and
relevant approach to problems of packaging and would appear
to have greater promise of real results.
By authorising-~indeed by expecting--the development of
a comprehensive, ongoing joint funding effort within the
various departments, this measure recognizes that no joint
funding approach will ever succeed without effective action
at the secretarial level.
It also recognizes that the individual secretaries-~far
more than an interagency committee or the Bureau of the
Budget-ars more likely to be able to make meaningful use
of the powers assigned to them under this kind of legislation.
In focusing on interdepartmental projects, it avoids
placing heavy reliance on the voluntary cooperation of depart-
mental heads and the coordinating capability of the Bureau of
the Budget--unlike the scross-the-hOsrd approach embodied
in H.R. 6656 and B.R. 12631.
It also recognizes that, despite the very great need for
joint funding on a governmentwide basis, it is best to
recognize at the outset the difficulty of achieving a
community of interest among the separate departments and
agencies involved; hence, efforts in this area are placed
on a limited-demonstration basis.
Quite clearly, interdepartmental rivalries along with the
heavy burden of the other responsibilities of the Executive
Office of the President--especially those of the Bureau of
the Budget-~nake it difficult to conceive of a situation
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uhere nt-erous joint funding applications involving progr-s
of too or nore departments could be effectively and expeditiously
processed, approved, jointly fmded, and subsequutly nonitored.
In all these reasons, we believe the interdgpartnental phase of
the to r- should he in es s relativsl nodost venture. this is achieved
bx limiting the mnher of ngroved interdepartmental projects to no nore
than 100 in o e dur o roe ar
urstion of th r o!
hitr and r l ro is taken the Co-ittoe oi t
sh to r fee r t 1
nature of this rm of cgliggted egfgrg should be ghnovledggd and
this is done bx gum; tho Pgegigggs'g ggthoritx under section 902
0 three e r e on of e e l o
confronts sgugrx mg (g; sh lg dung-gnu]. hlm an no: _
ikel t rel t roval authori to
ri t e the
-transfer of such authoritz fro. one depart-out to mother.
[n endorsing this two-level gproaoh to achieving pint
funding egglification. we are sanguine about the prospectivelz exten-
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go progrn. A; mg mg. howeverI gun the besrishness of exist-
ing hureeuergtig lifeI vs belie! :55; the prgpgged title will provide
221: challenge to an; the Egan m the gecutive Office of- _ _
e Pro t t ll neslorise
either of these par_tg of th_o_l'ederal executive branch.
lt night he noted at this point that in order to clarify the
definition of "Joint Project" consideration night be given to
section 112 (appearing on page 2) and substituting the following in
lieu thereof:
"Joint pro ject" neans any mdertdting duel: includes
conponents proposed or approved for aid mder lore than
one Federal ossistence progrn or qpropriation, or one
or more Federal assistance programs or appropriations in
combination with one or nore State or local pron-s, if
each of these coupononts serves so an integral part of a
de-
conprehensive effort by the applicant to nest the
interrelated progra- needs of a specified age or
income group, labor or occupational category. or
geographic area that falls within the applicant's
jurisdiction.
To sun up, like all of the other provisions of .11. 7366, this
title is geared to upgrading the management of Federal assistance
prograns to State and local govertsnents. By encouraging the develop-
nent of a sore flexible "packaging" approach to the abinistration of
these prograns, it seeks to titer-vent many of the negatiw hy-products
of grant-in-aid fragnentation. In the final analysis, houever, there
is no substitute for aggressive action on the core basic and more
difficult problen dealt with in the previous title: the need for
grant consolidation. At the sure tine, this title is still a signifi-
cant neans of reforming the existing systu and its effective implementa-
tion in all likelihood will produce a nuber of well thought-out
consolidation proposals.
Co res ion 1 I ecutive Over 0
Yedergl geisgme Prggrg!
e fin l e o r n r vernaental C eration
Act of 1969 focuses on the pressing need on the part of Congress, _
Federal depgrm; bu. m m; gigging; gg snug: I ears cmrehen-
sive and s stenatic viev e ti as o e at l seist e
proE-s. Title VI of the lnterggverusental Generation Act of 1968,
which nandated g exam; goggreggiml review of future grant-in- _
aid program. prong n uent gaging..ng in thig geeI but only a
beginningI
There is a need to extend the review procedures stipulated in
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dgtg. Hence, the first section of this title stipulates that during
the year preceding the date on which a progr-a authority is
slated to expire, the relevant substantive co-itteea of Congress--
either separately or jointly-rill conduct studies of the grant and
advise their respective Houses of their findings. Grants with
temination dates, of course, receive fairly careful Congressional
scrutiny before being renewed. But the procedures now applied do not
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aim. cover the intergovermntal implications of the progrn. lhis
provision in the final title of B.R. 7366 is designed to correct dais
deficiency.
here is a problen of staffing with resEct to Congressional
roversi tof ran-n- r :- Secti 0 f usesonthia table.
or authorizing establishment of the position of review specialist on
each of the standi coi to he Sen e h e r _
review. study 93 gggrgight of Federal assist-Ice progr-s. lhis
addition pggfgim It. mg; mg he lung m aggginted
b1 the chairman of a: standng committee with prior gprwal of the_ __
ranking linoritz elder, He would serve on a Euanent basis without
re srd to olitical affiliation and in recognition of his professional
.cgjgtence. His basic responsibility would be to assist the con-.ittee
in its performance of the functions assigned under Title V of the
Intergovernmental Cooperation Act of 1968, as .ended by this legislation.
There is also a need to strengthen gecutive branch oversight
with resgct to tag; .gghgme progrm, liege. a third basic
rovision 0 he f d tnents and encies
n terin t ro t annuall a re rt
Con resa d t on r cm of their r- r-Is
minni with e r e r e date of enactment. h
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progress and effectiveness of departmental efforts to i-plenent their
progr-s' statutogz pals'I the arrangenents used under each progr- to
afford recipient gov-artisan an opportunity to review and cment on
proposed adminiatrstive regulations and basic progrln changes; the
various Isaiah-u. utilised for achieving proper headquarters-field
coordination oi program activities; departmental efforts to simplify
and make more unifom application for-e and procedures as well as fiscal
reporting and auditing require-eats; the practicality of consolidating
functionall"-related assistance progrns falling within the department's
jurisdiction; the feasibility of delegating Io" abinistrative
authority to departmental field offices; and finally mother the
purpose, management, administrative procedures, and requirexnents in such
progress should be changed and whether-4n light of rapidly changing
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condlttasnsunh prov-s are nonth tho nonds my not. turn,
dnslpod to support.
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re r m valons do art-sntsl
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usch 1; In; in; 9g 135. at. Pnsldnnttsl mu wouldI
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depsrtnsntsl snsl sls all vonld s to -
alts-loos n! the ton in
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. I {Oggln
Sons nlt gusstion tho usstulnus of 1215. on this rsgort
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tthnrncor Vidal to tom
7 an: r r ul t
hntotn rnssl l c.1th of on r sntho
W sun-mu the dntnnsn (on W
nag-guano!" rsgnosts mentally-noun: sonarle nor in
onbl -- st
the Prssldnnt or the on with n no Eul do srtnontsl or Lntnr-
sr m on with to tho s rohlus and r-
em 0 list no to mks
of tls V o! m ngmm mrlnn Act of l! on dug
to hol l onstlon .
ldsslly. thou reports should (onus on tho lntsrgovsruonrsl,
lntnrsgsncy sod lntrnngnncy t-tllnstlonl as well u on tho lnovstlvo
needs at tho vsrtous grant progr-s rsthsr than on s stand-pat"
prograohy-progr- description that lacks my analysis o! thsss various
interrslstlonshlps. ldnslly, thou rsports would hn nod by dopsrt-nntnl
necntntloo, tho knead. otcn at tho Instant. nd tho roles-t
Congressional cuttm to nulst th- in discharging hottnr thou
respoctlvs nmt .d overslght wanna. I: m m5.
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inommn that would MI? W. not 1a 4-
sltlon of he s sun of tho rsssuros thst rnduns and r tustn
grant prolunrstlnn.
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Concluotm. to an op, Kr. Char-an, by (ocualng on tho (local
_I*~
llgglggggt. gggggllggggg, Iggkggggg. and gggraglgt dloonnloon of tho
rant on atr 1 into
crucial areas of lot tratlon that aunt be ontorod
.1! our federal agatgl ;. g h. gdggtog g9 tn. 1.; .3: gage of chango
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votolal and are 5:91:34 11th .g1g adggggtgg 2! narrow grgggan golltlca. A_4
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thonoolvoa to agggllaggc rooodloa.
Intergovornnontal rolatlono today aro ooro lntrtcato, noro
lnvolvad, and morn lntonao than they havo ovor boon in our onttro hlotory.
To auccood, thla ayaton--and oopoclolly lta labyrinth-Ilka pattorn of
adllnlotratlve rolatlooohlpo--ouot be govornod by a aplrit of coopora-
tloo ond greater ordor. Yot conflict and chaoo noon to ho the order of
tho day.
0 urb and reduco tho chaoo t policy-akora at
all lovola-otho Iroaldont and Consroao, tho govornor and tho logtalaturo.
tho ngzor and tho goggggl. hugs be otroggthonod so vlthotand tho
mounting Eorochlol groaguroa that swlrl around thou. An tho Advlaogz _
Calnloolon notod 1n lta loot aggual noggrg:
..Iho c lo: of lntorenta-nlddlo Ian ooont progra-
niotra to t a
and .rooauro r- ~o--that coaloaco around tho lndividual
-ranto caxrlod -- s .
I.
makers. Thuo loro otton thou not -o!torta to achi
in lifted
To ollc ohoro thou t all lovo ho coated to Ian
aoo lencnt 1a
to: r
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o rto to r -
ovol bonln nhoul aninod h tod ond-oohoro oorltortoua--
anggtod and exocutod.
tho uasura baton zoo is tootad in those hatch facts at
cmtmtg tadatalisn, It is also tootod in out historyI to: it
iua that ours is a stan of shared taa ihilitioa no ts.
.This was tho intan n P 00
_suggasts that it must ho our guiding grincigla today.
tho Co-iuion agrees with this haaic saunption, tot vs halicva
that no othot ton-ula holds groatat pro-isa for resolving tho nany
difficulties conirontin; as hot. at halo. Int we also tool that its
effective application Inquires tho ingnnuity. initiativn, and political
courage of officials at all lovola and that tho tututn of iadatalial
depends on hov wall so succeed now in randorin; intergovaru-ontal
aduinistrativo tclationahips Iota rolsvant and not. taaponsiva, to
the untolantin; tinas in which an 1iv.
Io: all thoaa reasons we a
Gaw
rt .l. 7366 and u! c itg_.
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...le geeeral. the baa-nun finde the grnt a useful
device (or harnessing cooperative gover-eetel effort in
the accomplth of a national legislative purpoec.
nae opportunity for cooperation between the lmle o!
covert-set (or the attain-cut of cm ohjectivca
should be recognised as a resource or our federal systee.
In some circueetences the use of a great my be the more
practical and desireble eethod of ehinietering an
activity than confining couplete responsibility to any
one level of goverI-ent....
\t develmt! ie (sent are have muted mtg college
as to the giggiveeese 3! the categorical-pet es s cues of (urther-
m intergoverueatel collaboratioe. At 2;; Loiet in tineI the gra_et
hea hecoee as euch e testi "ea it ia a technl "of c retlve
intergowmnentel reletiona.
Wanna.
Celloplns urhaeiaetioe. soaring population figures, a rial-g
tide of affluence. .d the continuing ctieee 1e our core citiee end in
the countryside-hue have been the Male (ectore that have generated
persistent deeaode tor eore and non public services (roe govern-set.
And govenueotuell warmth-have soudlt to rise to this challenge.
In teres of civilian-donut: expendituree. the total outlay increased
eore than (our times during the peat two decedee. In tern: of the
dittareot govermeetal levels. federal expendituree [or civil govere-
eeet during the period 1 to 1967 increeaed eore than two and one-
hell tines (reaching the 63.5 billion figure ll 1967); State outlaye
eore thee quadrupled during this s-e period (reaching 3-3.2 hillioe
in 1967); and local eapeediturcs eultiplied eore thee five tiees
(passing the 59 billion eerk in 1961). ora and eore since the and
at world war II and especially during the put eight years, Federal
expenditures in this sector have taken the lore of grenta-ie-eid.
Blather plugging-her. dollar neitudee, or t on intergovern-
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the eoet garnet single tool of tieceleederelig'j and m a _
gouditioner of "guasretive {mag-
2 dollar mu. 'ederal aid hee. ggrieeced core than a
(our-(old increase begged l957 and [g-gin 3 gang amlghlhe
Waln-
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l 1964 to an
esti-sted 320.5 billion for the current fiscal gear and, according to
a e tinetes Federal rant e nditures for
fiscal 1229 3111 aggggd tug £25.: billion nark--or more than three and
one-half times the 1950 figure,
In tern: of numbersI the total of separate grant authorizations
lore than doubled between 1962 to l933--risigg from 151 to 379. More-
OWLWAZ -mhmed grant argues
were enacted involving 1311 over this nunber in separate authorisations.
A cautious 'guesstinnte" than as to the grand total at the nonentgguld
place the figure at legs; 929, But no one can give an exact figure
with any certainty because of the difficulty of defining precisely what
constitutes a separate progren. We should keep in nind that we are
dealing here only with cash grants to State and local govern-eats and
not loans, advances or payments to individuals.
In torus of intergovernnental inpact. these lederel assistance
progrena now provide nearly l9 percent of State and local revenue and
their latching require-eats now generate expenditures by these jurisdic-
tions on the order of one for every two federal grant-in-aid dollars.
At the sen: tine, we are at that point in tine where the number, couples-
ity, and varying adninistrative and personnel require-cute of these aid
prograns reisc serious questions concerning their usefulness as tools
of a properly functioning federal systen.
A Progren for Refgll
Ihe proposed Intergovernmental eggpgrntion Act of 1969 is
designed to strengthen and iggrove the management of federal assistance
gloggagg, As gush. i; goggl to grips sigh {our bagig difficulties that
plague_£ggtegpgrggx gragt-Lg-aig sdnigiggrationg the Question of over-
lapping and tinc-consuning auditingI accounting. and fiscal reporting
gctivities; the difficulties facing those seeking to "pggkagg" grant
gpglicetions; the tough issue of curbing the excessive fregggntation of
rant authorizations and categories; and the problen of achieving nore
effective executive and legislative oversight with respect to these
programs.
ngrggeg Fiscal ggaggggnt
the first substantive title of_§:!:~7355 is ared_to_reforning
the financial nanalgggnt of federal grants-in-aid. As you know. federal
agencies administering such pregrans are charged by Congress with assur-
ing the proper and legal use of grant funds and only a few have relied
on State and local audits in fulfilling this nandate. Horeover. the
General Accounting Office is charged with ascertaining the effectiveness
of agency audits of Federal expenditures of grants-in-aid to State and
local levels. As with the agencies. the can has relied chiefly on its
own personnel to perform the necessary audits, although in at least
one instance, it has accepted those of a State agency.
It goes without saying that adequate fiscal and progree controls
are an essential feature of any assistance progran and the governnent
providing such assistancev-uhether it be State or federal-~nust be able
to assure itself that such funds are being legally spent for the pur-
poses intended. Quite clearly, adequate auditing procedures and
financial reporting requirements are essential for this purpose. ,3:/
manpower considerationsI the high incidence of double paper workI the
fact that some agencies already are enperinentin. with the use of State
and 1 an i and the need to stren then the basis of collaboration
in the fiscal nana nt field-call nd cate the need for a broad
federal le islative mandate or .area.
A study conducted by the Rational Association of State Budget
Officers nearly two years ago revealed that the detailed, burdened-e
and slow auditing and reporting procedures required by federal grants-
in-aid cause considerable difficulty at the State level. The varia
tion between Federal and State requirements and among Federal require-
ments regarding the frequency, classification systems, and methods of
accounting were cited as creating particular problens. The excessively
detailed reports on sane programs were singled out by one State official.
who indicated that 54 individual fiscal reports had to he prepared and
filed regarding expenditures of funds under the Vocational Education
Act at the State and local levels, taking weeks of staff tine. Another
official complained that the braahdouns requested uere almost endless.
An earlier study, prepared by the staff of the Senate Subcommittee
on Intergovernmental Relations. found that half of the State and local
respondents to its questionnaire indicated that the variations anon; the
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fiscal reporting and accounting require-cute and differences between
lederal and State require-nets had caused considerable difficulties in
sdsinistering grant-in-eid programs. As one governor stated:
Many Federal agencies ignore the Staten' basic
accounting system and the controls therein, making
it necessary for State operating agencies to keep
double set; of books for Federal audit purposes.
Saar. Federal agencies 30 to the extent of alnost
cunplete voucher-by-voucher audit and at times de-
nand that accounting; he done by a 'lederal' standard
which in essence is not Federal as such but P013011
to the needs of the specific agency concerned.
Owrall, an overwelning umber of the State and local officials
indicated that legislation was needed to achieve nore uniform accounting
and auditing procedures uong federal grant program. On the other hand
in a subsequent Subculttee study entitled me [geral slate. a! my
W. it was reported that a ujority of Federal
progrn athinistrators polled felt that the variations in auditing re-
quirenlents caused no difficulties in the State and local ad-inistratinn
of their respective program A sizeahle najority rejected the proposal
that the post-audit of aid program: night be dispensed with where s
State's post-audit eysten not standards the Conptrollcr General set
down. In addition. a conparable proportion disputed the need for note
uniforn auditing and accounting procedures for all grant-in-aid
progrlas. Je understand that the lnteragency rash Iorce now reviewing
intergoverr-cntal fiscal nanagenent prohlsne has fond further evidence
to corroborate nany of the earlier findings.
W
W
r a e a el to uniform fiscal
r a a a tin" re uironents. Yet there rennin __ _
e n to re le and e Ic-
tivc and whet a set i
one State and 1 al f isle that he re d thenselves on t e
s a t 0 Is a tee.
It seems glee; that legislation lg needed to sEed reform in
this long neglected area. Title 11 of the proposed Intergovernnsntal
-5-
Cooperation \ct of 1969 is cared to achieving three basic objectives}
zirst. it qives the President authority to prouulgate rules
rehulations desi ed to achieve reater consists -
Elicity and order inthe area of grant-in-aid financial
reporting-oan areaI we might add' that is only beginning to
be reconnized as a serious inter overnmental a trative
problem.
Second, this title (via sections 702 and 7031 reguires
Federal a encies administerin rant roar
accounting and auditing policies thatI to the greatest extent
possibleI rely on accounting and auditing performed at the
itete and local levels. Federal agency heads would determine
the adeguacy of the internal financial unnaggggg; system!
utili:ed by recipient jurisdictions. Such determinations would,
as a minhaue, involve ascertaining (1) whether accounting
records are maintained and reports are prepared in accordance
with generally accepted accounting principles, (2) whether
audits are carried out in accordance with commonly accepted
auditing standards, and (3) whether the auditing function is
performed on a timely basis by qualified staff whose position
is sufficiently independent of program operations to permit a
comprehensive and objective audit. Ehere such control systems
are found acceptable, heads of spenciea would authorize accept-
ence of audits performed under these systems as a substitute for
WW:
thc continuino reliebi t a e l at
a mandate is also given to each Federal grant agency to
strengthen the cooperation between and among financial manage-
ment personnel. This is done by requiring a continuous liaison
with counterpart State and local officials, by exchanging
auditing standards and objectives, and by joining together in
the development of auditing schedules. In addition' each
grant:dism.WammmmmaJAnius
and permitted by lawI to coordinate and make uniform the
guditing reguireuents of its prgLrams and to join with other
0'.
such agenci:s in cross-servici arrange-ants for the conduct
gf one another's audit. the bureau of the budget. or such
Ether agencz as he: be designated b! the President. is authorized
to prescribe such rules and regulations as are considered
necessarz for the effective ggigigtratigg 9 section 29}.
The Commission is ful
(all for short of the to osal advanced some that a sin in
unit should be established within the Executive Office of the
President to develop and sonitor unifor- accounting and audit-
inq procedures and reguirenents for all Federal agencies. At
the sea tine. we believe that these provisions of .l. 7366
age much more in barman! with the realities facing us now in
the financial management field within the Federal executive
.branch 2nd we are hopeful that they will accelerate efforts to
develop accounting systems within the agencies that neet GAO's
standards.
Third. this title (section 704) authorises the Conptroller
Gen.rol to prescribe rules and regulations vhsrebv the GAO
lguld accept the pgst-eudits of aid programs performed bx
ggcipicnt States and political subdivisions. but onlz where
they are performed under financial manageeent sxstens vhose
Erotedurcs meet generall! accepted auditing standards and uhose
personnel are sualified and in a position to perforn an adeguate
and objective audit. 4! in the sage of the [gigggl .ggggx
eads riodic can le testin is authorised to r be
cggtinuing reliabilitz of such szstons.
Criticisms of this title have been and continue to be divergent
and sometimvs difficult to resolve. Sons skeptics claim that assigning
the President authority to sinplify financial reporting require-ants will
lead to nothing. unless the Bureau of the Budget and depart-ental coup
trollera are uillin: and able to connit the-selves to this objective.
Sane argue that federal agency heads will be unwilling to substitute
State and local audits for their own. given the very different Ianage-
ment purposes these departmental audits serve. Sons State critics
contend that no Federal agency head should be enpousred to evaluate
their audits since only a minority of the agency auditing systems have
been accepted by the General Accounting Office. 5935 argue that Coggress
zguld be unwilling to accent State and local audits for its fiscal
accountability purposes and thisI in turnI would reduce any real agency
interest in utilizing the authority granted here. Some claim that the
GAO would never certify certain State and local post-audits for their
own purposesI since this would lead to invidious comparisons among the
vagying financial managanent systems of States and localities and would __
embroil the CAD in controversy. GAO's report on this bill, we understand,
tends to bear out this argument. Finally, some critics allege that many
State and local governments will oppose this legislation on grounds that
their financial control systems night not meet accepted auditing and
accounting standards and these deficiencies would be highlighted to their
sister States by the mechanics of the substitution process.
DesEite these various criticismsI the Commission is convinced
that financial management needs greater communication and collaboration
anong the Eersonnel gt yarious levels of government. The present
intergovernmental fisggl control system is certainly something less
than erfe t e b a rm 3 ti factor
The manpower gap facing this sector of the public service is recognised
by most people gnilig: nigh the figld. Enactment of this title would
onser e t er
simplicityI and enhance the basic goal of fiscal accountability at all
levels, For these reasons. we strongly sgpport it.
Consolidatign of Federal gsistsnce Programs
Title III of the proposed Intergovernmental Cooperation Act of
1969 as well as h.R. 199:4 authorize the President to sgbmit grant A! _
consolidation proposals to Congress under procedures generally comparable
to those laid down in the Reorganization Act recently enacted by Congress.
If consolid n f e major management problem-- _
ind gs believe i; i§--legi!lation along the lines outlined here is a
e e a --if n indie enssble-qneans of achieving a significant break-
through in this area. As was noted earlier, the proliferation of
Federal grants has created serious fiscal and administrative problems
at all levels. It has generated such difficulties as a lack of
-8-
Mmtioo cocoon mo of nut. (ado ad a coorqu
ad dqlicatioo acog grat progzas. in addition, the Lawsuit,
o! nay separato (ado ad chiniatrativo "quit-outs lsavo ca, tho
capacity of both ahiuiatrators ad aloctod oioiala to axacuta,
coordinate, and avaluata manly grant-in-sid progras.
Consolidation thou has boon-o a top priority iron on practically
avarybody's list on host to atroogthao tho pat-Wald systa.
lcgrotfolly. ccosolidatloo is (at assist to talk about na to achiava.
Wt. ad dospita out are mm. on this front,
recast devolopccta an (at Ira cocoa. lay boliovod that tho
passaga of tho hrtoorship ad hold: at in l, aid-t bogio a traod
toward consolidation and cabinstion o! catagorical grant program
'l'his progra, hmvar, vss subsequactly arodad by Congrcsaiooal
catogorizatioo o! baclth progras for nigrat workors, alcoholics. ad
drug addicts. lloroovar. oarly in l. hosidoat Maso- traaittod
to Congress dralt lagislatioo to pad ad nodanias Podoral asaiataro
(or vocational adocatioo. lo additica to iotroaaia dollar authorisa-
tiooa and asking ladoral aid avadlabla in a M of now brood aroaa,
thc proposed lagislatioo would luvs consolidated nay vocational
aducation catagorisa into a ganercl grant. During the coursa o!
Congrasuonsl hoaricga, lull cousidsrstioo was opposed by various
yrogra forcas ad tho raault was a daloat. at laaat for tho tins being.
(or proponents o! this pool is this tiald. no nal aasurc attai-
llahod an: as: authorisations ad throo aoyarato sonata-gs lla
attaining sac consolidation ad groatar stats discretion in oldsr
progra crass. no la diroctod tho Coaiaaiooor o! ldocatioo to
conduct anothsr study at tho feasibility of consolidating vocational
aducation progras sad to roport to Congrasa this you.
to data thanI Eat consolidation has lollovad tho ooml
coarso of tho nugnnn um; u m nu m in 33
W
W
Winn.
2 Egress for d I d f
a ial on s d
We! a non practical nature. 5;. 1--
mt uhiaistrators at both tho Itatc ad lodoral lovala call!
4-
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PAGE 11
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PAGE 12
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PAGE 15
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PAGE 16
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PAGE 17
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PAGE 18
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