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General Accounting Office - White House Audits
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General Accounting Office - White House Audits
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Philip W. Buchen Files
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The original documents are located in Box 18, folder "General Accounting Office - White
House Audits" of the Philip Buchen Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 18 of the Philip Buchen Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
August 27, 1974
MEMORANDUM FOR:
Jerry Jones
FROM:
Philip Buchen
SUBJECT:
White House Subsidiary Account
Please see attached copy of memorandum to me from
Dudley Chapman.
I do not see in the file the GAO deadline for response, but
I notice from its letter to Wilbur Jenkins of August 19 that
forms and instructions were sent to him.
Suggest completion of forms, which I would be glad to review
before filing, and prompt advance notice to GAO that filling
out of forms is in process.
Am returning looseleaf book related to this matter.
Attachment
cc: Gen. Haig
GEBRLD FORD LIBRARY
THE WHITE HOUSE
WASHINGTON
August 22, 1974
MEMORANDUM FOR:
PHIL BUCHEN
FROM:
DUDLEY CHAPMAN
De
SUBJECT:
The Hatch Act and Wilbur Jenkins
The Hatch Act (5 USC 7324(a)(2)) makes it unlawful for an employee
in an executive agency to "take an active part in political management
or in political compaigns. " An exception to this prohibition is made
for "an employee paid from the appropriation for the office of the
President" (Sec. 7324(d)(1).
Since Mr. Jenkins is paid from the appropriation for the Executive
Office of the President, he is not subject to the prohibition of
(a)(2). It is therefore unnecessary to resolve the question of whether
his registering and certifying the White House Subsidiary Account
under 2 USC 431(d) would constitute taking "an active part in political
management or in political campaigns. "
GERALD LIBRARY ,ORD
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
GAD
THE WHITE HOUSE
WASHINGTON
November 14, 1974
MEMORA NDUM FOR: Bill Roberts
FROM:
Phil Buchen That
SUBJECT:
Possible Reply to Press
Inquiry on Jack Anderson Story
Per our conversation, the following is suggested if
the Press Office gets inquiries on the Anderson story:
"The Ford Administration has made a
full disclosure of all the information available
to it concerning the White House subsidiary
account. There has not been an attempt to conceal
the fact that a White House fund was used to pay
the expenses of advance men during the 1972
campaign. All of these facts are fully disclosed in
the report submitted to GAO in accordance with its
request. Any determination of the legal conclusions
reached by GAO is subject to decision by the
Department of Justice."
GERALO FORD LIBRARY
THE WHITE HOUSE
WAshinGTON
November 14, 1974
MEMORANDUM FOR: PHIL BUCHEN
FROM:
DUDLEY CHAPMAN
SUBJECT:
Possible Reply to Press
Inquiry on Jack Anderson Story
In case you have not already done so, and if the
press office requests a comment on the Anderson
story, I would suggest something along the following
lines:
"The Ford Administration has made a full
disclosure of all the information available to it
concerning the White House subsidiary account.
There has been an attempt to conceal the fact
that a White House fund was used to pay the
expenses of advance men during the 1972 campaign.
All of these facts are fully disclosed in the report
submitted to GAO in accordance with its request.
Any determination of the legal conclusions reached
by GAO is subject to decision by the Department
of Justice. "
FORD LIBRARY is GERALD
The Washington Merry-Go-Round
THE WASHINGTON POST
Thursday, Nov. 14, 1974
F11
New White House Cover- up Alleged
By Jack Anderson
ary Account and signed the
checks."
fund, in violation of federal law,
hierarchy, won the 1973 election
The Watergate cover-up con-
But Jenkins apparently was
had failed to file any campaign
for district director. But the evi-
tinued in at least one instance
statement for more than two
the fall guy for Nixon aides who
dence was strong that Edward
after President Nixon left the
years. This forced the White
really controlled the fund. He
Sadlowski, the reform chal-
White House.
House to submit a belated fil-
told the GAO auditors that
lenger, should have won. A new
President Ford's associate
ing. But even after President
Bruce Kehrli, then the White
vote was ordered.
counsel, Dudley Chapman, al-
Ford's takeover, his associate
House staff secretary and later
legedly tried to conceal the fact
counsel continued to deny to the
Now Rauh has charged that
a minor Watergate figure, "ap-
GAO that the White House had
the Labor Department, which
GAO
December 10, 1974
MEMORANDUM FOR: Ken Lasarus
FROM:
Phil Buchen
SUBJECT:
Request of December 5 from
the Deputy Comptroller General
I would appreciate your giving careful consideration as to
what employees within the White House Complex performing
police or investigative services fall within the scope of this
request as directed to me. If you find that any or all such
employees are those of an agency or department not covered
by our questionnaire, I think we should find out how the
employing agency will be reporting in regard to those
employees.
Please keep me advised and seek whatever help you need
from Jerry Jones' office.
Attachment
PWBuchen:ed
FORD i LIBRARY OFNALD
THE WHITE HOUSE
WASHINGTON
January 2, 1975
Dear Mr. Staats:
This letter is to request an audit of the White House accounts
by the General Accounting Office. I respectfully request that
such an audit be made to settle the accounts of the accountable
officers and suggest that the period of the review be from the
time of the last settlement audit of June 30, 1969 through
August 9, 1974.
I believe it is appropriate to conduct such a review during this
transition period and the closing date mentioned above would
complete the audit of accounts through the end of the previous
administration.
The General Accounting Office is presently conducting a. com-
prehensive audit of White House expenses incurred to date in
connection with the transition. When the transition audit is
complete, we will be abie to furnish whatever assistance you
may require for the settlement audit. If this timing is suitable
to you, arrangements to begin may be made with Mr. Robert D.
Linder of the White House staff.
Thank you for your consideration of this matter.
Sincerely,
Philip W. Buchen
Counsel to the President
The Honorable Elmer B. Staats
Comptroller General of the United States
Washington, D.C. 20548
FORD is GERALD LIBRARY
THE WHITE HOUSE
WASHINGTON
January 2, 1975
Dear Mr. Staats:
This letter is to request an audit of the White House accounts
by the General Accounting Office. I respectfully request that
such an audit be made to settle the accounts of the accountable
officers and suggest that the period of the review be from the
time of the last settlement audit of June 30, 1969 through
August 9, 1974.
I believe it is appropriate to conduct such a review during this
transition period and the closing date mentioned above would
complete the audit of accounts through the end of the previous
administration.
The General Accounting Office is presently conducting a. com-
prehensive audit of White House expenses incurred to date in
connection with the transition. When the transition audit is
complete, we will be able to furnish whatever assistance you
may require for the settlement audit. If this timing is suitable
to you, arrangements to begin may be made with Mr. Robert D.
Linder of the White House staff.
Thank you for your consideration of this matter.
Sincerely,
Philip
Counsel to the President
The Honorable Elmer B. Staats
Comptroller General of the United States
Washington, D.C. 20548
FORD : GERALD LIBRARY
GAO
THE WHITE HOUSE
WASHINGTON
January 10, 1975
Dear Mr. Anderson:
This is in response to Mr. Keller's letter to me dated
December 5, 1974, requesting budgetary, organizational and
personnel information relevant to any employees of the White
House Office who perform police, investigative or intelligence
activities.
While employees of several departments and agencies; i.e.,
the United States Secret Service, the Executive Protective
Service, the Federal Bureau of Investigation and the Department
of Defense, may from time to time perform such activities on
behalf of the White House, there are no employees of the White
House Office who perform either police investigative or
intelligence activities. It is my understanding of Mr. Keller's
request that these other departments and agencies have been
contacted directly by the General Accounting Office and that
their responses are expected to include information relevant to
any such persons who may from time to time perform such
activities on behalf of the White House.
By copy of this letter, I am notifying the above-named agencies
of my response to you. I trust this satisfies your inquiry but do
not hesitate to contact me if I can be of further assistance.
Sincerely,
Counsel to the President
Mr. John Anderson
Washington Regional Office
U.S. General Accounting Office
803 West Broad Street, Fifth Floor
Falls Church, Virginia 22046
Attachment
LIBRARY GERALD P. FORD
GAO
January 10, 1975
Dear Mr. Anderson:
This is in response to Mr. Keller's letter to me dated
December 5, 1974, requesting budgetary, organizational and
personnel information relevant to any employees of the White
House Office who perform police, investigative or intelligence
activities.
While employees of several departments and agencies; i.e.,
the United States Secret Service, the Executive Protective
Service, the Federal Bureau of Investigation and the Department
of Defense, may from time to time perform such activities on
behalf of the White House, there are no employees of the White
House Office who perform either police, investigative or
intelligence activities. It is my understanding of Mr. Keller's
request that these other departments and agencies have been
contacted directly by the General Accounting Office and that
their responses are expected to include information relevant to
any such persons who may from time to time perform such
activities on behalf of the White House.
By copy of this letter, I am netifying the above-named agencies
of my response to you. I trust this satisfies your inquiry but do
not hesitate to contact me if I can be of further assistance.
bcc: Silberman - - Justice
Sincerely,
Kelley - FBI
Hoffman DOD
151
Knight - SS
Philip W. Buchen
McDonald Treasury
Macdonald
Counsel to the President
Mr. John Anderson
Washington Regional Office
U.S. General Accounting Office
803 West Broad Street, Fifth Floor
Falls Church, Virginia 22046
Attachment
GERALD LIBRARY #: FORD
THE WHITE HOUSE
WASHINGTON
January 10, 1975
FOR:
PHIL BUCHEN
FROM:
KEN LAZARUS
K
Attached for your signature is a
letter and attachment to the inquiry
made by the Deputy Comptroller
General which should go out today.
It has been cleared with Jerry Jones
and the NSC.
A GERALD
GAO
December 10, 1974
MEMORANDUM FOR: Ken Lasarus
FROM:
Phil Buchen
SUBJECT:
Request of December 5 from
the Deputy Comptroller General
I would appreciate your giving careful consideration as to
what employees within the White House Complex performing
police or investigative services fall within the scops of this
request as directed to me. If you find that any or all such
employees are those of an agency OF department not covered
by our questionnaire, I think we should find out how the
employing agency will be reporting in regard to those
employees.
Please keep me advised and seek whatever help you need
from Jerry Jones' office.
Attachment
PWBuchen:ed
FORD i LIBRARY 03RALD
Tuesday 12/10/74
11:00 I have not given copies of this to anyone; do you
want copies to Jerry Jones?
Marsh?
Walker?
FORD it LIBRARY GERALD
COMPTROLLE GENERAL
COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON, D.C. 20548
OF THE UNITED STATES
Mr. Phillip Buchen
Counsel to the President
The White House Office
DEC 5 1974
1600 Pennsylvania Avenue, NW.
Washington, D.C. 20500
Dear Mr. Buchen:
Senator Charles Percy, as Ranking Minority Member of the Committee
on Government Operations, has asked the General Accounting Office to
obtain budgetary, organizational and personnel information for all
departments and agencies in the Federal Government that perform police
and investigative or intelligence activities. The Committee Chairman,
Senator Sam J. Ervin, Jr., has endorsed Senator Percy's request noting
that such information would benefit congressional oversight responsi-
bilities in this area of Government operations.
The enclosed questionnaire is being sent to all Federal departments
and agencies. A description of the activities to be reported on is also
enclosed.
Please return the completed questionnaire in the envelope provided
by January 10, 1975. Because of the large number of organizational units
involved and the requirements for comparable data from each, it will
probably be necessary for us to do some followup work with your agency.
The questionnaire does not solicit information pertaining to foreign
intelligence activities. This information is also central to this study
but recognizing that it may be of a "sensitive" nature, we plan to obtain
such data through on-site visits rather than by questionnaire.
If your organization or any of its subdivisions performs foreign
intelligence activities, please provide Mr. John Anderson of our
Washington Regional Office (703-557-2151) with the name of an official
that we should contact. He will be available to help you with any
questions that you may have. If you plan to assign a liaison for this
request, please provide his name as well.
Sincerely yours,
Bitkeller
Deputy Comptroller General
of the United States
Enclosures - 2
GERALD ADVUSIT ? FORD
ENCLOSURE I
POLICE AND INVESTIGATIVE OR INTELLIGENCE
ACTIVITIES RELATING TO DOMESTIC AFFAIRS
Code 91286
In carrying out their missions, agencies may perform a variety of
policing and investigative or intelligence activities relating to
domestic affairs. (Foreign intelligence activities are to be covered
by interview rather than questionnaire). To respond to Senator Percy's
request, the following types of activities should be covered. "Policing
and investigative activities"--include preserving and maintaining law
and public order, protecting life and property, and investigating
and apprehending persons for violations of criminal law. These activities
would include uniformed guards as well as "sworn" law enforcement
officers having authority to arrest. "Intelligence activities"-- "
include the collection and dissemination of information for purposes
of preventing criminal activities or conspiracies. In addition, the
following listing of Civil Service Occupation/Job Titles illustrates
the type of activities to be included:
GS-007 --Correctional Officer
GS-072 --Fingerprint Identification Series
GS-080 --Security Administration Series
GS-082 --U.S. Marshalls
GS-083 --Police Series
GS-085 --Guard Series
GS-1810--General Investigators
GS-1811--Criminal Investigators
GS-1812--Game Law Enforcement
GS-1816--Immigration Inspection
GS-1890--Customs Inspectors
GS-1891--Customs Enforcement Officers
GS-1896--Border Patrol Agent
It should be noted that THIS LISTING IS NOT ALL INCLUSIVE. Our intent
is that all persons engaged in police and investigative or intelligence
activities be reported regardless of job titles. If you have any
questions, call.
GERALD FORD LIBRARY
ENCLOSURE II
Page 1
1. Does your department or agency or any division or subdivision
thereof perform police and investigative or intelligence
activities as defined in enclosure I?
Yes
No
If the answer to question 1 is no, disregard the remaining
questions. However, if the answer is yes, please complete
the rest of the questionnaire. Under either circumstance,
please return the questionnaire.
FORD & GERALD LIBRARY
ENCLOSURE II
Page 2
2. Please provide the following information concerning all divisions and/or subdivisions of your department or agency that perform police and
investigative or intelligence activities. Separately identify those divisions or subdivisions that solely perform the training for such
activities and those that involve only guard functions. USE THE FOLLOWING FORMAT TO PROVIDE THE INFORMATION.
Total number of employees
programmed for each line
Line item
Total obligation
item listed
Total man-years
1/
(division,
Brief description
authority for each
6/30/73 6/30/74 6/30/75
6/30/73
6/30/74
6/30/75
subdivision
of division or
line item listed
Full Part Full Part Full Part
Full Part Full Part Full Part
or function)
activities
FY 73 FY 74 FY 75
Time Time Time Time Time Time
Time Time Time Time Time Time
GERALD
FORD
LIBRABY
NOTE 1: Please footnote how man-year computation is made.
ENCLOSURE II
Page 3
3. What other costs of your organization would be applicable to
the units reported above? What basis is used for allocating
such costs and what were the allocations for fiscal years
1973, 1974, and 1975?
4. Do you expect to increase your programs for police and investigative
or intelligence activities in fiscal year 1976, discounting the
effects of inflation or cost-of-living increases? If not, will
these programs remain at the same level or decrease? Please
explain.
5. What is the average grade level of the personnel performing
police and investigative or intelligence activities?
LIBRARY
GAO
THE WHITE HOUSE
WASHINGTON
January 10, 1975
Dear Mr. Anderson:
This is in response to Mr. Keller's letter to me dated
December 5, 1974, requesting budgetary, organizational and
personnel information relevant to any employees of the White
House Office who perform police, investigative or intelligence
activities.
While employees of several departments and agencies; i.e.,
the United States Secret Service, the Executive Protective
Service, the Federal Bureau of Investigation and the Department
of Defense, may from time to time perform such activities on
behalf of the White House, there are no employees of the White
House Office who perform either police investigative or
intelligence activities. It is my understanding of Mr. Keller's
request that these other departments and agencies have been
contacted directly by the General Accounting Office and that
their responses are expected to include information relevant to
any such persons who may from time to time perform such
activities on behalf of the White House.
By copy of this letter, I am notifying the above-named agencies
of my response to you. I trust this satisfies your inquiry but do
not hesitate to contact me if I can be of further assistance.
Sincerely,
Counsel to the President
Mr. John Anderson
Washington Regional Office
U.S. General Accounting Office
YORD is LIBRARY 07VR70
803 West Broad Street, Fifth Floor
Falls Church, Virginia 22046
Attachment
UNITED
STATE
COMPTROLLER GENERAL OF THE UNITED STATES
GENERAL ACCOUNTING OFFICE
WASHINGTON, D.C. 20548
B-133209
January 16, 1975
Mr. Philip W. Buchen
Counsel to the President
The White House
Dear Mr. Buchen:
In accordance with the request in your letter of January 2,
1975, we will audit the White House accounts to settle the accounts
of the accountable officers of the previous administration for the
period June 30, 1969, through August 9, 1974. As also requested,
we will not start this audit until the site work on the audit of
the presidential transition which is currently underway has been com-
pleted.
Our site work at the White House accounting office is substan-
tially complete and we will be able to begin our settlement audit
within the next few weeks. Appropriate arrangements have been made
to avoid both staffs performing any work at the White House account-
ing office at the same time.
Mr. John J. Cronin, Jr., Assistant Director of our Division of
Financial and General Management Studies, who will be responsible
for the audit, will make the necessary arrangements with Mr. Robert
Linder of your staff. Since this audit will take several months,
these arrangements will include a request for Executive Office
passes for the audit staff.
The Sincerely yours, R. Aleats
Comptroller General
of the United States
FORD i GERALD LIBRARY
THE WHITE HOUSE
WASHINGTON
June 3, 1975
MEMORANDUM FOR: Jerry Jones
FROM:
Philip Buchen P.W.B.
I believe that you will find the attached memorandum
and opinion regarding GAO's lack of authority to audit
certain White House Office accounts to be of particular
interest.
My office is available for any continued assistance that
you require on this matter.
Enclosures
CC: Bob Linder
GERAL LIBRARY FORD
THE WHITE HOUSE
WASHINGTON
June 3, 1975
MEMORANDUM FOR:
PHIL BUCHEN
FROM:
BARRY ROTH
Subject:
OLC Opinion On the GAO Request
to Audit the Presidential Travel
Account
The attached opinion of the Office of Legal Counsel responds
to a request from GAO to audit the Presidential Travel Account.
Basically, OLC makes the following conclusions:
1. GAO lacks the authority to audit the pre-FY
1975 accounts for Presidential travel, official
entertainment, newspapers, periodicals, and
teletype news service.
2. Despite a contrary intent by Congress in
eliminating the reference to a Presidential
certificate in the White House Office appropria-
tion, the appropriation only served to amend
3 U.S. C. 103 to expend $100,000 for Presidential
travel, accountable only on the President's
certificate.
3. This change in the appropriation language does
subject to GAO audit FY 1975 expenditures by the
White House Office for official entertainment, news-
papers, periodicals, teletype news service and the
hire of passenger motor vehicles (unless paid for from
the Presidential travel account).
FORD LIBRARY
4. The failure of the former President to account by
certificate for such expenditures does not allow GAO
to audit these accounts.
2
5. It is proper for a later President to certify
expenditures under a former President.
On this last point, I recommend that we prepare a certificate
for President Ford's signature only if this formality is insisted
upon by GAO after discussions with their auditors and the Staff
Secretary's office, in which Bob Linder has asked me to join
him. In addition, Jerry Jones should give some consideration
to the political reaction that may occur in the Congress as a
result of this opinion. My initial reaction is that this will
not have 2 great effect on whether the new White House
authorization bill will provide for the continued use of certificate
accounts. Congressional focus is more likely to be based on the
simpler issue of accountability, wholly apart from what was
allowed in the past.
FORD is LIBRARY QERALD
6A0
THE WHITE HOUSE
WASHINGTON
July 27, 1976
Dear Mr. Staats:
Thank you for the opportunity to comment on the draft report of
the audit of the White House Office for the period July 1, 1969,
through August 9, 1974, the closing date of the previous adminis-
tration. The audit was directed at evaluating the system of con-
trols over receipts and disbursements for the operation of the
Office.
As noted in your report, the accounting system for the White House
Office was approved by the Comptroller General in 1969. We agree
with your assessment that most of the deficiencies discussed in the
report would not have occurred if the approved procedures had been
followed. The audit points to the need for improvements in docu-
menting procurement actions, in property accounting and physical
inventory procedures, in the system of controls over receipts and
disbursements, and in reporting reimbursements. The report lists
examples to support these findings and makes specific recommenda-
tions to improve operations. It also recommends that an internal
audit staff be established to insure effective control over and
accountability for all funds, property and other assets.
As the report states, a number of corrective actions have already
been taken. These include:
Procurement documents are being filed together
and uniform procedures established to show
authorization for purchase and receipt of goods.
Physical inventories are being conducted on a
regular basis and property records are being
up-dated to reflect the results of these inven-
tories. Improved procedures are being
implemented for property accountability.
BERALD FORD LIBRARY
Reimbursements are now being reported to the
Office of Management and Budget as required.
- 2 -
In addition, the following actions are being taken to improve
operations:
Payroll procedures are being changed to establish
uniform practices for personnel keeping leave,
time and attendance reports and retirement records.
Automatic data processing systems are being studied
with a view toward improving the accounting system
and internal controls.
The feasibility of establishing an internal audit staff
will be studied further and pursued with other
agencies in the Executive Office of the President.
We appreciate the constructive nature of this audit and trust that
our planned improvements will remedy the deficiencies.
Sincerely,
Buchen
Philip W. Buchen
Counsel to the President
The Honorable Elmer B. Staats
Comptroller General of the United States
Washington, D. C. 20548
FORD LIBRARY is GERALD
MEMORANDUM
THE WHITE HOUSE
WASHINGTON
July 26, 1976
MEMORANDUM FOR:
PHIL BUCHEN
THROUGH:
JIM CONNOR
FROM:
BOB LINDER Linder
SUBJECT:
Proposed response to GAO audit
On January 2, 1975 you requested GAO to conduct an audit of the
White House accounts (Tab A). The audit has now been completed
and a draft report has been sent to you for review and comment
(Tab B). A proposed response for your consideration is at Tab C.
The audit covers the approximate time of the last administration,
from July 1, 1969 to August 9, 1974. Although a number of
improper or unsupported transactions were found, no formal
exceptions are being taken by GAO.
One item of particular interest in the report is the transfer of nearly
$34, 000 from the CIA to the WHO in fiscal year 1971 as reimburse-
ment for printing and mailing responses to Presidential correspondence
on the Cambodian invasion. The reimbursement was termed "improper"
by the President's Commission on CIA Activities in the United States
(Rockefeller report) and GAO has taken a similar position.
The recommendations for improving the systems of control over
operations are reasonable and we have, in fact, been taking actions
to comply with them.
Your reply will be printed in the final report and copies of the report
will be sent to the Chairmen of the House and Senate Committees on
Government Operations and Appropriations and the Director of the
Office of Management and Budget.
I will be happy to discuss the specific recommendations and findings
with you at your convenience.
RECOMMENDATION:
That you sign the proposed reply at Tab C.
FORD & GERALD LIBRARY
CC: Dick Cheney
Friday 7/2/76
1:15
Bob Linder advises that Mr. Buchen
signed a letter asking for an audit
of the White House by GAO.
The audit has been completed and
Linder is told that they're sending
the audit report back to Mr. Buchen.
When it arrives, Linder would like
to have it so he can prepare a reply
for Mr. Buchen's signature.
(They have been working with the
GAO on this.)
FORD i LIBRARY
Recid 7/6
Copy sent Sah Linder.
UNITED
STATES
GENERAL OFFICE
UNITED STATES GENERAL ACCOUNTING OFFICE
WASHINGTON, D.C. 20548
DIVISION OF FINANCIAL AND
GENERAL MANAGEMENT STUDIES
B-133209
JUL 1 1976
Mr. Philip W. Buchen
Counsel to the President
The White House
Dear Mr. Buchen:
Enclosed are two copies of a draft of our proposed report. The
draft report is furnished for review and comments before it is issued
in final form.
Our general practice is to furnish copies of proposed reports to
the agency for comments and to consider such comments before the
report is issued in final form. It is also our general practice to
include a copy of the written comments in our report when issued.
We would appreciate receiving your comments within 30 days.
Your attention is directed to the limitations on the use of this
draft as indicated on the report cover. We request that safeguards
be imposed to prevent the premature or unauthorized use of this
report.
The findings included in this report were discussed with officials
of the White House. We will be glad to further discuss this draft
report with you. Any inquiries concerning it should be directed to
Mr. John J. Cronin, Jr., Assistant Director (634-5217).
Sincerely yours,
D. L. Scantlebury
Director
Enclosures
(Draft Report--FGMSD-76-34)
FORD in LIBRARY QERALD
DRAFT
IMPROVEMENTS NEEDED IN
ACCOUNTING SYSTEM OPERATIONS
THE WHITE HOUSE OFFICE
Weaknesses in the operation of the accounting
system at the White House Office are identified,
together with recommendations for improvement.
We are recommending that an internal audit function
be established to audit the White House Office and
other agencies in the Executive Office of the President.
NOTICE-THIS DRAFT RESTRICTED TO OFFICIAL USE
This document is a draft of a proposed report of the General Accounting Office. It is
subject to revision and is being made available solely to those having responsibilities
concerning the subjects discussed for their review and comment to the General
Accounting Office.
Recipients of this draft must not show or release its contents for purposes other than
official review and comment under any circumstances. At all times it must be
safeguarded to prevent premature publication or similar improper disclosure of the
information contained therein.
BY
THE COMPTROLLER GENERAL
OF THE UNITED STATES
FGMSD-76-34
CONTROL NO.
GAO-332 (Rev. Feb. 70)
GPO 1974 0 - 536-557
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Contents
Page
TRANSMITTAL LETTER
i
CHAPTER
1
INTRODUCTION
1
2
WHY IMPROVEMENTS ARE NEEDED IN THE ACCOUNTING
SYSTEM OPERATIONS OF THE WHITE HOUSE OFFICE
3
Basic responsibilities of Certifying
officers
3
Procurement documentation needs to be
improved
4
Improper transfer of funds from the
Central Intelligence Agency
8
Physical inventories of property should
be taken regularly
10
Need for improved controls over payroll
operations
11
Need to improve accounting for annual
leave to prevent incorrect lump
sum payments
12
Need for greater accuracy in the
maintenance of time and attendance
records
13
Improvements are needed in reconciling
White House Office and Civil Service
Commission retirement records
13
The White House Office exceeded an
appropriation limitation
14
Need to properly report reimbursements
and other income
16
Conclusions and agency comments
16
Recommendations
17
3
NEED FOR INTERNAL AUDITING AT THE WHITE
HOUSE OFFICE
18
Conclusion
19
Recommendations
20
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APPENDIX
1
Principal officials of the White House
Office responsible for administering
activities discussed in this report
21
ABBREVIATIONS
CIA
Central Intelligence Agency
GAO
General Accounting Office
OMB
Office of Management and Budget
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B-133209
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Mr. Philip W. Buchen
Counsel to the President
The White House
Dear Mr. Buchen:
At your request, we have audited the White House Office accounts for
the period July 1, 1969, to August 9, 1974, the date the current
administration took office.
Our review, which was directed at evaluating the system of controls
over receipts and disbursements, showed there was a need to improve
accounting controls and procedures to help insure that receipts and dis-
bursements are legal, proper, and correct and that proper accountability
is maintained for all funds, property, and other assets. We found that:
-- For procurement transactions tested many dis-
bursements for goods and services were not accompanied by
the support necessary to show that they were properly
authorized and received.
--Funds in the amount of $33,656 were transferred, without
legal authorization, from the Central Intelligence Agency to
the White House Office for use in paying printing and mailing
costs. The President's Commission on CIA Activities within
the United States also reported to the President on the
impropriety of the transactions. Since the White House returned
funds to the Treasury at the fiscal year end in excess of the
amounts transferred, no recommendation for corrective action is
being made.
--Equipment identified as lost or missing demonstrates that
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property accounting controls, including physical inventory
procedures, should be improved.
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--Improvements are needed in controls and procedures for
preparing payrolls, keeping time and attendance records,
and accounting for employees' leave to prevent erroneous
salary payments from occurring.
--The limitation of $10,000 for official entertainment expenses
was exceeded by $200 in fiscal year 1971.
--Financial reports to the Office of Management and Budget for
fiscal years 1970 through 1974 did not properly report
reimbursements and other income.
When expenditures are improper or unsupported, the General Accounting
Office has the authority to take formal exceptions. Most of the
expenditure transactions included in our review were for small purchases
of goods or services that appeared to be for normal administrative-type
operations, We believe that no useful purpose would be served by taking
formal exceptions because of the resources required to properly document
the numerous small procurements. In discussing the unsupported trans-
actions, the White House Administrative Officer said he was aware of the
fact that many transactions were not fully documented and told us that
complete documentation is now being required.
We discussed our findings with the White House Administrative Officer
and his staff members. In most instances they have taken or are taking
appropriate corrective actions. Also the White House Office is planning
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B-133209
to redesign its accounting system and to make more use of automatic
data processing. White House officials have assured us that the
financial management improvements suggested in this report will be
implemented in the revised accounting system and that the revised
accounting system design will be submitted to the Comptroller
General for approval.
RECOMMENDATIONS
We recommend that the White House Administrative Officer:
Require appropriate documentation, before certification
of vouchers for payment.
Require the taking of periodic physical inventories.
Provide written instructions to White House Office
personnel on the keeping of leave, time and attendance
and retirement records.
--Properly report reimbursements and other income to the
Office of Management and Budget as required.
The problems identified in our audit might have been avoided if
the White House had an internal audit staff. We are, therefore,
recommending that an internal audit function be established to insure
that there is effective control over and accountability for all funds.
property, and other assets. Consideration should also be given to
providing internal audit coverage of other agencies in the Executiv
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Office of the President and the Office of the Vice-President.
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We are sending copies of this report today to the Chairman of
the House and Senate Committees on Government Operations and
Appropriations; the Director, Office of Management and Budget and
the White House Administrative Officer.
We shall appreciate receiving your comments on the actions taken
or planned on the matters discussed in this report.
Sincerely yours,
Comptroller General
of the United States
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CHAPTER I
INTRODUCTION
We have audited the White House Office accounts in response to a
request from the Counsel to the President. Our audit was directed at
evaluating the system of controls over receipts and disbursements for
the operation of the White House Office from June 30, 1969, through
August 9, 1974, the date the current administration took office.
The White House Office Salaries and Expense Appropriation finances
the operating staff and administrative support services for the White
House Office; the Special Projects Appropriation is for expenses
necessary to provide staff assistance for the President in connection
with special projects. The appropriations from fiscal year 1970 through
fiscal year 1974 are shown below:
Fiscal year
Salaries and expenses
Special projects
1974
$11,260,000
$ 414,000
1973
9,767,000
1,500,000
1972
9,342,000
1,500,000
1971
8,899,000
1,500,000
1970
3,940,000
2,500,000
The accounting system for the White House Office was approved by the
Comptroller General, in October 1969. However, many of the transactions
processed through the system were not processed in accordance with the GAO
Policy and Procedures Manual for Guidance of Federal Agencies. Had the
guidance been followed, most of the deficiencies discussed in this report
should not have occurred.
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The White House Office is currently considering major revisions to
its approved system, including extensive use of automatic data processing.
The White House Office plans to submit the revised system for approval.
SCOPE OF AUDIT
We reviewed the White House Office system of accounting for receipts
and disbursements to find out if the system provided effective controls
to insure that the transactions were legal, proper, and correct. This
included a review of the controls over procurement of goods and services
and the control over payroll operations. We also reviewed the system for
property accountability. In a few instances, where financial management
weaknesses affecting the system in operation were identified, we tested
the current system in operation to ascertain if corrective action was
still warranted. We also reviewed pertinent laws and the legislative
histories relating to White House operations.
Each White House Office appropriation act provides for certain funds
to be expended by the President solely on his certificate. Amounts so
expended were not questioned for sufficiency of documentation.
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CHAPTER 2
WHY IMPROVEMENTS ARE NEEDED
IN THE ACCOUNTING SYSTEM OPERATIONS
OF THE WHITE HOUSE OFFICE
In carrying out their responsibilities for disbursing appropriated
funds, the White House Office:certifying officers did not always require
that purchases of goods or services be properly documented with
authorizing documents and evidencesof receipt before the payments were
made.
BASIC RESPONSIBILITIES OF
CERTIFYING OFFICERS
The responsibilities for certifying officers are established by law
(31 U.S.C. 82c). Guidance for fulfilling these responsibilities is provided
by Title 7 of the General Accounting Office Policy and Procedures
Manual for Guidance of Federal Agencies. Although the certifying officer
has responsibility for determining the propriety of payments, his
responsibility ends with the proper certification of a voucher. If the
goods or services obtained are used for improper, unauthorized, or illegal
activities, the responsibility shifts from the certifying officer to the
official directly responsible for those activities. Our review was
therefore, directed at evaluating the system of controls over receipts and
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disbursements which the certifying officers relied on in fulfilling their
responsibilities for determining that the procurement of goods or services
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were legal, proper, and correct. Our specific comments on the manner in
which the White House certifying officers carried out their responsibilities
follow.
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PROCUREMENT DOCUMENTATION
NEEDS TO BE IMPROVED
Numerous expenditures for procurement transactions were made without
properly documenting that the transaction was properly authorized and
the goods and services were received. Good accounting practice requires
that, when an agency receives a bill, it matches the bill with the purchase
order or other authorizing document showing that the goods or services
were ordered by someone having authority to do so and with a receiving
report or other document showing that the goods or services were received.
Also each bill or invoice should be approved for payment by the proper
administrative official who is aware of the facts as required by Title 7,
Section 23.1 of the GAO Manual. The certifying officer then authorizes a
disbursement from the Treasury. If the system of controls over disburse-
ments does not function properly, there are no assurances that goods or
services were properly authorized or were received, and payment of improper
or unauthorized expenses could result.
To test the effectiveness of the White House Office system of controls
over disbursements, we reviewed all recorded transactions, excluding payroll
and Presidential travel, for the first 3 months of fiscal year 1970 and the
last three months of fiscal year 1974.
There were 367 transactions in this category involving expenditures of
about $416,000 for fiscal year 1970 and 254 transactions involving
expenditures of about $364,000 for fiscal year 1974. Of the 367 transac-
tions examined in fiscal year 1970, 37 either did not have a procurement
authorization or evidence of receipt and 31 had neither. As a result about
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19 percent of the sample transactions did not meet the documentation
requirements for certification. Of the 254 transactions examined in
1974, 114 either did not have a purchase authorization or evidence of
receipt, and 41 had neither. As a result about 61 percent of the sample
transactions did not meet the basic documentation requirements for
certification,
Also many of the transactions examined for fiscal years 1970 and 1974
were only partially documented for authorization and receipt.
The major problems with the documentation follow:
--Informal and incomplete memorandums were used for procurements
rather than using standard White House Office purchase orders.
--Payments were made on the basis of vendors' invoices initialed
by various White House employees rather than a receiving report
signed by an appropriate White House Office employee.
--Many invoices had check marks and other indications of some
form of review, but the purpose of the markings were not
shown or fully explained by White House Office personnel.
The following examples selected from the entire period under audit
show the lack of support for payments made. We believe that, in these
and the other cases we have identified, there was inadequate support for
the certifying officer to assure himself that the transaction was legal,
proper, and correct.
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--A staff member was reimbursed $47.47 for rental of a
conference room. The files contained no invoice or
other supporting documentation other than an interoffice
memorandum stating, "forward to /staff member7 a check
for a conference room he had to rent $47.47."
-A private firm was paid $3,784.62 for magazine and news-
paper subscriptions. The support in the accounting records
for the payment was the vendor's invoice and delivery
receipts. There wereno records showing who was authorized
to receive the magazines and newspapers.
--A reimbursement of $2,739.11 for a dinner party was made.
The accounting records did not contain a copy of the bill
or any indication of a procurement authorization. Payment
was based on a hand written note "3/25 /individual/ (Stag)
Dinner $2,739.11."
--A staff member was reimbursed $71.65 for telephone expenses.
The files did not contain a copy of the bill or the required
certificate of the head of the agency (or his designee) that
the calls were necessary in the interest of the Government
(31 U.S.C. 680 (a)). The only support for the payment was
an interoffice memorandum that stated "/staff member7 has incurred
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the attached* telephone charges in connection with
work he is performing $71.65."
*no attachment in records
We believe the above transactions did not meet the requirements
for proper disbursementsfor the reasons stated in the examples.
Where disbursements were made without proper documentation to evidence
that the transactions were legal, proper, and correct, we have the
authority to take exceptions to such payments until such time as
the proper documentation is obtained and presented. Most of the
expenditure transactions examined excluding payroll and travel,
were for small purchases of consumable items of the types that
appeared to us to be normal and necessary for the administrative
support of the White House Office. We have therefore concluded
that no useful purpose would be served by taking exception to
the numerous improperly certified payments because of the resources
required and the attendant cost to the White House of properly
documenting the numerous small procurements.
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We discussed the need to follow normal accounting procedures with
the White House Administrative Officer who said he was aware of the fact
that many of these disbursements had not been properly documented. He
cited a reluctance to require senior White House officials and their
staffs to submit the required documentation. Often payments were made on
the basis of oral directives. We were told that corrective action was
being taken and that transactions were now being properly documented
before certification.
IMPROPER TRANSFER OF FUNDS FROM
THE CENTRAL INTELLIGENCE AGENCY
During fiscal year 1971 the ,Central Intelligence Agency (CIA)
reimbursed the White House Office for the printing and mailing costs of
replying to persons who wrote the President after the invasion of
Cambodia in the spring of 1970. In our opinion, the reimbursements
were not proper and the use of CIA funds for such purposes was improper.
The reimbursements, two separate payments totaling $33,655.68, were
credited to the White House Office salaries and expense appropriation.
The Presidente Commission On CIA Activities Within The United States
also reported on the impropriety of the transactions and recommended
that steps should be taken to ensure against repetition of such an
incident.
In the absence of express provision of law, the transfer of funds
between appropriations is not authorized by 31 U.S.C. 3628. (33 COMP
GEN. 216 (1953)).
There is no clear statutory authority that the
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White House Office could rely on for reimbursement by the CIA of the
mailing expenses.
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Section 403f, Title 50, United States Code, as amended, does
provide the CIA and other Government agencies with broad transfer
authority"
"In the performance of its functions, the Central
Intelligence Agency is authorized to--
(a) Transfer to and receive from other Government
agencies such sums as may be approved by the Office
of Management and Budget, for the performance of any
of the functions or activities authorized under sections
403 and 405 of this title, and any other Government
agency is authorized to transfer to or receive from
the Agency such sums without regard to any provisions
of law limiting or prohibiting transfers between
appropriations. Sums transferred to the Agency in
accordance with this paragraph may be expended for
the purposes and under the authority of section 403
a-403j of this title without regard to limitations of
appropriations from which transferred;* * *."
We do not think §403f could be relied upon, however, as authority
for the subject reimbursement. The section limits authority for the
transfer and the receipt of CIA funds only for the performance of any CIA
functions or activities authorized under sections 403 (including 403a-
403j) and 405. None of those sections appear to authorize the transfer
and receipt of CIA funds for funding a domestic activity unrelated to the
primary mandate of foreign intelligence gathering such as the printing
and mailing of letters by the White House Office to persons in the United
States.
At the end of fiscal year 1971 the White House Office returned unused
appropriated funds to the Treasury in excess of the CIA reimbursements.
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We are, therefore, not recommending any action to adjust the accounting
records of the agencies.
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PHYSICAL INVENTORIES OF PROPERTY
SHOULD BE TAKEN REGULARLY
The White House Office property accounting system accounted for
equipment valued at about $768,000 as of June 30, 1975. Required annual
physical inventories had not been taken to insure that equipment was
on hand and had been properly protected from theft or other loss.
The Federal Property and Administrative Services Act of 1949,
requires each executive agency to "maintain adequate inventory controls
and accountability systems for the property under its control, (40 U.S.C.
§483 (b)). Title 2 of the GAO Policy and Procedures Manual for Guidance of
Federal Agencies specifies that:
Property accounting for Federal agencies must include
appropriate procedures: the keeping of appropriate
records of physical quantities of Government-owned
property and its location; independent checks on the
accuracy of the accounting records through periodic
physical count, weight, or other measurement; physical
inventories of fixed assets shall be taken at regular
intervals.
Further, section 6 "Property Accounting", of the accounting manual
of the White House Office requires that a physical inventory of
capitalized items be taken annually and reconciled with the detailed
inventory records and the general ledger control account.
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During the period covered by our review, none of the required
inventories was taken, and we were unable to determine when the last
complete inventory had been taken. As a result of our inquiries, the
White House Office, in March 1975, took an inventory of typewriters.
Property records at June 30, 1975, valued the typewriter inventory at
about $280,000. As a result of the inventory, 58 typewriters, valued
at about $18,000, were determined to be lost, missing, or traded-in with
no record being made of the trade-in.
From the number of typewriters unaccounted for, there is a need
for periodic physical inventories so that prompt investigation can be
made to locate missing property.
The White House Office official in charge of the property records
told us that the major difficulty in maintaining current inventory
records arises, when White House Office staff members change offices
and property locations and the property records are not updated.
NEED FOR IMPROVED CONTROLS
OVER PAYROLL OPERATIONS
During fiscal year 1974 the White House Office paid $9,299,000 to
about 500 employees. Although we found no major weaknesses in the payroll
system, we found many areas in need of procedural improvement. The
White House Office should (1) improve accounting for annual leave,
(2) keep accurate time and attendance records, and (3) reconcile employee
retirement records.
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Need to improve accounting for annual
leave to prevent incorrect lump sum payments
The White House Office needs to improve its practices for recording
accumulated and unused annual leave which resulted in many employees
receiving incorrect payments for accrued annual leave when separating
from Government service.
Government employees are entitled to lump sum payments for accrued
annual leave at the time of separation. We reviewed the records of
127 employees who had separated during calendar year 1974 and found
that 79 employees had received lump sum payments for unused annual
leave.
Our analysis of the computation of the lump sum payments showed
that incorrect separation payments were made to nine of those employees.
These incorrect payments were aaused by errors in computing leave
balances and using improper pay rates; they ranged from an underpayment
of about $175 to an overpayment of about $750.
We notified the White House administrative office of the incorrect
payments, and collection letters were sent to the five individuals who
were overpaid and one collection was made; two waivers were requested and
granted for amounts under $500 each; and two other waiver requests
involving amounts in excess of $500 were forwarded to our Office in
accordance with the provisións of Federal Claims Collection Act
(Public Law 90-616). The White House Office has paid the four
employees the amounts for which they had been underpaid.
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Need for greater accuracy in the maintenance
of time and attendance records
Time and attendance reports are used for determining employees
biweekly earnings and unused leave balances. Some were improperly
prepared.
White House Office staff members earn and use compensatory
leave. However, this leave was not always recorded on the time and
attendance reports, although this is required by the GAO Policy and
Procedures Manual. In addition, some time and attendance reports
indicated that the approving official's name had been signed by
several different individuals.
We have brought these problems to the attention of the White
House Administrative Officer who is taking action to provide time-
keepers with written instructions for the preparation of time and
attendance reports.
Improvements are needed in reconciling White House
Office and Civil Service Commission retirement records
The White House Office was not reconciling its retirement records
or filing required retirement reports with the Civil Service Commission.
The Commission requires that each Government agency file a calendar
year report, Annual Summary Retirement Fund Transactions, no later than
March 31 of the following year. The report is the means by which the
Commission's Civil Service Retirement Trust Fund is reconciled with
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agency reports for these transactions. In addition, the Annual Summary
is a certificate showing that retirement deductions have been properly
accounted for by the agencies and entered on individual retirement
records.
A representative of the Civil Service Retirement Section said
that the last Annual Summary Report received from the White House Office
was for the calendar year ended December 31, 1972. We were told by
several members of the White House Office payroll staff that because
they have had difficulties reconciling the retirement reports due
after 1972, the reports had not been filed. After we brought this matter
to their attention, a representative of the Civil Service Commission
Retirement Section and the White House payroll staff worked together
and reconciled the records.
THE WHITE HOUSE OFFICE EXCEEDED
AN APPROPRIATION LIMITATION
The White House Office, in addition to receiving its regular salaries
and expense appropriations, receives an annual appropriation for special
projects to be used for purposes for which other appropriations are not
normally available. The appropriation for fiscal year 1971 provided $1.5
million for special projects and contained a limitation of $10,000 for
official reception and representation expenses. The limit was exceeded
by about $200 in fiscal year 1971 contrary to the provisions of the
Anti-Deficiency Act (31 U.S.C. 665 (a)).
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The Anti-Deficiency Act provides in part that:
"No officer or employee of the United States shall
make or authorize an expenditure from or create or
authorize an obligation under any appropriation or
fund in excess of the amount available therein.. "
The language of the statute applies to an entire appropriation, as
well as a limitation within an appropriation. The White House Office
spent about $200 in excess of the $10,000 limitation for official
reception and representation expenses in fiscal year 1971. The amount,
although very small, constitutes a violation of the statute. The
violation was caused by White House Office employees submitting bills
and requesting reimbursements for amounts in excess of administratively
established spending limitations and the administrative office authorizing
payments without adjusting other spending limitations.
The Anti-Deficiency Act also provides that violations of the Act
be reported by the head of the agency to the Congress. In view of the
small amount of the violation and the availability of other appropriated
funds in that year that could have been used, we do not consider it
necessary to report it to the Congress. However, the violation demon-
strates the need for White House Office employees and the accounting
office to adhere to administratively established spending limitations.
If amounts in excess of a limitation are to be paid, other's should
be adjusted accordingly.
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NEED TO PROPERLY REPORT
REIMBURSEMENTS AND OTHER INCOME
For fiscal years 1970 through 1974, the White House Office did
not properly report reimbursements and other income to the Office of
Management and Budget (OMB) as required by OMB Circular Number A-34.
OMB requires reports for reviewing how the Government carries out
its budgetary programs. These reports are designed to show the status
of budgetary resources and financial data related to the budget process.
The White House Office reports and financial statements submitted
to OMB for fiscal years 1970 through 1974, for the two appropriations
audited did not show any reimbursements or other income as required by
OMB regulation. The reimbursements and other income received were used
to reduce expenditures reported. During the period covered by our audit,
the White House Office accounting records showed that reimbursements
of $1.2 million were received but not properly reported to OMB.
CONCLUSIONS AND
AGENCY COMMENTS
The White House Office needs to improve its accounting operation
because it had not adequately documented many of its disbursements
transactions; received an improper transfer of CIA funds; did not take
required physical inventories; did not adequately keepttime and attendance
reports and retirement records; exceeded an appropriation limitation by
a small amount and did not report all financial data to OMB.
White House officials attributed many of these problems to the high
pressure environment of conducting day-to-day White House Office business.
ruko
We discussed our findings with the White House Administrative Officer and
his staff members. In most instances they have taken or are taking
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appropriate corrective actions. Also the White House Office is implementing
a redesign of its accounting system including the extensive use of automatic
data processing. White House officials have assured us that the
financial management improvements suggested in this report will also
be implemented into the revised accounting system design.
RECOMMENDATIONS
We recommend that the White House Administrative Officer:
--Require appropriate documentation to be submitted in all
cases prior to certification of vouchers for payment.
--Require the taking of periodic physical inventories.
-Provide written instruction to White House Office
personnel keeping leave, time and attendance, and
retirement records.
-Properly report reimbursements and other income to the
Office of Management and Budget as required.
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CHAPTER 3
NEED FOR INTERNAL AUDITING
AT THE WHITE HOUSE OFFICE
The White House does not have an internal audit staff.
The Congress recognized the role and usefulness of internal auditing
when it passed the Budget and Accounting Procedures Act of 1950 (31 U.S.C.
8865 et. seq.). This act placed responsibility for the institution of
this element of internal control on top agency management by providing
(in section 113 (a)) that:
"The head of each executive agency shall establish
and maintain systems of accounting and internal
control designed to provide *** effective control
over and accountability for all funds, property,
and other assets for which the agency is responsible,
including appropriate internal audit; ***."
(underlining supplied)
The overall objective of internal auditing is to assist agency
management in attaining its goals by furnishing information, analyses,
appraisals, and recommendations pertinent to management's duties and
objectives.
Management of an office such as the White House can benefit from
timely information on problems on which remedial measures can be taken
before an organization's function is impaired. These problems, once
they have been examined and appraised, often lead to opportunities for
achieving lower costs, increased efficiency, and faster ways of getting
things done.
Internal auditing can be of special benefit to the management of
smaller organizations such as the White House where the customary division
is
rund
of duties among employees is not always economical or practical.
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As stated previously, internal audit is an essential element of
management control. In this report we have pointed out a number of
weaknesses in management control over financial operations. One of the
basic responsibilities of an internal auditor should include examining
financial transactions, accounts, and reports and evaluating agency
compliance with applicable laws and regulations. During the first
month of our review, it was apparent that required annual property
inventories had not been taken in many years and subsequently the White
House could not find many items of recorded equipment. (See p.10.)
Had the White House Office been subjected to periodic internal audits,
we believe that many of the findings presented in this report could have
been reported to management earlier and that management would have been
afforded the opportunity to take corrective action sooner.
In addition to the White House Office, we noted that other agencies
in the Executive Office of the President; such as the National Security
Council, the Council of Economic Advisers, the Domestic Council, and the
Office of Management and Budget do not have internal audit staffs. Also,
the Office of the Vice-President does not have an internal audit staff.
CONCLUSION
In our view, the White House Office, by not having an internal audit
function, does not have an important element of management control. This
element of management control is particularly important in an office such
as the White House that frequently employs many individuals who have
not had prior experience with the numerous and complex government fiscal
requirements.
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RECOMMENDATIONS
We recommend that the Staff Secretary to the President make provisions
for an internal audit function at the White House Office either by the
creation of a small internal audit staff or by obtaining internal audit
services from other agencies such as the General Services Administration,
which provide such services on a reimbursable basis.
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- 20 -
APPENDIX I
APPENDIX I
PRINCIPAL OFFICIALS OF
THE WHITE HOUSE OFFICE
RESPONSIBLE FOR ADMINISTERING ACTIVITIES
DISCUSSED IN THIS REPORT
Tenure of office
From
To
STAFF SECRETARY TO THE
PRESIDENT
John R. Brown III
July 1969
Mar. 1971
Jon M. Huntsman
Mar. 1971
Feb. 1972
Bruce A. Kehrli
Feb. 1972
May 1974
Jerry H. Jones
June 1974
June 1975
James E. Connor
June 1975
Present
CHIEF EXECUTIVE CLERK:
Noble M. Melencamp
(note a)
May 1971
Apr. 1973
Robert D. Linder
Apr. 1973
Present
ADMINISTRATIVE OFFICER:
Carson M. Howell
Aug. 1961
Jan. 1971
Wilbur H. Jenkins
May 1971
Present
CERTIFYING OFFICER:
John J. Ratchford
Apr. 1968
Feb. 1973
Noble M. Melencamp (note a)
May 1971
Feb. 1973
Robert D. Linder
Feb. 1973
Present
Wilbur H. Jenkins
Feb. 1973
Present
a/Noble M. Melencamp was detailed from the State Department
from May 29, 1971, to April 14, 1973.
FORD & GERALD LIBRARY
- 21 -
GAO Audit of the White House
Q. Ron, Congressman Jack Brooks has recently released a
GAO audit of the White House Office accounts which indicates
a lack of accountability on the part of White House officials
as well as certain illegal financial transactions. Does
the White House have any comments on that audit?
A. Yes. This audit was requested by Phil Buchen at the
beginning of this Administration and it encompasses the
period from the last GAO audit, July 1, 1969, and through
August 9, 1974. The audit did find certain problems rela-
ting to the accounting controls and procedures that were
utilized prior to this Administration. As the GAO report
indicates, Phil Buchen has written to GAO and appraised
them of the corrective steps that have been taken to insure
that no recurrence takes place in the Ford Administration.
PWB/BNR 9/11/76
ruRD
LIBRARY
UNITED STATES
REPORT OF THE
GENERAL ACCOUNTING OFFICE
COMPTROLLER GENERAL
OF THE UNITED STATES
Improvements Needed In
Accounting System Operations
The White House Office
The Budget and Accounting Procedures Act
of 1950 requires each agency to establish and
maintain systems of internal control, includ-
ing appropriate internal audit, to provide ef-
fective control over and accountability for all
funds, property, and other assets for which
the agency is responsible.
We identified weaknesses in the White House
Office accounting system and a lack of inter-
nal auditing. The Office has taken action to
correct the weaknesses and will study the
feasibility of establishing an internal audit
staff that will serve the Office and other agen-
cies in the Executive Office of the President.
FORD is LIBRARY 07V839
FGMSD-76-34
SEPT. 2,1976
COMPTROLLER GENERAL
COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON, D.C. 20548
OF THE UNITED STATE
B-133209
Mr. Philip W. Buchen
Counsel to the President
The White House
Dear Mr. Buchen:
At your request, we have reviewed the White House Office
accounts from July 1, 1969, to August 9, 1974, the date the
current administration took office.
Our review showed there was a need to improve accounting
controls and procedures to help insure that receipts and dis-
bursements are properly handled and that effective accounting
control is maintained over all funds, property, and other as-
sets. Our review showed that:
--Many disbursements were not supported by the documen-
tation needed to show that the goods and services pro-
cured were properly authorized and received.
--Funds totaling $33,656 were transferred during fiscal
year 1971, without legal authorization, from the Cen-
tral Intelligence Agency to the White House Office
for use in paying printing and mailing costs. The
President's Commission On CIA Activities Within The
United States also reported to the President on the
impropriety of the transactions.
--Equipment was lost or missing indicating that property
accounting controls, including physical inventory pro-
cedures, needed improvement.
--Improvements were needed in controls and procedures
for preparing payrolls, keeping time and attendance
records, and accounting for employees' leave to pre-
vent erroneous salary payments.
The limitation of $10,000 for official reception
and representation expenses was exceeded by about
$200 in fiscal year 1971.
--Financial reports to the Office of Management and
Budget for fiscal years 1970 through 1974 did not
properly report reimbursements and other income.
B-133209
Generally, when expenditures are improper or unsupported,
the General Accounting Office has the authority to take formal
exceptions to them. However, expenditures out of the Special
Projects fund and expenditures falling under Presidential cer-
tification are not subject to exception by this office. Also,
most of the disbursements which were not adequately documented
were for small purchases of goods or services that appeared to
be for normal administrative-type operations. We believe that
no useful purpose would be served by taking formal exceptions
now based on our audit because of the resources required to
properly document the many small procurements years after they
took place. In discussing the unsupported expenditure transac-
tions, the White House Administrative Officer said he was aware
of the fact that some transactions were not documented and that
complete documentation was now being required.
In discussing our findings with the White House Adminis-
trative Officer and his staff members, we were also told that
the White House Office is planning to redesign its accounting
system and to make more use of automatic data processing.
White House Office officials have assured us that the finan-
cial management improvements suggested in this report will be
included in the revised accounting system and that the re-
vised accounting system design will be submitted to the Comp-
troller General for approval.
In a proposed report sent to the White House Office
Officer: for comment, we suggested that the White House Administrative
--Require that appropriate documentation be submitted
before certifying vouchers for payment.
Require that periodic physical inventories of
property be taken.
--Provide written instructions to White House Office
personnel keeping leave, time and attendance, and
retirement records.
--Properly report reimbursements and other income to
the Office of Management and Budget as required.
We did not suggest return of the funds transferred
by CIA because an amount of authorized funds, in excess
of the amount transferred, was not used by the White House
Office in 1971 and was later returned to the Treasury.
In commenting on our proposed report (see app. I), you
concurred with our assessment that most of the deficiencies
2
B-133209
discussed would not have occurred if approved accounting
procedures had been followed. You stated that the following
corrective actions had been taken.
--Procurement documents are being filed together and
uniform procedures are being established to require
proper documentation for certification of vouchers
for payment, such as authorization for purchase and
evidence of receipt of goods.
-Physical inventories are being made on a regular basis
and property records are being updated to show the re-
sults of these inventories. Improved procedures are
being implemented for property accountability.
--Payroll procedures are being changed to establish
uniform practices for personnel keeping leave, time and
attendance reports, and retirement records.
--Reimbursements are now being reported to the Office of
Management and Budget as required.
--Automatic data processing systems are being studied
with a view toward improving the accounting system
and internal controls.
Some of the problems identified in our audit might have
been corrected sooner if the White House Office had an inter-
nal audit staff to review its operations on a regular basis.
We are therefore recommending that an internal audit function
be established as one means of assuring more effective control
over and accountability for all funds, property, and other
assets. We are also recommending that provision be made for
providing internal audit coverage of other agencies in the
President. Executive Office of the President and the Office of the Vice-
In your comments on our proposed report (see app. I),
you stated that the feasibility of establishing an internal
audit staff will be studied further and pursued with other
agencies in the Executive Office of the President.
We are sending copies of this report to the Chairmen
of the House and Senate Committees on Government Operations
and Appropriations, and to the Director, Office of Manage-
ment and Budget.
3
B-133209
We shall appreciate receiving your comments on any
additional actions taken or planned on the matters dis-
cussed in this report.
Sincerely yours,
Acting Comptroller R.7.K.11er General
of the United States
4
Contents
Page
CHAPTER
1
INTRODUCTION
1
Scope of review
1
2
WHY IMPROVEMENTS ARE NEEDED IN ACCOUNTING
SYSTEM OPERATIONS
3
Basic responsibilities of certifying
officers
3
Procurement documentation needs to be
improved
3
Improper transfer of funds from the
Central Intelligence Agency
6
Physical inventories of property should
be taken regularly
7
Need for improved controls over payroll
operations
8
Need to improve accounting for
annual leave to prevent incorrect
lump-sum payments
8
Need for greater accuracy in keeping
time and attendance records
9
Need to improve controls over em-
ployees retirement records and
reporting to the Civil Service
Commission
9
The White House Office exceeded an
appropriation limitation
10
Need to properly report reimbursements
and other income
10
Conclusions, recommendations, and
agency comments
11
3
NEED FOR INTERNAL AUDITING
13
Conclusion
14
Agency comments
14
Recommendations
APPENDIX
14
I
Letter to the Comptroller General dated
July 27, 1976, from the Counsel to the
President
15
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17
activities discussed in this report
Office responsible for administering
Principal officials of the White House
II
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Page
APPENDIX
CHAPTER 1
INTRODUCTION
We have audited the White House Office accounts in
response to a request from the Counsel to the President. We
evaluated the system of controls over receipts and disburse-
ments for the operation of the White House Office from
June 30, 1969, through August 9, 1974, the date the current
administration took office.
The White House Office Salaries and Expense Appropria-
tion finances the operating staff and administrative support
services for the White House Office; the Special Projects
Appropriation finances expenses necessary to provide staff
assistance for the President in connection with special proj-
ects. The appropriations for fiscal years 1970 through 1974
are shown below.
Fiscal
Salaries and
Special
year
expenses
projects
1974
$11,260,000
$ 414,000
1973
9,767,000
1,500,000
1972
9,342,000
1,500,000
1971
8,899,000
1,500,000
1970
3,940,000
2,500,000
The Comptroller General approved the accounting system
for the White House Office in October 1969. However, many
transactions were not processed through the system in accord-
ance with the GAO Policy and Procedures Manual for Guidance
of Federal Agencies. If the guidance manual had been fol-
lowed, most of the deficiencies discussed in this report
would not have occurred.
The White House Office is planning major revisions to
its accounting system, including extensive use of automatic
data processing. It plans to submit the revised accounting
system to us for approval.
is
FORD
SCOPE OF REVIEW
GERALD
LIBRARY
In making our review we examined:
--The system of accounting for receipts and disburse-
ments.
The controls over procurement. of goods and services
and payroll operations.
1
--The system for property accountability.
--Pertinent laws and the legislative histories relating
to White House Office appropriations.
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2
CHAPTER 2
WHY IMPROVEMENTS ARE NEEDED
IN ACCOUNTING SYSTEM OPERATIONS
The accounting system and related controls over receipts
and disbursements the White House Office followed from July 1,
1969, to August 9, 1974, needed improvement to provide effec-
tive control over and accountability for all funds, property,
and other assets. The following sections describe the improve-
ments needed and the corrective actions taken or planned.
BASIC RESPONSIBILITIES OF
CERTIFYING OFFICERS
The responsibilities for certifying officers are estab-
lished by law (31 U.S.C. 82c). Guidance for fulfilling these
responsibilities is provided by title 7 of the General Account-
ing Office Policy and Procedures Manual for Guidance of Federal
Agencies. Although the certifying officer has responsibility
for determining the propriety of payments, his responsibility
ends with the proper certification of a voucher. However, if
the goods or services obtained are used for improper, unauthor-
ized, or illegal activities, the responsibility shifts from the
certifying officer to the official directly responsible for
those activities.
Our review was directed at evaluating the system of con-
trols over receipts and disbursements which the certifying
officers relied on in fulfilling their responsibilities for
determining that the procurement of goods or services were
legal, proper, and correct.
PROCUREMENT DOCUMENTATION
NEEDS TO BE IMPROVED
Numerous expenditures for procurement transactions were
made without properly documenting that the transactions were
properly authorized and the goods and services were received.
Good accounting practice requires that, when an agency
receives a bill, it matches the bill with the purchase order
or other authorizing document showing that the goods or
services were ordered by someone having authority to do so
and with a receiving report or other document showing that
the goods or services were received. Also, each bill or
invoice should be approved for payment by the proper admin-
istrative official who is aware of the facts as required by
title 7, section 23.1 of the GAO Policy and Procedures Manual.
3
The certifying officer should then authorize a disbursement
from the Treasury. If the system of controls over disburse-
ments does not function properly, there are no assurances
that goods or services were properly authorized or received,
possibly resulting in payment of improper or unauthorized ex-
penses.
To test the effectiveness of the White House Office sys-
tem of controls over disbursements, we reviewed all recorded
transactions, excluding payroll and Presidential travel, for
the first 3 months of fiscal year 1970 and the last 3 months
of fiscal year 1974.
In this category, 367 transactions involved expenditures
of about $416,000 for fiscal year 1970 and 254 transactions
involved expenditures of about $364,000 for fiscal year 1974.
Of the 367 transactions examined in fiscal year 1970, 37 either
did not have a procurement authorization or evidence of receipt
and 31 had neither. Therefore, about 19 percent of the sample
transactions did not meet the basic documentation requirements
for certification. Of the 254 transactions examined in fiscal
year 1974, 114 either did not have a procurement authorization
or evidence of receipt and 41 had neither. Therefore, about
61 percent of the sample transactions did not meet the basic
documentation requirements for certification.
Also, many transactions examined for fiscal years 1970
through 1974 were not adequately documented for procurement
authorization and receipt. For example:
-Informal and incomplete memorandums were used for
processing procurement transactions rather than using
standard White House Office purchase orders.
-Payments were made on the basis of vendors' invoices
initialed by various White House Office employees rather
than evidence of receipt signed by an appropriate White
House Office employee.
Many invoices had check marks and other indications of
some form of review, but the purpose of the markings
were not shown or fully explained by White House Office
personnel.
The following examples selected from the entire period
under audit show the lack of supporting documentation for
payments made. We believe that, in these and the other cases
identified, there was inadequate supporting documentation for
the certifying officer to assure himself that the transac-
tions were legal, proper, and correct.
4
--A staff member was reimbursed $47.47 for rental of a
conference room. The files contained no invoice or
other supporting documentation other than an inter-
office memorandum stating, "Forward to [staff member]
a check for a conference room he had to rent $47.47."
--A private firm was paid $3,784.62 for magazine and
newspaper subscriptions. The support in the account-
ing records for the payment was the vendor's invoice
and delivery receipts. There were no records showing
who was authorized to receive the magazines and news-
papers.
--A reimbursement was made of $2,739.11 for a dinner
party. The accounting records did not contain a copy
of the bill or any indication of a procurement authori-
zation. Payment was based only on a handwritten note.
--A staff member was reimbursed $71.65 for telephone
expenses. The files did not contain a copy of the bill
or the required certificate of the head of the agency
( or his designee) that long-distance calls were neces-
sary in the interest of the Government (31 U.S.C. 680a).
The only support for the payment was an interoffice
memorandum that stated "[staff member] has incurred the
attached* telephone charges in connection with work he
is performing $71.65." *no attachment in records
The requirement for proper certification was not met be-
fore the disbursement in the above examples. Generally,
when disbursements were made without proper documentation to
evidence that the transactions were legal, proper, and cor-
rect, we have the authority to take exceptions to such pay-
ments until such time as the proper documentation is obtained
and presented. However, expenditures out of the Special Proj-
ects fund and expenditures falling under Presidential certifi-
cation are not subject to exception by this office. Also,
most of the expenditure transactions examined, excluding pay-
roll and travel, were for small purchases of consumable items
of the types that appeared to us to be normal and necessary for
administrative support of the White House Office. We believe
no useful purpose would be served by taking formal exceptions
now based on our audit because of the resources required to
properly document the many small procurements years after they
took place.
We discussed the need to follow proper certification
procedures with White House Office officials who said they
were aware of the fact that many disbursements had not been
properly documented. They stated there had been a reluctance
to require senior White House Office officials and their
staffs to submit the required documentation and payments were
5
made sometimes on the basis of oral directives but complete
documentation was now being required. (See p. 11.)
IMPROPER TRANSFER OF FUNDS FROM
THE CENTRAL INTELLIGENCE AGENCY
During fiscal year 1971 the Central Intelligence Agency
(CIA) reimbursed the White House Office for printing and
mailing costs of replying to persons who wrote the President
after the invasion of Cambodia in the spring of 1970. In
our opinion, the reimbursements were not proper and the use
of CIA funds for such purposes was improper. The reimburse-
ments, two separate payments totaling $33,655.68, were
credited to the White House Office Salaries and Expense Ap-
propriation. The President's Commission On CIA Activities
Within The United States also reported on the impropriety of
the transactions and recommended that steps should be taken
to insure against repetition of such an incident.
Without express provision of law, the transfer of funds
between appropriations is not authorized (see 31 U.S.C.
§628) (33 COMP. GEN. 216 (1953)). There is no clear statu-
tory authority that the White House Office could rely on for
CIA reimbursement of the printing and mailing expenses.
Section 403f, title 50, United States Code, as amended,
does provide the CIA and other Government agencies with broad
transfer authority.
"In the performance of its functions, the Central
Intelligence Agency is authorized to-- (a) Transfer
to and receive from other Government agencies such
sums as may be approved by the Office of Manage-
ment and Budget, for the performance of any of the
functions or activities authorized under sections
403 and 405 of this title, and any other Govern-
ment agency is authorized to transfer to or re-
ceive from the Agency such sums without regard to
any provisions of law limiting or prohibiting
transfers between appropriations. Sums trans-
ferred to the Agency in accordance with this para-
graph may be expended for the purposes and under
the authority of section 403a-403j of this title
without regard to limitations of appropriations
from which transferred; * * *."
we think §403f could not be relied upon, however, as
authority for the subject reimbursement. The section limits
authority for the transfer and the receipt of CIA funds only
for the performance of any CIA functions or activities author-
ized under sections 403 (including 403a-403j) and 405. None
6
of those sections appear to authorize the transfer and
receipt of CIA funds for funding a domestic activity un-
related to the primary mandate of foreign intelligence gath-
ering, such as printing and mailing letters by the White
House Office to persons in the United States. A CIA official
concurred with our position.
At the end of fiscal year 1971 the White House Office re-
turned unused appropriated funds to the Treasury in excess of
the CIA reimbursements. We are therefore not recommending
any action to adjust the accounting records of the agencies.
PHYSICAL INVENTORIES OF PROPERTY
SHOULD BE TAKEN REGULARLY
The White House Office property accounting system ac-
counted for equipment valued at about $741,000 as of June 30,
1975. Required annual physical inventories had not been
taken to insure that equipment was on hand and had been prop-
erly protected from theft or other loss.
The Federal Property and Administrative Services Act of
1949 requires each executive agency to "maintain adequate in-
ventory controls and accountability systems for the property
under its control," (40 U.S.C. $483 (b)). Title 2 of the
GAO Policy and Procedures Manual for Guidance of Federal Agen-
cies generally provides that property accounting for Federal
agencies must include appropriate procedures for keeping
records of physical quantities of Government-owned property
and its location; making independent checks on the accuracy
of the accounting records through periodic physical count,
weight, or other measurement; and taking physical inventories
of fixed assets at regular intervals.
Further, the White House Office accounting manual re-
quires that a physical inventory of capitalized items be taken
annually and reconciled with the detailed inventory records
and the general ledger control account.
During the period covered by our review, none of the
required inventories was taken. Further, we were unable to
determine when the last complete inventory had been taken.
We were told that one of the problems of maintaining current
inventory records was caused by White House Office staff mem-
bers changing offices and property locations without the
property records being updated.
As a result of our inquiries, the White House Office,
in March 1975, took an inventory of typewriters. Property
records at June 30, 1975, showed that the typewriters on
hand were valued at about $280,000. The inventory showed
that 58 typewriters recorded on property cards at cost or
7
appraised value of about $18,000, were either lost, missing,
or traded-in with no record being made of the trade-in.
In our discussion with White House Office officials, we
pointed out that periodic physical inventories would make it
easier to locate missing property.
NEED FOR IMPROVED CONTROLS
OVER PAYROLL OPERATIONS
During fiscal year 1974 the White House Office paid
salaries of $9,299,000 to about 500 employees. Although
there were no major weaknesses in the payroll system, the
White House Office needed to improve (1) accounting for an-
nual leave to prevent incorrect lump-sum payments, (2) the
accuracy of time and attendance records, and (3) controls
over employee retirement records.
Need to improve accounting for annual leave
to prevent incorrect lump-sum payments
The White House Office needed to improve its practice
for determining accumulated and unused annual leave balances.
Although accuracy is always important, it is particularly im-
portant when employees leave Government service because such
employees are entitled to lump-sum payments for accrued an-
nual leave at the time of separation. Our review disclosed
a number of cases in which incorrect payments for accrued
annual leave had been made.
We reviewed the records of 127 employees who had sep-
arated during calendar year 1974 and found that 79 employees
had received lump-sum payments for unused annual leave. Our
analysis of the computation of the lump-sum payments showed
that incorrect separation payments were made to nine employ-
ees--five overpaid and four underpaid. These incorrect pay-
ments were caused by errors in computing leave balances and
using improper pay rates. Errors ranged from an underpayment
of about $175 to an overpayment of about $750.
We notified White House Office officials of the incor-
rect payments and they sent collection letters to the five in-
dividuals who were overpaid $1,890.04. Subsequently, one
collection was made for $51.84; two waivers were requested
and granted for $555.90; and two waiver requests involving
$1,278.30 were granted by GAO in accordance with the provi-
sions of the Federal Claims Collection Act (5 U.S.C. § 5584).
The White House Office has paid the four former employees
$236.34 for which they had been underpaid.
8
Need for greater accuracy in keeping
time and attendance records
Time and attendance reports, used for determining
employees' biweekly earnings and unused leave balances, were
improperly prepared primarily because of a lack of adequate
instructions.
White House Office staff members earn and use compensa-
tory leave. However, this leave was not always recorded on
the time and attendance reports, although this is required
by the GAO Policy and Procedures Manual. In addition, we
noted that the approving official's name on some time and
attendance reports had been signed by several individuals.
The White House Administrative Officer agreed with our
findings and told us that he would provide timekeepers with
written instructions for preparing time and attendance re-
ports.
Need to improve controls over
employee retirement records and
reporting to the Civil Service Commission
The White House Office was not reconciling its retire-
ment records or filing required retirement reports with the
Civil Service Commission.
The Commission requires that each Government agency file
a calendar year report, Annual Summary Retirement Fund Trans-
actions, no later than March 31 of the following year. The
report is the means by which the Commission's Civil Service
Retirement Trust Fund is reconciled with agency reports for
these transactions. In addition, the annual summary assures
that retirement deductions have been properly accounted for
by the agencies and entered on individual retirement records.
A representative of the Civil Service Commission said
that the last annual summary received from the White House
Office was for the calendar year ended December 31, 1972.
We were told by several members of the White House Office
payroll staff that, because they had difficulties reconcil-
ing the retirement reports due after 1972, the reports had
not been filed.
After we brought the retirement record problems to their
attention, a representative of the Civil Service Commission
and the White House Office payroll staff worked together and
reconciled the records.
9
THE WHITE HOUSE OFFICE EXCEEDED
AN APPROPRIATION LIMITATION
The White House Office, in addition to receiving its
regular salaries and expense appropriations, receives an
annual appropriation for special projects to be used for pur-
poses for which other appropriations are not normally avail-
able. The appropriation for fiscal year 1971 provided $1.5 mil-
lion for special projects and contained a limitation of $10,000
for official reception and representation expenses. The limit
was exceeded by about $200 in fiscal year 1971, contrary to
the provisions of the Anti-Deficiency Act (31 U.S.C. 665 (a)).
The Anti-Deficiency Act provides in part that:
"No officer or employee of the United States shall
make or authorize an expenditure from or create or
authorize an obligation under any appropriation or
fund in excess of the amount available therein
The language of the statute applies to a limitation
within an appropriation, as well as to an entire appropria-
tion and violations are to be reported to the Congress. The
White House Office spent about $200 in excess of the $10,000
limitation for official reception and representation expenses
in fiscal year 1971. The amount, although very small, con-
stitutes a violation of the statute. The violation was
caused by White House Office employees exceeding administra-
tively established spending limitations. It was not re-
ported to the Congress.
NEED TO PROPERLY REPORT
REIMBURSEMENTS AND OTHER INCOME
For fiscal years 1970 through 1974, the White House
Office did not properly report reimbursements and other in-
come to the Office of Management and Budget (OMB) as required
by its Circular A-34.
OMB requires agencies to submit reports designed to show
the status of budgetary resources and financial data related
to budget execution.
The White House Office reports and financial statements
submitted to OMB for fiscal years 1970 through 1974, for the
two appropriations audited, did not show all reimbursements
or other income as required by OMB. The reimbursements and
other income received were used to reduce expenditures re-
ported. During the period covered by our audit, the White
House Office accounting records showed that reimbursements
10
and other income of about $1.2 million were received but not
properly reported to OMB.
CONCLUSIONS, RECOMMENDATIONS, AND
AGENCY COMMENTS
During the period July 1, 1969, to August 9, 1974, the
white House Office financial operation needed considerable
improvement to conform to Government regulations and good
accounting procedures. Notwithstanding the high pressure
environment which officials told us were behind many of the
problems noted, we believe that the White House Office can
have a good accounting system and meet the prescribed re-
quirements.
Officials at the White House Office told us that they
had taken or were taking action to correct all the deficien-
cies noted.
In a proposed report sent to the White House Office for
comment, we suggested that the White House Administrative
Officer:
-Require that appropriate documentation be submitted to
the certifying officer before certifying vouchers for
payment.
--Require that periodic physical inventories of property
be taken.
--Provide written instructions to white House Office
personnel keeping leave, time and attendance, and
retirement records.
--Properly report reimbursements and other income to the
Office of Management and Budget as required.
In commenting on our proposed report (see app. I), the
Counsel to the President concurred with our assessment that
most of the deficiencies discussed would not have occurred
if the approved accounting system procedures had been fol-
lowed. The letter stated that the following corrective ac-
tions had been taken by the current administration.
--Procurement documents are being filed together and
FORD
uniform procedures are being established to require
proper documentation for certification of vouchers
for payment, such as authorization for purchase and
LIBRARY
evidence of receipt of goods.
11
Physical inventories are being conducted on a regular
basis and property records are being updated to show
the results of these inventories. Improved procedures
are being implemented for property accountability.
Payroll procedures are being changed to establish uni-
form practices for personnel keeping leave, time and
attendance reports, and retirement records.
Reimbursements are Bas now being reported to the Office
of Management and Budget as required.
Automatic data processing systems are being studied
with a view toward improving the accounting system
and internal controls.
We also learned that the White House Office is planning
to redesign its accounting system which will provide for the
extensive use of automatic data processing. White House Of-
fice officials have assured us that the financial management
improvements suggested in this report will be incorporated
in the revised accounting system design.
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12
CHAPTER 3
NEED FOR INTERNAL AUDITING
The White House Office does not have an internal audit
staff.
The Congress recognized the role and usefulness of in-
ternal auditing when it passed the Budget and Accounting
Procedures Act of 1950 (31 U.S.C. §§ 65 et. seq.). This act
placed responsibility for instituting this element of inter-
nal control on top agency management by providing (31 U.S.C.
§ 66a) that:
"The head of each executive agency shall establish
and maintain systems of accounting and internal con-
trol designed to provide * * * effective control
over and accountability for all funds, property,
and other assets for which the agency is respon-
sible, including appropriate internal audit; * *
(underlining supplied)
The overall objective of internal auditing is to assist
agency management in attaining its goals by furnishing infor-
mation, analyses, appraisals, and recommendations pertinent
to management's duties and objectives.
Management of an office, such as the White House Office,
can benefit from timely information on problems on which
remedial measures can be taken before an organization's
function is impaired. This information, once it has been
examined and appraised, often leads to opportunities for
achieving lower costs, increased efficiency, and faster ways
of doing things.
Internal auditing can be of special benefit to managing
of smaller organizations, such as the White House Office,
where the customary separation of duties among employees is
not always economical or practical.
As stated previously, internal auditing is an essential
FORD
element of management control. In this report we have
pointed out a number of weaknesses in management control
071
over financial operations. Some of the basic responsibil
LIBRARY
ities of an internal auditor should include examining finan-
cial transactions, accounts, and reports and evaluating
agency compliance with applicable laws and regulations. Had
the White House Office been subjected to periodic internal
audits, we believe that the deficiencies described in this
report could have been reported to management earlier and
management would have been afforded the opportunity to take
corrective action sooner.
13
In addition to the White House Office, we noted that
other agencies in the Executive Office of the President--
National Security Council, Council of Economic Advisers,
Domestic Council, and Office of Management and Budget--do
not have internal audit staffs. Also, the Office of the
Vice-President does not have an internal audit staff.
CONCLUSION
In our view, because the White House Office does not
have an internal audit staff, it does not have an important
element of management control. This element of management
control is particularly important in an office, such as the
White House Office, that frequently employs many individ-
uals who have not had prior experience with many complex
Government fiscal requirements.
AGENCY COMMENTS
In his comments on our proposed report (see app. I),
the Counsel to the President stated that the feasibility of
establishing an internal audit staff would be studied fur-
ther and pursued with other agencies in the Executive Office
of the President.
RECOMMENDATIONS
We recommend that the Staff Secretary to the President
provide for an internal audit function at the White House
Office either by creating a small internal audit staff or by
obtaining internal audit services from another agency, such
as the General Services Administration, which provides this
service on a reimbursable basis. We also recommend that in-
ternal audit coverage be provided for other agencies in the
Executive Office of the President and the Office of the Vice-
President.
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APPENDIX I
APPENDIX I
THE WHITE HOUSE
washington
July 27, 1976
Dear Mr. Staats:
Thank you for the opportunity to comment on the draft report of
the audit of the White House Office for the period July 1, 1969,
through August 9, 1974, the closing date of the previous adminis-
tration. The audit was directed at evaluating the system of con-
trols over receipts and disbursements for the operation of the
Office.
As noted in your report, the accounting system for the White House
Office was approved by the Comptroller General in 1969. We agree
with your assessment that most of the deficiencies discussed in the
report would not have occurred if the approved procedures had been
followed. The audit points to the need for improvements in docu-
menting procurement actions, in property accounting and physical
inventory procedures, in the system of controls over receipts and
disbursements, and in reporting reimbursements. The report lists
examples to support these findings and makes specific recommenda-
tions to improve operations. It also recommends that an internal
audit staff be established to insure effective control over and
accountability for all funds, property and other assets.
As the report states, a number of corrective actions have already
been taken. These include:
Procurement documents are being filed together
FORD
and uniform procedures established to show
authorization for purchase and receipt of goods.
GERALD
LIBRARY
Physical inventories are being conducted on a
regular basis and property records are being
up-dated to reflect the results of these inven-
tories. Improved procedures are being
implemented for property accountability.
Reimbursements are now being reported to the
Office of Management and Budget as required.
15
APPENDIX I
APPENDIX I
In addition, the following actions are being taken to improve
operations:
Payroll procedures are being changed to establish
uniform practices for personnel keeping leave,
time and attendance reports and retirement records.
Automatic data processing systems are being studied
with a view toward improving the accounting system
and internal controls.
The feasibility of establishing an internal audit staff
will be studied further and pursued with other
agencies in the Executive Office of the President.
We appreciate the constructive nature of this audit and trust that
our planned improvements will remedy the deficiencies.
Sincerely,
isslaydq
bris
P.R.lyw.Bucken Philip W. Buchen
Counsel to the President
The Honorable Elmer B. Staats to
Comptroller General of the United States
Washington, D.C. 20548
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16
APPENDIX II
APPENDIX II
PRINCIPAL OFFICIALS OF
THE WHITE HOUSE OFFICE
RESPONSIBLE FOR ADMINISTERING ACTIVITIES
DISCUSSED IN THIS REPORT
Tenure of office
From
To
STAFF SECRETARY TO THE PRESIDENT:
John R. Brown III
July 1969
Mar. 1971
Jon M. Huntsman
Mar. 1971
Feb. 1972
Bruce A. Kehrli
Feb.
1972
May
1974
Jerry H. Jones
June
1974
June 1975
James E. Connor
June 1975
Present
CHIEF EXECUTIVE CLERK:
William J. Hopkins
Apr. 1968
May
1971
Noble M. Melencamp (note a)
May
1971
Apr. 1973
Robert D. Linder
Apr.
1973
Present
ADMINISTRATIVE OFFICER:
Carson M. Howell
Aug. 1961
Jan. 1971
Wilbur H. Jenkins
May 1971
Present
CERTIFYING OFFICER:
William J. Hopkins
Jan.
1966
May
1971
John J. Ratchford
Apr.
1968
Feb.
1973
Noble M. Melencamp (note a)
May
1971
Feb. 1973
Robert D. Linder
Feb.
1973
Present
Wilbur H. Jenkins
Feb.
1973
Present
a/Noble M. Melencamp was detailed from the State Department
from May 29, 1971, to April 14, 1973.
GERA FORD LIBRARY
17
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WASHINGTON STAR, 9/11/76, A-2
Nixon Era Records Sloppy,
Property Missing, GAO Says
By Gene Bernhardt
required under government account-
United Press International
ing procedures.
"An inventory of typewriters,
An audit of the Nixon White House
taken at the GAO's request, disclosed
books shows a "total lack of account-
58 typewriters worth $18,000 missing
funds"
including
the
"