[Congressional Record Volume 140, Number 10 (Monday, February 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: February 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
REOPENING THE M ACCOUNTS AT DOD
Mr. GRASSLEY. Mr. President, last week I came to the floor of the
Senate and made some very critical remarks about Comptroller General
Bowsher's recent decision to reopen the M accounts at the Department of
Defense or DOD.
Congress passed a law in 1990 that phased out those accounts by
September 30, 1993. Now, Mr. Bowsher wants to reopen the doors to the
magic vault or M accounts by just a crack, he promises, to correct $130
million clerical errors.
I fear that Mr. Bowsher, the national money copy, has given DOD the
green light to proceed further down the road to fiscal mismanagement.
I fear Mr. Bowsher's decision will help to undermine discipline and
integrity of financial management within the Government.
This is strong medicine, I know, but the facts tell me the criticism
is deserved.
Over the years, I have been very complimentary of Mr. Bowsher's work.
He has cooperated with me on a number of important projects. He has
helped Congress exercise oversight. He has been a faithful watchdog at
the entrance to the U.S. Treasury.
But in this particular case, I have to disagree with him. He made a
bad decision.
My concerns about Mr. Bowsher flow directly from his recent decision
to reopen the Department of Defense or DOD M accounts.
The decision that authorizes DOD to reopen the M accounts is laid
down in a document entitled ``Department of the Treasury Request for
Opinion on Account Closing Provisions of the Fiscal Year 1991 National
Defense Authorization Act,'' No. B-251287, Dated September 29, 1993.
Mr. President, when I spoke about the issue on the floor last week, I
examined the weak legal foundation for the decision and urged Mr.
Bowsher to withdraw it.
I did not have enough time to get into the issues surrounding what is
called unmatched disbursements. That is what I would like to do today.
Mr. President, I feel that Mr. Bowsher's decision gives tacit
approval to improper accounting practices which breed unmatched
disbursements.
These improper procedures and their unfortunate by-product are
totally inconsistent with the spirit and intent of all provisions of
law governing finance and accounting.
Unmatched disbursements, I fear, are the principal driver behind Mr.
Bowsher's decision.
Unmatched disbursements are Government checks that have been cashed
and returned to the Treasury but Government accountants are unable to
match and post those checks to the correct accounts.
Mr. President, DOD is thought to have about 50 billion dollars' worth
of unmatched disbursements right now. The figure could well be higher
than that. Nobody knows for sure.
A multibillion-dollar pool of unmatched disbursements--from the point
of view of a Pentagon bureaucrat--has all the advantages of another
slush fund. Unmatched disbursements can hide cost overruns,
overobligations, unauthorized expenditures, and even illegal
payments.
Mr. President, I fear Mr. Bowsher's decision condones sloppy
bookkeeping at the Pentagon.
I refer here to the discussion on page 6 of the decision document, B-
251287 dated September 29, 1993, that I placed in the Record last week.
Mr. President, I would like to warn my colleagues. This is arcane,
complicated language, but it is important. It goes right to the heart
of the issue.
Please listen carefully.
This is how Mr. Bowsher blesses the ugly procedure:
If a disbursement that was made before cancellation of an
appropriation account cannot be matched with a recorded
obligation of a canceled account, but DOD can establish to
the satisfaction of Treasury that the disbursement represents
payment of a valid unrecorded obligation otherwise properly
chargeable against the canceled appropriation account, the
Treasury may adjust the canceled account balance to reflect
the disbursement.
The idea of being unable to match a check to a recorded obligation is
bad enough, but the thought of then allowing DOD to scour the
countryside in search of an unrecorded obligation to cover the check is
disgusting.
Mr. President, we are looking at the point where control over the
peoples' money is breaking down, and Comptroller General Bowsher is
right there in the middle of it. I fear he is making himself a party to
the problem.
Government checks that cannot be matched with corresponding entries
in accounting records are a danger signal--a red warning flag.
If Government checks are returned to the Treasury but cannot be
matched up with recorded obligations, then it is time to call in the
FBI, lock the doors, seal up safes and filing cabinets and launch a
top-to-botton investigation. Questions must be answered. Lot's of
questions. Were illegal or improper payments made? To whom? Why? Was
money stolen? Is there a violation of Federal criminal law?
The national money cop, the Comptroller General, should not be giving
the go-ahead signal on unmatched disbursements.
Mr. Bowsher's decision appears to do exactly that.
Mr. President, the existence of unrecorded obligations and
expenditures at the DOD makes one thing very clear to me: Financial
management at the Pentagon has collapsed.
And Comptroller General Bowsher should not dredge up a legal gimmick
to bless it.
For the ordinary citizen, unmatched disbursements are like writing
checks but never filling out the stub and not knowing how much money is
left over or which bills have been paid.
This practice is unacceptable. It must not be tolerated.
That is why DOD cannot audit the books. That is why the Defense
Business Operations Fund or DBOF cannot comply with the Chief Financial
Officers Act of 1990.
The failure to record obligations and expenditures in ledgers and to
link those transactions to the proper appropriations accounts is
totally inconsistent with the law of the land.
The required linkage between obligations and expenditures must be
established before a payment is made. If preliminary commitment
accounting work is done, then disbursements could be quickly and easily
posted to the proper accounts.
Mr. Bowsher does not dispute this fact. He says,
I share your concern about the failure of the agencies to
record obligations and expenditures as they occur and agree
this practice has exacerbated the problem of unmatched
disbursements.
Yet his decision would give DOD financial managers an indefinite
amount of time to make the necessary accounting hookups.
But how long should that take: 5 days, 1 week, 1 month, 6 months, a
year, or 5 years? What is it?
The Comptroller General does not seem to know the answer.
The Treasury will give DOD until May 31, 1994. DOD wanted a year or
more.
I had also asked Mr. Bowsher to help me craft legislation to
eliminate unmatched disbursements.
But Mr. Bowsher says current law is satisfactory. It already requires
Government officials to record obligations and expenditures.
This is what Mr. Bowsher says:
I think the statutes are clear with regard to the
requirement for the proper recording of obligations and
expenditures. What I think needs improvement is the execution
of the requirement of these statutes.
What the Comptroller General is telling us is this: DOD is not
complying with the law.
Yet Mr. Bowsher's decision tries to make noncompliance look more
legitimate.
Mr. President, I would like to direct the next logical question to
Mr. Bowsher:
Mr. Bowsher, what do we need to do to bring DOD into compliance with
these laws?
Mr. Bowsher's decision sends the wrong message to the financial
management community: sloppy bookkeeping is OK.
Mr. Bowsher needs to send a clear, unambiguous signal to the
financial managers at the Pentagon: Obligations and disbursements
should be recorded immediately--as they occur.
Anything short of that is unacceptable.
Mr. President, I will have much more to say on the question of
unmatched disbursements in the weeks and months ahead.
Mr. President, I hope to have more to say on this question of
unmatched disbursements in the weeks and months, until we either take
care of this by changing law, or until we take care of this by seeing
that the existing law is honored by those responsible for its faithful
execution.
I yield the floor.
I suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BYRD. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mrs. Feinstein). Without objection, it is so
ordered.
Mr. BYRD. Madam President, I ask unanimous consent that I may speak
out of order.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator is recognized.
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