Receipts, Disbursements, And Proof Of Accuracy


ALTHOUGH the law requires the payment of the revenue to the Treasurer of the United States and forbids payment except on the countersigned warrant of the Secretary of the Treasury, it is perfectly manifest that those requirements cannot be met by an actual manual delivery to the Treasury of each item of revenue, nor can each payment for supplies or services be made by a formal warrant. The spirit of the law is met by accomplishing those tasks through receiving and paying agents. The revenue is, in fact, all paid to the Treasurer, but it is accomplished by the deposit of funds to his official credit in the Federal reserve banks, in the mints, in the assay offices, and in private banks that are authorized to accept public funds. The spirit of the law is likewise met by the designation of disbursing officers to make payments from lump sums that are periodically credited to them by warrant and made subject to their check.

Every claim, however, that is settled by the accounting officials is paid by individual certification, is particularly described, and is individually authorized by the prescribed warrant of the Secretary. Upon delivery of the warrant to the Treasurer of the United States, the latter draws the payment check and transmits it to the payee.


Approximately 100,000 Treasurer’s check payments based on formal warrants are issued annually, but that number of checks is but a small fraction of the total number of Federal checks that are drawn on, and honored by, the Treasury. The Federal disbursing officers pay the current bills and thus draw the vast number of Federal checks. There are from 1,800 to 2,000 such paying officers, and the number of checks they draw exceeds a daily average of 100,000. The aggregate drawn in 1930 exceeded 32,000,000.


When Congress appropriates funds, a general descriptive title is assigned by the Secretary of the Treasury to each particular purpose described in the appropriation act. A particular account is opened for each such authorized project. Each paid claim relating to that project is charged to that account, and each advance to a disbursing officer designated to pay the bills relating to that project is likewise charged to it. Thus, the account always discloses the status of that particular object of appropriation. The record of the warrant that advances the funds discloses the amount advanced, the name of the officer, his official title, his station, and the description of the surety bond that guarantees faithful performance.

No officer may receive advances except on written request therefor that bears the approval of the head of the department or establishment to which he is attached. A record of every advance of funds made to a disbursing officer is maintained in the General Accounting Office.

By observing the entries on any appropriation account, each claim paid and each advance made can be traced in the General Accounting Office and the primary payment documents can be located. From them every dollar expended can be traced. The record is clear. It can be followed easily and, in fact, an entire appropriation is often subsequently and fully traced.


Every disbursing officer and every Government depository that accepts Federal funds must execute a formal receipt for the funds accepted, and the original copy of every such receipt is required by law to be transmitted to the Secretary of the Treasury.

A disbursing officer’s payments for supplies are practically all accomplished by executing a check drawn against the credit set up in the office of the United States Treasurer by the warrant that advanced the funds to the officer. Personal services, such as salaries of clerks and laborers, soldiers’ and sailors’ pay, day labor, and so forth, are usually paid in cash by the disbursing officers. The record of cash payment is usually a pay roll that is signed by the payee. The pay roll is the officer’s receipt and is in the form of a voucher. Check payments for supplies are supported by formal printed vouchers that disclose the name and address of the payee, the article purchased, the quantity, the unit price, the authority under which the purchase was made, and the fund—the appropriation—to which the payment is to be charged. Each voucher must also carry the approval of the superior of the disbursing officer, who, by the approval, signifies that he sanctions the expenditure. The voucher must disclose the number and the date of the payment check.


Every officer of the Government who receives funds, either by collection or advance, must periodically render an account, through the administrative office to which he is attached, to the accounting officers of the Government. That account must disclose under each appropriation title the amount the officer has received, the amount he has paid out, and the amount that remains to be accounted for. The account also must disclose how much of the amount for which he was accountable is still due the Government, how much of it stands to his credit in the Treasury, and how much, if any, is in cash in his possession. If the officer has repaid any part of the advance made to him, he should claim the amount repaid by noting it on his periodical account under the proper appropriation title and de-scribe the receipt he holds that demonstrates such repayment.


The officer is usually required to render his periodical statement monthly. When submitting it, he must transmit all the vouchers that demonstrate payment and, likewise, must submit with the statement a copy of each deposit he has made. He must acknowledge on the statement each item of advance and each item of collection.


With the statement in hand, the administrative office under which the officer serves may trace each of the officer’s financial transactions. When that review is completed, the statement, with vouchers, receipts, etc. accompanying, is transmitted to the General Accounting Office for review. The officials of that office, as previously stated, have copies of all warrants of advance and copies of all receipts, and by checking them against the officer’s statement of account each officer’s receipts and disbursements can be verified precisely. By scrutinizing each voucher submitted, the accounting officers pass upon the validity of each payment.

The audit can and does demonstrate legality and mathematical accuracy just as clearly as the paying officer himself can demonstrate those facts.

If irregularity exists, painstaking and capable audit will disclose the fact. The checks the officer has drawn are compared in the accounting office with the vouchers, and the balance that the officer asserts is still to his credit in the Treasury is verified by observation of the record of paid checks that the Treasurer pre-pares each month and transmits to the accounting officers.

The department concerned requires disinterested auditors periodically and unexpectedly to call at the office of each of its disbursing officers and to inspect his own record of his money accounts. The inspection includes a verification of the Federal cash in the officer’s possession. The accounting officers serving under the Comptroller General also have jurisdiction to verify the books and the cash of any Federal officer.

The means for proving the Federal money accounts is thus fully provided. The plan is wonderfully well conceived and the audits are carried out with great care and by skilled, disinterested auditors.


The General Accounting Office is the Federal auditing establishment and is under the direction of the official known as the Comptroller General. That official has complete jurisdiction to review the transactions relating to all funds appropriated by Congress. As to the auditing functions, the authority was quite radically changed by the Budget and Accounting Act, approved June 10, 1921. Whereas the law, from 1789 continually until the passage of that act, had always caused all the auditing to be accomplished by Treasury accounting officials, that act took that function almost entirely away from the Treasury and placed it under a distinct establishment that was made independent of the Treasury.

The original law not only provided that the auditing be accomplished in an especial branch set up in the Treasury, but also provided another and distinct branch of the Treasury to which appeals would lie from the findings of the auditors. The chief of the latter office was designated the “Comptroller of the Treasury.” Both the auditors and the Comptroller were subject to the orders of the Secretary of the Treasury. The former law accorded the Secretary authority to require those officials to act, but gave him no power to dominate them or to overrule their findings. The Budget and Accounting Act merged the several auditing offices with the office of the Comptroller of the Treasury, and the merged establishment thus set up was given the title “The General Accounting Office.” The act provided for a chief thereof; and accorded that official the title “Comptroller General of the United States.”

By combining the auditing offices with the office that had the power and the duty of reviewing the findings and the decisions of the auditors, the right of appeal does not afford reconsideration by an authority other than such as dictated the primary findings, be-cause the Comptroller General has the entire authority over both. As to final settlement of accounts and as to the right of appeal, it would seem that the present auditing procedure does not seem to be so well conceived as was the original law, for the old law recognized the right of review by an appeal to another independently controlled establishment.


The officials of the General Accounting Office have no jurisdiction to audit the revenue collections. The collectors of customs and the collectors of internal revenue are required to render money accounts just as are other disbursing officers, and their payments of funds advanced under the various appropriation titles are subject to complete audit by the General Accounting Office officials ; but the Comptroller General can-not exercise auditing jurisdiction over Federal revenue collected, except to determine that the collectors deposit all of it to the credit of the Treasurer. The Comptroller General has no power to pass upon the accuracy of any revenue assessment and collection. The customs collectors assess the tax on imports and the comptrollers of customs (both Treasury officials) verify the accuracy of the assessments and of the collections.

There is a clear business necessity for immediate verification of the assessment of the customs tax, for imported merchandise must be promptly released. It would clog commerce to hold up the clearance of customs collections until accounting officers, months later, in Washington might at leisure affirm or disapprove the findings and settlements made by the collectors. Disputes regarding customs collections are settled by appeal to the customs tribunals that are set up by law especially for that purpose.

The verification of the internal-revenue assessments and collections is likewise independent of the General Accounting Office. The collections relating to income taxes, corporation taxes, estate taxes, etc. (all internal-revenue matters) are verified under the authority of the Commissioner of Internal Revenue and appeal from his rulings lies with the Board of Tax Appeals.

The Comptroller General has jurisdiction to deter-mine that all funds appropriated for the conduct of internal-revenue operations are properly accounted for, and he may investigate and determine that each item of internal revenue collected is properly deposited to the credit of the United States Treasurer; but he has no power of disallowance or criticism as to the amount that should be exacted from a taxpayer. The power to levy and assess is lodged with the Commissioner of Internal Revenue, subject to the rules and regulations that are laid down by the Secretary of the Treasury.


There is a cogent reason why the revenue collections, both customs and internal revenue, should be subject to but one audit and that it be a final one, except as to appeals that involve the proper application of the rules and that relate to rights claimed that can be settled only by court proceedings. A second review, except as just referred to, has not been considered necessary by Congress, for it would cost a great sum and would not produce enough additional revenue to justify it. Also, in addition to the lack of departmental expediency and expense, the taxpayer would be put to the inconvenience incident to a greatly delayed final settlement of his tax. A great number of refunds of taxes are made necessary because a great many taxpayers overpay their income taxes. Their returns, in thousands of cases, disclose a lack of understanding of the requirements, and thus inadvertent voluntary overpayments result. Court decisions also cause many refunds by construing the revenue law in a manner different from the interpretations of the department. Excessive tax payments are refunded only after the most pains-taking scrutiny and verification of the taxpayer’s return by competent, highly trained, expert auditors.

The repayments are made voluntarily by the Government when the Government auditors discover excess. In thousands of cases, refund is made without claim therefor by the taxpayer. In case claim is made, the taxpayer’s return is reexamined. Adjustment of error is accomplished as the review discloses it should be or as the Board of Tax Appeals or the courts direct. A refund is never made by the bare order of a Treasury official. No Secretary of the Treasury ever arbitrarily required a refund to be made, and all refunds are sanctioned by Congress’ providing the necessary funds.