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Moreover, it appears that the Tennessee Valley Authority has consistently been regarded as subject to the budgetary provisions of title II of the Budget and Accounting Act and has followed the regular Budget procedure thereunder in requesting, justifying, and obtaining its appropriations. Section 2 of "Title 1-Definitions” of the Budget and Accounting Act (42 Stat. 20), provides :

“When used in this act

"The terms 'department and establishment' and 'department or establishment' mean any executive department, independent commission, board, bureau, office, agency, or other establishment of the Government, including the municipal government of the District of Columbia, but do not include the legislative branch of the Government or the Supreme Court of the United States." [Italics supplied.]

This definition is clearly broad enough to include the Tennessee Valley Authority as an "agency, or other establishment of the Government." The definition applies to the whole act; to title III establishing the General Accounting Office as well as to title II establishing the Bureau of the Budget, and it would at least be most incongruous to regard the Tennessee Valley Authority as an agency or other establishment of the Government for the purpose of justifying and obtaining its appropriations pursuant to title II of the act but as not such an agency or establishment of the Government when it comes to accounting for the disposition of such appropriations pursuant to title III of the act.

As originally passed by the House of Representatives, the bill H. R. 5081, which became the Tennessee Valley Authority Act, provided in section 10 (b):

“The Board shall require a careful and scrutinizing audit and accounting by the General Accounting Office or its successor in performing similar duties during each governmental fiscal year of operation under this act, and said audit shall be open to inspection to the public at all times, and copies thereof shall be field in the principle office of the Authority at Muscle Shoals, in the State of Alabama. At least once during each fiscal year the President of the United States shall appoint a firm of certified public accountants of his own choice and selection which shall have free and open access to all books, accounts, plants, warehouses, offices, and all other places, and records, belonging to or under the control of or used by the Authority in connection with the business authorized by this act. And the expenses of such audit so directed by the President shall be paid by the Board and charged as part of the operating expenses of the Authority.”

As amended by the Senate and finally enacted there was substituted for these provisions the ones appearing in section 9 (b) of the act (48 Stat. 63), as follows:

“The Comptroller General of the United States shall audit the transactions of the Corporation at such times as he shall determine, but not less frequently than once each governmental fiscal year, with personnel of his selection. In such connection he and his representatives shall have free and open access to all papers, books, records, files, accounts, plants, warehouses, offices, and all other things, property and places belonging to or under the control of or used or employed by the Corporation, and shall be afforded full facilities for counting all cash and verifying transactions with and balances in depositaries. He shall make report of each such audit in quadruplicate, one copy for the President of the United States, one for the chairman of the Board, one for public inspection at the principal office of the corporation, and the other to be retained by him for the uses of the Congress. The expenses for each such audit may be paid from moneys advanced therefor by the Corporation, or from any appropriation or appropriations for the General Accounting Office, and appropriations so used shall be reimbursed promptly by the Corporation as billed by the Comptroller General. All such audit expenses shall be charged to operating expenses of the Corporation. The Comptroller General shall make special report to the President of the United States and to the Congress of any transaction or condition found by him to be in conflict with the powers or duties intrusted to the Corporation by law.".

Thus there was substituted for the provision of the House bill for periodical special audits by outside firms of certified public accountants, in addition to "a careful and scrutinizing audit and accounting by the General Accounting Office," a provision for such periodical audits to be made by the Comptroller General with personnel of his selection. This substitution and the use of much of the same language with respect to such periodical audits strongly indicates they were intended to be of the general character which the House bill contemplated would be made by a firm of certified public accountants, except that they were to be made under the Comptroller General by personnel of his selection instead of by a firm of certified public accountants appointed by the President. The original provision for having such special periodical audits made by outside firms of certified public accountants denotes no purpose to exempt the Tennessee Valley Authority from general accountability under the Budget and Accounting Act, but such audits were apparently intended to be in addition to the accounting required under that act, and it would follow that this accounting requirement was not changed by the elimination of the provision for audits by outside firms and the substitution therefor of the provision requiring the Comptroller General to make such character of periodical audits. That is, the provisions of section 9 (b) of the Tennessee Valley Authority Act, supra, were not intended to limit the functions of this office to the duties there prescribed, but such duties were intended to be in addition to those prescribed by general law in the Budget and Accounting Act. That the principle of expressio unius est exclusio alterius does not apply under such circumstances, see Morgan v. Tennessee Valley Authority (28 F. Supp. 732).

As stated above, the various matters involved are not entirely clear. But, on the whole record, and in the light of the considerations herein discussed, I am constrained to hold, in the absence of clarifying legislation, that the Tennessee Valley Authority is not exempted from accountability under the Budget and Accounting Act, and that the duties imposed on this office by section 9 (b) of the Tennessee Valley Authority Act, as amended, of making periodic audits of the transactions of the Tennessee Valley Authority are in addition to the duties of settling and adjusting the accounts of the fiscal officers of the Authority pursuant to section 236, Revised Statutes, as amended by section 305 of the Budget and Accounting Act.

Applying these conclusions will entail primarily (1) the resumption of the procedure of submitting disbursing and collection accounts to this office supported by original youchers and necessary data for examination here by the Audit Division of this Office, and settlement, as in the case of other Govern. ment departments and establishments, subject to review under my personal supervision of any disallowances upon appropriate request therefor, instead of having vouchers examined and exceptions raised as a part of the periodic field audits under section 9 (b) of the Tennessee Valley Authority Act; (2) the deposit in this Office of Tennessee Valley Authority contracts pursuant to the provisions of section 3743, Revised Statutes, as amended (41 U. S. C. 20), requiring that “All contracts to be made, by virtue of any law, and requiring the advance of money, or in any manner connected with the settlement of public accounts, shall be deposited promptly in the General Accounting Office,” and (3) making the periodic field audits pursuant to section 9 (b) of the Tennessee Valley Authority Act on a basis as analogous as practicable to that of a financial or balance-sheet audit, and leaving generally to the settlement here of the disbursing accounts such questions as may arise as to the legality of particular expenditures.

Respecting the various points of past differences between the Tennessee Valley Authority and this Office as to certain classes of expenditures, I think these should be resolved in the light of the statutory purpose of establishing the Tennessee Valley Authority as a body corporate so that it might have much of the freedom and flexibility of a private business corporation. Prior to the amendment of the Tennessee Valley Authority Act by the act of August 31, 1935 (49 Stat. 1080), there was no requirement in the act that purchases and contracts be made after advertising, that apparently being left to the sound discretion of the directors under the broad corporate powers conferred on the Authority, it appearing from the legislative history of the amendment of August 31, 1935, requiring such advertising with exceptions there stipulated that it was not regarded that the general provisions of section 3709, Revised Statutes, were theretofore applicable. The same principle would be true of such matters as the purchase of “rubber boots and goggles, firearms for Authority safety officers, and noiseless typewriters,” mentioned in the Authority's memorandum, supra. The records of this Office show that the Acting Comptroller General held in intraoffice instructions of December 16, 1936, that the corporate powers conferred on the Authority to purchase and condemn real property carries with it the power to determine the validity of the title to be acquired, and, accordingly, that section 355, Revised Statutes, requiring generally the approval of titles by the Attorney General, does not necessarily apply to acquisi

tions of real property under such powers. This view of the matter appears to be confirmed by the provision cited in the Authority's memorandum, supra, from the act of October 9, 1940 (Public, No. 825), revising said section 355, Revised Statutes, that "The foregoing provisions of this section shall not be construed to affect in any manner any existing provisions of law which are applicable to the acquisition of lands or interests in land by the Tennessee Valley Authority.”

Respecting the certificates of settlement covering the period from July 8, 1933, to July 1, 1934, and the pending audit reports for subsequent years, you are advised that if the Authority will submit a statement indicating as to each disallowed item or exception either directly or by reference to prior statements—the Authority's reason or reasons for disagreement, such items will be reviewed on the basis of the principles herein stated with a view to the allowance of credit and the removal of exceptions where such action appears justified, and the settlements and reports will be revised accordingly. Such action should be taken as promptly as possible so that revised audit reports may then be submitted to the Authority without further delay for the Authority's statements to be filed with the final reports pursuant to section 9 (b) of the Tennessee Valley Authority Act as amended.

In the absence of further legislation determining otherwise the matter of the Authority's accountability under the Budget and Accounting Act, arrangements should be made as early as practicable to render accounts to this Office supported by original vouchers and data for examination and settlement here, and to deposit contracts in this office as required by section 3743, Revised Statutes, supra. Respectfully,


Comptroller General of the United States. Mr. ELSTON. Mr. Chairman. The CHAIRMAN. Mr. Elston.

Mr. ELSTON. I would like to ask Mr. Warren about the challenge of your authority. You said a memorandum was passed across the table in which the jurisdiction of the General Accounting Office was challenged. Are you privileged to tell who the author of that memorandum was?

Mr. WARREN. One of the directors. I was sitting down. I was trying to find out what it was all about; what this controversy was. And I assured him that I wanted to cooperate and work it out. And in the second conference there was handed to me a memorandum which absolutely went to the fundamental issue of jurisdiction.

Mr. ELSTON. What you were trying to do at the time was to devise some method by which you would have a fair and honest system of accounting adopted?

Mr. WARREN. That is correct.
The CHAIRMAN. That is, agreed upon ?
Mr. WARREN. Yes.
The CHAIRMAN. Are there any further questions?

Mr. Faddis. I might say to the Comptroller General when this bill was first passed by this committee I was a young and inexperienced member of Congress and I did not perceive the reasons for it at that time. Within a very short time when they began to buy very highpriced dairy stock and high-priced lumber, and you-drive-it-yourselfcars, and followed other methods of procedure of that kind, I right away saw it was necessary to put a bridle on this authority. And I believed ever since they should be bridled. I am glad the gentleman is here expressing his opinion today for the necessity of including them in the jurisdiction of his great office.

The CHAIRMAN. May I suggest this? This is a matter with which this committee is already fairly familiar. And while I have directed that the hearings be had by the proponents of the legislation today,


I feel that in view of the Comptroller General's very fair and impartial statement and presentation of the matter, that would necessarily close the testimony so far as the Comptroller General is concerned until we hear from the Tennessee Valley Authority. And if they have other material probably the Comptroller General's testimony could come in in the way of rebuttal if it is agreeable.

Mr. WARREN. That would be entirely agreeable to us, Mr. Chair


Mr. KILDAY. I would like to have explained for the record the technical difference between commercial auditing and Government auditing, by the General Accounting Office.

Mr. YATES. Mr. Chairman, I believe that question could be answered fairly briefly. I hesitate, knowing very little of the field of commercial accounting, to attempt to define for the committee exactly what commercial auditing is because I have heard expert accountants themselves disagree on that subject. But I have always understood it to be a kind of audit which would review the operations of a business organization and bring in a report showing the financial standing of the organization at the end of a given period, perhaps also including certain recommendations with respect to the conduct of the business and the manner in which the accounting records are kept. That is merely the attempt of a layman to define that part of it.

But in the audit as contemplated by the Congress in the Budget and Accounting Act and as provided for in that act and in its predecessor enactments which were brought forward and made a part of the Budget and Accounting Act, the General Accounting Office audit goes into the question of the legality of expenditures and it provides also for a settlement of an accountable officer's accounts. In such a settlement there would be shown the amount of money advanced to an accountable officer plus any collections made by him, if he is also a collecting officer; the expenditures made by that officer; whether they were legal or not; and then a balance of money to that officer's credit, or as sometimes happens to be the case, the balance which he owes the Government. Now, then, if in the showing of this balance there appear items which that officer has not disposed of in accordance with the law, be it a collection item or a disbursement item, those items are disallowed in his accounts and held against him under his official responsibility and under the bond which he is required to provide for the Government's protection. As to such balances found after an audit and settlement of the accounts, the Government has a protection because the Government can, if it succeeds in following the usual procedures applying, recover any money that is improperly spent.

Mr. KILDAY. That is the general and basic law relating to all Government agencies under which your office is operating, is it not ?

Mr. YATES. With few exceptions.

Mr. Kilday. Well, I mean that is the rule which applies in findings of statutory exemptions.

Mr. YATES. That is right.

Mr. KILDAY. And I believe that is in accordance with our general understanding—that all governmental bodies, whether city, county, State, or Federal Government, that the man charged with the responsibility or conduct of the office, the audit must determine the legality?

Mr. YATES. The auditor should have authority to question the legality of the expenditures made by a public officer.

Mr. KILDAY. That being a general rule. And I take it the position that the one who says that he does not come within that general rule would have the burden of showing here that he is exempt by existing law. That is all, Mr. Chairman.

Mr. HARTER. Further than that, would you not say—if the gentleman will yield—in this particular controversy the burden upon him is to show that he should be exempt--not only by existing law-because we have two bills before us—but that he should be exempt from the General Accounting Office audit.

Mr. YATES. Oh, yes; I agree with that. This would make that point clear one way or the other.

The CHAIRMAN. Let me ask a question or two.

Mr. Yates, when the accounts of the T. V. A. are presented to the Comptroller General's Office and audited and any question arises as to whether or not they come within the law, those are called unadjusted or

Mr. YATES. Exceptions or disallowances, perhaps.

The CHAIRMAN. Exceptions or disallowances. Now, are there a number of accounts of that kind in connection with the Tennessee Valley Authority's business at this time in the Comptroller General's Office known as exceptions, and so forth?

Mr. YATES. Mr. Tulloss, under whose direction the T. V. A. audit comes, can better answer that question than I. But I would say it would be safe to answer there are a number. Recently the Tennessee Valley Authority has filed replies to those exceptions just within the last few days and it may be, and we expect it to be the case, with the satisfactory nature of some of their replies we will be enabled to remove many of those exceptions. There are questions which arise in the normal course of audit of all the Government accounts. We question many expenditures fully expecting that the administrative agency responsible for making them will be able to supplement the record and prove they are all right. But the record as it stands does not show that they are all right.

The CHAIRMAN. Now, may we have from Mr. Tulloss a list of those things for the record—just a report of them, so we can put it in the record ?

Mr. YATES. The report respecting the present outstanding unremoved exceptions?

Mr. YATES. Yes, sir.
The CHAIRMAN. That is all we would like to have.

Mr. SPARKMAN. Do you know how soon those answers will be acted on or explanations ?

Mr. YATES. Just as soon as we can get through them, Mr. Sparkman. As I recall, the bundle is about that tall (indicating] and goes back over a period of several years and has been received within

the past 10 days, I should say.

Mr. SPARKMAN. In connection with the list of exceptions that you give will you also give us a list of those that the T. V. A. has explained

Mr. YATES. Depending on how soon the committee wants that report—it will take some time to consider all those explanations.

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