We

ganization of the Executive Branch of the Government, February 5, 1949. endorse this principle and believe that the authority to regulate the practice of certified public accountants in the District of Columbia should be vested in the Commissioners of the District of Columbia. It seems to us, however, that to restrict the Commissioners' authority to act only "upon unanimous recommendation of the Board of Accountancy" as provided in subsection 7(c) of the bill is entirely inconsistent with this principle. We therefore feel very strongly that either the phrase "upon unanimous recommendation of the Board of Accountancy" should be deleted in its entirety or at least that the word "unanimous" be deleted.

Subsections 7 (a) and (b) would require not less than 30 semester hours in accounting theory and practice, auditing, and commercial law as affecting accounting. We understand that many of the well-recognized universities do not require that many semester hours of accounting and related subjects for a major in accounting so that many college or university graduates with majors in accounting would have to take additional courses in order to qualify as a certified public accountant in the District of Columbia. For this reason, only 24 semester hours of accounting subjects is required for employment in the Federal service. In fact, the trend today is to require less semester hours of accounting and more hours of academic courses in the undergraduate universities and colleges. See page 378 of the book entitled "The Education of American Businessmen," by Frank C. Pierson, which is one of the Carnegie Series in American Education. The form of regulatory public accountancy bill which is suggested by the committee on State legislation, American Institute of Certified Public Accountants, as a guide to State societies planning such legislation, merely requires "a baccalaureate degree conferred by a college or university recognized by the board, with a major in accounting, or what the board determines to be substantially the equivalent of the foregoing; or with a nonaccounting major, supplemented by what the board determines to be substantially the equivalent of an accounting major, including related courses in other areas of business administration."

Subject to the foregoing comments, we are in general agreement with H.R. 7624 and recommend its enactment.

Sincerely yours,

JOSEPH CAMPBELL, Comptroller General of the United States.

Mr. ABERNETHY. Dr. Herbert, will you and your associates come forward.

STATEMENT OF DR. LEO HERBERT, DIRECTOR, OFFICE OF STAFF MANAGEMENT, GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY FREDERIC H. SMITH, DEPUTY DIRECTOR, ACCOUNTING AND AUDITING POLICY STAFF, AND JOHN W. MOORE, ATTORNEY, OFFICE OF THE GENERAL COUNSEL

Dr. HERBERT. Mr. Chairman and members of the committee, I am Leo Herbert, and I have with me Mr. Frederic H. Smith, who is Deputy Director of the Accounting and Auditing Policy Staff, and John W. Moore, an attorney in the General Counsel's Office of the General Accounting Office.

We are pleased to be here at your request and to comment on H.R. 7624, a bill to provide for the regulation of the professional practice of certified public accountants in the District of Columbia. On June 17, 1965, the Comptroller General sent to you a letter outlining the position of our office on this bill.

We feel very strongly that the experience of accountants and auditors employed by the General Accounting Office is fully comparable to experience obtained in the employ of a certified public accountant and should qualify as the experience required for the CPA certificate. While subsection 7(c) of the bill specifically provides that it shall not be interpreted as precluding consideration of Government experience, we are of the opinion that because of the

importance of the work of our accountants and auditors to the Congress, to its committees, and to individual Members of the Congress, the experience obtained while employed by the General Accounting Office should be specifically recognized in the bill as qualifying for the CPA certificate.

Mr. ABERNETHY. Do I understand you to say the bill does not de that?

Dr. HERBERT. No, sir; it does not do that now.
Mr. ABERNETHY. You recommend that it do?
Dr. HERBERT. That is right.

Mr. HARSHA. May I ask another question? Would there be any particular time limit of service or minimum limit of service with your department that the individual would have to have?

Dr. HERBERT. It would be exactly the same as the certified public

accountant.

Mr. ABERNETHY. In view of your recommendation, we would appreciate it if you would put the amendment in your own word or have your counsel do so, and submit it to the committee. Assuming the committee would agree, which I am not saying it will, we would not want to attempt to reduce to language an amendment which you are proposing.

Dr. HERBERT. We have done that in the letter.

Mr. ABERNETHY. I beg your pardon. That is fine.

Mr. FRASER. On that point, Mr. Chairman, do I understand wha you are proposing here, Dr. Herbert, would be an amendment whic would say that anybody who is employed by the General Accounting Office

Dr. HERBERT. Only the accountants and auditors.

Mr. FRASER. Anybody employed as an accountant or audito should have their experience qualify them on a comparable basis t someone employed by a CPA?

Dr. HERBERT. That is right.

Mr. FRASER. Would it be true that everybody employed unde those designations does in fact have that kind of general experience Dr. HERBERT. Everyone who is employed as an accountant auditor in the General Accounting Office would meet those qualif

cations.

Mr. FRASER. I know you are proposing that, but is it true in fac that every such person does get the experience which is comparable Dr. HERBERT. We feel so.

Mr. FRASER. Without exception?

Dr. HERBERT. Without exception. That is, in these profession accounting and auditing classifications. If there is ever any questio about it-for example, in Virginia there may be a little question i terms of some of the particular work-we have enough work in th General Accounting Office, as you gentlemen know, that we can specif cally assign those individuals to that particular job so there is n question whatever in terms of the quality of the experience. We se that that happens in the General Accounting Office in terms of ou rotation policy and in terms of our assignments.

Mr. FRASER. With respect to both Maryland and Virginia, what o their laws provide on this point?

Dr. HERBERT. The laws in Virginia allow our accountants to l accepted on the basis of experience. It is a little bit more experien

than the normal experience. It is usually grade 12. The law in the State of Maryland requires only education. There is no experience requirement when the satisfactory education requirement is met. Most of our men qualify in Maryland on the basis of education. Mr. FRASER. Then there is no problem.

Dr. HERBERT. There is no problem except in terms of the quantity of hours in the particular courses selected for the educational requirements. It is almost the same as the University of Maryland.

Mr. FRASER. The amendment you are proposing would make it easier for someone in your employ to qualify in the District than in Virginia.

Dr. HERBERT. In terms of time, it would be a little quicker in the District than it would be in Virginia, but it would not be as quick as it would be in Maryland because in Maryland there is no experience requirement if you have the education.

Mr. FRASER. I am not trying to indicate any conclusion, but you are stating in Virginia the work has to be at grade 12?

Dr. HERBERT. Around the grade 12 level or higher.

Mr. FRASER. Are your men required to be level 12?

Dr. HERBERT. Our men would be exactly the same as in terms of the certified public accountant, which in the District is less than some States and more than others.

Mr. FRASER. At what level can an accountant be hired?

Dr. HERBERT. We hire all of them at grade 7.

Mr. FRASER. Then someone who had been in the department at grade 7 for a number of years could qualify under your amendment in the District of Columbia but could not in Virginia?

Dr. HERBERT. Theoretically, but not practically, because the man would never stay at grade 7 because in terms of the quality of the work, if he cannot do the work, he would never stay at 7. We would suggest that he get a job somewhere else. Our basic operational levels would be grades 11 and 12 and above.

Mr. FRASER. I am very sympathetic to what you are seeking. I know many people are employed under a certain designation but it turns out their work is very specific and narrow. You say this is comparable to the general practice of accountancy. To say that this should be set, as a matter of law, without any administrative discretion, seems to me a fairly strong contention.

Dr. HERBERT. What you are saying is exactly true in some of the fiscal areas, and especially some of the fiscal areas which used to be handled in our office, where you had payroll and cost auditors. At the present time, practically all of our professional accountants, more than half of our men, now are in the professional accounting and auditing classification. So we are talking only of the professional accountants and auditors. We are not talking of the fiscal auditors or payroll auditors or transportation auditors.

Mr. FRASER. You are talking about an internal designation that you think is adequate to protect against the problem that I am raising. Dr. HERBERT. Right.

Mr. ABERNETHY. Dr. Herbert, may I make a suggestion. From my experience on this committee, and most committees, for that matter, if we can eliminate differences-I am not saying there are any, nor am I assuming there are, between your position and that of the gentlemen who just testified-if there are differences, I would like

to see a little counseling between you and your office and respresent tives of this CPA group and endeavor to see if you can reconcile th language that you can agree on. I hate to be put in the position being the umpire in a field in which I do not have experience. I wou not know anything about accounting. I would not know whether not what you have recommended is good or bad. I am not saying know that they recommend is good or bad. But I am saying if w go to the floor and you are of one mind and they are of another, have trouble.

W

So if there are differences between you as to what should be in th bill on this specific point, I think there should be some counselin between you before the committee meets again so we can have report from you to see if you have reached agreement on it. The makes our task easier.

I want to assure that we do that which ought to be done and t which I hope you gentlemen would agree.

Dr. HERBERT. We would be happy to cooperate in that respec Mr. ABERNETHY. I think the previous witnesses heard what I wa saying. It was not directed only to you. I imagine they would d the same thing.

(Subsequently, representatives of the General Accounting Offic and of the District of Columbia Institute of Certified Public A countants conferred and their further recommendations to the con mittee on H.R. 7624 appear in the appendix hereof.)

Mr. SICKLES. I wonder if I might inject this one point. You a pleading the case for those who are designated as accountants auditors in the U.S. General Accounting Office. Would there no be in the executive branch some job descriptions that would have th same qualifications and perform the same functions, so if we give th one exception to you, are we opening the door to many others, or a we leaving others out and just protecting this one group? What your comment with respect to that?

Dr. HERBERT. In terms of the entire Federal Government, the bi pretty well provides for all of the accountants and auditors in th Federal Government. I think the General Accounting Office is specific case. We are required by law to do specific work. example, to render opinions on the corporations in the Federal Gov ernment. I know of no other Federal agency that has that authorit which is specifically the same authority which the public accountant have, the "attest" function, as they call it.

Mr. SICKLES. Would there not be other individuals in the Federa Government performing exactly the same function on a day-to-da basis?

Mr. SMITH. May I respond? My name is Frederic Smith.

There are a few such individuals. Possibly the examiners for th Farm Credit Administration. They audit banks and lending institu tions. Beyond that, I would have to search my memory quite deepl to find a good parallel to the work we are talking about.

Dr. HERBERT. We are not saying anything about the quality of th work of the other Government agencies. I want that clearly under stood. There are some excellent accountants in the other agencies I think their experience should qualify and, according to this law, i will, the way it is intended.

Mr. SICKLES. Explain to me what the new law would do with respec to that. Does it give discretion to the Board?

Dr. HERBERT. Yes, and we have a reference in this statement on that. Section 7(c) of the bill reads:

The Commissioners may, upon unanimous recommendation of the Board of Accountancy, accept for any required year of certified public accountant employment as set forth in subsections (b)(1)(C), (b)(2) (°C), and (b) (3) (C) of this section, one and one-half years of actual and continuous experience of any person (1) in auditing the books and accounts of other persons in three or more distinct lines of commercial business * * [Emphasis added.]

Further, near the end of the section, it says:

Nothing in this subsection shall be interpreted as precluding consideration of Government experience for recognition under this subsection.

It appears to us that this is a negative approach to it.

Mr. SICKLES. Your intention is that this Board would have discretion to look at the job description and see if in fact there was the right kind of employment in the actual day-to-day operation and then to give credit to that. Would it be necessary to amend the law to provide specifically that a particular group would have this?

Dr. HERBERT. In terms of the General Accounting Office, we feel so, yes, and we think in terms of generalities it would be better. We also have a recommendation on the phrase "upon unanimous recommendation of the Board of Accountancy."

Mr. SICKLES. Do you want to take out the word "unanimous"? Dr. HERBERT. Either that or take out the whole thing. We are saying, by this language, that the Board of Accountancy could tell the Commissioners what the Commissioners should do.

Mr. SICKLES. In effect, you are saying you are satisfied the type of work which is being done by an employee in the Federal Establishment, particularly the General Accounting Office, is such that by this experience and passing the exams and then going out into private practice 8 or 10 years later, he will be able to perform the function as well and be able to do anything that any other certified public accountant could do?

Dr. HERBERT. Yes, sir, I feel so. We have it being done. Several of our men have gone into partnerships with local and national public accounting firms. We know it can be done. There is no question about it.

Mr. FRASER. Section 7 (c) says in effect that 11⁄2 years of employment in non-CPA firms will be equivalent to a year of such employment. Dr. HERBERT. Yes.

Mr. FRASER. Is that what we are talking about here, or are you looking for 1 for 1?

Dr. HERBERT. We are looking for 1 for 1.

Mr. FRASER. What is this language?

Nothing in this subsection shall be interpreted as precluding consideration of Government experience for recognition under this subsection.

Does that deal with the 1% for 1, or is that just 1 for 1?

Dr. HERBERT. According to the way we read it, the section deals with 12 to 1.

Mr. FRASER. So, your amendment not only would specifically write in your agency, but would also drop the 1%1⁄2 to 1 down to 1 to 1? Dr. HERBERT. Right.

Mr. FRASER. There are really two exceptions. One is that it be counted as a matter of law and, secondly, that it be counted on a 1 for 1 basis as a matter of law, rather than 11⁄2 to 1.