world with a staff, to see to the efficiency and honesty of the operation of AID, and I wonder whether the possibility of this has occurred to your organization in view of our deep concern about exploitation of the poor, about political influence, about honesty in the administration of these funds, about very serious accounting problems, such as, for example, with HARYOU-Act in New York, which is still the subject of great controversy!

Has any consideration or might any consideration be given to an inspector general's staff in the Office of Economic Opportunity to give us a feeling that these subjects are being closely watched all the time, aside from the normal executive planning?

Mr. SHRIVER. Yes, sir. We have given some thought to that and we do have an office of inspection which does some of the things you are talking about. In addition, we have not only our own auditing staff, but we have been able to call upon the Defense Department and HEW and labor audit staffs.

To date, out of the total moneys expended by OEO, approximately $1 billion has been selectively audited by governmental auditors, and of the $1 billion selectively audited, 0.7 percent of all the expenditures have been questioned, which compares very favorably with other agencies of the Government, and it appears now that about 0.2 percent of the $1 billion selectively audited may ultimately result in disallowances. So we have, first, the inspector's office which does what you are describing: second, we have the auditors that look on it not just from a management point of view; then we have the office run by Dr. Kershaw, on my right, which is a research and evaluation office, which attempts to find out whether there are more efficient ways from the point of view of the taxpayer of accomplishing the same result, known as-as you described it a minute ago-cost effectiveness studies.

We have three prongs to assure both honesty and efficiency.

Senator JAVITS. Would you give us a memorandum as to the organization of the inspector's office the personnel, the job they do, what they are looking for, et cetera ?

Mr. SHRIVER. We will be very glad to do that.

(The memorandum subsequently supplied follows:)

MEMORANDUM FROM THE OFFICE OF ECONOMIC OPPORTUNITY ON THE ORGANIZATION OF ITS OFFICE OF INSPECTION

The Office of Inspection, under supervision of an OEO Assistant Director, plans and directs investigations, surveys, and inspections of all programs and activities for which the Agency Director is responsible. Accordingly, it inquires into alleged improprieties reported by any source.

The Office of Inspection also (1) conducts and arranges for periodic inspection of the Community Action Program, VISTA, Job Corps, and delegated programs of OEO; (2) collects, reviews and analyzes reports and other source information concerning or affecting OEO and its programs; (3) maintains liaison and acts in cooperation with other Government agencies on inspections and investigations of delegated programs and arranges for provision for assistance if appropriate; (4) serves as the investigative facility for the agency and (5) in coordination with the General Council, refers to the Department of Justice those matters of civil or criminal implication of interest to the Department. Field representatives of the Office are detailed to OEO Regional Offices located in principal cities throughout the country.

At present, the Office of Inspection is staffed by 25 professional employees, 25 administrative and secretarial back-up personnel, and 8 full-time consultants. Among the regularly employed professionals are 9 former journalists, 5 attorneys, and 7 professional investigators. Fifteen of the professional staff have been in Government or career military service six years or longer.

The Office Director, Mr. Edgar May, Assistant Director of OEO for Inspection, formerly served as assistant to the Director of Public Affairs and worked with the Volunteer Task Force which planned the implementation of the legislation which was responsible for the War on Poverty. Prior to this, he had a distinguished career in journalism which included an award of the Pulitizer Prize. He is also the author of "The Wasted Americans," which is often cited as a standard in the field of social welfare.

Mr. Robert G. Emond, the Deputy Director for the Office of Inspection, served 14 years with the FBI, including eight years as a supervisor at FBI headquarters. He subsequently was Deputy Assistant Director for Security with the United States Information Agency and later appointed Senior Management Analyst in that organization.

Senator JAVITS. You say $1 billion has been audited. How much has been spent?

Mr. SHRIVER. Let me introduce the Chief Auditor for OEO, who may know how much has been spent, Nathan Cutler. Mr. Cutler, you find out about the audits and I will find out about how much has been expended.

Senator JAVITS. Mr. Cutler, what we are anxious to get is an answer to the question: If a billion dollars has been audited, what proportion of the total expenditure is that billion dollars?

Mr. CUTLER. It is difficult to identify exact proportions. Actually all of the expenditures referred to by Mr. Shriver have been tested through audit, which involves all of the major programs, and most all of the locations. Our objective is to get a typical sample of all expenditures and I think our audit reports have indicated that in every major area there has been some sort of an audit test which is supplemented by the additional evaluation referred to by Mr. Shriver.

We can for the record give you an indication of where we have made our tests, and the extent to which the observations have been germane.

Senator JAVITS. You still have not told us what proportion of the total expenditure has been so audited.

Mr. SHRIVER. The total expenditure for fiscal 1965 and 1966, according to Mr. Wolfrey, is $1,101 million.

Senator JAVITS. So that you have audited almost the whole thing? Mr. SHRIVER. We have audited

Mr. CUTLER. We have audited typical areas which base generated those expenditures; we have not audited every particular dollar, but of all those expenditures we have sampled and typically selected programs and locations involved in the expenditures.

Senator JAVITS. In all of this work, Mr. Shriver, the inspection, the audits, et cetera, can you give us--and if you cannot, tell us whya record of what you have turned up as to material dereliction, violation of law, dishonesty, political abuse or anything like that? In other words, what has been the case history?

Mr. SHRIVER. The case history, in my judgment, has been phenomenally good. To have anticipated you could put out that amount of money through these thousands of organizations, both public and

w and had as little questioned by auditors as 0.7 percent, is a donomenon and can only have occurred in the United States where ople are worried about the Internal Revenue Service coming around

Sorator JAVITS. I think you have every reason to be proud of your ow record, but I think we would like to know specifically what has aned up in the way of cases of any material character in the course his activity.

A: SHRIVER. I can give you a report now which shows the number places where there was, for example, an inadequate accounting syso or weak internal controls or noncompliance with OEO condiappropriate budget estimates, inadequate Federal share. In other words, they are supposed to come up with 10 percent nonModeral share and we claim they did not. Other adverse matters were

noted through the whole andit procedure. What the audits resel, fundamentally, Senator, is that there has not been any gross misopriation of funds for political purposes or as a result of dissty, proven dishonesty in any of these programs.

The audit summary follows:)

Audit program-Total program contracts and grants: $924,078,355, fiscal years 1965 and 1966 to May 1, 1966

Questionable costs:

Contracts
Grants
Loans

Total

$3, 649, 390 3,065, 728

186, 384

16, 901, 502

1 Questions by auditors-Approximately 0.75 percent of aggregate OEO expenditures.

Senator MURPHY. The Director seemed to point to me when he said "gross misappropriation."

Mr. SHRIVER. I thought you had mentioned that there was a lot of political misuse of the funds and, frankly, Senator, we find very little of it.

Senator MURPHY. There was political misuse of the power that the funds provided. And if you would like evidence of that, I will give you a stack of editorials in the Los Angeles papers which show a running fight over a period of 18 months between some Congressmen, the mayor, and every once in a while even the Governor, who incidentally is the only Governor who decided that he did not want anything to do with the veto.

I did not say there was a "gross misappropriation."

Mr. SHRIVER. It was the fact that it has not been misused; they are all fighting over the way somebody else is allegedly misusing it; when you have fighting like that nobody is getting away with much.

Senator MURPHY. I admire your defense, but I am sure if Mayor Yorty were here, and he has firsthand knowledge, he would disagree with you.

Mr. SHRIVER. Does he claim it has been misused in Los Angeles? Senator MURPHY. Yes. I have sent you copies of those editorials. Mr. SHRIVER. In other words, Mayor Yorty, who is on the committee itself, claims the committee is misusing it? I have never seen him make that statement.

Senator MURPHY. Don't be nimble and try to twist my arm. Mayor Yorty said that for 18 months there was a political hassle, in Los Angeles, as to who would be in control of the funds. This held up the actual job that should have been done, which was to help the poor. I have sent the editorials and if you have not received them, I will be glad to give you copies of them.

Mr. SHRIVER. I understand that, but that is a different subject.

Senator MURPHY. I was about to ask a question with regard to one that the often been cited in the press. Do you agree or disagree that there has been a problem in New York City?

Senator KENNEDY of Massachusetts. Wait, the time is running on Senator Javits. If he wants to yield at this time?

Senator JAVITS. I will ask unanimous consent that Senator Murphy may interpose on his own time. I was going to ask you about New York myself. Is it not a fact there was a tremendous hassle in New