It was a spring day when I left Washington for duty with a board investigating accountability in the Fleet. Eight months and twenty-six hundred pages of record later the task was done, but the three members, the legal specialist who served as recorder and mentor for the board, and the seven staff assistants had performed no other duty. Moreover, thirty-two others were diverted from their regular duties for varying periods and many ships and stations furnished data for use by the board. When I returned to Washington in December, I learned more of the impact of these cases on Naval administration, both initially during investigation and later when punitive action was taken.
Accountability cases are on the increase and absorb an undue proportion of naval effort but this condition is not peculiar to the Navy. A director of the Federal Deposit Insurance Corporation stated recently that the growing rate of bank embezzlement is a matter of grave concern and part of the increase is attributed to the general let-down in morals after World War II. Federal and state agencies and the banks are pushing a vigorous campaign to reverse the upward trend.
It has been my observation that Navy cases run in cycles without any reference seemingly to the size of the Navy, the number of accountable officers, or the character of operations or the volume of transactions; and while they may be related to the same general factors which influence other defalcations, most Navy accountability cases stem from ignorance of the laws which govern the accountable officer and failure by reason of such ignorance to conform to these laws.
While there may never come a time when there will be no need for boards and courts, because the fool cannot always be protected from his foolishness nor the knave from the consequences of his knavery, each person assigned to accountable duty represents a substantial Navy investment which is lost when he fails in his trust and, all too frequently, others also are lost when they become involved with the accountable officer.
While responsibility inevitably attaches to the instructional, supervisory, inspection, and audit forces of the Navy in accountability cases, my interest centers in the accountable officer; because if he is skilled and effective in the performance of his duty there is no need for inspection and audit, and if he fails a most important safeguard has been breached. Inspections and audits are of value to strengthen his hand and help him in his work. Prevention is the task of the accountable officer.
There are differing and complex definitions of accountability. I am concerned with the broad assignment of specific responsibility for money, property, or supplies to one person who must account for his actions. It includes therefore, the disbursing officer subject to audit by the General Accounting Office at one extreme and the mess treasurer subject to local review at the other extreme. The responsibility is direct and personal and seldom can be shared; the penalty for failure is always heavy. The surety which furnishes bond may replace any loss but cannot save the accountable officer from the consequences of his actions. Qualified personnel may assist him in his tasks but cannot share his responsibility nor relieve him from blame, because the Navy assigns him for the specific purpose of directing and controlling their actions.
Subordinates at times may lack experience and even technical aptitude, but generally they are intelligent, resourceful, and aggressive—all qualities highly to be prized in any military organization. These very qualities, however, prove dangerous in the area of accountability unless directed to proper ends and subject to control. When supervision grows lax and the leadership is without competence, invariably one more ruthless and aggressive than the rest will take the initiative and form a conspiracy to defraud, and such conspiracies are difficult to detect and even more difficult to prove.
Experienced officers acquire competence through successive tours of duty under varying conditions of authority and responsibility. They learn gradually to separate the chaff of detail from the grains of essentiality. I have no purpose to assist such officers but instead desire to elicit their assistance in the education of the accountable officer without experience.
Those who need assistance are the recalled reservist with new and complex requirements not faced in prior active duty nor included in his peacetime indoctrination and training, because there have been many changes since World War II; the newly appointed officer assigned to accountable duty after a brief and crowded period of instruction at a Service School; and the officer of relatively senior rank who finds himself the accountable officer on a combatant ship without prior opportunity to gain experience in subordinate details.
There is no lack of instructional information—quite the contrary. The Regulatory Publications contain a wealth of data, and each new legal or administrative requirement adds thereto. It is this plethora of information which overwhelms the inexperienced officer and forces him to take refuge either in “general administration” or in complete dependence on his subordinates. Moreover, the accountable officer seldom can spend much time on accountability tasks alone. He has pressing administrative and operational problems quite apart from those involving accountability. There is no time to conduct “refresher courses” in accountability afloat under present conditions.
The accountable officer needs a few concise and easily understood principles which he can apply and gradually expand as he gains experience. The Federal Deposit Insurance Corporation and the Federal Bureau of Investigation have urged bank directors to concentrate on four basic requirements. These four basic requirements are:
(1) Watch officers and employees to see if they are living too high. Gambling, drinking, and living beyond means were found to be the chief reasons for embezzlement.
(2) Rotate employees without notice and insist on vacations, so that shortages cannot be hidden long.
(3) Impose tighter auditing and other internal check-ups.
(4) Talk things over with Federal and State bank examiners to get hints on signs of possible weakness or lack of audit control which would not show up in a formal examiner’s report.
These requirements are applicable also to the Navy. They must be supplemented by other laws if they are to help the inexperienced officer assigned to accountable duty. Basic to these other laws are the rules of administration—-to fix responsibility, to delegate authority, and to control performance under delegated authority. The accountable officer is not always free to delegate authority; and even though he may delegate authority, he retains responsibility. He must, therefore, consult the Regulatory Publications; but within such limitations as are thereby imposed upon him, he must identify the tasks which he will perform and the tasks to be delegated to others.
Delegation is a difficult matter and will depend on the size of the ship, the allowance of personnel, the number available and their capabilities, and the interest and experience of the accountable officer, but the latter must make the decision and, through the use of charts, written organizations, instruction, and indoctrination, make known to his subordinates the pattern of organization and administration which has been adopted. Nothing is more important to the accountable officer than to prepare both general and specific instructions and to require that each person under his charge understand such instruction and certify that he has received and understands the requirements for his assignment.
Probably the most important and the most neglected requirement is the inventory. Many accountability troubles stem from the conduct of the inventory. Yet inventory is both the point of departure for the accountable officer and the means for checking his position from time to time during his tour of duty. The pre-inventory effort, the detailed check of containers, the proof of the correctness of the unit of issue and the price, and confirmation of the accuracy of extensions and totals are all essential elements of the inventory. The count by area rather than by item, the sealing of spaces prior to inventory and the resealing after inventory until all spaces have been counted and the delivery of a copy of the inventory to the custodian are additional important elements.
Accountability is never static, and there is a constant flow of new receipts after inventory. Such receipts must be inspected, and if the accountable officer does not perform such inspection himself, he must delegate authority in writing to others. Inspection is similar to inventory in its requirements. The inspecting officer must certify the quantity and quality over his signature. Inspection reports are “original records of original entry” and are of great value to the accountable officer.
Expenditures are also important, whether to other accountable officers, to use, or to sales. The authority to release material from custody should be in writing over the signature of the accountable officer, should be specific, and should bear specimens of the signatures of authorized persons, and each custodian should be furnished a copy. Wherever practicable, an intermediary should be introduced between the custodian and the user, and all transactions covered by two-name records. Where sales are conducted, the transactions should be recorded always at sale price; and each custodian, each intermediary, and each sales custodian should be required to maintain his own control records and to keep a copy of the stores voucher until the accounts are closed for inventory and accountability has been established.
Expenditures to use should be checked for reality by random-selection and by the use of practical yard-sticks of measurement. It is possible to check fuel issues by the use of meter records of distances, and there are other similar measurement devices. The ration controls provide very realistic measurements, and in one case recently it was found that not only did the general mess menu not include items reported as issued but it would not have been possible for the crew to have consumed all the quantities of the items reported as issued.
Because sales offer an opportunity to convert stores into cash, they require special safeguards. Sales custodians should be charged with all receipts and given credit for cash collection. They should be required to maintain their own control record and to balance out at intervals by their own inventory. Such controls are more effective than cash registers, which assure only the customer, while the custodian who maintains his own control record can be assured at any time he desires whether accountability is correctly maintained.
Where accountability cannot be established with exactness by charging the custodian at sale price with receipts, and where the sale price is subject to variation—as in the case of the soda fountain afloat—the solution is to assign trusted teams to operate the sales outlet until established norms can be determined. This is a problem which has concerned commercial sales outlets, and the best solution to date is to use trusted teams to develop variances or expectancy.
Accountability generally is subject to confirmation by inventory at monthly or quarterly intervals when the books are closed and a new value of accountability determined. These periods are important because they represent water-tight doors between one period and another. The effort in preparation for such closing includes “footings” for complex accounts, preparation of a trial balance, and a verification of vouchers. It is most practicable to conduct such checks as a joint effort, drawing in the custodians, the record keepers, the cash collectors, and those who took part in the inventory. Group confirmation is a most effective deterrent against conspiracy. And when completed they should be despatched without opportunity for change.
On small ships the accountable officer will maintain his own controls, but on large ships it is customary to use a records keeper. Nevertheless the accountable officer should retain within his own grasp the elements of control, though this need be no more than a ruled note book, recording the value of the inventory, the value of receipts cleared for payment, the value of transfers, and the cash collections. Entry of inventory permits such a personal control to be closed, and it is available then to confirm the trial balance. Many accountability cases would have been saved had such a simple personal control been used.
The accountable officer must guard the lines of communication to the commanding officer, the inspection and audit officers, and others who have a concern in his work. He should provide a safe place for the deposit of all communications and ensure there is no chance for diversion. He should particularly study the exceptions taken during inspection and audit, because sometimes a detail will be revealed which is not clearly understood by the inspector or auditor but will have a larger meaning to the accountable officer.
More and more returns submitted for audit are summary reports, depending upon their elaboration on the detailed “working data” retained by the accountable officer. Audit is shifting rapidly to the “on-site” type of audit which makes the utmost use of local records. Hence it is important that local records conform to the rules of evidence, whether they be primary evidence (the original records of original entry) or secondary evidence.
All accounts and records must “stand on their own feet” without need for explanation or interpretation and must show the six elements—when, where, who, what, how and why. Of these requirements the why is perhaps the most important. Records are maintained usually for the period prescribed by the statute of limitations—from two to three years—and because they are of great importance to the accountable officer, they should be identified and safeguarded.
The accountable officer must be frank with those in authority over him, especially the Commanding Officer. Because all who have such authority also have a stake in his performance of duty, they likewise have an interest that it is done properly. The accountable officer must never conceal an excess or a shortage, but must report the facts promptly, honestly, and in detail to his Commanding Officer. If the Commanding Officer cannot provide a solution, he knows where to seek assistance. Many inexperienced officers get into trouble because they conceal small differences, whereas if they had made immediate report, skilled assistance would have been given them.
The accountable officer is a valuable member of the Navy team who is “entrusted with property of the United States intended for the Naval service thereof” and who is responsible that such property is applied always to lawful purposes and that accurate accountability is maintained. The Navy has a high reputation for integrity and honesty, and this reputation rests in the area of accountability squarely on the personal integrity and professional skill of its officers assigned to accountable duty.
It is to the interest of all those who have had experience to help those who lack such experience. While such help is best given directly by those who serve with their juniors, and by those assigned to inspection and audit tasks, there is also an opportunity to make the Regulatory Publications of greater value through concise, simple digests which stress essentials and strain out the details.
A splendid job has been done in providing such digests in the instruction manuals used by enlisted personnel in preparing for advancement in rating. Similar digests covering the essentials of performance of duty by mess treasurers, welfare and recreation officers, and officers assigned to clothing, subsistence, and ship’s store details would provide means to bridge the gap between inexperience and a detailed knowledge of requirements.
Perhaps this description of the laws of accountability as they affect naval officers will stimulate others to contribute from their experience to the production of such digests. There is certainly a need at this time for such assistance to the inexperienced.