Outside Audit Finds House Accounting System ‘a Mess’

The financial accounting used by the House of Representatives is in utter chaos and should be revamped, outside accounting analysts said Tuesday after conducting the chamber’s first independent audit.

The Price Waterhouse accountants said that the records are so shoddy that they could not give an opinion on their reliability.

“They have found the whole system is a mess,” said House Speaker Newt Gingrich (R-Ga.).

At a rare bipartisan press conference, Gingrich and Democratic House leaders embraced the $3.2-million study by 100 Price Waterhouse auditors, which found $20 million in achievable savings through a variety of management techniques and use of computers.

Gingrich and House Minority Leader Richard A. Gephardt (D-Mo.) said that they intend to correct the problems identified by Price Waterhouse and to work further to improve House operations.

“It is the first of what we expect to be a regular process--the review of the House with a view toward improving its operations and financial management,” Gephardt said.

“I’m willing to give the Republican Party credit for what’s being done today,” he added, calling the audit and its bipartisan endorsement “an important first step.”

The audit, which covered a period from October, 1993, to the end of last year, was ordered by the GOP-controlled Congress as part of a drive to increase efficiency in the day-to-day operations of the House. The chamber employs more than 10,000 people and spends more than $700 million annually.

Citing poor management, waste and inefficiency, Price Waterhouse was sharply critical of virtually every phase of House finances and operations, saying that it “lacks the organization and structure to periodically prepare financial statements that, even after significant audit adjustment and reconstruction, are accurate and reliable.”

And hinting at potential bombshells down the road, the report said that some House members are in “apparent noncompliance” with various accounting rules.

But Gingrich said that it would be premature to identify the members because the raw files used by Price Waterhouse, often in the form of handwritten ledgers, made it impossible to accurately determine fault.

Price Waterhouse found, for instance, payroll overpayments of $299,000. All but $13,000 of that was repaid by the end of the audit period.