Books and Documents > Medical Department of the U.S. Army in the World War, Volume III, Finance & Supply
CHAPTER XLVII
FINANCE AND ACCOUNTING
PURPOSE
An act of Congress, dated September 24, 1917, authorized the Comptroller of the Treasury and the Auditor for the War Department to send to the American Expeditionary Forces portions of their organizations for performing there the functions of their offices. As a result of the establishment of the offices of the Assistant Comptroller of the Treasury and of the Assistant Auditor for the War Department in France,1 and in accordance with the request of General Pershing, the chiefs of the various War Department bureaus organized units to function in the American Expeditionary Forces in a manner similar to the finance and property divisions of the several departments in the United States. Thus the unit formed in the Medical Department eventually became the finance and accounting division of the chief surgeon’s office, A. E. F.2
PERSONNEL
In availing himself of the authorization referred to above, the Surgeon General had an officer of the Medical Corps ordered to Washington for consultation, and upon arrival directed him to obtain and organize a force sufficient to care for the Medical Department accounts for an army of 2,000,000 men.3 After consultation with the Assistant Auditor for the War Department and with various other departmental authorities this officer modeled his organization on that of the corresponding division of the Surgeon General’s Office.3 In order to get men qualified for this work all the large banks as far west as Chicago, and a large number of insurance companies, railroads, and department stores were requested to supply the names of drafted men qualified for service in this group.3 Prompt replies were obtained but, meanwhile, almost all the men named had been assigned to such duties that their transfer was not feasible. Banks were then asked to supply lists of their employees who were about to be called to the colors and from these by induction and enlistment the number desired was obtained. From time to time personnel to a total of 7 officers (including the chief of the division) and 135 men pertaining to this group were sent to France.3 It was purposed, in so far as the men were concerned, that many of them would perform clerical service not only in the office of the chief surgeon, A. E. F., but also at medical supply depots, with division surgeons, and in similar assignments.3
Because of numerous transfers, the enlisted personnel of this unit was further reduced to37 men. One of the officers was sent to Paris for duty in the bureau of accounts, A. E. F., and one was assigned to duty with the general purchasing board, A. E. F.
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On April 1, 1918, when the unit was attached to the office of the chief surgeon, it consisted of 6officers and 47 men. Gradually other personnel were added until in February, 1919, this division consisted of 10 officers, 132 enlisted men, and 15 French civilians. This was its maximumstrength.3
PREPARATORY WORK
In November, 1917, a temporary office was established at the New York medical supply depot, where the plan of organization was developed, and recruits were examined to determine their technical qualifications.3 These men were then sent to Governors Island to be recruited and temporarily quartered. While there they were given some drill and were instructed in their prospective duties. Supplies also were collected at this place and plans made for the details of procedure and work of the detachment abroad.
The first section of this detachment, consisting of 5 officers and 100 men, left the United States on January 4, 1918, and arrived at St. Nazaire on January 17. 3 From January 24 to February 13 the group was stationed at Bois, where its organization wasperfected.2 Plans of procedure were chartered and suggestions worked out for the improvement of the methods of handling money and property accounts of the Medical Department.
After the unit moved to Tours, on February 13, it established its office, and about March 15 began its actual work in rooms assigned to it in barracks No. 66.3
A second section of this group, consisting of 2 officers and 35 men, which had arrived in France on February 9, was broken up, only the officers and 2 enlisted men eventually joining the original unit then at Tours.3
On May 1, 1918, the finance and accounting division became a part of the division of supplies of the chief surgeon’s office, A. E. F.3
SCOPE OF ORGANIZATION
At first, the division had three chief activities: Money accounting, disbursing, and property accounting.4 As occasion demanded, other functions were added until eventually the division had 15 distinct but related activities and was divided into corresponding sections.2
DISBURSING
This section paid French commercial bills, all doubtful vouchers (when found to be legal)which were referred to it by other disbursing officers of the Medical Department, all laundry accounts, and all civilian personnel pay rolls.2 For the month of January, 1919, these disbursements amounted to 844,207.70 francs, representing 573 vouchers. Prior to March 1, 1919, the disbursing officer paid one-third of the total number of Medical Department vouchers settled in France. Before payment the auditor checked up duplications. A liaison was established with both the hospitalization division, chief surgeon’s office and the quartermaster department, A. E. F., in matters pertaining to laundry accounts whereby many hospitals through use of near-by quartermaster laundries saved many thousands of dollars. By April 30, 1919, the section had
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paid 4,593 vouchers. This section made considerable savings by eliminating duplicate payments and by arranging that hospitals use existing facilities instead of purchasing supplies and labor in open market. Records were made of the time elapsing between dates of purchase and dates of payment, and every effort was made to expedite settlements, thus promoting good will on the part of French vendors. Arrangements were made whereby quartermaster disbursing officers of Base Hospitals and hospital centers might pay accounts of civilians then employed, the Medical Department appropriations to be reimbursed by Treasury transfer. The importance of this provision is borne out by the fact that on November 30, 1918, there were 3,782 French civilians on Medical Department pay rolls. The average amount of purchases made direct by field organizations were made of record, by which many possible expenditures, by certain units which were given to extravagance, were eliminated.
AUDITING MONEY VOUCHERS
In this section were audited all accounts which already had been paid (except those on civilian pay rolls) by disbursing officers of the Medical Department, A. E. F.2 So far as possible any errors in these accounts were corrected before they were forwarded to the Treasury Department at Washington for final audit. Vouchers were examined to determine whether they were legal, were correct charges against Medical Department funds, conformed to authorization for disbursement, were arithmetically correct, and there was no duplication. The analysis also included such matters as the time interval between delivery of supplies and payment thereof or; the size of average purchase; comparison of volume and prices of similar articles purchased by different units. Data thus gained made possible not only an expedition of payments, hut also an elimination of unnecessary purchases and an approximate standardization of prices. Because of this careful auditing very few suspensions were made by the Treasury Department in the accounts of Medical Department disbursing officers. By cancellation of erroneous vouchers and by securing the agreement of other departments, A. E. F., to pay items which properly belonged to their appropriations, many millions of dollars were saved to the Medical Department. A cash refund of approximately $15,000 worth of overpayments was received, as a result of detection of overpayments and duplication of vouchers. The value of carefully auditing money vouchers and recording financial data was fully demonstrated when it was necessary finally to submit the accounts of medical disbursing officers to the Assistant Auditor for the War Department. These accounts were in such condition that they could be accepted without causing any difficulty to the disbursing officers.
ANALYSIS AND RECORD OF DISBURSEMENTS
This section made an index and abstracts of all vouchers before they passed out of the possession of the Medical Department.2 These important abstracts included such data as the name of the vendor, material, price paid, date paid, by whom paid. They were made with the view of facilitating future settlement of claims which previous wars showed would continue to be made for many years.2
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ANALYSIS AND RECORD OF ACCOUNTS OF CIVILIAN PERSONNEL
This section audited and made abstracts from pay rolls of civilian personnel before the rolls were forwarded to the Treasury.2 The abstracts showed names of civilian employees, authority for employment, when and where employed, when and by whom paid, etc. Prior to payment many erroneous items were eliminated, some refunds were procured, and some payments were transferred to other corps. Also in this section, efforts were made to provide for prompt payments.
ANALYSIS AND RECORD OF HOSPITAL FUNDS
This section audited the individual hospital fund statements rendered by the mess officers of the various Medical Department units, maintained a file of custodians of hospital funds, and records covering the amounts due to various hospitals from individual officers for subsistence while they were patients in hospital.2 At the peak of this work in March, 1919, 691 organizations were rendering monthly statements and the transactions represented by them amounted in one month to approximately 35,000,000 Francs.2 Not only were many underpayments and overpayments corrected, but efforts were made also to promote prompt payment of bills rendered by French civilians.4 Deficits were prevented by issuing warnings to those concerned ;in some instances, when gross negligence was evident, liquidation was secured from the private funds of officers who were responsible. Arrangements were made for the transfer of food stocks between organizations. The decision of the Comptroller of the Treasury giving the Medical Department the right to retain proceeds from sale of waste, and the right to turn in to the Quartermaster Corps unused food stocks, led to relatively large savings; proceeds thus secured from the sale of garbage amounted to several hundred thousand francs.4 One of the activities of this section pertained to the collection of funds from officers for payment of their subsistence while in hospital at the rate of $1 per day.4 Many officers inadvertently overlooked this obligation, but thousands of dollars were saved by carefully following them up.4
TRAVELING AUDITORS OF HOSPITAL FUNDS
This section consisted of a small staff which checked up records when there appeared to be anything irregular, but whose chief duty was instruction in the field of mess officers and hospital fund custodians in technicalities pertaining to these funds, the correction of errors, and the proper execution of disbursing and property papers.2 Constantly in the field, they gave instruction to Medical Department clerks in the preparation of disbursement vouchers, property vouchers and returns;2 also, they assisted very materially in closing money and property accounts of units returning to the United States.4 Always there were more calls for their services than could be met.2
CUSTODIANSHIP OF CENTRAL HOSPITAL FUND
The work which engaged this section was taken over about September 13, 1918, when the hospital fund in the chief surgeon’s office amounted to 18,800 francs.4 Subsequently, this section controlled the central hospital fund, the loan or donation of small amounts to new organizations, the transfer of
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hospital funds between organizations, the reception of funds from disbanding units, and the closure of balances.2 The fund on May 1, 1919, was over one hundred and fifty times what it had been when taken over in the previous September, the item of interest alone amounting to almost as much as the initial central fund.2 By May 9, 1919, it amounted to 2,862,792.31 francs;5 By May 24, it was 3,084,000 francs.6
LIAISON WITH FINANCE DIVISIONS AND TREASURY OFFICIALS
By means of this section the finance and accounting division maintained close liaison with similar divisions in other departments, American Expeditionary Forces, the finance officer, the finance requisition officer, and the officials of the Treasury in the American ExpeditionaryForces.2 This contact proved to be of value in keeping abreast of the various developments in financial matters in the American Expeditionary Forces.
ISSUE OF CLEARANCE CERTIFICATE
Through this section clearance certificates were issued covering money and propertyaccountability.2 In the cases of deceased officers these certificates were issued to the Treasury Department and in the case of others to the officers themselves. This work became considerable during the later history of the finance and accounting division; however, its performance was expedited through advance information concerning organizations or individuals returning to the United States which thus permitted the preparation of clearances even before these were called for. Arrangements were such that these certificates were issued at any hour of the day or night, usually a few minutes after they were requested. Of the total number of clearances issued prior to April 30, 1919 (other than those to deceased officers), only 156 were for parts of the accounts concerned, all other clearances being complete. Officers were assisted in every possible way in placing their accounts in correct form, and every effort was made to create good will among those returning to the United States and to civil life. Only 312 of the many certificates for deceased officers were for partial clearance and practically all of the debts in these cases were for small charges while in hospital.
BILLING ALLIES FOR HOSPITAL CHARGES
One section of the finance and accounting division was engaged in compiling data, from all available sources, relative to the hospitalization of allied troops in American hospitals, in converting these data into proper bills, and in submitting them to the governments concerned.2 During the period that this work was being conducted by this section, these bills amounted to $194,084.32. In April, 1919, this work was turned over to the Medical Department representative at Paris in compliance with orders that that officer be charged with the conduct of all financial transactions with foreign governments. Also this section formulated some of the bills against other departments of the American Expeditionary Forces, but this work also was turned over eventually to the Medical Department representative in Paris.
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COMPILATION OF STATISTICAL DATA AND FINANCIAL REPORTS
This section compiled monthly, semiannual, and annual financial reports of various kinds, and also certain special reports which were of peculiar value at different times.2 These financial reports, which were rendered to the offices concerned, covered almost every phase of the financial operations of the Medical Department. From statistical data which this division maintained it was possible to trace completely all Medical Department funds from the time they left the United States Treasury until they were expended for material and labor. These records covered the financial transactions of the Medical Department from the inception of the American Expeditionary Forces until April 30, 1919.
EXAMINATION AND FILING OF PROPERTY VOUCHERS
This section maintained from 7,500 to 10,000 individual files each of which concerned an accountable or responsible officer.2 During its most strenuous period approximately 3,500 vouchers per week were handled. Invoices, receipts, and returns were compared; discrepancies noted; certificates were audited, recorded, and filed; a card index for all officers responsible for medical supplies was maintained. The determination of property responsibility was the source of much trouble throughout the entire period of activity of the finance and accounting division, for it was seriously handicapped by the uncertain states of property accountability in that jurisdiction. This was occasioned by confusing orders capable of various interpretations. Before the armistice was signed accountability was especially uncertain, but an attempt was made to require a strict accountability, subject to due consideration of the conditions incident to active warfare. By May 1 returns to that date had been audited. Whenever necessary, statements of differences were drafted and the balance of the returns filed in such away as to be accessible and to show the final disposition of the case and the authority for this action.
EXAMINATION OF PROPERTY RETURNS
More than 1,000 returns were received and audited by the section engaged in this duty.2 It would have been completely overwhelmed had not Circular No. 68, chief surgeon’s office, February 8, 1919, been issued, conformably to existing orders. This circular limited the officers responsible for Medical Department property to those at base hospitals, supply depots and schools and thus eliminated from such accountability thousands of other officers who would have been required to render returns.
LEGAL REFERENCE LIBRARY
The section in charge of the legal reference library maintained complete files and formulated indices of Army Regulations, general orders, bulletins, and circulars issued by the different headquarters, whether the United States Army or the American Expeditionary Forces, abstracts of statistics and decisions of the Comptroller of the Treasury, the Auditor for the War Department, the Judge Advocate General, etc. 2 This section had been organized merely for the
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use of the finance and accounting division, chief surgeon’s office, in settling questions of legality and in keeping up to date different files of orders and decisions, but in addition, copies of its compilations were used by Treasury officials, the advisory board of war risk insurance, the secretary of the general staff, financial bureaus and other departments of the Army, and by various officers of the Medical Department either in the office of the Chief Surgeon orelsewhere.3 This section was also called upon to draw upcontracts.4 Questions were referred to it much as opinions were asked of attorneys in civil life, for the personnel of this section were lawyers in civil life.
LIAISON WITH BUREAU OF ACCOUNTS AND FINANCE BUREAU
With the formation in Paris of the bureau of accounts by General Orders, No. 5, Services of Supply, 1918, and the finance bureau, by General Orders, No. 199, General Headquarters, A. E. F., 1918, a member of the finance and accounting division, chief surgeon’s office, was in liaison with each of them and was permitted to pass upon many contemplated plans which affected financial operations in which the Medical Department wasconcerned.2 The cash expenditures of that department until April 30, 1919, amounted to $15,000,000. By May 8, 1919,the Medical Department had purchased in Europe medical and hospital supplies to a value of $21,084,943.14, exclusive of the cost of 19 hospital trains(approximately $5,166,666.67) 2
CENTRAL HOSPITAL FUND, THIRDARMY
By March 21, 1919, instructions had been given for the establishment of a central hospital fund in the office of the surgeon, Third Army, and authority had been given that office to give or take from hospital funds of units in the Third Army such sums as might seem proper, to retain in the central fund such portions of hospital funds, of departing units as might seem desirable, to audit hospital fund statements of units in the Third Army and to retain audited statements, to arrange for payment of civilian personnel out of the hospital funds, Third Army, and to audit civilian pay rolls.7
ARRANGEMENTS FOR RETURNING IMPORTANT FINANCIAL AND PROPERTY PAPERS TO THE UNITED STATES
Early in April, 1919, arrangements were made to send important financial and property papers to the United States by regular courier service, and at the same time a commissioned officer from the finance and accounting division, who was thoroughly acquainted with the various documents and could explain them to the interested departments in the United States.8 A section was established in this division to collect all these Medical Department finance and property papers to he sent back to the United States and to compile a complete index of all communications and other papers which previously had been sent there.
DISCONTINUANCE OF FINANCE AND ACCOUNTING DIVISION
By May 14, 1919, the chief surgeon ,A. E F., approved the discontinuance of the finance division as of June 15, following.2 Small detachments of the office force were to remain in service at Tours, Coblenz, Antwerp, and Washington, while other members of it were to be discharged. The entire division
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was then preparing copies of all records that might be needed after the originals had been returned to the United States. These copies were to be retained in in the chief surgeon’s office, A. E. F.2
A small part of the finance and accounting division continued in the chief surgeon’s office, to make such disbursements as were necessary and to maintain liaison with fiscal offices in the United States.2 This service continued after the American Expeditionary Forces was succeeded by the American Forces in France and the American Forces inGermany.9
During the period August to November, 1919, the closing months of our activities in France, claims for services rendered or supplies delivered to various hospitals and units throughout France were investigated and vouchers prepared and paid.9 Many of the accounts so paid were of long standing, the original bills apparently having beenlost.9 Investigations of these charges were difficult, not only on account of insufficient receipts but also because officers who gave the orders, received the supplies, or engaged the services had returned to the United States.
After November 15, 1919, no further payments were made by the Medical Department, but all vouchers were prepared and submitted to the quartermaster disbursing officer forpayment.9 Since the medical disbursing officer ceased to function, a total number of 70 claims for services rendered or supplies delivered (many of these being final settlements covering a series of transactions with the various persons or companies and requiring a complete check of all bills rendered and paid in order to avoid duplication) were investigated and vouchers prepared for submission to the quartermaster for payment.
REFERENCES
(1) A handbook of economic agencies of the war of 1917. Monograph No. 3. Prepared in the Historical Branch, War Plans Division, General Staff, 1919.
(2) Report on the activities of the chief surgeon’s office, A. E. F., to May 1, 1919, made to the Surgeon General by the chief surgeon, A. E. F. On file, Historical Division, S.G. O.
(3) Historical report to the secretary, general staff, G. H. Q., A. E. F., on the Medical Department, A. E. F., to May 31, 1918, made by the chief surgeon, A. E. F. Copy on file, Historical Division, S. G. O.
(4) The Medical Department, A. E. F., to November 11, 1918, compiled by Capt. E. O. Foster, S. C., from the chief surgeon’s records, A. E. F., under the direction of the chief surgeon, undated. On file, Historical Division, S. G. O.
(5) Letter from the officer in charge, finance and accounting division, chief surgeon’s office, A. E. F., to the chief surgeon, A. E. F., May 12, 1919. Subject: Report for week ending March21, 1919. On file, Historical Division, S.G. O.
(6) Letter from the chief surgeon, A. E. F., to the chief of staff, A. E. F., May 28, 1919. Subject: War diary for week ending May 24, 1919. Copy on file, Historical Division,
(7) Letter from the officer in charge, finance and accounting division, chief surgeon’s office, A. E. F., to the chief surgeon, A. E. F., March 24, 1919. Subject: Report for week ending March 21, 1919. On file, Historical Division, S.G. O.
(8) Letter from the officer in charge, finance and accounting division, chief surgeon’s office A. E. F., to the chief surgeon, A. E. F., April 14, 1919. Subject: Report for week ending April 11, 1919. On file, Historical Division, S. G. O.
(9) Letter from the chief surgeon, American Forces in France, to the commanding general. A. E.F., December 30,1919. Subject: Report from July 1, to December 30, 1919, Copy on file, Historical Division. S. G. O.
