(Sanitized) RESERVE FUND

Document Type: 
Collection: 
Document Number (FOIA) /ESDN (CREST): 
CIA-RDP80-01240A000400100015-2
Release Decision: 
RIPPUB
Original Classification: 
S
Document Page Count: 
4
Document Creation Date: 
December 9, 2016
Document Release Date: 
September 18, 2000
Sequence Number: 
15
Case Number: 
Publication Date: 
December 3, 1954
Content Type: 
MEMO
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PDF icon CIA-RDP80-01240A000400100015-2.pdf439.54 KB
Body: 
25X1A Approved For Release 2001/09/06 : CIA-RDP oGs- HAS REVIEWED. Chief, Techn 1 Accounting Staff Member, Technical Accounting Staff Fun& 000400100015-2 3 Doceber 1954 1, The subject regulation dated 19 July 1950 authorised the Chief, Special Support Staff, to establish a reserve fund for the purpose ding against: a. Curtailment or elimination of sources of foreign currencies. b. Losses or depreciation of foreign currencies on hand. c. Urgent operational used for sterile U* S. dollars. d. Urgent operational need for gold or jewele. 2. The Comptroller has suggested preparation of a current regulation outlining policy, procedure and responsibility with respect to the Reserve Fund. 3. A review of data compiledRegulations Control Staff in con- 25X1A nection with promulgation of although far from complete, revealed the following information. 4. An unsolved prOblem was the budgetary disposition of funds invested in foreign currencies, whether or not the amount so invested should be considered unexpended appropriations to be returned to the Department of the Treasury at the close of each fiscal year and charged against the succeeding year's appropriation and allocation to *overt offices. A memorandum to the Xlecutive from the Assistant General Counsel for Obvert Affairs dated 15 Merch 1950, reads in 1i-it-I1follows: of your memoranda t you refer to the still sition to be made of foreign es rema-iniratoi hand at the end of each problem has been the subject of several with the General Accounting Office. 085 raised the problem in 1944 with lir. Lindsey Marren, the Comptroller General. In the file of this office entitled, 'Foreign Currency llabangel (No. 230 A), there is a copy of a i/semorandusa, dated 3 June 1944, from the General Counsel to the Acting Director. That 'memorandum reports the results of a conference held on 1 June 1944 between the General Counsel and the Comptroller General. The problem of disposition of foreign currency balances at the end of fiscal years was discussed in considerable detail. It was agreed by all concerned that OSS funds used to purchase foreign currencies for the purposes of conducting clandestine opera- tions in foreign countries should be considered as having been Approved For Release 2001/09/06 : CIA-RDP80-01240A000400100015-2 ifigNErma 25X1A 25X1A Approved For Release 2001/09/06 : CIA-RD 000400100015-2 'expended' at the time of such purchases,re would be no need for any readjustment with respect to such funds between the appropriations for different fiscal years. It was pointed out, however, that an accurate profit and loss account should be maintained at the end of the fiscal year, enemy loss could be viewed as an operating expense of that fiscal year. Any net profit resulting should be covered into the Treasury as a mis- oellansous receipt. That could be done once a year at the close of the fiscal year. It was felt by Mr. Warren that the principal thing to be avoided was the use by OBS of the net profits. b. In the above-mentioned fil, of this office, there is also 7$ copy of a memorandum, dated 19_40reember 2:6A eoncerning the same problem. That memorandum is addressed to Director, CIG, fros the General Counsel. The results of a conference with W. Fisher, General Counsel of the General Accounting Office are reported. Mat conference was arranged in order to reaffir: the principle set forth in the previous discussion with Kr. Warren. W. Fisher generally concurred in the principle that vten dollars mere used to premise fOreign currencies they could be considered as expended at the ties of purchase. The matter of good faith was brought out. It was pointed out that any large purchases toward the close of a fiscal year would give rise to the inference of intent to supple- ment succeeding fiscal year appropriations. 4. The'purpose of the conferences mentioned above was not to official ruling of the General Accounting Office but to advice and guidance of individuals who were eminently to advise on such lettere. In view of the agreements softie. is of the opinion that the principle of not year-end appropriation adjustments for foreign currencies on hand is veil establiehed and needs= further examination at this time from a legal standpoint.* A memorandum dated 17 J 0 signed by George E. Miloon, Chief, ial Support Staff, ?Id a meeting for discission of the proposed attoI3., then in the formative stage, and referred to certain individuals tend. The then Chief of 822 and another of those mentioned um are unable to furnish any information at the present with respect to the fund contemplated by the Regulation. 6. A memorandum dated 21 July 1950 from k, Actinfigutive to the Director of Central-InteiIignce, attaching changes in reads in part: 3. I wish to point out for your special attention 'Reserve Fund.' We have on hand, carried over from J and not 25X1A obligate& or expended, a total of $4,031,000 in cash, gold and jewels which has never been reported to the Bureau of the Budget, Genera Accounting Office, or to appropriation committees of Con- pees. This sum is in excess of any appropriations made for CIG or CIA, and has neither been augmented from such appropriations nor used for augmentation of appropriated funds." Approved For Release 2001/09/06 : CIA-RDP80-01240A000400100015-2 - 2 Approved For Release 2001/09/06 : CIA-R A000400100015-2 25X1A 7. Under date of 24 July 1950AP perltY Chief, Finance Division addressed a memormaife to the Budget Officer describing the it.. of appearing an CIA books as a credit to predecessor 25X1A . organisations. This paper vas the basic memorandus in addressing a memoranda dated 10 August 1950 from the Director of Central Intelligence to Mr. William F. Schaub, Bureau of the Budget, requesting guidance in the dispositioe of ti* foregoing amount. v/Ii. A Memorandum for the Record dated 18 August 1950, signed by R. R. Sunder*, Budget Officer, reads; 25X1A 25X1A 25X1A 2X1A 5 1A 11111111111 finance Division, and the undersigned met Mt. and explained the circumstances under which the amount of 0,028,000 was accumulated from predecessor organisations, who stated he would discuss the subject further with Mr. Scheib and advise when a deci- sion had been reached. Later in the day Mr. Per-Lee advisol that the establishment of the amount as Reserve fund bed been informally approved and that a notation to that effect had been placed on the Director's mosorandum which would be retained in the Bureau's files." dated 19 July 1950 was issued on 23 August 1950. 1.951 a second was issued, rescinding 2.0.c(3) Funds Regulation. Jo information is in the Regulations file to explain this duplication of It does, the opinion of Budget Division persoaahl 25X1A Reserve Fund had been rescinded in the far distant past. 11. Author belief that the subject Regulation has been rescinded is the fact that the Special Support Staff was succeeded by the Covert Coordinating Committee, which in turn was succeeded by the Project Administrative Planning Staff. The latter has no responsibility with respect to the functions and responsibilities outlined in the subject Regulation. 12. An ammaination of general ledger account 450 Operating Fund Aequired fros OSU,* reveals a balance of $4,030,868.30 on 21 March 1950, and 0,028,168.01 on 19 April 1950? which belences are referred to above in paragraphs 6 and 7 respectively. However, the account is not a "fund,' it is an evaluation or swans reserve revealing a credit balance, Offsetting the amount of net assets taiga over from MU by CIO. 13. The CIC general ledger is not available for inspection having been sent to the Senoras Center. Audit papers in possession of the Audit Office indicate the journal entry _recording the net assets taken over C1G from SOM on 20 October 1946, as set forth hereunder $2 076,631.04 2.3, 65.26 42,211,996.30 Approved For Release 2001/09/06 : CIA-5 80-01240A000400100015-2 SEC 25X1A Approved For Release 2001/09/06 : CIA-R U. S. Do Dollar Instruments Advances Special Commodity Assets U. II, Dollar Purchases SOU Oxpenses assumed by CIG Accountability for Net Assets transferred frms SOU 2.311A000400100015-2 z,117 Atamo, it 219,219. 313,546.69 145,331.41 14,945.61 $ 4310097.77 1,672.13 14. Inasmuch as the situation with respect to carrying stocks of foreign and domestic currencies at overseas installations has been clarified since the date on which -se issued, 25X1A the regulation appears to be obsolete and should be rescinded. Flartber- UM the Agency has established a policy and practice of carrying 'nib- stantial funds at overseas ',Installations for the purpose of ensuring continuity of operations, with the knowledge of the Bureau of the Budget, independent of an authorizing or covering regulation. This function is one falling within the general responsibilities of the Comptroller, and 25X1A although not specificallly so enumerated in Regulation paragraph 25X1A 3 of Sagniatio41111111 authorises the Comptroller to establish such speotal accounts and !Ueda, including but not United to . . cached funds . . stockpiling and exchange Of foreign currencies as are needed to fetal the mission of the Ammar." 15. In view of the foregoing, it is thewriter', opinion thatME25X1A is inoperative, not applicable to current procedure, should be resc and need not be replaced with a current regulation. 16. general Ledger Account No. 400, "Accountability for 'Undo Acquired from SOU" is in fact donated capital and as such the account might properly be elininated by transfer of the balance to Account No. 450, Invested and Donated Capital.' 25X1A TASALM:jh (2 Dec 54) Distribution: Orig. - Addressee 1- TAB Chrono 1 - Deputy Comptroller ?, 1 - TAS Subject Approved For Release 2001/09/06 : CIA-RDP80-01240A000400100015-2