SCOPE OF AUDITS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01495R000300070019-5
• Release Decision: RIFPUB
• Original Classification: U
• Document Page Count: 2
• Document Creation Date: January 4, 2017
• Document Release Date: June 30, 2005
• Sequence Number: 19
• Publication Date: November 4, 1974
• Content Type: MF

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4 November 1974
MEMORANDUM FOR: Chief, Audit Staff
THROUGH: Inspector General
SUBJECT: Scope of Audits
DDI-7 4
1. Thank you very much for your proposal of "program audits"
in CIA, together with your Report of Audit of OJCS as a specific example.
I fully understand that this proposal reflects the Federal Audit Policy
issued by the General Services Administration in FMC 73-2 and the
Comptroller General's Standards for Audit. I understand at the same
time that certain line managers have expressed concern over this widen-
ing of the scope of traditional audits in CIA. The General Services
Administration has adopted these audit standards set forth by the
Comptroller General; at the same time the special characteristics of CIA
will require certain exceptions to the established procedures, as outlined
in General Walters' letter of 26 March to GSA Administrator Sampson,
This memorandum outlines my concept of the way we in CIA should
approach the audit process.
2. Traditionally the CIA Audit Staff limited itself to financial and
compliance audits. The Inspector General conducted organization inspec-
tions on a periodic basis. As a result of some question in my mind as
to the end value and effect of those organizational inspections, the
Inspector General's staff was reduced last year in conformance with
personnel reductions and this inspection routine was suspended. At the
time I contemplated its replacement by a combination of the annual Program
Review pursuant to Management by Objectives procedures and a broadening
audit function consistent with the Comptroller General's new standards.
I believe this to be an adequate resolution of the competing demands of
independent staff examinations of the management of our subordinate
units, stringent financial audits of our activities, and detailed examinations
of programs and performance of all our units on an annual basis. We need,
however, an articulation of the inter-relationship of these three activities.
3. The Program Call and Annual Reports provided the primary
vehicles for the annual appraisal of the needs and performance of
subordinate units pursuant to Management by Objective procedures.
The first priority task of the Audit Staff is to ensure that vigorous
and regular financial audits are made of our activities. As a second
task, the Audit Staff will conduct supplementary, independent program
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audits of our o era * qApursuant to the audit standards established by the
Comptrolll n% al. Such audits will cover Agency-wide subject matter
selectS'n coordination with the Comptroller, or directorate problems
selected in coordination with the deputy director concerned. These program
audits, additional to financial aspects, will be conducted with the coopera-
tion of the Comptroller's office, the appropriate programs staffs of the
directorates supervising the units audited, and in appropriate cases the
Office of Personnel. In this fashion I believe the Audit Staff can also re-
view program decision-making and performance through established mech-
anisms, focusing where possible on whether these mechanisms are func-
tioning effectively. On these program audits, the Audit Staff will consult
with the component under review, as has been customary in the past with
its financial audits as well as with the Comptroller, prior to issuance of
its report and findings. I expect the Audit Staff's independent judgment on
the management aspects as well as the financial aspects of the audit, as
required by the Comptroller General's audit standards. In carrying out
program audits, it is expected that the Audit Staff will augment its regular
financially-oriented personnel with individuals selected for their specific
knowledge and background from a roster composed largely of CIA retirees.
4. The Inspector General will continue to inspect any.situations in
the Agency coming to his attention or suggested to him by others which in
his view should be inspected and brought to my attention,
5. Following the submission of an audit by the Audit Staff to me, I
will expect the Inspector General to ensure that a follow-up report of
compliance or difference with the Audit Staff's conclusions will be made
to me after an appropriate interval of time. Any substantial differences
in view should be called to my attention for resolution with the deputy
director concerned.
6. Any exemption from audit.for reasons of sensitivity of intelligence
sources and methods will be subject to my approval after justification by
the deputy director concerned.
W. E. Colby
Director
cc: Deputy Director for Administration
Deputy Director for Intelligence
Deputy Director for Operations
Deputy Director for Science and Technology
Comptroller
General Counsel
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