REPORT OF AGENCY TASK FORCE REVIEW OF GAO AUDIT OPTIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81-00261R000100050047-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 9, 2016
• Document Release Date: September 6, 2000
• Sequence Number: 47
• Publication Date: November 10, 1975
• Content Type: REPORT

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WORKING DRAFT
*OGC Has Reviewed* NO. 2
,1. 0 i 0V IW 5
REPORT OF AGENCY TASK FORCE REVIEW
OF GAO AUDIT OPTIONS
The Agency Task Force of Directorate representatives established
at the request of the Director to develop recommendations for ground
rules which should apply to any resumption by GAO of audit of Agency
activities has reached conclusions which are set forth in the para-
graphs which follow.
I. STATEMENT OF THE PROBLEM
Shall GAO resume audit of Central Intelligence Agency activities
and if so with what limitations or restrictions.
II. OFFICIAL POSITIONS
A. Comptroller General
It is assumed the Comptroller General favors resumption of GAO
audit of Agency activities, provided it could have sufficient access
to produce meaningful evaluations.
B. House and Senate Select Committees
We infer from conversations with staff representatives of the
Committees and from congressional questions that the Committees are
likely to recommend resumption of GAO audit of Agency activities.
C. Rockefeller Commission
The Commission Report made no reference to GAO audit, recommending
instead that the President's Foreign Intelligence Advisory Board assume
an audit responsibility.
D. Congress
At least one bill has been introduced (by Senator Proxmire)
to formally direct resumption of GAO audit of Agency activities.
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E. Director of Central Intelligence
The Director is on record as being of the opinion that arrangements
can be made for resumption of GAO audit of Agency activities subject
to necessary limitations and to agreement on security procedures and
on distribution and content of reports on audits.
III. DISCUSSION OF OPTIONS
A. General
The Task Force in preparing this report gave careful attention
to (1) the history of GAO audit relationships with the Agency, (2)
the nature of GAO audits as currently conducted in other agencies and
(3) the impact on CIA of resumption of GAO audit of Agency activities.
1. History of GAO audit relationships.
a. Initial audits. Following enactment of the Central
Intelligence Agency Act of 1949, the Director, notwithstanding
the very broad and unusual powers granted to CIA by the Act,
requested site audit of certain expenditures consistent with
arrangements initiated in August 1946 with the predecessor Central
Intelligence Group. Under those arrangements the site audit
covered expenditures referred to as vouchered funds (those which
can be accounted for and audited in conformance with the laws
that apply to other Government agencies and with standard Govern-
ment regulations and procedures) as distinguished from confidential
funds (accounted for outside the Agency solely by certification
of the Director of Central Intelligence under the authority of
section 10(b) (now 8(b)) of the CIA Act of 1949.) The audit
process was essentially limited to a review of fiscal officers'
accounts, including examination of certain related vouchers and
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other documents evidencing the expenditure of appropriated
funds to determine whether the expenditures were made in accordance
with the National Security Act of 1947, the CIA Act of 1949 except
Section 8(b) and with laws and regulations generally applicable
to Government expenditures. In addition, the site audit staff
performed liaison functions between CIA and the General Accounting
Office as requested by CIA officials. Potentially questionable
expenditures were submitted to the site audit staff for review
Prior to payment. Reports were not issued to anyone outside CIA,
and formal exceptions to the expenditures made were not taken
but instead any questions were discussed informally with CIA
officials.
b. Expansion of Scope. Subsequent to enactment of the
Central Intelligence Act of 1949 the General Accounting Office
broadened the type of audit made of the activities of Government
agencies generally. Under the new "comprehensive" audit approach
the General Accounting Office construed an agency's financial
responsibilities as including the expenditures of funds and the
utilization of property and personnel in the furtherance of
authorized programs or activities in an efficient, economical
and effective manner. In 1959 the General Accounting Office
asked permission to discontinue audit of CIA, however, the CIA
Subcommittee of the House of Representatives Committee on Armed
Services requested that the General Accounting Office actually
broaden the scope of its audit of CIA activities. This request
was made in a letter to the Director of CIA from the Honorable
Paul J. Kilday, Chairman, Special Subcommittee on CIA, Committee
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on Armed Services, dated 19 June 1959. Following a series of
extensive discussions, the Director proposed to the Comptroller-
General in a letter dated 16 Oct 1959 certain principles for
the expanded audit. The Comptroller-General in his letter to
the Director dated 21 Oct 1959 agreed to proceed with plans
for the expanded audit on a trial basis within the principles
expressed in the Director's letter.
c. Discontinuance of Audit. In 1961, after completion of
a trial period, GAO concluded that under existing security re-
strictions on its audit of CIA activities, it did not have sufficient
access to make comprehensive reviews on a continuing basis which
would produce evaluations helpful to the Congress. It further
determined that continuation of the limited financial audit effort
which it had conducted in prior years at the CIA would not serve
a worthwhile purpose; it therefore proposed to discontinue all
activities at the Agency. At about this same time the Agency
was engaged in a major reorganization and strengthening of its
comptroller and internal audit functions. (The Agency Audit
Staff reports directly to the Director of Central Intelligence
through the Inspector General and observes the same audit principles
and standards as the GAO.) Based in part upon these developments
and in recognition of the validity of the need for restrictions
on the scope of audit the Honorable Carl Vinson, Chairman, Committee
on Armed Services, House of Representatives agreed in July 1962
to the Comptroller General's recommendation to terminate all audit
efforts; since that time GAO has not conducted any reviews at
the CIA nor any reviews which focus specifically on CIA activities
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except for two recent reviews discussed in the next paragraph.
d. Ad Hoc Reviews. Recently, the Honorable Lucien Nedzi,
Chairman, Special Subcommittee on Intelligence, requested GAO
to review the processes followed for the sale of the assets of
two of our air proprietaries whose relationship with the Agency
J-3 o
had become generally known to the public. Qe reviewshas- been
completed and a, classified report5commenting favorably on the
method and propriety of the sale;wa-s issued directly to Mr. Nedzi.
T-he-second--i?ev+ew is---ire--p-reeess.=
2. Current Nature of GAO audits in other agencies.
a. The objectives of GAO audits are as follows:
(1) Whether the agency is carrying out only those
activities or programs authorized by the Congress and is
conducting them in the manner contemplated to accomplish
the objectives intended. Where appropriate, a review is
also made for the purpose of considering whether the authorized
activities or programs effectively continue to serve their
originally intended purpose.
(2) Whether the programs and activities are conducted
and expenditures are made in an effective, efficient, and
economical manner and in compliance with the requirements
of applicable laws and regulations, including decisions of
the Comptroller-General.
(3) Whether the resources of the agency, including
funds, property, and personnel, are adequately controlled
and utilized in an effective, efficient, and economical
manner.
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(4) Whether all revenues and receipts arising from the
operations under examination are collected and properly
accounted for.
(5) Whether the agency's accounting system complies
with the principles, standards, and related requirements
prescribed by the Comptroller-General.
(6) Whether reports by the agency to the Congress and
the central control agencies disclose properly the information
required for the purposes of the reports.
b. The usual emphasis of current GAO audits is on the "big
picture" and typically includes reviews of (1) activities of the
agency against the backdrop of governing laws and Congressional
intent, (2) management controls and (3) budgetary and financial
control practices. Continuing attention is given to possible
duplications of effort within an agency or with activities of
other agencies.
3. Impact on CIA of Resumption of GAO audit of agency activities.
a. It is patently obvious that unlimited access by GAO to
agency activities to achieve the general and specific objectives
discussed above and full public reporting of the results of audits
would be unacceptable from any viewpoint.
b. The comments and conclusions which follow take into
consideration the positions of each of the Directorates based
upon careful soundings by the respective directorate representatives
of the principal components in their Directorates for an objective
analysis of the potential impact of a comprehensive GAO audit on
the diverse functions of each such component.
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(1) Each of the Directorates except the Directorate
for Intelligence (DDI would of course limit access to sensitive
documents and information received from other Directorates
in accordance with guidelines of the component) has voiced
a variety of very legitimate concerns about a comprehensive
and unrestricted GAO audit. These concerns all basically
relate in a broad sense to the need to protect the sensitive
intelligence sources and methods which the Director by "t/50
statute must protect from unauthorized disclosure and mo e
sppeci f-i-c-a-l4Y to an urgent need to continue the Director's
8(b) authorities free of any ambiguity about how they might
be compromised under the terms of an audit agreement with
GAO. In the context of these concerns there is general
agreement in a pragmatic sense that in determining the
potential scope of audit should GAO nevertheless resume an
audit function, a clear distinction must be made between
activities which would provide information which if divulged
would represent an unauthorized disclosure of intelligence
sources and methods versus activities which would directly
compromise the Agency mission and thus cannot be allowed,
e.g., various external verifications or evaluations of
transactions or activities not openly Agency sponsored.
Examples of such latter transactions or activities are
attached as Exhibit A.
(2) There presumably should be no real controversy in
reaching agreement with GAO upon the types of activities
which cannot be allowed because they would compromise the
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Agency mission. Likely to be much more difficult will be
the attempt which the Task Force believes must be made to
deny GAO access to the following kinds of activities or
information involving sensitive intelligence sources and
methods:
(a) "Identities of agents, sources and persons
and organizations involved in operations which, if
disclosed, would subject them. to personal physical
danger, or to extreme harassments, or to economic or
other reprisals."
(b) "Material provided confidentially by cooperating
foreign intelligence services."
(c) "Diplomatic exchanges or other material disclos-
ure of which would be embarrassing to foreign governments
and damaging to the foreign relations of the United States."
(d) "Specific details of sensitive intelligence
methods and techniques of collection."
(3) The Task Force rationale for advocating denial of
GAO access to the foregoing is that the most effective way
of precluding unauthorized disclosure of information is to
prevent access to the information. The Agency has established
the right to deny these categories of information to the
Congressional Oversight Committees, House and Senate Select
Committees, Office of Management and Budget and to the
Congressional Investigative Group now reviewing Sigint
activities as a basis for recommending the continuing
responsibility for that function as between CIA and NSA.
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(4) Although GAO in the normal execution of its audit
programs might not necessarily press for the foregoing
categories of information, the point is that in the absence
of an agreement any auditor has a right in a normal audit
situation to any information he believes to be relevant to
his audit mission. Hence the importance of treating the
principle here involved as an issue for open resolution.
(5) The Task Force believes it is important to emphasize
that this proposed audit limitation cannot be monitored simply
by denying access to financial vouchers covered by DCI
certification under section 8(b). Much of such information
is not related directly to 'N specific disbursement, ~ hence
it is important to establish the broader principle of denying
access not on the basis of DCI certification of funds but
on the basis of the substance of the information.
(6) There is general recognition in relation to all
of the foregoing the Agency has never been immune to the
risk of unauthorized disclosure by its own employees either
by carelessness or by design, particularly on the part of
employees who have terminated their Agency association.
The risk of such leaks is of course minimized by a large
body of security practices with heavy emphasis on compart-
mentation and the need-to-know principle. The missing
ingredient in security practices is of course the lack of
a law (which the Director has requested) which would impose
penalties against unauthorized disclosures.
B. Audit Options
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1. Assumptions
a. For the purposes of this report it is assumed that
whether or not resumption of GAO audit is based on a legislative
directive, there will necessarily be negotiations between the
Director and the Comptroller-General to establish the general
parameters for the scope of audit and related arrangements. In
this context it is urged as a precondition to resumption of
any GAO audit relationship:
(1) that all GAO personnel to be involved directly or
indirectly in such audits be subject to identical security
arrangements as pertain to Agency personnel, i.e., full
security clearance(s), execution of secrecy agreements, and
observance of the compartmentation principle to the maximum
practical extent.
(2) that audit reports be subject to review and
sanitization by the Agency to protect sensitive intelligence
sources and methods.
(3) that classification and distribution of audit reports
also to be subject to Agency review.
(4) that all written materials used or developed in
conjunction with the audits be secured in accordance with
Agency security standards.
b. It is further assumed there will be a direct correlation
between the foregoing security and control arrangements assuring
protection of sources and methods and the agreed upon scope of
audit; i.e., the extensiveness of scope agreed upon will be
contingent upon the security and control arrangements.
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2. Specific options.
After full exploration of the range of viable options for
consideration, only two are considered viable in the circumstances.
Resumption of a limited audit of pre-1962 scope is not included
because there is nothing to suggest such an approach would be
more palatable to GAO today than when it was discontinued. The
two
options are as follows:
a. Systems Audit (Least Impact)
(1) Review of Agency Audit Staff procedures, the Agency
Accounting System and supporting procedures for Agency
financial administration. Such a periodic systems audit
or review could provide Congressional Oversight Committees
with an independent evaluation and confirmation that generally
accepted accounting principles and standards are being
observed by the Agency in its stewardship of public funds
and that audits are conducted in accordance with Federal
Audit Standards.
(2) It is the consensus of the Task Force this type of
review could be accommodated without undue risk to unauthorized
disclosure of intelligence sources and methods. As a matter
of precedent the Agency on its own initiative in 1973
to review Agency audit
engaged
practices. This review also would have the advantage of
placing the Agency in compliance with the GAO requirement
upon Federal agencies generally for GAO review and approval
of Agency accounting systems.
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b. Full Scope Audit in accordance with GAO Standards with
Limitations on External Verification (para 3a below).
(1) Full access to internal fiscal and program docu-
mentation for all CIA activities excluding access to:
(a) "Identities of aeeret agents, sources and
persons and organizations involved in operations which,
if disclosed, would subject them to personal physical
danger, or to extreme harassments, or to economic or
other reprisals."
(d) "Specific details of sensitive intelligence
methods and techniques of collection."
(2) It is the consensus of the Task Force this type
of review would create an increased potential risk to un-
authorized disclosure of intelligence sources and methods
which would increase in direct proportion to any erosion
of the areas to which GAO should be denied access as stipulated
above. General public knowledge and awareness of these
expanded scopes of audit could also serve as a deterent to
25X1 C
so necessary to the accomplishment of the overa
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3. Audit Limitations
a. It must be recognized by all concerned that the question
of denied access to information is separate and distinct from the
issue of prohibiting actions conventional for auditors that would
actually compromise sensitive activities or programs. More
b. Although the audit opt-ion described above
envisions full access to internal documentation with the exceptions
specified, circumstances will inevitably arise where there
will be differences of view between the GAO and Agency components
as to the scope and definition of information to be denied.
As a forum for establishing and administering guidelines for
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identifying denied material it is suggested a Senior Review Panel
comprised of the Associate Deputy Directors be established. Issues
not satisfactorily resolved by the Panel would necessarily be
referred to the Director for resolution directly with the Comptroller
General. It is suggested this Senior Review Panel above should
also provide a forum for resolving any differences of view between
Agency components and GAO concerning areas in which external
verifications are suitable.
IV. RECOMMENDATIONS
1. It is recommended that the Director ask the General Accounting
Office to enter into a Systems Audit relationship with the Agency as
discussed in Paragraph III.B.2(4_ above subject to the assumptions
stated in Paragraph III.B.l.
2. It is recommended, should it become necessary to allow GAO
to resume an audit relationship, that the Director negotiate the audit
le,
relationship described in Paragraph III.B.2 l above subject to the
assumptions stated in Paragraph III.B.1.
V. PROPOSED ACTION FOR IMPLEMENTATION
The following steps are suggested as a basis for implementing
either of the above recommendations.
1. Decision by the Director as to adoption of recommendation
No. 1 or No. 2.
2. Discussion by the Director with the Comptroller-General
of the general concept being proposed for resumption of relationship
between GAO and the Agency.
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3. With agreement in principle name an Agency officer (e.g., DDA)
to be responsible for further discussion with a designated Comptroller
General representative about the arrangements for resumption of arrangements.
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Next 1 Page(s) In Document Exempt
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SUBJECT: GAO Task Force Draft Paper
I believe the initial draft of the Task Force paper should be reorganized.
I believe the following outline for the paper would be more suitable:
This short section should include the type of information
included in the first two pages of the present introductory section,
i . e. the nature of the assignment, how and why it was levied, a
sketch of how the Task Force went about its business, any notable
problems encountered, and the fact that the following sections
reflect our conclusions.
This section should include a brief discussion of the history
of GAO relationships with CIA. It should discuss the nature of the
audit GAO now conducts of other Government agencies, stressing
the comprehensive, program scope of their present audit. The
paper should then discuss what this audit would mean to CIA .
discussed this at a couple of the mectings--what we
might expect from the GAO audit. He emphasized they would not
examine every pay slip or travel voucher, but that they would he
looking for duplication in the major technical programs, such as any
duplication between NPIC and IAS. Although some discussion of
the conceptual audit options would be worthwhile at this point, it
is my belief that any limitations on the GAO audit will be limitations
on the type of information to which they have access (e.g. , we may
be able to withhold the names of cooperating foreigners). I cannot
foresee that they would conduct anything but a comprehensive
program audit. In this connection it seems to me that there is an
additional option not mentioned in section 3 of the present paper.
Option 3 is a "full. scope fiscal audit" but the description of this
section indicates it will not really be "full scope," as key data will
be excluded from GAO purview. The other option would be a true
"full scope fiscal audit," an audit with no overall program evaluation
but with. complete access to all internal fiscal documentation.
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III. This section would be the real guts of the paper. It
should lead off by stating the kind of information in paragraph 3
on page 1 and paragraph 2 on page 4, namely that the Task Force
concludes that certain CIA activities are simply not compatible with
the GAO audit and that the DCI must categorically refuse to permit
these activities. We must then produce a comprehensive list of all
of these activities, which will be integrated into this section. In
the present paper this data is presented as Exhibit A, and this list
includes only "representative examples" of "verboten" activities.
I believe this list is the essence of what the Task Force was asked to
provide, and a representative list just won't do. The Task Force
should discuss each item in this list and reach agreement that each
cannot be undertaken by GAO. I believe this is what the Director
expects from the Task Force.
IV. In addition to those activities which would be destroyed
by a GAO examination, even if there were no leaks, the Task
Force views certain Agency information as so sensitive that the
Director should attempt to preclude GAO examiners from gaining
access to this material. The information in the fourth paragraph on
page I should be included in this section. Here again the Task
Force must set forth a list of all items we feel the Director should
attempt to keep from GAO. This list might include items such as the
identities of secret agents and Americans who deal with us only if their
confidentiality is insured, in contrast to items such as actual contact
with secret agents or Americans which would be part of the list
provided under section 3. The Task Force should discuss each of
these items and reach agreement that they must be included in this
list. We might also seek some Office of Security inputs on this point.
V. This section should detail the procedures of GAO access
that the Director should propose, such as, hypothetically, GAO review
will only take place at CIA buildings, no raw materials are to be
removed from these buildings, proposed guidelines for content and
control of GAO reports, and a mechanism to dissolve CIA-GAO dis-
putes, such as the senior review panel proposed in the first paragraph
of page 4 of the present paper. I think this mechanism needs full
discussion by the Task Force. My own guess is that this might be
handled better by a single official, such as the DDA, rather than
a panel.
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Those are my recommendations for the organization and content of
the Task Force paper. One question I have not resolved in nay own mind
and I have not addressed in these remarks is what treatment we give in
the paper to the very valid point made in the last sentence on page 3. I
am not certain where this point should be made in the paper and how it
should affect our recommendations as to the specific items included in
the two lists I propose.
Assistant Legislative Counsel
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4 November 1975
Chairman, GAO 25X1A
MEMORANDUM FOR:.
Task Force
SUBJECT Report of Agency Task Force Review of
GAO Audit Options
REFERENCE Memorandum for Members of GAO Task Force
from dtd. 17 October 1975 25X1A
1. In response to the referent memorandum and the report
attached thereto, it is proposed that the final GAO Task Force report
soundly endorse the continuation of the Director's 8(b) authorities free
of any ambiguities about how these might be compromised under the terms
of an audit agreement with GAO. It should be made clear that as to certain
funds expended by the Agency there can he no review and certification
beyond the Director's certification that the funds were expended for
objects of a confidential, extraordinary or emergency nature.
2. While it may not be desirable to define the perimeter of the
area in which the Director may so act in terms co-extensive with the
area of today's unvouchered funds expenditure, some such reservation
of authority should be made a part of any agreement under which GAO
resumes its audit function at CIA. It may be an oversimplification to
consider the alternatives of a limited GAO audit of pre-1962 scope on
one hand and a full fiscal audit on the other without recognizing that
there may be acceptable alternatives lying in the middle ground.
3. It is probably not the case that all expenditures falling into
the unvouchered funds category are unreviewable by GAO. But rather
than jump immediately, because of this fact, to a position where GAO
has full access to all internal fiscal documentation for CIA may be
unwise, as well as unnecessary, when a more carefully drawn definition
of confidential funds is all that is required.
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4. Full access to all CIA internal fiscal documentation would
mean the end of any meaningful exercise of the Director's 8(b) authority.
The Agency continues to undertake projects of a sensitive nature and
of a type that the 8(b) authority was designed to make possible. Clearly,
the purpose of 8(b) was to permit the President to direct his intelligence
chief to undertake intelligence initiatives of a sensitive nature without
opening them up to the normal reviewing bureaucracy of the Government.
In this fashion knowledge of certain matters extremely critical to the
welfare of the nation can be limited to those members of the intelligence
community, of the military community and of the congressional leadership
whose participation is necessary to make the undertaking; a success.
Exposure of an undertaking of a project of this nature. to a circle larger
than those whose participation is absolutely necessary is simply anathema
to the success of the operation.
5. This self-evident proposition has been recognized from the
earliest days, and at the highest levels, of our Government. General Wash-
ington in a letter dated 26 July 1.777 to one of his intelligence officers, Elias
Dayton, stated:
. . . The necessity of procuring good Intelligence is
apparent and need not be further urged---All that
remains for me to add, is, that you keep the whole
matter as secret as possible. For upon Secrecy,
Success depends in most Enterprises of the kind,
and for want of it, they are generally defeated ....
Under the Continental Congress, the Committee of Secret Correspondence,
which had an intelligence gathering mission, refused to reveal the
contents of a dispatch from an American spy in England, stating that:
. . . Considering the nature and importance of it,
we agree in opinion, that it is our indispensable
duty to keep it a secret, even from Congress...
We Find, by. fatal experience, the Congress consists
of t_oo many members to keep secrets. " (emphasis
added) (Force, American Archives Fifth Series, II, 818.)
This clearly is an official recognition of the principle that in endeavors
depending on secrecy for success widening the, circle of witting beyond
those necessary to carry out the endeavor is an invitation to failure. The
manifest need for a capability to conduct some matters, and necessarily
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fund them, in secret was very much a part of the thinking of the Founding
Fathers during the period the Constitution was written and adopted. With
the adoption of the Constitution, the executive power passed to the President
and with it the principal responsibility for the conduct of foreign relations.
Commenting on this new distribution of power, John Jay, whose diplomatic
experience in the service of Congress during the Revolution and the Confed-
eration had given him insight into the weaknesses and requirements of
American practice, discussed the problems of conducting secret foreign
intelligence gathering in these terms:
. . . There are cases where the most useful
intelligence may be obtained, if the persons
possessing it can be relieved from apprehensions
of discovery. Those apprehensions will operate
on those persons whether they are actuated by
mercenary or friendly motives; and there doubtless
are many of both descriptions who would rely
on the secrecy of the President who would not
confide in that of the Senate, and still less in that
of a large popular assembly. The convention
have done well, therefore, in. so disposing of the
power of making treaties that although the President
must, in forming them, act by the advice and
consent of the Senate, yet he will be able to
manage the business of intelligence in such a
manner as prudence may suggest. (The Federalist)
This is exactly what we are talking about when we debate the status
of the Director's 8(b) authority in the face of the proposal for GAO
audit, the ability to "manage the business of intelligence in such a
manner as prudence may suggest." Prudence will sometimes require
that the auditors not be involved until an undertaking has passed an
especially critical, or sensitive, phase.
6. The capability of carrying out certain operations in the interest
of the United. States Government in an extremely secret fashion is a
capability that has been continued down through the nation's history.
President Washington asked for, and got, a secret "contingent fund"
expenditures from which he could account for "by making a certificate. . .
of the amount of such expenditure, as he may think it advisable not to
specify; and every such certificate shall be deemed a sufficient voucher
for the sums therein expressed to have been expended." (Stat, at Large,
I, 299). This fund was used by Washington and successive Presidents
for their foreign intelligence efforts, and it was well understood that
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the existence of the iond was grounded on the nc ed i'or extr em e uF c:recy
in certain matters. This rather special capability comes down to us in
present times of more complex government in the form of statutory authority
for the President's Director of Central. Intelligence to exercise control over
the expenditures of confidential funds. This is the Director's 8(b) authority
the actual terms of which closely parallel the authority given President
Washington. The capability for the Government to fund certain sensitive
undertakings in a manner consistent with the requirements for strictest
secrecy has never been lost or abandoned throughout our history. Yet it
is this very capability that is threatened by a proposal for full access to
internal fiscal documentation for intelligence activities by GAO auditors.
It is not necessary to extinguish all capability to operate with the utmost
secrecy when the problem actually confronted is that not all activities
excluded from audit need be .
7. It is proposed that in the process of arriving at an agreement,
in accordance with the terms of which GAO will resume an audit function
at CIA, it will be made clear from the outset that there would remain an enclave
for expenditures not reviewable by GAO. It is the boundaries of that enclave,
and the terms and conditions of its use, that should be made the subject of
negotiations setting the guidelines for a renewed GAO audit. The boundaries
of that enclave quite possibly would enclose a smaller portion of confidential
expenditures than they have in the past. And they should probably be
reserved for the most sensitive of projects, where, for instance, the very
involvement or interest of the United States Government in a certain area is
explosive information. There should also most probably be a time dimension
to the use of secret funding, with an audit of a project routinely taking place
after its most critical phase had been passed. In any event, such a secret
funding mechanism should be preserved in addition to specific exclusions,
such as the names of agents, within the areas that do become subject to
routine GAO audit,
Office of General Counsel
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