MEETING WITH STAFF OF HOUSE GOVERNMENT OPERATIONS COMMITTEE ON H.R. 3077, INSPECTOR GENERAL ACT AMENDMENTS OF 1985

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90B01390R000300420014-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 27, 2016
• Document Release Date: December 21, 2010
• Sequence Number: 14
• Publication Date: July 31, 1986
• Content Type: MEMO

Sanitized Copy Approved for Release 2010/12/21 : CIA-RDP90BO139OR000300420014-6
v Au
RECPT 9
MEMORANDUM FOR THE RECORD:
STAT
STAT
STAT
STAT
(OCA) of the Agency met with sta o the Subcommittee on
Legislation and National Security of the House Government
OCA 86-4277
31 July 1986
MEETING WITH STAFF OF HOUSE GOVERNMENT
OPERATIONS COMMITTEE ON H.R. 3077, INSPECTOR
GENERAL ACT AMENDMENTS OF 1985
1. On 31 July 1986, (OGC) and
Operations Committee: Richard Barnes (Staff Director), Cynthia
Meadow and Carl Levin ( Professional Staff Members). The
purpose of the briefing was to discuss the application of H.R.
3077 to the Agency and that such application was unnecessary,
if not harmful to the intelligence mission.
2. I introduced to the staff as the Agency
representative from the Office of General Counsel and pointed
out that he was qualified to speak on audit matters by virtue
of his experience as a certified public accountant, having
performed audits in the Agency and when he was in private
business. He began his presentation by reiterating some of the
arguments that the Justice Department made against the bill.
Attached is a copy of a draft letter by Jusitce including those
arguments. Barnes said that they were long familiar with those
arguments and have found them unpersuasive.
3. then went to CIA specific arguments in support
of an exclusion from the bill. He observed that we have a
comprehensive system of oversight which reflects a delicate
Constitutional balance between the executive and the
legislative branches of government, (50 USC 413). This system
has been in effect for a decade and has operated
satisfactorally. Presently, we have the House and Senate
Intelligence Committees that review in great detail all of our
expenditures. To a signifigant extent this review is already
duplicated by the Armed Services Committees and Appropriation
Committees.
Sanitized Copy Approved for Release 2010/12/21 : CIA-RDP90BO139OR000300420014-6
 Sanitized Copy Approved for Release 2010/12/21 : CIA-RDP90BO139OR000300420014-6
4. Another aspect that warranted empahsis is the tiny size
of the Agency compared to such enormous institutions as DOD,
Agriculture and HUD with their correspondingly huge budgets.
Clearly, these agencies were in need of statutory inspectors
aeneral because of their size and budgets. In this connection
pointed out the underlying reason for IG's and for
"statutory audit units." Specifically, they were to maintain
"internal controls" so that managers could manage more
effectively. Effective internal controls are more readily
obtainable in smaller agencies which is reinforeced in the
intelligence community by a elaborate oversight and review
process. Additional review is conducted by the National
Security Council and the President's Foreign Intelligence
Advisory Board. OMB also plays a major hand in budget and
audit review. Therefore a statutory auditor saddled with
elaborate reporting requirements as specified in H.R. 3077 at
this Agency would be unnecessary, duplicative and pose
disclosure problems. In addition, it puts the reviewer of
those reports outside the Agency in the role of second-guessing
Agency decision making.
5. Cynthia Meadow asked whether the Agency had an IG. At
this juncture explained how the office of the IG was
structured and t e fact that he was independent, reporting
directly to the DCI. She was also interested in whether our
audit staff was separate from our investigators. It was
apparent that the Committee staff had no appreciation or
foreknowledge of the audit and investigative process in an
intelligence environment. They seemed to think that merely
because section 5(e) of IG Act provides for the confidentiality
of records and that DOD has a stat that the CIA could
live with a statutory audit unit. hastened to explain
that security clearances were one ing ut this bill requires
a wider dissemination of information than is currently
required. Moreover, that the information was of the most
sensitive type - how and where we spend our money. It would
create an audit trial which would be a documentary disclosure
of sources and methods. This is, perhaps, the most pernicious
form of disclosure. Such disclosure is life threatening. In
the face of this reasoning the Committee staff again retreated
to their position that the DOD has lived with an IG. We
explained that the DOD IG is needed to protect the hundreds of
billions of dollars given for defense; he spends his resources
auditing the visible projects such as DOD contracts for tanks
and planes. Plus he spends a tremendous amount of time
searching non-sensitive items - $500 toilet seats and $2000
coffee makers. Our budget pales by comparison. In addition it
should be noted that all CIA personnel are cleared for top
secret because of the nature of our work, while there are
thousands upon thousands of DOD personnel that do not have such
clearances.
Sanitized Copy Approved for Release 2010/12/21 : CIA-RDP90BO139OR000300420014-6
 Sanitized Copy Approved for Release 2010/12/21 : CIA-RDP90B01390R000300420014-6
6. ~ described the professionalism of our IG and
audit staff. Most have some form of advanced degree such as a
CPA or masters. We also hire MBA's to start as auditors. The
DCI encourages a strong audit effort and a high degree of
professionalism and independence. As evidence of this, a
retired CIA audit director is now teaching at the interagency
audit training center run by the Agriculture Dept..
Furthermore, we are required by statute to report violations of
law, including illegal spending, to the oversight committees.
The Agency also has a mechanism for audit resolution. Unlike
auditing in private industry where the auditee pays the
auditor, CIA auditors have every incentive to be independent
and objective.
7. Brief mention was made to the Federal Managers
Financial Integrity Act of 1982. Essentially, auditing and
systems of financial control are managers tools. Agency
practices and the statutory scheme of oversight provide more
than enough of a framework for Agency managers to promote
economy, efficiency and integrity. We believe that we are
scrutinized more than any other agecny of our size.
8. Ms. Meadow said that this bill has passed the House
three times without action by the Senate. On none of these
previous occassions has the Agency approached us with their
concerns and to the extent that our arguments parallel the ones
made by the Justice Dept., they have been already aired and
found unpersuasive.
9. To effect our needs we offered a number of alternatives
to the staff: (1) an exemption for the intelligence community,
(2) an exemption for the CIA only, (3) referral of the matter
to the intelligence committee. Barnes said that they would
take too much political heat on a straight CIA exemption. A
community exemption was too broad and was not acceptable. They
would consider changing the reporting requirement so that the
Agency makes its audit reports to the intelligence Committees.
Another problem they had to overcome was that the agency
auditor had to be in the Civil Service. They suggested that
the CIA auditor would not have to be in the Civil Service.
Sanitized Copy Approved for Release 2010/12/21 : CIA-RDP90B01390R000300420014-6
 Sanitized Copy Approved for Release 2010/12/21 : CIA-RDP90BO139OR000300420014-6
10. It was obvious from the attitude of the staff that the
we were not going to get an exemption, even when we pointed out
that the Senate companion bill had a specific exemption for the
CIA. We also reminded them that OMB had testified that it
oppossed the general extension of the statutory audit unit
concept to all agencies because of the diversity of the
missions of these agencies. OMB asked the Committee to defer
action on this bill until January of 1987 pending the
completion of a report covering agencies not having statutory
IG's.
11. After the meeting with the Committee I called the
General Counsel of NSA and asked how they deal with the DOD
IG. an attorney for NSA, said that the IG has
never been here, he has no authority over our actions because
of sensitivity. IG type scrutiny of NSA is the responsibility
of the Assistant Secretary for Intelligence Oversight (ASDIO);
that position has been created by law through the Armed
Services Committee. He reports directly to the Secretary of
Defense. The same applies to DIA, as confirmed by
of DIA. This fact seems to draw from the claim by Government
Operations staff that components of DOD are surviving with an
12. Since the mark up by the full committee is scheduled
for next Tuesday, the staff said that they would get back to us
by Monday, 4 August.
Legislation Division
Office of Congressional Affairs
Distribution (made 19 Feb 87)
Original - OCA/ islation Subject File: Inspector General
1 (OGC)
1 - OCA Registry
per SARI:pap (19 February 1987)
Sanitized Copy Approved for Release 2010/12/21 : CIA-RDP90BO139OR000300420014-6