THE DIRECTOR'S STATEMENT CONCERNING MANAGEMENT OF THE AGENCY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-00300R000100030001-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 19
• Document Creation Date: December 12, 2016
• Document Release Date: August 26, 2002
• Sequence Number: 1
• Publication Date: October 10, 1975
• Content Type: REGULATION

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STAT
This Notice Expires 1 November 1976
1G October 1975
THE DIRECTOR'S STATEMENT CONCERNING
MANAGEMENT OF THE AGENCY
1. This notice is published in accordance with the
Director's desire to keep employees informed of matters
concerning management of the Agency.
2. The attachment contains the major portions of
a prepared statement by the Director before the House
Select Committee on Intelligence on 6 August 1975. The
statement outlines the basic authorities by which the
Agency conducts its business, the organization of the
Agency to carry out its mission, and a detailed outline
of the planning, programming, and budgeting cycle by
which funds are made available to the Agency and the
methods used to control such funds. This in effect
describes "management" within the Agency.
3. Additional copies of the attachment can be
obtained from the CIA Library, Room 1-E-41 Headquarters
Building, and may be removed from Agency premises by
employees openly identified with the Agency.
FOR THE DIRECTOR OF CENTRAL INTELLIGENCE:
JOHN F. BLAKE
Deputy Director
for
Administration
DISTRIBUTION: ALL EMPLOYEES (1-6)
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Statement
by
W. E. Colby
Director of Central Intelligence
before
House of Representatives
Select Committee on Intelligence
August 6, 1975
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The National Security Act of 1947 established the
National Security Council and, under it, the Central In-
telligence Agency. The Agency's mission was described,
under the direction of the National Security Council, in
the following terms: to advise the Council; to make
recommendations for the coordination of the intelligence
activities of the departments and agencies; correlation,
evaluation, and dissemination of intelligence; performance
of services of common concern centrally; and, in what was
deliberately a broad grant of authority, the performance
of "such other functions and duties related to intelligence
affecting the national security as the National Security
Council may from time to time direct." The Act specifically
provided that the Agency have no police, subpoena, or law
enforcement powers or internal security functions. The
departments and other agencies of the Government, however,
would continue to collect, evaluate, correlate, and dissem-
inate departmental intelligence, which should be open to
the inspection of the Director of the CIA.
CIA was conceived as a central agency drawing upon the
other members of the Intelligence Community, but having a
unique capability to perform certain of the missions ex-
pected. Its predecessor, the Office of Strategic Services
during World War II, was the model upon which it developed,
and it included intelligence collection, intelligence analysis,
intelligence production, and covert activities in the
political and paramilitary fields. The techniques of secret
operations and on many occasions the specific individuals
and organizations with whom such operations must be conducted
are the same as those which provide secret intelligence.
In the earliest years of CIA, there was an attempt to con-
duct these in an organizational compartment separate from
the other work of CIA, but General Walter B. Smith found
that this produced friction, duplication and inefficiency,
so he merged the functions of collection with these other
"functions and duties."
The major work of the CIA is carried out in the four
main directorates. In order, their main functions are
the analysis and production of finished intelligence, the
work of the Directorate of Intelligence; the conduct of our
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clandestine overseas operations and the supporting struc-
tures necessary in the United States, in the Directorate of
Operations; a special Directorate of Science and Technology
which combines the analysis of foreign information in these
important fields with research and development of new tech-
nical systems for acquiring or analyzing information; and
the last, the Directorate of Administration, with the normal
administrative services of communications, personnel,
finance, logistics, etc. Many of these "normal" aspects of
administration, of course, need to be done in somewhat
special ways in support of the clandestine operations and
requirements of the Agency.
. Intelligence is by far our major function these
days,~and it is broken down into the collection of
the types of information noted, the processing of this
information both technically and intellectually by our
corps of analysts, and the final production of finished
intelligence, i.e., the product which goes to the customer.
Whereas most of our final product does depend upon clas-
sified sources and consequently is classified, we have
made an effort to publish in unclassified form such material
as we could. .These formal publications, and the much
larger number of classified ones. ., are supplemented
by the briefings we provide within the Executive Branch
and to a number of the Committees of the Congress. In
these briefings, we do not discuss the details of our
operations or the specifics of our sources, but we do use
the most sensitive intelligence in order to draw together
all information available to the United States Government
on some foreign question. This was the original concept
of central intelligence, and it has worked with great ef-
fectiveness in practice. It means, however, that when you
examine one of our publications, and especially our un-
classified publications, the information therein also de-
pends upon the other military and civilian agencies con-
tributing to our total knowledge. It would be misleading
to indicate that the intelligence result available to us
depended only on the investment made in the CIA itself.
The management functions of CIA are those normal to any
large organization, supplemented by CIA's and my role in
the Community as a whole. CIA also carries out centrally
certain services of common concern to the Community where
it is more efficient to conduct these under one roof than
to establish duplicative organizations in each member agency.
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The covert action mission has been mentioned before,
of course. CIA was heavily engaged in this activity
during the days of massive confrontation of the 1950's
and the period of counterinsurgency in the 1960's. In
recent years, however, the change in the world situation
has been such that CIA's activities in this field have
dropped to a very low percentage of our efforts. I do
believe it important, however, that the United States
retain this potential, as I could easily envisage further
changes in the world situation which could once again make
it important that our Government be able to help some group
in a foreign land struggling against a hostile or extremist
group there, which could threaten the safety and well being
of the United States; for example, through terrorism or
even nuclear proliferation. I believe it important that
our Government in such cases have, as I have stated before,
some option between a diplomatic protest and sending the
Marines.
. The CIA has been the target of a veritable
torrent of sensational charges. This is not solely a
recent phenomenon, although it certainly has enormously
increased in these past few months. The Rockefeller Com-
mission examined one of these areas, i.e., whether the CIA
was engaged in a "massive illegal domestic intelligence
operation." The Commission stated that: "A detailed
analysis of the facts has convinced the Commission that the
great majority of the CIA's domestic activities comply
with its statutory authority. Nevertheless, over the 28
years of its history, the CIA has engaged in some activities
that should be criticized and not permitted to happen again."
The Commission said that scme of these activities were
initiated or ordered by Presidents, either directly or in-
directly, .some fell within doubtful areas, and some were
plainly unlawful. The Commission noted that the Agency's
own recent actions have gone far to terminate the activities
upon which its investigation was focused.
I think that conclusion fairly states the true situation
with respect to the Agency. It has indeed done some things
over its history that it should not have done and that under
current guidelines it will not repeat. In a community
the size of CIA, I believe it highly likely that a number of
wrong things would be done over 28 years. When one adds
the enormous challenges given to CIA, the climate of opinion
of the country during past periods, and the secrecy within
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which CIA's activities must be conducted, I believe that
the instances of wrongful action were truly few and far
between, both in the domestic field and in the other areas
of charges. That they were not more is due, I believe, to
the fundamental integrity and loyalty to American principles
of the employees of CIA over these years. These employees
have worked with little or no applause and under a great
number of sensational attacks; they have worked in danger,
on intellectually difficult problems, and at the leading
edge of technology. CIA personnel have invented new ways
of obtaining intelligence. They have boldly and independently
challenged interpretations of foreign events and weapon
systems by other departments. They have conceived and
executed many quiet., modest and effective actions in support
of U. S. policy throughout the globe. They are proud of
their contribution to their country; they seek anonymity
rather than public appreciation, but they deserve the
co~~ntry's thanks rather than the abuse .they are receiving
today. .
CIA BUDGET POLICIES AND PROCEDURES
The CIA has duties, responsibilities, and authorities
that differ in a number of ways from other U.S. Government
agencies, and our financial procedures for dealing
with the outside world are unusual. But, however uncon-
ventional and secret our activities may be, we are very
conventional in our internal budgetary practices and our
financial controls. Many of the details .-could
as well describe any other Federal agency or department--
although I am inclined to believe that we may be somewhat
more cons-cientious about money matters than the average.
Our CIA budget system closely parallels that of all
parts of the Federal Government. For any one fiscal year,
planning, budgeting, approvals, appropriations, and execution
extend over a three-year period. At any particular moment,
we are therefore dealing with the current year, the upcoming
Budget Year, and the subsequent Program Year. Our programs
are developed internally, examined by OMB, submitted to the
President for his decisions, and then submitted to Congress,
where they are reviewed (and often cut) by the designated
subcommittees. of the Appropriations Committee in both House
and Senate.
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PROGRAM PREPARATION
The budget cycle in CIA begins in January with the
issuance by the Comptroller of the Program Call, calling
for estimates of resources to be required during the fiscal
year beginning 18 months hence and operating plans .for the
fiscal year beginning 6 months hence. When the new fiscal
year goes into effect, these lead times will extend to 21
and 9 months respectively. In January 1975,. for example,
a call was issued for program plans for fiscal year 1977 and
operating plans (.based on the previously-prepared program
plan) for fiscal year 1976.
The Program Call goes from the Comptroller to the
Deputy Directors. They distribute it to subordinate
echelons with such supplementary guidance and instructions
as they deem appropriate and establish schedules for the
submission of data to allow time for their review and for
compilation of an aggregate presentation to be submitted
to the Comptroller. During February, March, and April.
program managers revise their previous estimates for the
fiscal year about to begin and develop preliminary estimates
for the fiscal year following, on the basis of discussions
with other interested Agency components and Community ele-
ments. Entries into the computer data base are made during
this time by components throughout the Agency. The com-
puters produce printouts which array the data for the
current year and the next two years for review. .
Computer programs are submitted in May to the Deputy
Directors, who review the requests of their subordinate
units and conduct "hearings" with program managers to
validate the estimates. This permits each Deputy Director
to develop an aggregate program which he can support and
defend. After this review process has been completed,
the computer data base is revised to reflect the Deputy
Director's decisions. The aggregate program for the
directorate is compiled and submitted to the Comptroller
early in June for the Program Review.
PROGRAM REVIEW
The smallest unit in our computerized accounting
system is the FAN (financial analysis number) account.
There currently are about 2,100 FAN accounts, established
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to insure availability of planning and control data for
management. For in-depth analysis by upper-level management,
however, we look not at FAN accounts but at the next higher
level of aggregation--Resource Packages,. which currently
number about 275.
The Resource Package is the central element of the
internal CIA resource allocation system. Each Resource
Package is a unit of activity to which resources are as-
signed for the achievement of a particular purpose or set
of integrally related purposes. A Resource Package may be
an organizational element, an operational activity, a project,
a function, or a group of related functions. It is chosen
so as to give us the most meaningful way of examining the
package, its activities, and its resource requirements.
For the Program Review, components provide a brief
summary description of each Resource Package, followed by
descriptions of major activities within the package,
identification of major products and services, and major
consumers. Each package submission also includes an
evaluation of the accomplishment of each activity in the
package through the previous year. Evaluations are required
to relate accomplishments to objectives and, to the extent
practical, to the resources assigned. Disappointments,
failures, or shortfalls and corrective actions taken or
to be taken are described, as well as notable successes
achieved. Reasons for year to year differences are spelled
out, and any resource implications for the future which
will follow from program decisions are identified.
The computerized accounting system arrays the financial
data on all Resource Packages and summarizes it in three
different ways:
--Organizationally. By Office, Division, or Staff
and by the four directorates which are our major
subelements.
--Functionally. By the nature of the activity--
for example, clandestine collection, overt collection,
information processing, production of finished intel-
ligence, and communications.
--And by "object classes" similar to those used
throughout the Government to designate salaries,
fringe benefits, travel-, utilities, and so forth.
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The Comptroller reviews the personnel positions and
dollars requested for each Resource Package, considering
the functions performed and projected in relation to past
performance and to relative importance as a part of the
broader directorate and Agency programs. The Agency pro-
gram is then compiled as a package-by-package summary that
includes both the positions, and dollars requested by the
components and the positions and dollars recommended for
each package by the Comptroller. The Comptroller often
recommends position and dollar levels lower than requested
by the directorates. The composite program is in book form
that this year runs to 201 legal-sized pages including
both statistical data and textual treatment of the problems
and issues for the two years under discussion. In mid-July,
it is presented to the Management Committee which is made
up of the Deputy Directors and the Heads of Independent
Offices reporting directly to me.
The Management Committee reviews and discusses the
issues with me, often debating the recommendations of the
Comptroller. The Deputy Directors justify and defend their
original requests or agree to adjust them in light of overall
requirements. Within a day or two after this meeting, I
meet with the Comptroller and his staff for a detailed
review of the resources requested and recommended. Final
decisions are reached during this review and become the
directorate "marks" for the fiscal years under considera-
tion, in the current case FY 1976 and 1977.
The Comptroller immediately prepares a financial guidance
letter from me to each of the Deputy Directors. These letters
establish the program levels for funds and positions within
which the directorates must operate during the operating
year and make plans for the budget year. Usually the ap-
propriation for the operating year and OMB guidance for the
program year will not have been received before these letters
are issued and the instructions have to be qualified ac-
cordingly. The obligation rate for the operating year is
controlled by the continuing resolution passed by the Con-
gress until the appropriation has been received., while the
levels established in the financial guidance memoranda are
used as the basis for preparation of the OMB budget.
In addition to establishing position and fund levels,
the financial guidance letters place restrictions upon the
authority of the Deputy Directors to reprogram between
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approved programs; identify certain key programs representing
major investments or activities in which I have a particular
interest; .require supplemental reporting on certain speci-
fically described types of actions; and assign responsibility
and due dates for the review and study of organizational
or substantive issues. They also contain a paragraph re-
quiring that I be notified in advance of any planned en-
deavors that carry a significant risk of embarrassment to
the Government in general or the Agency in particular.
The latter provision was first spelled out in this memorandum,
drafted by me when I was Executive-Director, which also
details a number of the other general conditions that
govern program execution. It replaced an earlier system
of levels of approval determined by the amount involved,
as in many cases a $5 thousand expenditure could be more
dangerous than a routine $5 million one.
During August the components revise the computer data
base and the supporting narrative as necessary to incor-
porate the newly-made decisions into the development of
budget estimates for the next year. These are submitted
early in September to the Comptroller, who compiles the
Agency budget request for submission to OMB by 1 October.
The OMB examiner reviews the Agency budget, selecting issues
for further examination. During late October and November
he conducts detailed hearings on each selected issue with
the operating officials of the responsible components. He
can and does ask for and receive detailed information on
any aspects of our activity which interest him. He then
makes his recommendations to his own chain of command, and
the review and decision process proceeds through OMB to
the President and thence to Congress in the course of the
year.
THE OPERATING YEAR
While budgets and program plans for the future are
being prepared and reviewed, we are of course also executing
a budget already presented to Congress. Each month, the
computer system produces reports which show the status of
obligations to date and provide projections to year end
based on that experience. These reports are reviewed by
the Comptroller; after the first quarter of the fiscal year
has passed and some trends have been established, the
Comptroller and his staff meet monthly with the Deputy
Directors and the Director of Finance. At these meetings,
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the overall status of obligations is compared with pre-
planned rates, reasons for unexpected deviations are examined,
and potential shortages and surpluses in individual components
are identified and discussed.
Throughout the year, new requirements develop--because
of a change in world conditions, a new technological develop-
ment, or a change elsewhere in the U.S. Government such as
the passage of new legislation affecting the rules under
which Federal Departments and Agencies conduct their programs.
Legislative requirements are clearly obligatory; last year,
for example, the resource system had to adjust to a limit
on travel expenditures that was imposed and subsequently
lifted and to the new demands of the Freedom of Information
Act. Some world events also present us with unanticipated
financial requirements that are nondiscretionary--for example,
the turn of events in Southeast Asia this spring. Other
new requirements are examined in terms of their consistency
with .the Agency's charter, their desirability,, their priority
in competition with other demands, and their 'urgency. Those
which emerge from the examination as the most worthy of
immediate consideration of all counts are then looked at
in light of funds that can be made available within the
limits of existing policy guidance from the White House and
our Congressional oversight committees.
. The CIA has somewhat more need for financial
flexibility than the average Government agency. We are
confronted from time to time with requirements or opportuni
ties of great urgency; if we are offered a document of tre-~
mendous intelligence value, we cannot tell the seller to
return next year when we have had an opportunity to budget
for it. And we cannot ask the Congress to vote a sup-
plemental appropriation without attracting exactly the
sort of unwelcome attention from abroad that we are anxious
to avoid. We can sometimes cover relatively small require-
ments by curtailing expenditures on other, lower priority
activities. But our budgets are tightly drawn and leave
us relatively little room for maneuver. Thus, arrangements
have been in existence for many years with OMB and the
Appropriations Committees of the Congress to permit us to
obtain additional funds for purposes approved at the ap-
propriate policy levels when we believe additional money
is necessary and OMB concurs. These are, of course, funds
appropriated in accordance with law, and our oversight
committees are kept informed on a current basis of all
transactions from them.
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After each monthly Comptroller's meeting, the Comptroller
advises me of the current status of our financial accounts,
his recommendations for funding urgent new needs, and the
concurring or differing opinions of the four Deputies. I
make the final decision on any large sum of money, and
that decision is conveyed to the Comptroller and the
Deputies and reflected in the financial accounting system.
Our need for financial flexibility is, of course, a
reflection of our need for program .flexibility. We cannot
simply adhere to a rigid plan when the world around us is
changing, but neither can we permit ourselves to simply
react to events without frequently taking an overall look
at ourselves. Each directorate therefore conducts program
reviews during the yes.r, in which each Deputy Director sits
down with his subordinates and discusses progress to that
time and plans for the remainder of the year. The timing of
these reviews varies--the Operations Directorate and the
Intelligence Directorate have semi annual reviews, the
Science and Technology Directorate follows a quarterly
schedule, and the Administration Directorate has its con-
clave every two months. I am kept informed of all signi-
ficant developments and proposed changes in approved plans.
CONTRACTING AND PROCUREMENT
A substantial share of the Agency's budget goes for
procurement. The normal procurement authorities pertaining
to the Agency are the Federal Property and Administrative
Services Act of 1949. In addition, the CIA Act of 1949
authorizes the expenditure of funds without regard to law
and regulation for objects of a confidential, extraordinary,
or emergency nature, subject only to personal certification
by me. As indicated in the headquarters regulation, .
the accounting procedures within the Agency for our con-
fidential funds are every bit as rigid as those for what
we call "vouchered" funds. The distinction lies entirely
in the fact that I am authorized by law not to provide the
detailed certifying documents to authorities outside CIA
for our confidential expenditures. The regulation
. imposes on every Agency employee a responsibility for
bringing any instance which appears to involve possible
misuse of funds to the attention of either his own chain
of command or the Inspector General.
A number of management controls have been established
within the Agency to insure that our contracting is carried
out according to the intent of Congress. Briefly, these
are:
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--Publication of procurement regulations and
handbooks to be followed by our contracting
and technical personnel in effecting pro-
curements.
--The establishment of technical requirements
and review boards both at the office and
directorate levels to review proposed pro-
curements.
--Establishment of an Agency Contract Review
Board to examine the total procurement pro-
cess prior to the contract award of all major
procurements.
--Examination and audit of industrial contractors'
proposals and cost records to insure reasonable
prices and protection of Agency funds.
--Management audit and review of the entire Agency
procurement process by the Inspector General's
Audit Staff.
Responsibility for production and services procurements,
Federal Supply Schedule items, and purchase orders is cen-
tralized in the Procurement Division in the Office of Logistics.
For research and development procurements, the Director of
Logistics has established a decentralized procurement system
consisting of contracting teams serving each directorate.
A Procurement Management Staff functions as the overall
point of coordination for the creation and maintenance of
uniform policies and procedures; the chief of this staff
serves as the Agency representative on various governmental
committees concerned with procurement such as the Commission
on Government Procurement and Executive Subcommittee of
the Committee on Government Patent Policy.
The Agency is authorized to undertake procurements by
formal advertising or by negotiation. Negotiation has
normally been the most practicable method, given the nature
of our business. We therefore place great emphasis on
source selection procedures, emphasizing competition as
much as practicable. Our list of qualified sources cur-
rently includes more than 2,200 contractors beyond those
dealing in GSA Federal Supply Schedule items. In the last
couple of years, over half our funded procurement actions
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and about 30 percent of the total dollars obligated were
on a competitive basis. Our contracts conform to all
the legal requirements of the Armed Services Procurement
Regulations. Contractor audits, carried out by the Com-
mercial Systems Audit Division, apply the standards of the
Defense Contract Audit Agency, with which we maintain direct
liaison. We are equally careful to conform to all
Government rules and regulations when we carry out procure-
ment actions on behalf of other Government agencies under
the provisions of the Economy Act.
There is yet another area of our financial activities
that has attracted some recent public attention and has
been the subject of considerable misinterpretation. I
refer to apparently commercial entities that are in reality
controlled by the Agency--entities we call proprietaries.
Such companies provide cover and support for clandestine
activities and enable us to carry out administrative tasks
discreetly.
Operating proprietaries are formed, operated, and
eventually liquidated according to specific regulations and
under close control by high Agency officials. All projects
must be approved by the appropriate Deputy Director, and
projects of special import also come to me for a further
approval. For each project an administrative plan is re-
quired, which must have the concurrence of several of our
highest Agency officials, including the General Counsel and
the Director of Finance. These projects are subject to
annual review and evaluation as part of our regular budgetary
process. All expenditures and reimbursements must be ap-
proved by the senior operating and finance officers, and
regular audits are performed by our audit groups.
A very few of our former proprietaries, such as Radio
Free Europe and Air America, have been fairly large entities.
However, the vast majority have been and are small, usually
having fewer than ten employees. They are, of course, dif-
ferent from conventional business activity, in that their
very purpose is concealment of Agency people or activities.
They engage in activities of limited economic significance,
purposely providing little or no competition with private
enterprise. They must nevertheless appear to conform to
normal business practice and to have the normal business
accounts, contracts, etc. When they own property or assets,
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appropriate secret trust agreements provide that the ul-
timate legal ownership remains with CIA. Proprietaries
comply with all applicable Federal and State financial laws
and regulations, including payment of proper taxes and fees
and conformance with licensing and other legal commercial
requirements.
Proprietaries use revenues to offset operating costs,
but most have been unprofitable, requiring continued support
through our regular budgetary process. Only two proprietaries
ever made significant profits. One was Air America, now
being disposed of, which provided cover and otherwise sup-
ported our efforts in Southeast Asia. Its net assets are
being turned in to the Treasury. The other, remaining, is
a financial enterprise which enables the Agency to administer
certain sensitive trusts, annuities, escrows, and insurance
arrangements without attribution to the Agency. It enables
us to pay annuities to individuals whose links with the U.S.
Government must remain secret. In both of these eases,
in the past, profits were retained for use by the proprietary
companies. By 1973, accumulated profits amounted to a con-
siderable sum, so what-was excess to likely requirements
was reported to the Appropriations and Armed Services Com-
mittees and used to reduce the amount appropriated. Our
General Counsel has ruled that this did not constitute the
full appropriations process, however, so this procedure has
been abandoned and subsequent profits have been and will
be delivered to the Treasury.
I foresee a continuing need to use the proprietary
mechanism to further accomplishment of Agency operations.
In the past nine years, however, we have reduced the number
of proprietaries by about 50 percent, and they will be
limited to those situations where they are the only, or
clearly the best, approach.
FINANCIAL PROCEDURES AND CONTROLS
To complete the picture of our internal mechanisms
for handling financial transactions, I must touch briefly
on the activities of the Office of Finance, the Audit Staff,
and the General Counsel. It is the Director of Finance
rather than the Comptroller who is responsible for most
aspects of financial administration. We do not handle
money loosely. We may procure the particular kind of
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currency we need in somewhat unorthodox ways and deliver
it in the "little black bag" so popular among fiction
writers, but expenditures for even the most sensitive
operations are backed up by an array of receipts, vouchers,
certificates, etc. A key element of the Agency system for
financial administration is the requirement that proper
authority must exist for every transaction. Each transaction
is subject to review and approval by an "Approving Officer";
in addition, all claims and vouchers for payment and all
accounting for advances must be certified as correct, in
accordance with Agency regulations and in conformance with
applicable Federal and State laws, by an authorized Finance
Certifying Officer independently appointed by the Director
of Finance. Finance is responsible for the accounting
system which reflects the status, use, and accountability
for all funds, property, and other assets entrusted to the
Agency. This system is consistent with the principles and
standards prescribed by the Comptroller General. Finance
also handles all payrolling and disbursing functions,
purchases foreign currencies, and audits contracts with
commercial firms.
Financial and selected program reviews of Agency com-
ponents and activities are conducted by the Audit Staff,
which is organizationally part of the Office of the Inspector
General but reports directly to me rather than to the
Inspector General. Made up largely of people hired from
outside the Agency, one-third of whom are Certified Public
Accountants, the Audit Staff conducts annual reviews of all
major activities at CIA Headquarters and in the field.
Smaller activities are audited on a two- or three-year cycle.
The audits are conducted in conformance with policy guide-
lines set forth in Federal Management Circular 72-3, General
Accounting Office Standards for Audit of Governmental Or-
ganizations, Programs, Activities, and Functions, and
standards issued by the American Institute of Certified
Public Accountants. The audits determine whether financial
operations are properly conducted and in compliance with
applicable laws and regulations, whether operations are
being conducted efficiently and economically, and whether
desired objectives are being achieved.
The Office of the General Counsel also plays an im-
portant role in the financial processes of the Agency.
Proposed expenditures are submitted to that Office by Finance
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Certifying Officers and others for legal rulings, which
are written at the rate of hundreds each year. In this
respect the General Counsel serves the same role for Agency
Certifying Officers as does the Comptroller General for
Certifying Officers in other agencies.
As I hope all of the foregoing makes clear, we are
careful with the taxpayer's money. Our budgeting system
,works well. Our internal control systems are strong and
getting stronger. In accordance with recommendations of
the Rockefeller Commission, I am currently in the process
of expanding the staffs of both the Inspector General and
the General Counsel. The fact that we do have certain
exemptions from normal Government procedural requirements
makes me acutely aware of my unusual responsibilities and
especially careful to keep the Agency's financial house in
order.
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 ? Approv
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