MANAGEMENT STAFF SURVEY REPORT OF FINANCE DIVISION SPECIAL SUPPORT STAFF MARCH 1950

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP61-00274A000100030002-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 45
• Document Creation Date: December 9, 2016
• Document Release Date: August 24, 2000
• Sequence Number: 2
• Publication Date: May 1, 1950
• Content Type: REPORT

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1 May 1950
MEMORANDUM FORS Director of Central Intelligence
T-IRUs Acting Executive, CIA
SUBJECTS Finance Division T/O
1. In accordance with your instructions the T/O of the Finance Division,
Special Support Staff, is re-submitted for the purpose of establishing position
grades. In submitting this report a few comments regarding current Agency pro-
cedures for establishing both position requirements and position grades may be
in order. These procedures embrace the steps set forth belows
a. A survey is made by the Management Office for the purpose
of determining work load, procedural efficiency, functional require-
ments and the numbers and types of required positions. At this
point a preliminary survey is made by one of the Classification
Branches to determine the tentative grade requirements of each
position in terms of the functional duties as envisaged by the operat-
ing office and the Management Office.
b. The findings and recommendations of the Management Office,
and the tentative findings of the Classification Branch, are then pre-
sented to the Executive for final determination as to the number and
type of positions to be authorized. Based on this, a tentative T/O
is issued, in each case including a statement that grades are subject
to final review and approval by the Personnel Director, in order that
personnel procurement or other required action may be initiated.
c. (1) Thereafter a detailed position study is undertaken by
the appropriate Classification Branch in terms of the approved
functions and requirements of each position. This study, or audit,
embraces a review of the work performed in each position to determine
position grade requirements; or, if new positions are authorized, de-
tailed discussions are held with appropriate officials in the unit
concerned to analyze and evaluate the duties and responsibilities
proposed. Upon completion of this phase, controlling factors of in-
dividual jobs are analyzed and measured against Civil Service specifi-
cations or standards. Appropriate comparisons are then made with
similar positions in other agencies by reviewing job descriptions in
the Civil Service Commission central classification files. Lastly,
comparison is made with previously allocated positions in other seg-
ments of CIA for the purpose of ensuring proper internal position
alignment.
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(2) Upon completion of this study, recommendations are
made to the Personnel Director for final review and official es-
tablishment of grade levels. In this respect, the Personnel
Director's office acts as the Civil Service Commission for CIA
as directed in the functions established by the Director for
that office.
2. The Finance Division T/O, as recommended in the Manage-
ment survey, and the attached Classification study (covering new
positions and those positions involving grade changes only) were
accomplished in accordance with the procedures outlined above.
While no change in grade is recommended at this time for the Chief
of the Monetary Branch, pending a more exhaustive study of the
position by the Classification Branch, preliminary information de-
veloped indicates that by comparison with a similar position in
the Department of the Army allocated at the GS-l4 level and Civil
Service standards for comparable responsibilities, consideration
of the subject position at the GS-14 level is warranted.
3. In considering the up-trading of the positions involved,
no weight was given to the increase in the number of employees
supervised. The predominant factor is recognition for the first
time of increased variety and complexity of financial duties
arising with the establishment and activation of OPC, and the
greatly increased responsibilities arising from revisions in the
Confidential Funds Regulations. Not the least of these new com-
plexities are the undertaking of subsidy and proprietary activi-
ties of great sensitivity and financial magnitude.
4. In addition, the majority of the positions involved have
been subjected to a close classification scrutiny for the first
time, owing to 030 policies previous to General Order 24 prohibit-
ing desk audit of OSO positions for security reasons. For this
reason some of the grade increases reflect functions and responsi-
bilities which would have been recognized previously under proper
classification study.
5. In recommending grades for the Finance Division, con-
sideration has also been given to various essential factors which
are not inherent in other government positions of seeming com-
parability. These factors include the followings
a. Employees of the Finance Division are subject to
rotation to the field, and rotation between a number of dis-
similar positions in Washngton and the field as emergencies
or needs arise. This requires that most employees not only
be qualified for their immediate position, but be capable of
assuming on short notice the duties and responsibilities of
other basically different positions.
tkrng
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b. The very nature and type of financial administration
required for Confidential Funds requires unusual integrity, judg-
ment and initiative on the part of employees of all levels. In
the necessary absence of precise regulations governing operational
expenses, and the necessary lack of precise and formalized account-
ing procedures, forms and standards, the highest type of personnel
are essential to ensure effective and efficient financial processing
and administration.
c. The required qualifications for financial administration
and processing can be acquired neither solely in Government nor in
the commercial field, but are a mixture of the two with the major
addition of lengthy on-tl -job ecporience and practical impregna-
tion with the philosophies and .-.policies governing the use of Con-
fidential Funds. This "act, together with highly selective recruit-
ment practices, required proper but upper-range classification of
positions to minimize turnover, of employees between CIA and other
government or commerical positions in the interests of maintaining
optimum standards of financial administration and security. This
latter point may well be stressed since the financial processes and
records of the Finance Division constitute a critical security
focal point.
6. (a) In conclusion, it is the opinion of the undersigned
that the recommended grades are not only warranted by the duties and
responsibilities of the individual positions, but are desirable to
ensure the employment and retention of incumbents who will maintain
and improve agency standards in the handling of Confidential Funds.
(b) I therefore recommend that the grades recommended in
the Management survey report for the reorganized and expanded Finance
Division be approved, based on the attached review and the facts
developed above.
7. I would like to express satisfaction that the Management
Staff, as a result of its thorough study, has confirmed the extreme
need for additional personnel in the Finance Division. To my per-
sonal knowledge this group of employees constitutes one of the hard-
est working segments of the organization, and it is my opinion that
many of the key employe'~s have fulfilled their duties during the
past eighteen months only by great curtailment of their family and
personal life, and at the risk of physical breakdown.
\ 5/s
Approved by the Director 7ILLIATJ J. `CLLY
after personal discussion Personnel Director
with Mr. Kelly on 2 May 1950
S/S: LTS
2 May 1950
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5. Regarding the new positions recommended by the Management Staff,
it is our opinion that each is required under present conditions and at
present work levels to afford reasonable attention to the processing of
business and provide reasonable protection to government ttuids. The re-
commended organizational structure is also concurred in and we believe it
will lead to a better distribution of supervisory responsibilities and
an improved work flow.
6. In consideration of the above, we recommend approval in its
entirity the attached report of the Management Staff.
25X1A9a
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30 March 1950
TO: The Management Officer
THRU: Chief, Special Support Staff
FROM: Finance Division
SUBJ: Management Survey Report of Finance Division
1. The Finance Division, Special Support Staff, requested a survey
by the Management Staff due to its physical inability to fulfill its responsi-
bilities and dzties under a greatly increaded work load without serious
curtailment of its services and impairment of the standards of fiscal con-
tol desired by the Agency. F or many months a back log of work has been
accumulating and day-by-day fiscal requirements of the Covert Offices have
been met only at the expense of the physical welfare of employees and
lowered work standards. This in turn has resulted in increasing errors,
technical deficiencies and inadequate documentation.
2. Notwithstanding these undesirable trends, many procedural improve-
ments have been effected daring the past year, and we believe that we have
maintained proper protection of funds from both physical loss and misuse.
We feel the examinations by the Audit Division, Inspection and Security,
support this conclusion.
3. In our opinion the attached report of Management Survey of the,
Finance Division is a factual portrayal of existent problems and a sound
proposal for corrective action. This report is the result of a detailed
study of the assigned functions, responsibilities, volume and complexities
of business and present facilities of the Finance Division. The study in-
cluded independent verification of the financial requirements of other
similar units, including other agencies.
4. With respect to recommended improvements in procedures, we believe
that all can be instituted immediately upon assignment of personnel to the
recommended positions. We are in accord with the Management Staff that the
functions of the including logging, routing, referencing,
indexing and filing should be the subject of a special survey; however,
under the circumstances it appears desirable to delay this survey until
other more pressing needs are attended to.
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Office Memorandum ? UNITED STATES GOVERNMENT
'25X9A2
TO : Director of Central Intelligence
FROM Executive
SUBJECT: Increase in Administrative Positions
DATE: 6 April 1950
1. Attached is a Management Survey h.eooort covering the Finance
Division, Special Support Staff (formerly Confidential Funds Division).
This. report recommends an increase of positions for the Finance
Division, and the placing of all positions on a vouchered funds basis.
2. Currently the Finance Division is authorized . vouchered and 25X9A2
- unvouchered positions - a total of
3. There are two basic reasons supporting the recommended increase:
a. Greatly improved policy guidance and control provisions to
safeguard the utilization of confidential.funds.
b. OPC support requirements which have gromi considerably beyond
any previous conception upon '4.zich personnel authorizations were based.
1.. In connection with this, ire are encountering the fol:lorri.ng pro-
blems resulting from inadequate staffing of the Finance Division:
a. Inability to audit the accounts of Class A foreign stations
(we are fortunate in having trained'f inance personnel at. these stations).
b. Backlogs in accounti for reported expenditures.
c. Delays in processing payment of certain allowances to field
personnel.
d. Inadequate provision 'of essential information for the Budget
Officer and the Director.
e. Continual lowering of efficiency due to excessive overtime
work by assigned personnel.
5. Every effort has been made to carry the increasing workload
within current authorization before requesting additional strength.
25X1A 6. I propose to authorize this increase, but wish to bring the
problem to your attention in view"of your expressed desire, in which I
concur,to hold administrative in&reases`to a minimum. As an offsetting
factor we have recentl reduced tbe OSO and OPC personnel authorizations
by approximately through Management Staff action.
"
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,
ivisiona Special Support Sta'.
garding this report will be appreefated.
DATE: 28 March 1950
sutlrI : Management Survey of the Finance Division, Special Support Staff.
ce Memorandum ? UNITED STATES GOVERNMENT
Chie sSpec $alSupport staff
;ement Officer
, ttach9ld is the Mariaremen staff survey report of the Finance
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Management Survey Report of
Finance Division,
Special Support Staff
1. Scope of Survey
At the request of the chief, Special Support Staff, the Management Staff
was requested to make a survey of the Finance Division to analyze, evaluate
and make recommendations on organization,prooedures, workload, forms, practices
and personnel requirements, Work measurements and procedures studies were
conducted with working personnel and later reviewed by the Chief and Assistant
Chief as to the correctness of the findings.
2. Findings
a. The Finance Division was first established in the Office of Special
Operations as the Special Funds Branch, later transferred to Budget and Fiscal
Office as the Confidential Funds Branch in January 1949. More recently it was
transferred to the Special Support Staff as the Finance Division. Many of the
present difficulties and deficiencies can be attributed to the changes in con-
cept of operations that occurred during the foregoing reorganizations,
b, While operating as the Special Funds Branch, Office of Special Oper-
ations, the processing of financial transactions was accomplished with a
minimum review which determined that a transaction had been directed, was
properly approved, and the expense appeared to be reasonable, later the
Division was transferred to the jurisdiction of the Budget and Finance Office
with the function of administering all Agency confidential funds under an
entirely new concept and under much more detailed regulations without any
increase in personnel.
e. Operating under the new concept of operations and more stringent
regulations it soon became apparent that new organizational units and pro-
cedures were required to perform detailed audits and render service required
in accordance with Agency policies and regulations, standardized government
travel regulations, Comptroller General's Decisions, etc. This did not
materially reduce the workload of other sections or personnel who previously
performed such duties but merely reflected the increased time required to
process accounts in accordance with the more detailed regulations*
do The greatly increased workload created primarily by the expansion of
OPC and a change in the type of financial servicing required by 080 has reached
the point where the Finance Divisio.is doing everything possible within their
present personnel strength to provide service to covert offices at the expense
of lowering their standards of performance in carrying out their functions of
audit and accounting.
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e. The use of commercial cover for covert agents and projects is steadily
increasing. This type of operation contributes greatly to the work of the
Finance Division. For example, accounts of staff employees can be processed
in volume by employees at an appropriate grade level whereas the processing of
covert agent and project accounts particularly those under commercial cover
require special handling by a certifying officer or a trained assistant in the
higher administrative grades.
f. We find, that trainees, unless they are in the Finance Division six
months or more provide little or o productive work. Actually it has added
to the workload of supervisors. A, trainee cannot work on covert projects
because of the complexities of such projects. Even when a trainee is assigned
to the for one month's training it is problematical if you
will receive two weeks of productive work. Trainees cannot be used to compute
foreign allowances for the short period they may be assigned to the Payroll
Branch.
g, There has been considerable. overtime work required to perform normal
audit and accounting functions which the Finance Division is unable to accomplish
during the regular workday. Special handling of OSO-OPC transaction such as
preparation of travel vouchers, processing advances and travel orders on an
urgent basis, together with the handling of covert OSO-OPC transaction on a need
to know basis does not lend itself to a smooth and efficient operation.
he The Finance Division has continued to review their operations toward
improvements, many of the deficiencies existing are known and have been known
to the supervisors for some time* lack of personnel and sufficient time on the
part of the supervisors of the Division are the primary reasons why corrective
measures have not been implemented,
3. Major Deficiencies in the Operation
a. Class "A" field accounts are not audited and certified as required by
regulations. Lack of sufficient personnel in the Finance Division and the fact
that trained finance officers are disbursing funds at these Class "A" instal-
lations are the reasons advanced for noncompliance with regulations*
b. Accounting reports on expenditures rendered to operational offices are
not adequate in that they do not reflect current total expenditures and obligations
against allotments.
e. There is inadequate provision for handling audit exceptions, these are
now being handled under the personal guidance of the Office of the Chief.
d, Travel and other advances of money are not being properly followed-up
and settled as required by regulations.
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es There are inadequate provisions for follow-up and maintaining leave
records on field personnel on a current basis*
to There is an urgent need for an indexing system on regulations, decisions,
opinions, etc., which must be readily available to certifying officers and auditors
if they are to properly perform their duties,
g. The practice of the Chief, Finance Division, signing as the Contracting
Officer on covert projects or agent contracts is basically unsound since he is
a party to a contract and at the sale time he is responsible for the audit of
expenses incurred under the terms of the contract&
he The Registry can be very helpful in the operations of the Finance
Division since all correspondence, touchers, eto., can be tied to either a
project, station, or individual. However,'the Registry is not serving as such
in the Division. Branches are maintaining files which could best be utilized
by auditors and certifying officers if the files are consolidated in one place.
This has been discussed with the Assistant Chief who concurs and has requested
upon approval of the new organization and TAO a further study be made of the
filing system.
4. Contributing Factors to the Deficiencies
as Due to the covert nature of the accounts, Certifying, Audit and Liaison
Branch personnel are required to spend approximately one-half of their time on
liaison activities. (See Exhibit E.)
b. The policy of auditing and certifying in Washington all allowances and
travel expenses incurred overseas prior to payment being authorized overseas,
results in considerable expense and time in preparing cables and correspondence
to the field requesting information and/or authorizing payment.
o. The fact that the Chief and Assistant Chief of the Finance Division
are appointed as agent cashiers and must execute all checks drawn against their
accounts makes for unnecessary reviews and flow of papers. (See Exhibit D.)
d, Broad and general provisions in covert agent contracts cause much
misunderstanding and discussions between the certifying officer and the
Divisions before a determination can be made as to whether an item of expense
is proper*
e. Delays in processing field accounting reports on a current basis are
partially caused by delay on the part of operating divisions in returning the
reports which are forwarded to them for review and approval,
to All of the overt operatin4 offices have one or more unvouchered projects,
however, due to their unfamiliarity with Confidential Funds Regulations it becomes
a practice of special individual handling by the certifying officer in assisting
in the preparation of vouchers.
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g. Agency Decisions and Directives on certain functions to be performed
with confidential funds have failed to recognize the additional workloads
placed on the Finance Division, i.e.
(1) The decision that al travel of OSO and OPC personnel and
and Inspection and Security
a rom oo Zen e s has increased the workload
of the to the Vxtent that considerable overtime is
required to process vouchers on a reasonable current basis.
(2) A recent decision that the practice of having one local
packing firm pack and ship household effects of Agency personnel
proceeding abroad be discontinued, will result in considerable
additional vouchers to be processed in the Finance Division. The
new plan necessary for security reasons would advance the employee
sufficient, funds to pay for the orating and shipping, who in turn
will submit receipts as the funds are expended. Instead of re-
ceiving one billing a month from a local storage and packing firm
it is conceivable that one to ten different receipts may be sub-
mitted by each traveler all of which must be audited and credited
to the advance account.
Conclusions
In the opinion of this analyst the following are the basic problems
existing in the Finance Division which must be corrected before the Finance
Division will be able to function as a smooth and efficient operation.
a. The covert offices are insistent that accounts and projects be pro-
cessed on an "individual need to know basis" with documentation and information
being available to the Finance Division only to the limit that they (the oper-
ations officers) deem it permissable within the security aspects of the project
or account. On the other hand, the control and regulations governing the use
of confidential funds are becoming more stringent and in greater detail.
Consequently the employees of the Finance Division, all loyal and conscientious
workers who are endeavoring to provide maximum service to operations at the
expense of forsaking and/or delaying their equally important function of audit
and accounting, are going to be just as insistant that more information and
documentation be made available to them prior to processing and certifying
expenditures.
The above situation will result in operations protesting they are not
getting service and support and that the security of their operations is
being jeopardized by this demand for information and documentation. As
opposed to the foregoing, the Finance Division and the Agency itself without
a good business system of control and accounting of funds are vulnerable to
criticism and exceptions since the avenue is widened for incorrect and over-
payments, possible collusion and fraud.
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i. The system of maintaining accounts including payroll accounts should
be converted to a machine operation at the earliest possible date. The
increasing requirements for reports on expenditures and allotments under
preaent.conditions can only be accomplished at the expense of creating back-
logs in the processing of field accounts and domestic expense vouchers. This
project is now under study by the Machine Records Division, OCD, and the
Special Support Staff.
j. A statement of functions on the branch and section level be prepared
by the Chief, Special Support Staff, and submitted to the Management Staff
for review.
k. The proposed new organization will eliminate many informal routing
forms and memoranda. As discussed during the course of the survey, the
Finance Division will review all forms for possible consolidation and/or
elimination, Y
1. The organizational structure (Exhibit B) be approved.
Z 'h ber of positions (Exhibit A) providing an over-all increase
of be approved subject to classification review by the Employees
Division and final approval by the 'ersonnpl Director.
Attachments: Exhibit A - Proposed and Present T/O
Exhibit B - Organizational Chart
Exhibit C - Flow Chart - Processing Travel Vouchers
Exhibit D - Flog Chart - Processing Vouchers
Exhibit E - Workload ax Other Data
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be The Finance Division is 1pnderstaffed to provide the service and to
perform the basic functions which.they are presently responsible for,
e, The Chief and Assistant Chief are required to devote more and more
of their time in assisting the covert offices in the planning of operations
with little time available for thg internal planning and supervision of their
own office.
6. Recommendations
a, That the provision for a-Disbursing Officer to be designated as an
agent cashier be approved, This will relieve the Chief and Assistant Chief,
Finance Division, of the tasks of reviewing routine vouchers which have been
audited and certified by high level certifying officers. Creation of this
position will provide for a more efficient processing of vouchers (see Exhibit
D) and will allow more time to the Chief and Assistant Chief for supervision
and planning,
b, The Budget Officer review the current arrangements with U. S. Dis-
bursing Officer with respect to the procedures on how the Agency requisitions
and accounts for confidential funds and determine what changes should be made,
if any. The requirement that agent cashiers render an accounting three times
monthly appears to be excessive.
0. Consideration be given to the practicability of assigning certifying
officers to foreign stations of a class an status.
d, The Budget Officer define, explicitly the type and content of monthly
reports required on expenditures of confidential funds. A survey has been
initiated by the Budget Officer since the first draft of this report was
prepared,
e, The designation of the Chief, Finance Division, as the Contracting
Officer on agent contracts be rescinded. We recommend that this authority
be vested in the Chief, Special Support Staff.
f. That a control system be established for the follow-up and settle-
ment of advances and audit exceptions.
g. Current instructions issued to the field should be revised to the
extent that they are current and consistent with Agency and other applicable
government regulations.
h. A responsible officer should be designated to plan, schedule and
conduct the on the job training programs for new employees proceeding to
foreign stations as finance officers or clerks.
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CERTIFICATION, LIAISON AND AUDIT BRANCH
FINANCE DIVISION
Survey reports on the are submitted separately,
therefore, this report is on the Office of the Chief, Liaison and Audit Branch
25X1A and the
1. Findings
25X9A2 a. The T/0 provides 0 positions, all are encumbered, however, only
personnel are on duty. The Chief of the Branch is absent on temporary duty
overseas,
b. The following are the major functions of the Certification, Liaison
and Audit Branch:
(1) Audit and certification of expenditures involving unvouchered
funds including payments made in foreign stations.
(2) Audit of Agent Cashiers bank accounts.
(3) Audit of commercial contracts.
(41.) Liaison with appropriate operations officers of OSO, OPC and
other offices where covert activities prevail.
co Due to the present volume of work1Class "Art foreign accounts are not
audited and certified as required by regulations.
d. The following factors contribute greatly to the workload of the
25X1A and as such cannot be measured in exact
number of hours required to perform them:
(1) Audit of commercial supply contracts.
(2) Consulting with operations officers on the planning of projects
as pertain to finance matters.
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(3) Briefing of agent personnel on procedures and regulations.
(4) Handling of local payments on agent personnel when requested
by the operations office (i.e,ba.nk deposits).
(5) One certifying officer responsible for the collection of premiums
and payment of claim under the insurance program established for security
reasons.
(6) One certifying officer responsible for unvouchered accounts
authorized for overt officers spends a great deal of time directing
Y
these offices in the use of vouch?red funds since the Confidential
lands Regulations are not ava`lable io them.
4
a. Workload measurements:
(1) The following are the types and number of accounts handled by
three certifying officers and three;` uditors~support of OSO-OPC activities:
Class "A"
Class B and other installations
{
Staff agent accounts`
Career agent accounts
Projects (overseas)
(2) Disregarding Class "k" accounts which are not being audited,
we find the following is desoriptivo of the number of man-hours available
in a working month as against the volume of work and time required to
handle same.
{3) Average monthly aocountingfreceived 150,E 4 hours, average time
to audit and process one accounting : 600 hours. This means that three
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certifying officers and three auditors are required to apply a total of
600 hours against their combined total. working time of 960 hours on the
audit and processing of accountings.
is
(.) 360 hours or a total of 60 hours per individual are available for
performing the variable duties as ou+lined in d. above.
(5) Comments on the 60 hours available for liaison activities and
duties which necessarily must be conducted outside of his office.
(a) Audit of contra tors books on supply contracts usually
require a minimum of two days or 16 hours.
(b) Briefing of agents may require 8 hours per month.
(o) Arranging for and making deposits to covert accounts will
average 8 hours per month,
(6) Thus we find that when we consider annual and sick leave plus
attendance at meetings, subsidy and proprietary projects and other variables
that may arise it appears that there is unsu?fioient man-hours available to
perform his duties.
(7) One certifying officer with half time help of an auditor and a
ypk
clerk is responsible for the a,fiudit aid certification of all accounts which
are considered departmental iu nature including:
Purchase and contract , supply
Communications, 080
Operational Aids, OSO
Unyouchered Funds Aogounts for Director's Office, 00, ORE, OSI,
OCD, Advisory Council and Inspection and Security.
The number of vouchers as c],aims against these accounts are not
constant, therefore, we are only able to deter-nine that the workload requires
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 one Full time certifying officer and one auditor with the part time
assistance of a typist.
{8) One clerk full time is required to administer the Employees
Insurance Program under the direction of a certifying officer.
(9) One clerk-stenographer or a total of four clerk-stenographers
ofro'
certifying and three auditors are available for clerical and typing
2. Tentative Recommendations
a. Certification and Liaiso Offioe,'s be relieved of the responsibility
for the audit and certification of-payroll, allowances and travel. This
would be accomplished by designating the Chief, Payroll, Allowances and Travel
Branch, as certifying officer for
such accounts.
b. The Certification and Liaison Officers discontinue the practice of
maintaining informal logs and memoranda apcounts on projects for which they
are responsible. All the informat,on pertaining to a project or individuals
(agent contract accounts excepted) is or should be available in the central
Registry or Accounts Branch.
c. Add three auditors necessary due to expansion of OPC activities and
change in type of service required:by OSO.
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"UnICI
 _ Draft-Preston
? Hpprovea ror cr a ase zuu-uuurur, l-OiIR-5 l I'b"I-UUZ141W-1 uuUJUUUZ-Z
encumbered and personnel are on duty. Trainees have been available from
time to time for limited productive work.
b. The basic functions are to audit all travel vouchers and carriers
invoices for transportation, where the use of confidential funds are authorized,
including travel overseas outside of the employees assigned station area,
INN*, DIVISION
1. Findings
a., The table of organization provides for , all are
o, Major factors contributing to the Workload in this Section are:
(1) Audit of travel performed overseas, and subsequent approvals
required of Division Chiefs, coordination with
- of the Special Support staff.
(2) Ninety per cent of OrC;travel requests are hand-carried and
require special handling. Individual employees of OPC-OSO, and other
offices, returning from a travel status are directed to the-
25X1A here the employee sits with the traveler computing the time
and preparing the voucher in a rough draft for typing. This kind of
service is being furnished to operating activities at the expense of
delaying the accomplishment of their primary function which is to audit
(3) One employee's full time required for audit of 00/Contact and
I&S field personnel who are in a continual travel status.
(1) An average of 400 travel vouchers per month times two hours
average time required for computing and preparation ^ 800 hours.
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 (2) 165 travel orders average per'month plus an average of two
25X1A
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amendments to each order times an average of ten minutes per order or
amendment = 85 hours.
(3) Posting to travel records accounts 75 hours per month.
(4) Audit of carriers invoices on'transportation requires approxi-
mately 65 hours per month.
6 employees time 160 hours 960 hours plus
80 hours of productive work'of trainees - 1040
'Overtime required to provide service and perform the basic
(5) Supervision by Chief, liaison activities and dictating cables
and pouch letters on overseas travel ^160 hours.
(6) Clerk-typist, filing, typing all correspondence and. other
clerical or messenger duties = 160 hours.
Total man-working hours required per month a 13.5 hours.
Total man-hours availaile per month
functions* of the Travel Section = 385 hours* )b-,--;
It is evident from the above production figures that the Section is
understaffed and has only been able to keep up with the work by overtime*
Recommendations
a, e established under a Payroll, Allowances and Travel
t
Branch as proposed under the new organizatione
b. Table of organization be increased from six positions to eight,
allowing for one additional auditor and one clerk.
o. Eliminate files on individuals. Once the voucher or data has been
posted to the individual's travel account the voucher or correspondence can
be forwarded to the central Registry in Finance Division where the information
will be s flebdd Fk- Ro2904 3?aC$@L-RBO@4-00274A000100030002-2
 Approved For Release 2001/09/01 : CIA-RDP61-00274J00100030002-2
-3-
d. Travel vouchers be certified by the Chief, Payroll, Allowances and
Travel Branch. This will eliminate double handling aq at present where
travel vouchers are forwarded for review and certification by four different
certifying officers depending on which one is responsible for the project or
account chargeable.
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 25X1C
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NW 1 -2-
f. One accounting clerk is responsible for maintaining a ledger of the
Chief Agent Cashier Fund, preparation of vouchers, making disbursement from
the cash fund, maintaining the account, and assisting in the examination,
.
2, Tentative Recommendations
a. The cash payment function and account be transferred to the Disbursing
Officer as proposed in the new organization of the Finance Division.
b, That no change be made in the table of organization. A minimum of
25X9A2 re necessary to administer the basic functions as outlined in
paragraph l.b. above.
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IWEVMRRMV~
 ,, 0 Drafter 25X1A9a
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A CCOUTTS BATCH, FINANCE DIVISION
1. Findings
a. The table of organization provides for = positions. All are
encumbered and personnel are on duty, Three trainees have been available to
the Accounts Branch for over a year. They have been retained in this section
due to the inability to accomplish their work within the present T/O.
b. The major function of the Accounts Branch is to develop and maintain
an accounting system of unvouchered funds expended by the Agency in the United
States and abroad including:
(1) Monthly accounting reports of expenditures for the Budget
Officer and reports of property acquired in foreign stations.
(2) Receive advice of allotments from AD/OSO, AD/OPC, and Budget
Officer and establish control accounts.
(3) Maintain a cash journal account for each of the three Agent
Cashiers funds.
o? Aside from the routine business of maintaining the accounts, the
principle factors contributing to the workload are:
(1) Pre-audit of accountings, a function which properly should
be preformed in the
(2) Preparation of monthly reports on status of unvouohered funds.
Present reports require the assistance of three GS-9 accountants for
approximately ten days to assist the bookkeepers in closing the accounts
and preparing the reports.
(3) Searching of old OSS-SSO files in connection with claims against
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k
(la.) Delay in receiving field accountings forwarded to Division
Chiefs for approval make for uncontrolled baoklags in posting operations.
2. Tentative Recommendations
a. The reports on expenditures to Agency officials and operations should
be reviewed and revised toward the e pd of simplifying and giving a current and
meanful accounting of expenditures. This should be constantly pursued and the
Assistant of the CIA Budget Office should be available to define the type of
information required.
b. The bookkeeping function should be converted to a machine operation.
This will provide for a more efficient operation especially in the reporting
end and will allow more time for the accountants and bookkeepers to perform
"Ulmer primary funotioni
"Slse ta~cseased fro s s = ,tuc l y 'it` has -i6quired
or the past year to pr1"lcess yi ark in tP s r oh.:.
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 njpnftrx~ Draft 25X1A9a
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Findings
25X9A2
a. The present table of organization authorizes _ positions. All
positions are encumbered,
b. The basis function is to establish and maintain a system for the
computation, payment and record of salaries and allowances of all personnel
paid from unvouchered funds including
Quarters, living and post differential allowances.
Permanent retirement records.
Tax deductions.
Leave records.
c. The greatest single workload factor in this Section is the computation
of allowances to personnel in foreign stations. Three contributing factors
which have required 300 hours of overtime to perform this function are:
(1) Reclassification Act.
(2) Changes in post allowances by the State Department (devaluation
of the pound sterling).
(3) Year-end computation of Withholding Taxes and posting to each
employee's retirement record.
d. Salaries and allowances are,paid on a 28 calendar day pay period.
This means 20 days are available in each pay period for the computation,
25X9A2 recording and payment of the payroll, We find that the _ employees are
performing the following duties:
25X9A2 - employees are computing payrolls, allowances, posting to
pay data card on each individual employee paid from unvouehered funds.
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Cghnri
%F I- V it 6-IF--
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/0 : -2- CIA-
One employee is assigned to maintain time and attendance
records on all employees including those assigned to overseas
stations.
One employee is available for typing, maintaining stamp
registry, posting to individualts retirement records and other
clerical duties in the Office o' the Chief.
The other employee is the Chief, responsible for overall
supervision, liaison with certifying officers and other offices of
the Agency.
e. There are at present approximatel pay accounts with the
expectation that they will be increased to .y 1 July 1950.
According to the Bureau of the Budget standards one employee is required
for eaol ay accounts which does not include the computation of quarters
and living allowances which this Section is required to perform.
2. Tentative Recommendations
a? be establisheds a new branch entitled Payroll,
Allowances and Travel.
25X9A2 be A T/O of - positions be provided on the basis of one employee
25X1A for each pay accounts.
o. A separate section to be established as Allowances, with a T/O of
positions.
L,,,-' d. The payroll, allowances and leave records to be converted to a
IY machine operation as quickly as possible.
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Approved
N?
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I%W
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 Approved For Relepe 200
R.Port of SW4 Ceverix; Obi,
Applicable to +`ouehered
f ,e's the a Oget Officer dated I April
i be appreciated if represe
i! disouus t. tad r al
o the *%ut date and .aas the ieetir will be hold.
9 `'sy 1950. Your, cr ioe will be
p1
Subject File
Attached is a :a
4-m-133-50
DP61-00274A0001 002-2
6~?4-Z-7~
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 OTANDARD FORM No. 64
p ved For Rplats 2001/09/ : C A- P61-00274A1 100030002-2
Offi, ce emoranc um ? UNITED STATES GOVERNMENT
J
? Management Officer
FROM : Acting Budget officer
DATE: 19 April 1950
SUBJECT: Report of Study Covering Obligation and Related Accounting
Procedures Applicable to Unvouchered Funds
1. In connection with the attached report it is desired to
generalize briefly on certain of the aspects of the problem in-
volved as discussed in variois portions of the report. It should
be pointed out at the beginning that the report is intended to
offer only the possibility of a general solution to the problem
and that it will take a considerable period of time to adequately
implement any method which may be adopted. This is particularly'
true due to the fact that an ,adequacy of competent administrative
and clerical personnel may not be available.
2. A distinction has been made in the report between
ttfinancial management" and "accounting and financial services".
The latter term is used for the purpose of indicating the type of
financial activity and support in which the Finance Division, SSS,
should normally engage in assisting the covert offices and other
activities of the Agency Which have occasion to use unvouchered
funds. The problem of financial management concerns itself more
with the Budget and Liaison offices of OSO and OPC, the 'Projects
Review Committee, and agency staff units. From the standpoint of
rendering accounting support for the purpose of this study, and
particularly from an "obligationst viewpoint, the activities and
systems of the Finance Division may be compared functionally with
those of the Fiscal Division, Administrative Staff.
3. The basic proposal set forth in the attached. report is
that a reasonably adequate system of obligation control and
reporting could be established by the extension and/or modifica-
tion of present methods and procedures being used in the Finance
Division and that further, the proposal envisages some deviation
in the reporting procedures recently developed in OSO and OPC for
the purpose of securing more current obligation and/or expenditure
data (refer to paragraph 3, page 3, and paragraph 3, page 8).
This office is in general accord with the conclusion set forth in
the report and believes that the basic recommendations can be
adopted, subject to certain requirements or deviations involving
time elements and further development of detailed mechanics and
procedures. The proposed system is not substantially different in
principle than that which is being used on vouchered funds in
connection with the establishment and liquidation of obligations
applicable to overseas operations of m
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4. In arriving at a final"conclusion in regard to this matter,
there must be taken into consideration the fact that conventional
or exact governmental methods and mechanics cannot be used (except
in certain instances), but the basic principles applicable to
government accounting can be applied in arriving at a satisfactory
solution and in rendering the desired service as well as providing
necessary information for adegadte financial management.
25X1A9a
Attachment
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 Approved For Rese I.1 iA-RDP61-00274A0Q?Q100030002-2
BUDGET STAFF REPORT
ADAPTATION OF UNVOUCI ED FUNDS ACCOUNTING AND FINANCIAL REPORTING TO
T NO W GO T,NTAL REQUI TENTS 'OR F.Y. APPRO IATION CONTROL
AND ADEQUATE FINANCIAL I'MAGEb .
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 Approved For R se CIA-RDP61-00274AO4p100030002-2
,INDEX
Page No.
I
II
III
IV
Problem
Possible Solutions
General Recommendations,
Discussion
A. Reasoning for Action Recommended
B. Financial Management as Related to
Accounting Support
Problems of financial management related
to accounting support
4,5
Inadequacies of the monthly report of
expenses
4
Basic change required to strengthen
accounting support
5
C. Proposed Methods
General considerations relative to
implementation of recommendations
6
Concept of conventional obligations
6
Method proposed for establishing
obligations
7
Method proposed for recording obligations
8
in accounts
Dissenting Views
9
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 Approved For Rase 2
BUDGET FTAFF PORT
ADAPTATION OF UNVOUCHERED FUNDS.ACCOUNI'ING AND FINANCIAL REPORTING TO
T NUMVULL TT L REQUI YTENTS 'OR F.Y. APFR-015RIATION CONTROL
I Pjoblem
The immediate problem was outlined at a meeting attended by repre-
sentatives of the management Staff, Budget Staff, Office of the Chief 1 CD
and Finance Division of the Spe ial Support Staff, OSO, and OPC on 14
March. It consists of determin ng.the,most practical and effective
methods of supplementing existing unvouchered accounting data through
the addition of unliquidated obligation information. The solution of
this particular problem and the resulting implementation of recommendations
is basic to the more general Agency problem of adequate unvouchered
financial reports required for overall financial management. It also
has an important application tothe internal management of funds within
covert operational offices.
II Possible Solutions
Two alternate solutions for the collection and subsequent handling of
unliquidated obligation data were discussed at the 14 March meeting. One
proposed solution contemplated the collection of data by the Finance
Division where it would be recorded in established accounts. These
accounts would then become the basis for the preparation by the Finance
Division of overall agency reports on unvouchered funds and reports to
covert offices on the status of.operational financing. Under the second
proposal, operating offices utilizing unvouchered funds would collect
unliquidated obligation data. Information pertinent to management of
operational financing would be Ixtracted and the data forwarded to the
Finance Division for consolidation into overall agency reports on un-
vouchered funds. This latter proposal made no provision for the record-
ing of unliquidated obligations in official accounting records of the
Agency. However, the data furnished the Finance Division by the operating
offices could be entered in the established unvouchered accounts.
III General Recommendations
The recommendations that follow are offered as being the most
logical com qa1 ble with good management principles and operational
techniques/ the fulfillment of the varied requirements of top adminis-
trative levels and program offices. It should be noted that adoption
of these reco aendations, or any other orderly plan for accomplishing
the desired objective, will entail some displacement of existing
financial procedures and *rdnor1.additional expense of manpower (both
field operational employees and Finance Division employees). However,
the recommendations have been dgveloped on the premise that the additional
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 Approved For RWease 20-1(A-RDP61-00274AW0100030002-2
unvouchered information is an urgent requirement that can no longer be
disregarded rrespec ive of increased cost. ose recommendations are
"tat:
(1) The Finance Division as the responsible organization
for securing and coordinating all unvouchered accounting data
obtain unliquidated obligation information through existing
facilities where possible and through facilities established for
the purpose where they do not now exist.
(2) Accounting control of unvouchered sub-allotments, down
to the project level, be effected through a system of true allot-
ment control accounts (maintained by the Finance Division) which
reflect allotments, expenses, unliquidated obligations, and un-
obligated allotments. The connecting link between accounting
control and budgetary control would be a monthly report of these
elements issued to program offices.
(3) The appropriate administrative officials of the program
offices continue to exercise budgetary control within overall
allotments issued by the CIA Budget Officer through a review of
monthly reports of allotment status issued by the Finance Division.
Program offices should receive reports of information from field
offices only when necessary'for the establishment or revision of
sub-allotment amounts. Normally this information will consist of
projected requirements beyond the end of the period covered by
reports furnished by the Finance Division.
(4) The value of accrued commitments (obligations) incurred
during the fiscal year be reflected in overall Agency reports of
unvouchered funds prepared by the Finance Division.
(Some suggested methods for carrying out the recommendations
are offered under the section headed "Proposed Methods".)
IV Discussion
A. Reasoning for Action Recommended
Three primary considerations entered into the choice between the
methods proposed. They consist of (1) functional propriety, (2) purpose
to be served by the additional information and (3) extent to which
existing facilities could be utilized in securing and processing the
information.
(1) Functional propriety: The basic problem involves the
securing ana processing of information required to fill a "gap"
that exists between the expenditure data reflected in existing
accounting records and accrued financial commitments entered into
by the Agency. Any process which is designed with this object in
view is considered to be an accounting function. Accounting
records and reports should give complete support to the budget
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function, which consists of fund programming based on estimates
and future program objectives using information from accounting
sources as a gauge of past accomplishments. Any process which
places the program offices ii a position of securing obligation
data is functionally improper and should be avoided. Recognition
of the support aspect of the'Tcovert accounting function of the
Agency has been giv of responsibilities of the
ance Division in which reads as follows:
110 1111111
Fin
"Provides accountin and financial services for the Agency in all
matters involving the use of confidential funds". Recommendations
in this report, if adopted, should serve to further implement and
strengthen the accounting support provided by the Finance Division.
(2) Purpose served: Somewhat related to the question of
functional propriety is that of the purpose to be served by the
additional information -- whether it has a general application or
whether it is to serve only the specific purpose of assisting
program offices in the proper utilization of funds. If it served
the single objective of an aid to fund programming, some justifica-
tion might be seen for locating the accounting collection process
with program offices. However, the information has at least two
other important applications, that of supplementing reports of
status of unvouchered funds p repared for top administrative levels
of the Agency, and preventing overobligation of available funds.
In view of the general usage of information to be derived through
the process it is considered to be a proper function of the Finance
Division.
(3) Utilization of existing facilities: One important aspect
of the problem is that of facilities for securing and processing
obligation data. In general, the facilities of the Finance Division,
consisting of the existing organizi.tion and processes, accessibility
to information, and overall knowledge of the unvouchered financial
picture, are superior to those of program offices for performance
of the particular task at find. The process can be made to operate
successfully by coordinated'processing through the Finance Division.
This coordination can best be accomplished and a more uniform treat-
ment of material will result if the entire process is handled by the
Finance Division.
About the only reason for giving consideration to the possibility
of collection of obligationn data by staffs of program offices is
the existence within those offices of a recently installed system
for obtaining financial information from overseas installations and
the feeling that program offices are the only present source of
obligation information. As' explained later in this report, obliga-
tion data, with the exception of that obtained through reports of
field installations, can be developed by the Finance Division from
information at their disposal. While the system used by program
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 Approved For
offices in obtaining data from overseas installations does provide
some obligation data, this Information could be obtained more
readily through the facility of monthly accountings by making
provision for the inclusion'of the necessary additional information.
At the present time the overseas "obligation report" received by
program offices contains, in addition to information on unliquidated
obligations, estimated future requirements. By removing obligation
information from the reports and supplying such data through the
medium of the monthly accountings the report would then become
strictly a budgetary report of estimated fund requirements to be
used in programming ds.
B. Financial Management as Related to Accounting Support
Some changes in the management of unvouchered funds appear to be
desirable. As appropriations stabilize, it becomes essential to the
proper conduct of Agency programs to ei'fect stronger and more positive
financial management. In the administration of a single year appropria-
tion good financial management has two primary objectives: (1) that of
keeping financial commitments within the limits of the year's appropria-
tions, and (2) the full and proper utilization of appropriated funds.
The former objective is achieved by obligation control under an effective
allotment system, and the latter by fund programming and maintenance of
a fluid state of funds based on'repeated analyses during the year.
Effective financial management c emands'strong accounting support.
Accounting data now available, unless supplemented by information ob-
tained from sources entirely unrelated'to the accounting process, do
not provide acts essential to a program of sound financial management.
The single report of unvouchered financial data which comes nearest
to having some analytical value with respect to management of a fiscal
year's appropriation is the expense report. However, this report is
rendered partially ineffectual through the absence of a common point
of reference with respect to period of'time represented by the different
values reported. Amounts in exense reports represent most recent expenses
recorded in the accounting records. Oiling to delayed receipt of account-
ings against advances of funds,`which serve as the basis for writing
off all or a portion of the advance as expense, the expenditures actually
paid as reflected in the report may be delayed one month to as much as
several years in exceptional cases. F6ur of the classes of advances
resulting in a non-uniform time` pattern in expenses are recorded below.
(1) Delayed field accountings from both stations and individuals.
(2) Irregular periods covered by accountings of dispatch agents for
transportation services. }
(3) Irregular periods'for communication services covered in
monthly accountings.
(4) Advances to other goverment departments for which no
expense is currently recorded.
-4-
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The basic change required to make unvouchered accounting data self-
sustaining as a tool of financia' management is to place all the data
on common ground with respect to time. The only known acceptable method
of accomplishing this is to use the "obligation" device to fill the
agap" between the latest date for which,o xpense is recorded and the end
of specific reporting periods.
Due to the peculiar nature of operations in this Agency there are
two problems of financial management in addition to the one of adminis-
tration of the annual appropriation. These are (1) the funding of covert
operations and the administration, of the Working Capital Fund established
for funding purposes, and (2) the control of expenditures during a year
within the amount of funds alloccted for covert operations. %hile these)
two aspects of the management of unvouchered funds should be studied in
greater detail, general observations are that the use of accrued commit-
ment information will assist in golving some aspects of these problems.
Expense Control: It appears that control of expenditures would to
a large extent become the by-product of any positive system of obligation
Working Capital Fund: The greater. porf ioi of the Working Capital
Fund cannot be identified with azy particular covert operation but must
be treated as an overall Agency fund. It consists primarily of un-
expended balances of foreign currencies accrued frpm prior year appro-
priations and advances charged against current year's appropriations.
The size of the fund normally is related to the scope of operations
financed through it. To maintain this relationship and to avoid un-
warranted accumulations in the P nd, withdrawals from appropriations
resulting in currency conversiong should be gauged to the rate of
commitment accruals. The proper_level of the commodity currency can
be maintained by positive and orderly methods through the use of
information relating to value of-.,accrued commitments which must be
liquidated from the fund and othgr factors affecting its status which
can be determined through existing; facilities.
A further problem exists that has a definite relationship to
improved unvouchered accounting support. It involves the reflections
of unvouchered funds in overt accounts of the Agency and external
financial reporting which is based upon the overt accounts. Under the
present system withdrawals of cash from,the current appropriations plus
a more or less arbitrary obligation intended to cover amounts disbursed
by agent cashiers from Treasury Advances represent unvouchered obliga-
tions in the overt accounts. Hov~sver, because of the use of commodity
currencies to liquidate obligations and other factors, accrued un-
vouchereci obligations may be in excess of values carried on the overt
books and reported to Bureau of the Budget and the Treasury Department.
The establishment of obligations for unvouchered funds would provide
the means for a more realistic presentation of data concerning such
funds in overt accounts and reports.
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C. Proposed Methods
After a study of factors involved, the conclusion has been reached
that unvouchered fund accounting can be converted to an obligation basis.
Exact methods used in conventional. government accounting cannot apply
for reasons of the unique problems encountered. However, the basic
principles can be employed with some improvisation to overcome obstacles.
The initial step toward conversion to an obligation system will require
carefully prepared plans and procedures based upon complete knowledge
of the unvouchered problem. Although the term "obligation" can be defined
as "a setting aside of funds against future expenditure" decisions will
be required as to the manner in which a considerable number of unvouchered
transactions will be handled on a. obligation basis. Contemplation of
the existing special funds operation would suggest the possibility that
basic organizational changes may be required. These considerations are
not possible of adequate solution and adjustment immediately. At the
outset we must anticipate that the job is a big one and highly complex,
but that the constructive objectives for which this study was initiated
cannot be served otherwise. The unusual conditions attached to the
handling of special funds in this Agency in the past have enforced the
development of systems and processes constructed on the basis of
expediency. as distincuished from standard government practice.
It is felt that this study cannot do more than demonstrate a
general solution. For adequate implementation, and since it will take
a period of several months, it is suggested that development of d
processes and procedures be accomplished under the supervision of
individual familiar with standard ,Federal accounting practices an
generally familiar with the Agency's covert activities. The prob
should be approached with an open mind and a detached point of vi
for this reason it would be preferable to assign an individual no
associated with the covert operational or support activities. Al
as indicated above detailed procedures and practices will require
development over a long period of time, it is possible to make so
generalizations covering the subject.
(1) Conce t of conventional obligations: Some reasons which have
been given for thinking that an obligation system is not practicable
for unvouchered funds indicate a misunderstanding of "obligations"
used in conventional accounting process. Some misunderstanding is
predicated on the assumption that conventional obligations are almos
without exception established on the basis of definite quantities of
commodities at a definite cost anc that postings of obligations to
accounts must be supported by formal documents which legally cor. :it
the government. This is not the case. Qbligations often constitute
an informed estimate of probable costs. This is expecially true of
travel, transportation, some communication services, and various con
traetual services. Postings are supported by any number of devices
in addition to formal methods. One such device is the use of a report
submitted by field installations which operates in a manner similar to
the system being proposed for unvouchered funds paid overseas. In
general the attitude toward obligations used in conventional government
accounting processes is that they represent reasonably accurate values
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of accrued commitments but not necessarily factual commitments.
(2) Establishing obligations: Obligations are placed into two
main groups =or purposes o isoussion. One group consists of obliga-
tions paid through field establishments for which a reporting procedure
must be developed. Obligation estimates for this group would be a total
amount for all objects of expense for each sub-allotment issued (each
project in the case of OSO). Obligations would be estimated in monthly
increments to cover the normal lag period between closing date of each
expense accounting and its entry in the accounting records. It has been
proposed earlier in this report that monthly accountings be modified to
include the obligation as well as expense data. The second group is
made up of those obligations pail through headquarters. Obligations for
this group normally would be established for each object of expense. A
variety of methods will be necessary in deter fining amounts for the
latter group. These are discussed briefly as follows:
(a) Personal Services. The obligation would consist of
salaries earned durinp g e time elapsed from the end of the last
period for which payment was made and the end of calendar month.
Amounts would be determined by prorating the last payroll.
(b) Travel. A portion of this expense is paid through
advances to ne rocurement and Supply Division of the Special
Support Staff. Transactions financed through this advance are
written off as expense with'little delay as a result of frequent
accountings. Under the assumption that the bulk of these trans-
actions are reflected as expense at any particular time no
obligation would be set up expense
this portion of the expense. The
greatest portion of the remaining expense of this class is
financed through advances to individuals. Since the travel
advance is based on estimated cost of travel, the advance could
be considered an obligation. This method would correspond to
the conventional procedure of establishing travel obligations
from estimated costs entered on travel orders.
(o) Transportation. the portion of transportation financed
through advances t e rocurement and Supply Division would be
given the same treatment as" travel financed by the same method.
The remaining large portion of transportation is paid through
advances to dispatch agents upon which accountings are sloe and
irregular. Obligations for this item could be based on pro-
rations of previous accountings recorded.
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(f) Contractual Services. The two main items in this class
are serviceobtained t ou i formal contract and subsidy or
proprietary expenses. Obligations'for contract items could be
established on the basis of` terms of the contract either in a
single amount or prorated depending on whether the contract
provided for one time service or continuing service. There is
precedent in the Finance Division for establishing obligations
on the basis of contracts in the contract obligation record that
is being maintained
financial plans of each project would have to be taken into con-
sideration.
(g) Supplies and Eguiment. Primarily three methods are
used for financing supplies and equipment. They are advances t
Procurement and Supply Division, contract method, and transfers
to Bureau of Federal Supply; Obliations for the first two cou
be treated as are travel an contras ual services respectively
when. financed in a si~.ilar manner. IZhe Bureau of Fe uUUl
fund can be considered as a&. obligation at the time of transrer
current accounting of expenses.
(3) Recordin obligations in accounts: The expense account now
being maintained by Finance Division could be adapted for use as an
allotment control account by the addition of columns for entering
allotted amounts, obligations, and unobligated balances of allotments.
Estimated obligations recorded sliould cover the complete period between
the last recorded expense and the end of the current month and should be
posted in increments (with respect to time periods) which will facili-
tate liquidation of the obligatipn. As an example, accountings received
from overseas establishments each month would show estimated obligations
from the end of the period for which expenses are being accounted to
the end of the following month, and for possibly one or two additional
monthly periods depending on the'normal time lag. obligations to cover
the appropriate period would be entered in the account in monthly incre-
ments. Upon receipt of accountings for the following month, obligations
which had been established on the basis of the previous accounting for
the period covered by the current accounting would be liquidated and
the expense for the period of the current accounting would be recorded.
At the some time obligations indicated on the current accounting would
replace those previously recordea for periods beyond that covered by
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Federal Supply) where individual transactions are rather small and nu;nerous,
it would be preferable from the accounting point of view to establish
separate allotment accounts underreach office for each of these items rather
than having obligations and expen as under them distributed to the accounts
of the many operational units involved. Since the amounts involved are
fairly small it does not appear that loss of the distribution information
should be of any serious consequence to operational staffs. Both the bud-
getary and accounting handling of these items would be facilitated to a
considerable degree.
V Dissenting Views
Some ideas expressed and recommendations made in this report are not
in agreement with views held by members of covert operational and support
offices.
The concept of some official@ regarding obligations against unvouchered
funds is at variance with the one set forth here. In the opinion of these
officials sub-allotments within the unvouchered allotment granted to covert
offices by the Budget Officer of QIA which are issued by the program offices
constitute an obligation. Procedytres now used in the Finance Division have
been developed along this line wit h provisions being made for the recordati9eLEGIB
of the liquidations (expenditures) of these so-called obligations (sub-
allotments). This point of view, however,. does not correspond with princ
applicable to normal government practices. Sub-allotments are too genera
nature, covering the period of a thole year and based on rough estimates,
serve the purposes for which obliiationsare intended.
There has been quite some concern expressed both by OSO and the Finance
Division over the amount of time that will be required at overseas establish-
ments in the preparation of obligation material. This is considered as one
additional administrative burden J41 a situation where staffs are inadequate
to properly carry out existing administrative responsibilities. While the
additional work of supplying obligation information' does not appear to be
excessive in view of the fact that, estimated obligations need not be broken
into the various classes of expenditure, the problem is related to recommenda-
tions being made here and should by considered along with them. One proposal
was offered for preventing the imposition of this additional load. Under it
obligations for overseas establishients would be developed at headquarters
on the basis of most recent expenses recorded and a proration of allotted
amounts. By use of this system developments affecting obligations that are
known only in the field could not be taken into consideration in establishing
obligation amounts. The suggestion was not incorporated in proposals in this
report because of the belief that results would be too unreliable for practical
application.
The Budget and Liaison Staff of OSO has offered a dissention against the
proposals made in this report that certain minor types of expense related to
the servicing of overseas establishments to financed through allotments
established for these items rather,than through allotments to operational
units. This matter can be resolved by weighing the advantages of the pro-25XIA9a
posals against those of having a spread of these costs to each pertinent
operation.
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