INSPECTOR GENERAL S REPORT OF SURVEY OF THE OFFICE OF FINANCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84-00780R002100170026-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 92
• Document Creation Date: December 14, 2016
• Document Release Date: August 19, 2002
• Sequence Number: 26
• Publication Date: November 1, 1967
• Content Type: STUDY

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DDIS "G15114
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p I L
INSPECTOR GENERAL'S REPORT OF SURVEY
OF
THE OFFICE OF FINANCE
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INSPECTOR GENERWS REPORT OF 9URVEY
OF
TUE OFF= OF FINANCE
November 1967
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TABLEO (=TENTS
SUMMARY Psge
I.VrRODUCTION ...... . ., A ? ? 0 IP ? . ? 1
THE ROLE OF Tin U1ICOR OF FINANCE . ....... . . . . . . 4
14ANAGE ME NT
STAFFING AND
The SF Career Service. . ? ........ * .. ? .
Recruitment and Trainine
The Age aud Grade Structure of the Finance Career Service.
Retirement
Unfilled Positions, Casuals, and Transients ? *
Position Reclassification .
Rotation
Re-evaluations of Custodians of Funds
The Role of the Support Staff in Personnel Management.
MANAGEMENT. . a . .
d; 816r N,R
TRANSACTION PROCESSING AND RECORDS . 6 4. ? ? . . 44
OF FIAANCIAL OPERATIONS . . . .?...... ? 50
IiApTfl
AUDIT . .
VEL CIAIMS
.
?
,-..
,,..)
Travel Re ulations and Handbooks
.
57
Authoritative Decisions on Questions Conceriirig Travel
.
61
Disparate Practices in Paying for Travel and Per Diem.
.
64
Conclusions Concerning Travel Processing
65
ISTRATION or THE CIA RETIREMENT MD DISABILITY FUND. .
?
ON PROCZSSIOG SYSTEM
79
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th(MARY OF FINDINGS AND CONCLUSIONS
ctor of Finance
1. The formal_promulgtion in Agencz rtW.lael of themission
of the Director of Finance states thet he is nreavAlla&tpT_Alt
fiwclalQperatione of the A&eSZ.I_practice, however T2N,
aspects of
the
tew financial operations ere within theiTelpy_pr
.0.116.M.11......-Me.14.....1,1,?
of
inance only tangentially or not at all. Ai-
guities in the relationship between Finance and the rest of the
Agency may have existed from the very beginning as all unavoidable
consequence of compartmentation. For whatever reason, the Director
of Finance is excluded from natters that should be of proper concern
to him. Be does v
Airmizgar
we feel should be one of his main revzisbilities. 'We recoie4.
,..4010.MIONatodior,
4111110NOMMINSININNIMINISOMIMOMM/N04.
of the statement of mission and. functions of the Director
of Finance to reflect more realistically what is expected of
Management
2. Management of the =ice of Finance is highly centralized,
Ifflawomwmt?mmrm............arwoI/M.MIOM.MamupieMM...osmoMnsp-wEywos... , or....????????.1.1.11,-
conservative, and quite rigid. It is not an office in which
7a4mm?a..?11?19.11.121111110..1.1.- 1,114.-r ? ""
change comes easily nor in which creativity is encouraged. Over one-
third of our report is devoted to the subject of personnel management,
and we are highly critical of much of what we found.
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C9 Career rvice
3. The Finance Career Service has a
Authorization of 1111 poeitioes, of which
the Office of Finance at headquarters and
eer Service Grade
rr e allocated to
are allocated to
other Agency components. We see as one of the major problems
facing the Director of Finans2_21.2t22.11.E2212.1.mprk force-
-
with a composition such that it can meet the varying needs of
the present and, as a corollary, build the broadly based talents
--------------------------------------------
essential to future nanagemeat of the Career Service, The Career
Service is now populated with
eeekeeeeeeeesum.....emeeeeeeeee.e.
with narrow skills of limited utility and the trend in the Service
emeeemeememeeweeee.
appears to be toward perpetuation of that pattern. Change will not
..e,e-efeeemeeegee.ee? eeeeee.eeeeeeeee?e,
e_nenber of persons
cone easi4 or quickly nor
t add of its own volition. What
?????????=???
is required is a deliberate and diligently pursued effort to recast
the Finance Career Service mold so as to attract personnel with
-4.111????????*11.
potential for growth and to furnish them the incentive and the
y to develop their native talents.
Recruitment
4. The Director of Finance is interested primarily in recruits
with accounting backgrounds. Almost all new Finance professional
personnel are obtained by direct recruitment and almost none through
the Support Career TrainiaLtmattl We westion whether an aecount-
e....--
bag background is essential for _many of tIlosit1ons in the Office
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of Finance. We believe that rj..e....51R-Dajjajl.b.2..pleced on
????????????????A?111^??=110?1111?1110,
dbtai5ingg 5kfiverP 4t1;t112;g-brO441Y,V4ABA-421111104.,A0
ts who may be groomed f of managexnent and le r-
ship.
tructure f the Finance Career Service
5. The Finance Career Service has a much older population
than either the rest of the Support Services or the Agency as a
whole. It has a heavy concentration of QcC11
level with an average age of 45.9 yearB.
e average age of
officers at the G$-9 to 05-,11 level is )2.2 years; thus, they will
be approaching the retirement zone closer on the heels of the
large number of 08-12's and GS-lVe. One-quarter of the present.
VP PT
Finance work force either will be expected to retire or will become
eligible for optional retirement within the next five years.
Position Reclaslifieation
6. The Director of Finance hopes to find at least partial
solutions to many of his roblems of personnel managenent through
Upgrading of....2dEmL21.1211,5ons by position reclassification.
WAN*/
Regardless of the merits of his plea for epgrading of slots, we
cannot see position reclassification as anything but a short-ranee
ummmommmew*...
iative for long-renge
ising from Finance's philosophy
,111.
personnel management.
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Rotatton
7. We encountered extensive and severe criticism of the
? Operation of the rotational scheme by the Office of Finance. The
thruet of those criticisms wee to the effect that the finance officer
is transferred just about the time he has really learned the job,
that the transfer is often on very Short notice and that the
replacement is slow in arriving. The lack of flexibility in the
t of
eer Service, vhieh is manifested in y_ielys,,
is perhaps most noticeable in the adninistration of the rotational
mechanism. The crash reqatpment which will always be with us?
disrupts the rotational pattern and Finance does not have the
o._2.-E,I.iUM.aiulloriorjailative resilience needed to bring it smoothly
back into Wasp,.
The Role o the Support Staff in Personnel Manegement
8. We question whether the Support Staff of the Office of
cc makes the sort of contribution to planning and execution
that one finds in most other Agency components. The support element
suAt be an instrument of command, but it also should have the capacity
to influence command decisions by Lansing ideas drawn from knowledge
of or experience with other ways of doing things elsewhere in the
Agency. The Director of Finance has stated that he wants to upgrade
21.222.2..21,2112.1_umortgl_____....alf. We think it is worth a try.
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Financial Transactions - Processing and Records
9. In our last survey of an Operating Division of the
Clandestine Services, we observed certain anomalies during our
_
inspections of its field stations that led us to believe there
was need for streamlining the Agency's mechanisms for financial
administration. We examined the procedural aspects of financial
operations at headqparters in this survey to see if the previously
observed complexities were unique to field financial operations or
whether they were a reflection of the operation as a whole. It
may be that the system cannot be simplified--that the cheeks and
411....64.,,eatm nner..01119,1%91,.., 9ese .
balances are essential to detect and to eliminate error. It is
our distinct impression, however, that the mechanism is error-prone
In part because of its sheer unwieldiness. The Study of the
....??????
F
Procurement Sxstema of the Central IntelltgenceAgeng, which VFW
made by aL117,..5.specialists under Agency guidance, made numerous
recommendations for improved efficiency of procurement operations.
We believe that a similar stLialoy_a_nparable group of specialists
of financial paper proces!Lai and mmemILIAliza!ld be veil worth
the cost of the study.
Processing of Travel Claims
10. We examined the problems of processing travel claims quite
closely?in part because we took with us to the survey a concern for
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this matter. The Inspector General, over the years, has been the
recipient of a number of complaints or of appeals of settlement of
claims, Which upon investigation appeared to have arisen from
defects or ambiguities in interpretation of travel entitlements.
a. We found evidence of mu
usion deal
of lost time resulting from lack of familiarity with_shauea
in travel regulations, new travel forms, and the like.
'Lwow
b. There is little unifo
thin the Agm_7_2h
payment for travel and of per diem at rates less than the
established maximums. We found reidbureements ranging from
"something out of pocket" to "all that the law will allow."
We are unable to see the rationality system that permits
?
such extremes to exist 82412.12u1.12Jithin.a_sihfle ogency.
1111.1fildidleniaiMUMNIMMWOINfalliiPM.
c. There is no single point in the 45ency to Which
technical questions on travel and tranwrtation may be directed
for an authoritative answer. The particularly troublesome
cases are those arising from provisions of Agency regulations
that may be interpreted either for or against the claimant
and which, legally, could be decided either way.
We think an answer lies in a well ordered and vigorous attack on
the whole range of problems associated with travel proceseing. We
recommend the establishi of an Agency Travel Policy Committee,
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patterned after that in the 31124Etant....2!_alnse, with broad
responsibilities and authorities in the field of travel and
transportation.
tration of the CIA Retirement and Disability Puna
11. Although the procedures during the first few years have
been rather informal, we believe that the Fund has been adequately
41??????????????...
stered and is now well invested. All estimates, however,
point to an imminent increase from the
folio to about
of over
Projected
now in the port-
-to which will be added an annual surplus
for a number of years to come. The PT 1967
timate of Fend Activity predicts a principal fund of
by 1980, and that sum may well be exceeded. The number
of annuitants and their total annual benefits may triple in the
next three or four years. These factors point up the need for a
more formal method of administering the Fund, particularly the
long-range investment program, We have recommendations toward
that end.
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INTRODUCTION
1. The last Inspector General survey of the functions now
performed by the Office of Finance was made in 1954 when the preeent
Office of Finance was part of what was then known as the Office of
the Comptroller. We ordinarily are able to judge progress in attain-
ing long-range goals by comparing findings in a current inspection
with those of the last report of survey of a component. In this
case the results of an inspection made so long- ago of a component
that is now so different are of little pertinence to our present
effort.
2. The present inspection was made by a three-man team consist
ing of two members of the Inspection Staff and the former Assistant
Deputy Director for Support who was brought back from retirement
under contract specifically to participate in this survey. Although
the last report of inspection of the finance function was of little
value to the inspection team, the inspectors found that other, more
recent reports of survey did pertain, at least in part, to the func-
tions of the Office of Finance. Principal among these is A Studzr, of
the Procurement Systems of the Central Intelligence Agency. That
report and various others were reviewed, as well as applicable regula-
tions, handbooks, and other issuances. We did not attempt to interview
all employees of the Office of Finance. We did, however, interview
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all available officers in positions of responsibility in the Office
of Finance, a representative sampling of personnel in all grades in
all Finance coomonents and any senior personnel in other offices
who are knowledgeable of the Office of Finance or of financial opera-
tions in general.
3. We did not intend that this be a survey of the finwic1l
of the agencyr an analysis of bow Une Agency spends its
rained ours
an #ifltiOfl of the role of thq,.
nen e
performance of his Office
?-?????????????????-?---
ney's financial ope tions and of the
charging its rem
and directives.
of officers outside or the Office of
4. In our mealy in
ibilities under
.Ifine____nrefundnonew_houestioned the integrity of the Agen
for aceountabili
dealings with the Monetary
of funds. All who had
sad with the Industrial Contract
Audit Division spoke well of their performance*. Everyone seems to
take for granted the work of the Compensation and Tax Division in
getting out our pay Checks. We know personally several senior officers
ilao rose through the Finance service and who now are in positions of
responsibility elsewhere in the Agency.
5, Yet, in spite of these plus fact ep we fin0 that the Office
of Finance has a generally poor image. It is looted upon as an office
that has stood still while the Agency as a whole has moved foryard.
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Many of the officers who began in Finance and have since gone on to 1
other Sas tend to view transfer more as a means of escape than as
advancement. Improving the image is a desirable goal, but it is not
an end in itself. Finance's image is an external reflection of its
.011.111MIIIIMM?Is.fflep.
1.22_,.........._______Zternalmodeoforation.eind as that mode Changes, if it does so
will the image change.
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THE ROLE OF TB] DIRECTOR OF FINANCE
. The Director of Finance does not involve himself aggressive
--------------------------------------
aimmaallalmr
in financial management issues outside the narrow field of accounting
-- in areas such as process and systems improvement, covert funding,
evaluation of current techniques, studies of coat effectiveness, and
generation of reports useful to management in program evaluatioh.
The Director of Finance himself feels that he has no charter to
analyze costs or cost effe i'enesst to,a*r the vu ity o
tures (as opposed to mere legality), or to contribute tothelTepera-
-,...........?
tion of budgets (other than that for his own office). In our view,
won10011Morintawil.dar ..4
the charter of the Director of Finance could be interpreted as granting
- _
him authority to do all of these things but is actually interpreted
.I.Nr???,???????' ....................???????????????????????????????11.
to xiy him most of those autnrities.
2. The formal promulgation in Agency regulation of the mission
of the Director of Finance states that he is "responsible for all
financial operations of the Agency." We realize that this statement
was written by the Director of Finance himself, but the fact that
it was approved for publication attests to its acceptance throughout
the Agency. In practice, however, many aspects of Aznez_finanaial
.4m1.1606.101111.,64110,
operations are within the purview of the Director of Finance only -
MM.
tangentially or not at all. We found the Director of Finance troubled
over his exclusion from matters that he felt should be of proper con-
cern to him. This feeling does not stem from a thirst for power but
from honest frustration in the face of ambiguity.
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frustration may not be of recent origin. Ambi uities
3.
in the relationship between Finance and the rest of the Agency may
have existed from the very beginning as an unavoidable consequence
of compartmentation. The evidence we have suggests rather strongly
that, regardless of the duration of the prOblem its dimensions today
differ from those of earlier years.
4. Originally, budgetary and financial operations were coribined
at vas knovn as the Office of the Comptroller, which was cUb-
ordinated to the Deputy Director for Support. Effective 1 April
1962 the MOB was relieved of responsibility for directing and
woriainating the activities of the Comptroller, 'who thereafter reported
to the Office of the Director. Effective 2 July 1962, the mission of
the Comptroller, 'which until then bad included responsibility for
financial analysis as expended to include responsibility for program
analysis. Effective 18 November 1963 there was a massive realio
ment of responsibilities for budgeting, financial operations, and
program analysis. The Otago of the Comptroller was made an integral
pert of the Office of the Executive Director, and the Executive
Director became the Agency's Comptroller. The Office of Budget
Program Analysis, and Manpower (BPA) was established, with its
Director reporting to the Executive Director-COmptrolIer. An
Office of Finance was established, with its Director reporting to
the Deputy Director for Support. aimultaneously with that reorganization
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the mission and functions of the former Office of the Comptroller
reapportioned among BP AM (budgeting and program analysis),
(automatic data proeeesing), and the Office of Finance
(financial operations, accounting gust's= and control of funds,
assets and liabilities).
5.. The present alignment of functions, which separates planning,
awing, and budgeting from financial operations, is /similar to
that found elsewhere in government and in large businesses and,
gicv.11y, places control of programs and of manpower in the hands
of persons authorized to act instead of to recommend. Yet, something
seems to be missing: the bridge between financial operations and
jarogrmL21,1ulning. The financial nanagement issues, to 'which we refer
in the first paragraph of this section, largely concern this gap,
which we will here call 'financial analysis."
6. Financial an&Lyeis once loomed large enough in the responsi-
bilities of the Comptroller to be named as one of his three main
missions. We find it listed in each revision of the statement of
niseion and functions of the Comptroller beginning in February 1958
(the earliest version we have) and continuing until March 1964. In
July 1962 program allay is vas added to the mission and was coibined
with financial snalysis. The Comptroller had immediately subordinate
to him a unit known as a Financial Analysis Staff, whieh became the
Program Analysis Staff when program analysis was added to the mission.
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MISSION
The Comptroller is responsible for all budgetary and financial operations of the Agency;
The Director of Finance is responsible for all financial operations of the Agency;
for the establishment and maintenance of accounting systems;
for the development, establishment, supervision, and maintenance of accounting systems; and
for the control of all funds, assets, and liabilities; for providing management with program
for the control of all assets and liabilities.
and financial analysis; and for the development, preparation, and execution of the Agency budget.
FUNCTIONS
The Comptroller shall: Conduct program and financial analysis; issue analytical reports
The Director of Finance shall: Conduct financial analysis
for planning purposes; and render advice
and operations.
and operations.
on the financial aspects of program plans
and render advice, as appropriate, on the financial aspects of program plans
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With the establishment of BPAM in November 1963, it absorbed the
Program Analysis Staff. Program analysis and financial analysis
thereupon disappeared from the statement of the mission of the
Director of Finance.
Financial analysis analysis remains as one of the
ennunerated functions
the Director of Finance, but we find ver:,
little of it being done. The little there is exists at the braecb
level.
7. It might be held that financial analysis is implicit ie
program analysis, but vs believe that there is a distinction and
that at least some effort has been made to maintain it. On the
facing page is a comparison of statements of mission and of one
function for the Comptroller prior to the creation of BPAM and for
%Iry
the Director of Finance thereafter. The statement pertaining to the
Comptroller is in black and to the Director of Finance in red. It
seems clear that it was intended that fieenciel
is remain 'with
the Director of Finance.
8. Other ambiguities in the role of the Director of Finance
stem from fragmentation of his stated responsibility for all
financial operations of the Agency. An example is the development,
review, and evaluation of covert funding arrangements. Before the
ent compromises of Agency funding teaelseeee covert funding vas
he responsibility of the ChtamEentral Cover Staff of the
Clandestine Services. The Director of Finance has a representative
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of his *watery Division working with Central Cover on covert
xn,a, -nraera*
but he has no charter1:21:_aL flPi__AgL!!_m ie
ay be implicit in h
.....21bISLEtatedreibils90___IIi for financial operations.
9. On the other hand, there are aspects of finan2141mEntions
for which he does have a clear Charter but in which he plaza a limited
role. An example is the liJaM4-0101242112Agation of the Director of
.ffliar.141
t of proprietor
established in
One of WA
egulation, is to "develop,
establish, and technically supervise, in cooperation with applicable-
Agency components, necessary accounting systems, financial reporting,
and funding procedures and fiscal controls. . for proprietary,
subsidy, and other special projects." There is basic disegreemmt
----
over Iaumps role of Finance's Proprietary Systensand Accomite
Division (PSAD)--whether it nia2211mrlaz_eep the books or Whether
it should have, a real Weld in financial management. We might note
that as of June 1967 PSAD had insufficient qual:ified memerto do
bare bookkeeping and accounting function.
The Proprietary Studily Group, which made its study concurrently with
this survey of the Office of Finance, looked closely at financial
=nagement of proprietaries, especially the role of service proprie
taries. We feel that the Director of Finance should be allowed to
xerciee greater influence on the financial services of all proprle-
es than he now does. The Study Group's report, which
been issued, has recommendations to that effect.
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10. Certain, in fact many, of the aMbiguities in the role of the
Director of Finance do not arise from imperfeetions in the written
statement of his mission and functions. We suspect that pert of the
difficulty lies in an uneasy adjustment to the changed mission of the
"W.
Office of Finance. Responsibilities it once had for budgeting end
for program analysis are no lost to it, yet much of the work is still
done by Finance careerists on assignment to OPPB. We have seldom
found it profitable to seek bureaucratic solutions to prdblems, but
in this case we think a bureaucratic approach may help. The Direct?
of Finance is now, and ve believe has been from the beginning, asligned
responsibilities tixe_is_nsit,mmi ted
carry out. Historically,
the statement of his mission and functions has described what he thinks
his role should be. It has not described the role as it actual4
existed. We believe it is time to rewrite the statement to reflect
e Director of Finance is really expected to do--:king it
clear to those concurring in the statement that they do so in the
understanding that the Director of Finance will be expected to exercise
the responsibilities assigned to him.
It is recommended that:
Ao. i.
The Deputy Director for Su ort cause to be issued
a revision of Agency Re3ulatiorIOganiat.on,
Office of Finance, assigning to the Director of Finance
those responsibilities and authorities agreed among the
Deputy Directors as being properly his, specifically to
include financial analysis as one of the principal ele-
ments of his mission.
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1. Management of the Office of Finance is highly centralized,
markedly conservative and quite rigid. Finance is not an office
in which change comes easily nor in which creativity is encouraGed.
This is a harsh judgment, but it is one that is sapported by our own
observations and. by the cammants of Finance employees we interviewed.
Many of our findings and conclusions set forth in sUhsequent sections
of this report are concerned with the managerial style of the office
trfli-.1111ILEITImunats. These brief examples are illustrative:
a. In fiscal year eleven leven employee suggestions were
made within the Office of Finance; Finance endorsed only one
*ma..
approval?for an award of $30. This compares with 23
suggestions made within the Office of Communications, of which
nine were a
ed for a total of $1,200 in awards; 33 mad*
within the Office of Logistics with 15 adopted for a total
of $2,860; and 11 made within the Office of Security with
?100.1110M.1?0?14Mb.,?111111
five adopted for a total of $1,255 awarded. Sug;estions for
simplified Time and Attendance procedures, for example, were
mode in 3.956 but had not yet been acted upon as of 6 July 1967,
eleven years later. The reason given in response to our query
was that "this involves a regulation change."
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b. The establishment of the Covert Tax and Allowance
Committees, the cmsTitLof commuted travel and the decen-
tralization of certifica:12222E2pedures
viewed within the ,tiralcv_12_1ga1de4 Qyt were
Iti.11:::6L2:21=111.Lbz.he Office of Finnac,
c. The Office nest administer a comylex rotational scheme
in which one-half of Finance careerists serve in 111.1.U0F3ents
.e vide_.;y
OMEN.
away from the Office of Finance. That and other personnel
"...mandmorAdOomodo...."W.". sallmoor?Mo.OPop?
matters are almost Nhoily controlled by the "front office.
The Director of Finance estimates that his deputy devotes -(5
percent of his time to personnel administration. The office
does not have a professional personnel specialist. (As ye will
note in a later section on personnel management, ,Any of the
components to which these finance officers are rotated are
quite critical of the way rotation is managed.)
2. We cannot, in fairness, say that the managerial style of
"dooridamoomoodamimodoodordosidorrodoidopoorddeorportorddiosodr000rdramos
the Office is deliberately intended to operate as it does-. It is
".1..amormslinialiNNIftwomempOWNINAMIAISMOrlega0. .0'"Adiddirldrr?o ' A-OrrrObOlOodOrr td.rdrorddIde"4-`
likely that it has evolved gradually over the years as a result of
the concentration of expertise in the hands of a very few.
dor
rOMONNOr
enior o
The
the Office of the Director have 130 years
rig them and an average age of 56 years.
They are solidly experienced in financial operations. Not unnaturally,
to stick to methods they have used and vith which they are
horoughly familiar.
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STAPflNG AND NNEL MANAGEMENT
1. The most serious of the problems aff1.1AIBLIIML=142.Pf
2.seFinantheSF......2..(FinanceCareer Service are centered in the area
2/2512nne,....21.molgamut. The Director of Finance_hopesto
lecimmatfi./1.Mtliti sOlatailla.I2.342-.2...q....112231-M2P?11"..9ner2,K81421.2W,-
JraL2a9..el.202.112E.5.22!ens f positions by position reclassifi-
cation. Regardless of the merits of his plea for upgrading of slots,
we cannot see position reclassification as anything but a short-rsaJge
palliative for lone!range ills eall,104.11 from Finance's philosophy and
,
methods of personnel managemant.
areer Service
2. The SF (Finance) Career Service has a Career Service Grade
Authorisation ofF---Ipositions, which are allocated as follows:
Office of Finance (headquarters)
The permanent manpower ceiling of the Office of Finance is
positions, and as of 15 June 1967 there werer?Ipeople assigned to
the Office. Thus, just about one-half of the personnel with 8F
Career Service designations are assigned to positions on the T/O's
of other Agency components.
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3. The SF Career Service is constituted along conventional lines
as specified in regulation
The Director of Finance is the
Head of the Service and is supported by a Career Service Board. The
Deputy Director of Finance is chairman of the Career Service Boerd,
and the voting membership corsists of the division chiefs, the ctiefs
of the Support and of the Policy and Planning Staffs, and a designee
of 0/PPB. The Administrative Officer of the Office of Finance (an SF
careerist) is a nonvoting merber providing technical advice and
assistance to the Board.
4. We often find that, tbe Career Service Board (or ---Pal.wl pr
-
COmmittee) of a component we are inspecting is not beld in very high
esteem by those who do not participate in its de
come to expect this, but we were not prepared for the fregnency nor
S'--
the intensity of criticisms made by Finance careerists of their
office's career development program. The views of these people can
not be ignored, because many of them have worked intimately with
personnel of other Career Services under circumstances that enabled
them to see at close range the workings of other career develop:lent
programs. They conclude that Finance's career development progrem is
appreciably less effective than those administered by other Career
nnen ^1.1.1wiare,am.
Services. Our own examination of the Finance career derelopment
roevwfor
program and comparison of it with other programs of which we have
knowledge leads us to the same conclusion.
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5. One of the nein sources of discontent is the promotion
vithin inance Career Service. In general, ea
considered eligible for promotion unless his grade
is lower than that of the position he occupies. This concept, whieh
is in the tradition of the old-line competitive civil service, is not
consistent with yromotion policies in most CIA Career Services.
Poeition..oriontett career planning has several ill effects. Perhaps
the most damaging Is that the flexibility essential to the career
development of the promising individual_ is hard to maintain in the
face of the rigidity of the T/0 structure. The Director of !finance
./11.111.11?10.111?4.401..-.1.4.?
in seeking to gain adt4kUmeAjleaka4Lby upward reclassification
of seleeted positions. We doubt that a long-range solution lies in
A100.1.emmor...
that direction. Even if be vera granted the higher grades he seeks,
???*mar.wasiwaw.mn
in the not too distant future the average personnel grade would again
approximate the average position grade and again a means would have
to be found for attaining flexibility.
6. One of the consequences of ?inane 's position-oriented
promotion policy is that a surprisieLnumb of everienced finance
-officerst to accept overseas aseignments. The reason
U. that the finance officer vho goes abroad to fill a position carrying
the grade he has already attained views his promotion prospects as
virtually nil while overseas- He understands that he cannot be pro-
moted as long as he occupies that position, and he cannot be shifted
to another position until he has completed his oversees tour.
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Another adverse position-oriented c
t tends to ellettee the development of specialized
skillsnical at the elense of general managerial ski] Is . The
individual sets his sights on a position that alleles margin for
promotion and then begins acqgiring or polishing the technical skills
that 'would qpalify him to carry out the duties of the position.
Once he has begun to spec )1ze, he sees simple succession in the
BAUM or a closely related specialty as the clearest avenue for
*Continued advancement. A large nu -r of _Mance careerists feer
that their service is fast becoming one of technicians with few
oortunities d_i_velwent of broad experience.
8. We are not advocathg disregard of the necessary restraints
inosed by position and grade ceilings. What we do urge is that the
man t qualified for advancement be the one who is promoted, regard-
less of the position he may occupy at the time. Other Career Services
do it, and it works. It can be argued that the Finance approach
asounies that the man best qpalified for promotion has been identified
"
in advance and has been moved to a position with headroom before he
-
ILLIue...4.4"Upozor . The flaw, as we see it, is that the WO becomes
?????rimmerani6
the master of career planning rather than its tool.
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It is re
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nded that: No. 2
The Director of Finance seek the aesistance of the
Director of Personnel:
a. in exploring with the Heads of other Agency
Career Services prevailing practices in accommodating
career development programs to the restraints of
position And grade ceilings, and
b. in adapting for use in the Finance Career
Service those techniques that will permit departure
from existing inflexibilities in the Finance career
development progran.
Reruitment and Training
9. The Office of Finance obtains almost all of its new professional
personnel through direct recruitment by the Office of Personnel. At
the time of our inquiries, the SF Career Service was o erstrength by
four, but there were 32 professional/technical applicants and ten
payroll clerks being processed for entrance on duty. Based on past
experience, it may be anticipated that few of those processed for
employment will actually enter on duty. For example, during the
period June 1966 - May 1967, only 20 of 255 applicants survived the
review process and chose to eceept employment. Forty-eight percent
of the applicants who survived file review cancelled after their
processing had been initiated.
10. The Government has recognized the tight labor market ae
rwEILEnt?ael with an interest in and qualifications for work
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4 4 4 As. 4 eft
in the finance field busteblishing a special pay scale in the
accounting series for those at the GS-5 through 05-9 level who
meet certain basic criteria. We found nmembers of the sr Carter
Service being paid at the higher 08F rates. The demand for qualified
junior finance professionals can be illustrated by comparing the OSF
pay scale with that of the regular General Schedule:
Grade GS GSF
5/1
6/1
7/1
8/1
9/1
$5,331
5,867
6,451
7,068
7,696
*6,387
6,857
7,303
7,538
8,218
U. The Director of Finance has leviedarequirement for tea
4.44?444
Support CT's forj967 "whosealEa2Leducation_and or experience 11.
intl._..___3.2_.!1......atilnansalud.saztojm basic career interest is finance.
-
those holding a degree in accounting are preferred." Experience
I ..
thus far suggests that the revirement is unlikely to be met.
Whether by design or from lack of choice, the Office of Finance
has obtained an insignificant number of its new professionals
through the Support CT Program. We found only two members of the
SF Career Service who had been through the Support CT or JOT Programs.
a. One SF careerist now assigned to the Office of
Planning, Programming and Budgeting entered the Agency through
the JOT Program.
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b, One SF careerist vas an internal selectee and returned
to the Office of Finance upon coup1etion of Junior Officer
Trioning.
c. Three other SF careersts were internal selectees and
have completed the CT Program, but none of them has yet elected
to return to duty with Finance.
d. Ten Support CT's have been assigned to the Office of
Finance, but none of them has elected to become a menber of the
SF Career Service.
e. The first five Support CT classes completed since the
spring of 1965 graduated
officers who are still Agency
employees. Fourteen of them have been assigned to specific
career services. The other
are still categorized as SD, 25X9
the career designation assigned to a Support CT until be becomes
meMber of an individual career service. There are no indica-
tions that any of these
SD career trainees intends to elect
Finance as his career service. (Nor is there any indication
that the SF Career Service is interested in any of them becoming
an SF careerist unless he has the prerequisite accounting beet-
ground.
12. The Director of Finance states that he is interested.srimaril.y
in recruitvith account backgrounds . Ws cipestion whether seciqpnt-
ing background is essential for many of the
.061PruerottiroixaMaraila**M.37,4ini....4.90.1, .1*,1112.17.,,,,10 r`,"
18-
itions in the Office of
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./.:=2.A. We believe that an interest in and an aptitude for finance
workinnadbe sufficient qualification for many of these positions.
ion on recruitment of persons with accountingbackgrounds
it the risks of hiring people who are overqualified for
the positions they will occupy for a number of years and of building
a service overpopulated with technicians. We believe that more
?
mastasis s laced on obtainiailoung officers with more
broa4l-baaed aptitudes and interests vho may be groomed for posi-
wo.~0000.0^8/kawwwirmoseets*pmeRMONSMINSIMO-.........W.....*, -""" '
tions of sianagemnt and leadershik--in other words through the
Support Career Training Program.
It is recommended that:
No. 3
The Deputy Director for Support instruct the Director3
of Finance, of Personnel, and of Training:
aE to review the requirements of the Director of
Finance for recruitment of professional employees for the
Finance Career Service, and
b. to submit to the Deputy Director for Support
for approval their joint recommendations as to meseures
necessary for the fulfillment of a significant portion
of Finance's requirements for new professional person-
nel through the mechanism of the Career Training Progran.
13 The SF Career ServI!!!!...tod record of participationin
? IIMOOV-t -
Agsnc Lining programs.- This is especially true of the external
programs. EMployees have attended the Harvard Advanced. Menagement
Program, the Industrial College of the Armed Forces, Industrial War
College lectures, and various Civil Service Commission courses. In
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fiscal year 1967 tuition was paid for two employees to attend ADE
courses and for three to attend accounting courses--all at the college
level. The Office of Finance was the pilot component for office-vide
study of the Managerial Grid.
14. Review of records reveals participation by Finance- careerists
in the following internal training courses that are not specifically
oriented toward finance work:
Mid-Career Executive Development Course: 14 have
attended since 1963.
b. Support Services Review (Trends and Highlights Course):
34 have attended since December 1966.
c. ADP Orientation: four in fiscal year 1967.
d. Senior Management Seminar: two in fiscal year 1967.
e. Introduction to Intelligence end Introduction to
Communism: 12 new professional employees have completed both
courses.
f. Clerical: a number of employees have attended short-
hand and typing classes to improve their clerical skills and
have taken the shorthand and typing qualifications tests.
15. The Office of Training offers a three-weeks' course, Field
Finance and Logistics, for finance careerista and for other employees
who are to be assigned as operations support assistants and be required
to maintain budgetary, financial, and property records at Class B or C/
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Type II or III stations. There are a variety of other courses
designed for employees who areAQ_beeseigned overseas in support
of operational activities= The Office of Finance has its own on-the-
training_projaretsforev oyeeBI and above. This train-
ing lasts for 19 weeks, with seven weeks melt in the Accounts
Division four weeks in the Monetary Division, and eight weeks in
MIIIMINMaitligtikibillial44,46.1f010.1014a.*.... +
the Certification end Liaison
INEW welita< }./k.
..scevwma
16. There is not, however, a formal training course specifically
tailored to prepare an SF careerist for assignment as finance officer
of a Class A Field Station, The assumption is made that before a
finance officer is assigned to a Class A Station he will have had
sufficient experience within the Office of Finance to qualify him
for the responsibilities of the position. Same are sent to the
to observe the operation of that model
Class A/Type I station. Prom our interviews it is apparent that many
finance officers themselves see a real tilor better organized
ve tr4.41411 ele.9419e14 k!Xed t9fFeti?ning
of a Class A station. Those vho most feel the need are officers who
have advanced through specialization in narrow fields (budget ate
fiscal work in an operating division is a specific example).
Is recozwiwiled that: No. 4
The Director of Finance, in consultation with the Director
of Training, have established, either within the Office of
Finance or the Office of Training, a scheduled or tutorial
training course designed specifically to qualify a Finance
careerist to serve as finance officer of a Class A field station.
21
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t 50 finance careerists are
sesoutside_th,s_Afeney. They
view this additional schooliag as being for the purpose of increasing
the level and scope of their professional qualifications. Many of
these *MPloyees lath whom ye spoke feel the
career planniag within
the Office of Finanee does not ape sufficient recognition to the
.Ree
initiative shown by the individwil in privately apirisg o
- ArittowiNe441..14..,o. +, - ' t
ing skills of value to Agsgy. This is not a problem that is
to the Office of Finance; we have encountered it elsewhere
461106116
. We are not aware of any workable formula by which
the worth of this privatelyiur ued education can be measured against
job performance factors. We do feel, though, that it should be taken
into account in career plann.r.
The Age and Grade Structure of the Finance Career Service
la. A senior officer of another component to which the Off ice
of Finance regularly furnishes finance officers remarked to the
inspection team that "the SF Career Service seems to be bankrupt in
Ar=
talent in the 08-9 and GS-11 categeries." Although he was speaking
of direct observation of finance personnel assigned for service with
his component, we aseumed that the remark was likei? a deliberate
overstatement made for effect. We took note of the comment, bouever, as
a point we would later attempt to confirm or refute from eimmtnntion
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of the structure of the SFCareer Service. We findt t the state-
ment has substantial ba
414111_ fact.
19. Although the average grade of incuMbents of 5F Career
Service positions is identical with the Agency average grade, the
distribution of grades within the SF Career Service differs quite
markedly from that of the Agency as a whole. The Chart on the
g2=22,Ntiyes a mment of the grade distribution of SF
_
careerists with the same segment of the distribution for the entire
cy (including Finance). To suppress the fluctuations caused
little-used OS-8 and 08-10 grades, we combined grades 8 with
9, 10 with 11 12 with 13, and 14 with 15. As can be seen, both
curves peak at 05-12/130 but Finance has a decidedly larger per-
centage of its professional employees at the 05-12/13 level and a
somewhat smaller percentage of its professionals in grades 8 through
11 than does the Agency as a whole. What this amounts to is that
Finance, in comparison with the rest of the Agency, has a "surplus
of 05-12's and -13'8 to replace and a "deficit" of 06-9's and -11's
A,frr
being brought along.
20-. Here numbers do not tell the Whole story, however. The
chart on the following page plots average age by grade for the SF
Career Service, for the Support Services, and for the ??gency. The
wie..111.011:
..t...a2.5.e.e.m.21..E.22!:=2!!!,,in each grade is higher than the
,1441V atek 141WWW46.rffr,r,r-
averages for either the Support Services or the Agency as a whole.
VarrarpowK
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What is more significant is that the disparity is moot marked in
grades 7 through 10. The average age of thoselai.m!es 12 and 13
is
__re; ts12.22,samatLIMIL jedes 9 throufh
years. Thus, not only is there a relative deficit in number of
fftmniemino
o......1ff.c.Lrsumabl/being!).2:::m..?,.m.....,..e.omed to move intojgaitions now
N ,
occupiedby 03-12's and -131s, but thmjunior-grade officers
will be approaching the retirement zone closely on the heels of
the mass of 05-12's and -13's.
**04/00.40/.........11..ANC.."4.144402/144,1?1*.kieTWAW4,1-4Ni.$ erAIL4.43
2
Retirement
21. The chart following page 23 reveals that the average age
of Finance careerists at each grade level is higher than the
averages for the Agency as a whole. The difference can be por-
trayed in another way: by age groups rather than by grade groups.
The chart on the facing page compares distributions by age groups
r NO=
for three catecattLeS2222,n2222.2.8.:L.and above: Finance Career
Services Support Servieand entire Agency. The graph shows that
,
the Finance Career Service has a much older Rcvlation than either
the Support Services or the Agency. The impact of this older
average age on retirement expectations is revealed in the follow-
ing tabulation.:
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SF Career Service Grade Authorization
CIA Retirement Participants
Eligible for retirement now
Fifty years old but do not yet meet service
requirements
Will be 50 years old within the next five years
Sub-total
etirement Participant
Will be expected to- retire within the next
,five years
Will be eligible to retire within the next
five years (55/30
SUb-total
Total
These figures show that almost precisely one-quarter of the preeeet
"S
Finance work force either will bewamted to retire or will become
t
eligible for optional retirement within the next five years. We do
not know how many of those employees becomine eligible for retire-
ment will Choose to retire at the earliest age they may without
reduction in earned aanuity. Neither does the Office of Finance.
22 Prospective retirements in the Office of Finence should be
a matter of real and immediate concern to Office management.
Kvq,, , A
believe that the Director of Finance should begin now to assesible
- "fi 07.4,10,1Vg.
and to maintain on a -continuing basis data or the retirement plans
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or nearing the zone of retirement eligibility.
is being asseMbled solely for
ng and not as a means of exerting pressure
purposes()
0
personnel to retire earlier than specified in Agency regulations,
JE212_0 ded
The Director of Finance assemble initially and nintsiri
continuing 'basis information on the retirement expecte-
of all Finance careerists vho are in or are nearing
no of eligibility for optional retirement, making it
to the emplOyees concerned that the information is
needed for orderly personnel planning and not as a means of
exerting pressure on employees to retire earlier than
expected under existIng Agency policy.
11ed sttona Caeua.s, and Transients
23. /be doubts we have as to the ability of the Director of
el.es arise in considerable part from
that we assembled during the course of
ce t
positionant or
disturbingiz_large numberof superviso
filled by persons vho_ere.,only_asting,
MO also noted that a rather large number of positions were filled
with "casuals" or "transients."
a. /he COmpeusation and Tax Division has bean headed by
an acting Chief since November 1966. The regular Chief bas
been serving as acting chief of snort for the office.
b. The Accounts Division had only fan duty against a
total of Position.
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(1) Three of the tour po5iticn1E in the Aua1
Beports Branch were vacant.
(2) Two of the six positions in the Propert
sis and
Account-
ing Branch were vacant.
0. The Certification and Liaison Diviaion was 21
understrength.
(1)
The position of Deput
ant.
(2)
vacant.
(3)
The position of Chief
There van no deputy I
25X1
25X1
Sec on.
(4)
25X1
position of Chief,
Section was vacant.
(5) The Field$tation
duty against 18 positions.
Chief.
d. Personnel from other sections of the Accounts DI i
were detailed to ass
Branch (which had an on-duty strength of one officer against a
T/0 of four).
ten on
branch
work of the Analysis and Reports
The
of
to
Division has
Lt
created by rotation of pe
We found a number of "casuals"
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working at jobs with responsibilities far below those normal for
their grades.
Position Reclassification
24. The Director of Finance maintains that a number of tht:
positions to which SF careerists are assigned carry grades that are
too low for the responsibilities of the incuMbents. he attributes
many of his problems of personnel management to what he sees as an
inequitable grade structure. There was a major reclassification of
SF positionsappro/mat.nr_tyojear! ago, but the Director of
Finance believes its effect was to create an idsalance between the
grades of finance slots at headquarters and those in the field.
The Deputy Director of Finance submitted a memorandum to the Office
of Personnel on 26 May 1967 requesting the reclassification of some
[]positions, the majority of which are at overseas stations.
25. We met with the Chief Position Management and Compensation
Division Office of Personne1122111112ELsaltsification specialists
to discuss their reactions to Financelp_xlea. It is evident that
**MOR**1*.a *
there is a fundamental disloreement betweea thernices of Personnel
and of Finance, and there appears to be little prospect of their
amproffeemes....
working out their differences.
26. We do not consider ourselves qualified on the basis of
our limited exposure to the problem to pass judgment on the merits
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of any of the arguments. We did observe a few instances of what
appear to us to be anomalies in the Finance grade structure.
a. The new professional Finance employee begins his on-
the-job training program in the Voucher Review Section
(Accounting Control Branch, Accounts Division). The section
finds it difficult to retain permanent employees because Of
the nature of the work, Which requires accuracy and attention
to detail but offers little variety. In our view, some of
the positions are unrealistically classified. _The.wollAta
essentially clerics
11.1?11111111???????Ili
....LnlyFenntArade structure resUlts
in the assignment of overly qualified personnel who soon become
bored and dissatisfied.
b. Within the Compensation and Tax Division, the normal
progression of personnel is from the Vouchered Payroll Branch
to the Confidential Funds Staff Employee Payroll Branch. The
duties of the payroll clerk in the latter branch are appreci-
ably more complicated than they are in the former; yet, payroll
clerk positions in both branches are established at the 06-5
level. The Director of Finance has requested that the basic
grade of payroll clerk in the Confidential Funds Staff
Employee Payroll Branch be raised to 08-6. It appears to us
?????????????????=0??????...........
that a case can be made for reclassification.
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hed
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.ef of Support for the Office of Fl. oe is esta12-
inance concurs
in our later recommendation that the Chief ,91,22,132a,,Jav.
otairmer.
assigned broader responsibilities and authorities in fort-
and _carrying out administrative _a0?ppsagaramakcies for
the Office, then we think itspLo.ate to raise the of
??---
the position to GS -15.
????=0????=.1111111.1811111m11......a.././......./"....!
The examples cited above should not be construed as being in support
of or in dissent from Finance's plea for broad reclassification.
They are drawn from observation of the functioning of the Office
as a whole and are offered merely as a contribution to deliberations
now under way. Although we thought it better not to Involve our-
selves deeply in a problem that is already receiving attention, we
do think it appropriate for us to concern ourselves with finding
some sort of solution with a minimum of delay. Actions to seek
solutions to too many problems of personnel. ma.?....r2aLme_nt of the SF
p_e_treer Service are beihe1L12 dt_iLez.a.uending deciskon on
revision of the grade structure. From our conversations with those
involve it apears ts_utt.n.,aLt?!Director, of Personnel and the
Director of Finance have reached impasse. We see no solution short
Ma.
of referring the disagreement to the Deputy Director for Support for
resolution.
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It is reoornendad that:
The Deputy Director for Support require to be Ga-
m:Med to him for review of and decision between the
proposal of the Director of Finance for reclassification
of certain positions in the Finance Career Service and
the objections of the Director of Personnel to that
proposal.
Rotation
27. We have earlier shown the allocation of the positions 25X0
of the Finance Career Service Grade Authorization. It is repeated
here, because we wish to discuss certain of the implications of that
allocation.
This breakdown reveals that the Finance C
Service is responsi-
ble for providing Finance careerists for 1111pos1tions outside of
the Office of Finance, and thatr?lof those external positions are
at overseas stations.
28. We made quite extensive inquiries among using components
regarding their experiences with finance specialists assigned to
finance positions outside of the Office of Finance. -lose felt that
the Office of Finance did not screen its candidates carefully enough
and that the using component had to be vary of the nominee who might
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lack the qualificatione for the job or who might be unsuitable in
some other way. In general, though, the "customers H spoke well of
the performance of Finance personnel offered to and accepted by them.
29. The criticisms we encountered of the atelnig of external
finance positions (m(1 TAIY,Yere fYSTIeet and strengly !Aged)
centered on the operation of the rotational schelmOuLAA1_9411ne_gf
---------
Finance. The thrust of these criticism was o the effect that the
finance officer is transferred just ahT.sUgmLAUELjas
learned the job that the transfer is often on ver 2 short notice
and that the replacement is slow in aulyleg. The castes that we
were able to identify and run dovnIrs_veLp114,,,ELAances of having
-ddeo
to fill unexpected vacancies on short notice. It seemed, though,
All?????????????1
that an inordinately large number of the "customers" with Whom ue
spoke have experienced disruptions of their support apparatuses as
a consequence of Finance's "emergency" shifts of Finance personnel.
30. We encountered a variation on this criticism in our inter-
view* of Finance careerists. A good marr them feel that thew
know too little abc!Llt_planning for rotational alaigaffnts involving
prticularly as tranaferoverseas, and that the little
ow is learned too late in the planning cycle. We suspect
that the bulk of these
r
cisme came from officers who had been
personally inconvenienced by short-notice transfers occasioned by
emergency personnel reqpirements, but, again, the prevalence- of the
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criticisms suggests either a weakness in the management of the
.....?????????????? ?????????????.?../............MPI??????????
rotational ch or a deficiency in communication between those
doing the career planning and those affected by
31. Slightly more than one-sixth of the Finance Career Service
positions to be filled are at overseas stations. Of the
employees assigned to the Offipe, of Flailance itself it is estimated
w`Sie
that 64 percent are not available for overseas service Within
--------
tire SF Career Service, about one-half are not rotatable to
?????=0.0/1.1=Mao?si.a.....zeranelemu-sarrea...k
overseas positions. The individual may be unavailable for rotation
for any of several reasons, including medical hold, personal cir-
cumstances, Age or grade factors, lack of qualifications, or
apecialization in a field that has no overseas application. The
percentages given above need some qualification. They do not
differentiate between professionals and clericals. The positioao
outside of the Office of Finance are preponderantly professional;
1,1.- -Joy
hence, a clerical in the Office of Finance would not be_tallie
for ro titan to most of them. In fact, the distinction between
clerical and professional cannot always be made, because the
employee who may one day be considered a professional may progrece
through a series of assignmeats in positions that are categorized
as clerical.
32. Although the figures are not susceptible to precise
interpretation they do reveal quite_2121Eay that
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e Finance
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Career Service in hezered by having to plea and to2r_astIjk
ratat onal mechanism that can draw from only a portion the
Career Service Authorizatiag, It appears to us that the rota-
tional base, although appreciably smaller than the Career Service
Authorisation, is large enough to support an orderly scheme of
rotation. We are at somewhat of a loss in trying to discover iew
it does not work better than it does. It is likely that the
imperfections are tkaregult_a_clgatiaation clf_circumstances.
a. Not all of theili!EsEtions are attributable to the
urgencies of Vietnam or Africa, although most arise from over
seas needs.
b. Because a large number of Finance personnel cannot
or at 1942.t 4? riot) se.a1.2.111rselAt_Manct-021717.01,0 9.69V
one rotational mechanism but a series of indlendent, closed-
-
44Ycls_m!tems *mpg which
1 ted iaterchlmability.
For example, the man destined for oversees assignment ideally
should first serve in the headquarters element of the parent
Operating Division to familiarize himself with the finance
operations of that division. This is not often dont. In our
last survey of an. Operating lxalon we found that none of
IlLyamlayarters Finance personnel was rotatable ,to any of its
overseas stations.
c. The reluctance of Finance careerists to accept over-
seas assignments because of the effect such assignments have
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on promotion prospect? (a subject of Which we have spoken
earlier) further shrinks an already limited rotational base.
d. The tendency toward specialization within the Office
fUrther erodes the rotational base by creating a body of
experts much in demand for technical Finance jobs but who
do not develop the broader skills required of the field
finance officer to whom the chief of station may look for
advice on any of his finance problems.
33. The list of contributing factors could be extended, but
it would only recapitulate much of what are have already said About
the consequences of the inanegerial style of the Office of Finance.
snageznent of the Career Service,
, is perhaps moot noticeable in the
administration of the ro t onal dhaniam. The craeh requirment,
Which will always be with Lit., disrupts the rotational patternand
Finance does not have the organizational or manipulative resilience
needed to bring it smoothly back into shape.
34. An additional ,complication is the loss of productivity
from the man at each end of his rotational assignment away froLl the
Office of Finance. This loss of working time further aggravates the
problems of the SF Career Service in providing personnel from a
relatively small base of qualified and rotatable employees. It is
The k of flexibility
ch is manifested
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not a problem unique to Finance, however. Other components suffer
similarly, and in most cases the loss of working time must be
absorbed by headquarters.
35. The prospects for the near future are that management of
- -???????????Milkm..a.wialainibillmealsRi
the rotational pattern will be even more difficult than it is_now.
cut in2111..mtozatLEILlizz Director of Finance ?
has chosen to abolish. his Dexplaspalagalment rather than to cut
%411?????????????.k.
positions from his Stalna_Complement. The consequence of this
?Vrmy-.---nolhaftr.ilhO
ijettol t.?.2.1s,m, even more pEonounced lack of flexi-
bility in person
the
The concept f
;MmelOpme t
r?.94n.M.TI
that the Staffing
lament,
te.1...at2us.f.:Zi.s.?..,...?......relativeRLIvdsition, cannot easily assmo
date a work force that is A Development CoMplement
is not a substitute for long-range planning of personnel assignments,
but it does provide a Nosy of moving personnel laterally without a
perpetual rejuggling of position assignments. We do not sv that
,1.1.11.....e.itt.iitale...to manage rotation of personnel without a Development
Complement, but we view the'Dervelopment_ (si7lemen t as something
b13 more than an administrative convenience. Without it,
in Finance seems destined to become even more
wture of the T/0 than it now is.
36. We see as one of the major prat
cing the Director of
Finoncs the need to create s work orce 'with a coEit ion such that
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it can met the varying the itreeerit
build the brtsdaztated. nuptial to future management of
the Career Service. The Career Service is now populated with an
unduly large number of persons with narrow skills of limited
utility, and the trend in the Service appears to be toward perpetua-
tion of that pattern. Change will not come easily or quickly nor,
we might add, of its own volition. What is required le a deliberate
and a diligently-pursued effort to recast the Finance Career Service
mold so as to attract personnel with potential for growth and to
furnish them the incentive and the opportunity to develop their
native talents. Only in this way can the rotational base be
expanded sufficiently to permit the Director of Finance to meet
any reasonable need that may be levied upon him.
s recommended that: No.
The Director of Finance prepare and submit to the
Deputy Director for Support for approval a phased program
for broadening the rotational base of the Finance Career
Service over the next five years, for providing flexi-
bility to meet contingency requirements, and for ensuring
orderly planning and control of the rotational cycle.
7/
We think it appropriate to add the additional comment that it may
be possible to devise and to administer such a program in the
absence of a Development Complement, but if that mechanism is
abolished, some other means of providing flexibility must be found
as a substitute.
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Re.eveluationa of CustQdians of Funds
37 Since July 1964 whenever an officer is selected for
designation as principal custodian of funds at a Class A station
or in the Monetary Division of the Office of Finance he is
re-evaluated as to his suitability for such responsibility. The
Offices of Security, Medical Set-vices, and Personnel jointly
conduct these re-evaluations and records of the results are main-
tained in the Special Activities Staff of the Office of Personne?
38. The bulk of our installations abroad are not designated
as Class A stations. At the Claes B and Class C stations the thief
of station is the official custodian of funds, but he rarely is
the person who is physically in charge of the funds, who disburses
them, and who maintains the station's financial records. This
usukrky falls to the lot of the administrative officer, the admin-
istrative assistant, or a secretary. The station's admlnistrative
officer, if it has One, may be a Support Services careerist; but
usually the finance job at the smaller station is handled by a
Clandestine Services careerist. Nominations of these personnel
for overseas assignment are reviewed by the Overseas Candidate
Review Panel, the composition of which is essentially the same as
the panel that re-evaluates personnel for assignments as custodiaze
of funds at Class A stations. The Overseas Panel, however, in
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evaluating information relating to suitability for overseas
rt-
ment, ordinarily doea not know' that the candidate will have reseonsi-
bility for handling funds--except as the likelihood that the
individual will have that duty my be inferred from the job title.
39. We believe that offices nominating employees for Merl
assignment thould be required to identify to the Overseas Candidate
Review Panel those whose duties will include functioning as a station
finance officer. Available information, whith might not support a
recommendation Against overseas assignment, might well be evalunted
as indicating the undesirability of Charging the individual with
control of funds. Further, me often find in our inspections of
overseas stations that the person Who handles finance in addition
to other duties is poorly qualified for the finance aspect of the
job, either by experience or by training?especially the latter. We
believe that a determination that the candidate either had already
received adequate finance training or was scheduled for it is within
the Charter of the Overseas Candidate Review Panel.
t is recoimnde that:
No. 3
The Deputy Director for Support instruct the Director
of Personnel to explore with the Deputy Director for Plant
the feasibility of establishing, within the existing frame-
work of the Overseas Candidate Review Panel, a mechanism for
rerneraluating the suitability of personnel nominated for
essignment to duty as finance officer at a Class B or Class
C station?to include a determination that the candidate is
or will be properly trained in finance procedures.
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Personnelf in
40, The S
f of the Office of Finance has a TIO of
Flpositions. I-12r the slots are allocated to the Registry
Unit and the other compose What we would term the actual
are designated
E1114S5As.29
support element of the office.
as clerical positions. Etlall
fall" at the time of eur
inspection and one of thosemiLME.2914.?tion of Records Administra-
511ser. The Support Staff Xe
rative officer, an SF careerist. She has been
in the
13, has the 522.12.2.1.1.2...21"2.4.--,:1zeta the
job done with a minimum of wasted motion.
41. All of the Support Staff positions carry an SF ervice
411????=samr -wttctss
designation on the POnition Control Register, and at the time of
our inspection all of the inmesIE_Tare.,SF samaists7 The
position of chief, 09-14, was temporarily filled (for a period
of several months) by one of the division chiefs on detail. The
Support Career Service was to provide an officer for assignment hiS
Chief of Support, and we learned while this report was being written
that the nominee had been accepted and had moved into the job.
42. /his is a quite small support element for an office as
411004.0.41i4.0040?,44ffic01411161.VS b3,-, t,'AIS.to
large as Finance, especially in view of the complexities of
eer Service in which half of the personnel are
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on rotational assignments away from the parent office. Although
mo000.00m*
comparatively small, the staff is probably large enough (if all
positions were filled) to carry out the responsibilities given it.
In most respects the support ob appears to be handled extremely
well.
43. We question, though, whether the Support Staff of the
Office of Finance makes the sort of contribution to planning and
execution that one finds in most other!Fency components. The
support element must be an instrument of command but it also
should have the capacity to influence command decisions by infusing
ideas drawn fron
Z or experience with other ways of
*1141M*0410611110011.001bgambil0010*-40 4,4
elsewhere in the Agency. The Director of Finance has
*****0000f
stated that be wants to upgrade the role of his Support Staff.
We think it is worth a try.
44. We also believe that. the Director of Finance should carry
,
the revamping or his Support Staff one step further by establishing
a position for a personnel officer and by having an experienced0****90411000.00 .*.r *a t ,
personnel specialist assigned to it. The complexities of administer-
tug the wite large and rotat Finance Career Service ampyjustify
the assignment of a full-tims_mttinel officer.
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omAended tha
The Director of Finance:
No. 9
a. Assign to his Chief of Support reaponilbility,
sect to review and concurrence by the Deputy Director
of Finance, for planning and administering the rota-
tional program of the Finance Career Service and for
supervising those other aspects of personnel manage-
ment that are commonly delegated to a chief of support.
b. Establish the position of Personnel Officer
within the Office of Finance.
c. Bequest the Director of Personnel to furnish
a personnel specialist to fill the position.
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SE CRIET
MANAIGEMENT
1. The Office of Pinanee is the repository for the Agen
financial records. The accunulation of these records over a period
f several years
holdi of almost
site. The
_wable
sent jtroblem is of serious
to the Office of Fixwuce, but it is a problem that is not
Finance's to solve.
2. Government financial records may be destroyed only %Inn
authorization by the General Accounting Office (GAO), and such
destruction authorization is given only after GAO has audited the
records. For years prior to 1960, Finance had a destruction plan
that permitted the schedWed destruction of records that were no
longer required for current operations. The last GAO audit was
made in 1960; hence, there is no authorization to destroy records
that have accumulated since 1960.
3. The General Counsel is working with the newly. inted
Comptroller General to develop a destruction plan and is hopeful
that, with the assistance of the Chairmen of our Cftgressional
Counittees, an approved schedule of destruction can be established.
Until that is done, Finance has no alternative but to live with its
unwieldy mass of records holdings.
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In our Last s
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an Operating Division of the
Clandestine Services, we observed certain anomalies during our
inspections of its field stations that led us to believe there
was need for streamlining the Agency's mechanisms for financial
administration. At one station for example, which had a full.
......????????????????????????..
is finance officer with clerical wi.tnp antIyragI only
t to discover that
Ilmtur.Aix vouchers uer day1 it took
1.1...1.111.1.61.111??????.ii T.0111.1110.
0 At another station with two full-
tine finance officers
auditor rerfted that overall controls
?
at the stations were generally adequate, but he than went on to
401/.........ePa.???????????puNIR .0.1C00?111...tew.
make 17 recommendations for correcting 21 identified failures to
3/with"blistatinarteiales? 2M4.122S1MAlaaa
that acnethi is wrong with the eYe.tem or with the people admir
tering it.
2. We emmainwl the procedural aspects of financial operations
at headquarters in this survey to see if the previously-Observed
conlexitiee were unique to field financial operations or whether
they were a reflection of the operation as a whole. The procedures
we find in use at headquarters are essentially as follows:
Authorization
The transaction (travel, purchase, operation, or other)
be sutherimedm-either orally or in writing. If in
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vriting, as Is usually the caste, the authorization must be
typed in multiple copies, signed, logged, retention copies
filed, and the remainder routed.
Advance
/f an advance of funds is authorized, that authorisation
must go through the same steps.
Cbligation
An essential accounting step is the establif3bment
of an obligation on the records of the component to which
the transaction is to be Charged.
Performance
The authorized traasaction is performed and often requires
the keeping of detailed records to support the claim for pay-
ment.
Claim
The person performing the transaction abmit hie claim
for payment in writing. Again this must be typed, signed,
logged,filed in part, and routed?again in multiple copies.
Approval
The claim for perriient must be approved, often by the
officer authorizing the transaction, and again requiring
signature.
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The claim is then reviewed by an auditor, either in the
Office ot Finance or in a component to 'which reviewing
authority hoe been delegated. Review involves checking the
claim against the original authorisation for the trans-
action. If purchase of goods or services is the basis of
the claim, a check muat be made to insure that they have
been received as ordered. Another signature is required.
CertifteWat
The claim is then certified for payment by a certifying
officer, involving another signature and more logging, filing,
and routing.
Payment
The papers then go to Monet
disbursing officers for payment.
check or if a bank deposit is required, there is additiona1
typing, signing, logging, filing, and routing required.
vision or to one of its
laim is paid by
Review
The voucher then goes to the Accounts Division
it
is reviewed for accuracy and completeness.
Recording
The payment is then recorded in the general ledger accounts.
It may be broken down among several accounts and find its way
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into a number of cost centers and into reports of various kinds
under the system of processing now followed.
Filing
Record copies of documents related to the transaction are
filed in the Office of Finance Registry.
Post Audit
Records may be post audited by the Audit Staff, depending
upon the type of audit being conducted.
Storage
Records ultimately go
Where they are stored and guarded for up to 12 ye
eases they may be retained even longer.
Destruction
Records are finally destroyed under appropriate authoriza-
tions. Records of destruction are typed, signed, logged, and
filed.
If in the course of these approvals, reviews, audits, etc. an error
is found or an element in a transaction is questioned, the papers
are returned to the proper point in the sequence for revision and
for repeat routing through the balance of the chain. Frequently
these questioned transactions can be clarified only by the writing
of memorandums, telephone calls, or holding, meetings. We have no
In some
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good figures on the volume of such defective transactions blLt 'we
were given estimates ranging from a Lox of 10 percent to a high of
20 percent.
3. The Chief of Finance's Accounts Division reports that his
division processed 94,200 vouchers in FY '66. A voucher may repre-
sent a single transaction or it may cover dozens of accountings of
a Class A field station. An average of two claims to a voucher is
probably a reasonable estimate. At an average of *25 per claim in
processing costs, which is also probably a reasonable estimate, we
are speaking in terms of something like *4.7 million as the annual
cost of doing the paperwork involved in paying the claim proceaaed
through the Office of Finance.
4. This seems to us a very high premium to pay for ins *ace
410.011.1MMOMMIPAIWPairtral. -,441.0141,^10..0.11411.411.,
21.skt_latgam of claina_processing. the estimates onjer-
.. ? 1r -Or 11,411.......P.
eentage of error are close to actual experience factors, then it
would seem that we have a mmehantsm too complex for operation by
those engaged in administering it. It aay be that the system caa-
fteaca,......34.410.1541:,44011141,10001144.40814,..m.-1 nomx-r.,. ?
not be simplified--that the checks and balances are essential to
detect and to eliminate error. It is our distinct impression, how-
-
ever, that the mechanism is error-prone in pert because of its sneer
? .141%14?16,,V4MH r 0M,.." ??.??????
unwieldiness. The Study of the Procurement Systems of the Central
=MM. ,m????????
Inte1lience Agency, which was made by a firm of specialists under
Agency guidance, made numerous recommendations for improved efficiency
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of procurenent operations. We believe that a similar study by
group of comparable specialists of financial paper processing and
record keeping would be well worth the cost of the study.
It is reccended that:
N
The Deputy Director for Support hire on a one-time
contract basis a systems expert or experts qualified to
make a time, motion, and systems-improvement study on
the processing of financial transactions and the keeping
of financial records within the Agency.
49
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departure, the Director of Finance should consider combining func-
tions that are now distributed among small, difficult-to-keep-
staffed units. The reconstitution of the Financial Analysis Staff
with responsibility for both analysis and liaison seems to us a
good way of accomplishing this.
It is recoddthat.: No. 11
Ttes Director of Finance re-establish the former
Financial Analysis Staff of the Office of the Comptroller
by merging the various analytical operations now being
performed in the Office of Finance, combining them with
the liaison function, and charging the Financial Analysis
Staff with responsibility for devising and pursuing an ef-
fective financial analysis program.
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INDUSTRIAL CONTRACT AUDIT
1. The purposes of industrial contract audit are to assure
that a contractor is financially responsible and able to perform
the vox* that his accounting system and records are adequate;
and that his charges to the Agency are fair, reasonable, and in
accordance '4th government procurement regulations. The principal
user of the services of Finance's Industrial Contract Audit Division
(ICAD) is the Procurement Division of the Office of Logistice.
2. The Study of the Procurement. Systems of the Central
generelly sound; however, the report recommended that an indus-
trial2mg_neass1_112!_..02LIo ICAD to insure oper cost analyses
especially of hours of labor and of material costs. The report
also noted that contracting officers could override ICAD10
MI11~0111?1110.
mendetiel.:!1hout proper sign off" and that ICAD vas "experienc
unnecessary misunderstandings with some contractors concerning
I!,121222EItE.ILLierfor!....,p2at *nate of Firm Fixed Price contracts."
3. At the time of this survey of the Office of Finance, 'we
found lOAD preparing to implement the recommendation that a team
approach be used in negotiating contracts --consisting of a tech -
er ?
sentative of the 1,101M/L9M91.1,111a C.9,4rtet1:Piofficer
from the Office of Logistics, and an auditor from
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to one or more
DD/S&T components, to the TechnicalnpeLpirl..sionofthl
Clantestine Service t1:141te.41049P11,1 It* phic Interpretation
Canter, and to the Offiee of Commmaications. This seems to us a
sound approach although we recognize that a number of problems
rein to be worked out before thIleamconcept actually in
Wii.4401.4tlelAT, Aiz ; Y.546
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PIOCESSING OP TRATL CLAIMS
1. We examined the probl
eeesirg t
1 clet,ievs
closely. The Inspector General, over the years, has been
the recipient of a nuMber of complaints or of appeals of settle-
ment of claim, vbieh upon investigation appeared to have arisen
from defects or alibiguities in interpretation of travel entitle-
ments. Our concern vas intellsified when we discovered the costn
of processing routine claime and the eometimes phenomenal costs
of settling those that deviate from the ordinary. We found, to
that this subject is far too broad
it with
.
Zy in the framework of an inspection of the Office of
11 limit ourselves here to a
lens that are in need of attention and
WiftsikeragookiiilliffOrIPOSII.11?4..01.142.
_!)proposhecrffft_ion of a methanism to examine them in minute
detail end to arrive at ...21.29241rs?
2. A staff study made by the Office of Finance in 1962 con-
cluded that some although not all, of the processing of travel
claims could be handled centrally with a net gain in efficiency.
The result was the establishment in 1964 of the Central Travel
Breath of Finance's Certification and Liaison Division. Central
Travel Branch currently provides advice and assistance to travelers
returning from overseas; assists in finding answers to difficult
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questions relating to preparation of travel claims; audits and
certifies vouchers relating to travel, transportation, and storage
of effects; handles and accounts for government travel request
forms; processes carrier billings; and handles a number of other
matter*: relating to travel. During the l2iinth period. ending
31 March 1967, Central TraveLmmat.2yEA2i900 transaetiply
of which about 20,750 were claims for travel, transportation gild
.010.1414fr...110?00...W*MIN.
storage of effects.
3. Central Travel Breach processes only part of the travel
claims generated, within theAge9s We were unable to find any
4,4,
relidble statistics on the total number of claims handled by the
_?. ?
Agency per year, but we think it likely that Central Travel Is
its estimate that there are at least as many bandied ou
Central Travel as hare are handled by Central Travel.
as many many people involved in the pro
-
1 claims outside of Central Travel Branch as there
n Central Travel?and perhaps a good maAy more. The
Central Travel Branch cognizance include:
Invitee travel is handled by the Central Pro esaJe
Drench of the Office of Personnel.
gmunoweauggillimendMINKOSINIMMINIMMIaa"Ma
b. OSA handles travel of all o
c. llenents of the Clandestine Services both at head-
quarters and in the fiellaralsvel iTalvir.ng
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PCS staff travel to the field and all travel of staff agents
Ind of non-staff Clandestine Services personnel.
Central Travel Branch estimates that the average cost of administer-
.,
travel transaction, from preparing the travel order to paying
a claim is $25 to $30--and this is in addition to the amount of the
claim itself. If the settlement is contested by the traveler, the
processing costs can mount to hundreds or even thousands of dollars
on a single claim. Thus, if there are some 40,000 transactions a
year, ve are speaking in terms of processing costs on the order of
ammerviiieWiwiati
Nomirnimaan
$1 to l.2 million pr year. In the following paragraphs we
ennumerate and briefly discuss what we see as the main problem
areas in travel processing.
Travel Regulations and Handbooks
Agency regulations are the basic medium for prescribing
directives of a continuing nature; they prescribe policy, _establish
on, delegate authority, and assign responsibilities.
.14,00111,1110,1111141n5.11?4
Mosey handbooks supplement regulations by providing tt?..gsWard.
procedures necessary to effect Agency nollsi&s. The Agen
regulatory issuance on travel, I seems to fit neither
cate-
gory. It goes far beyond the mere prescription of policy and
stops well short of providing detailed guidance on the procedural
aspects of travel. We once had a true handbook on travell
iell0.00600.111
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was rescinded in 1958. Nothing has since appeared to tilte
no
sion.
ly concerned with draft -
-,....i.roacmoirgemwmar AiniSt
5. Sloping our regulatory issuances on travel current is
0.40itt*oraws,4?.
cult in the face of frequently-Changing government policies on which
? ' '
they are based. Even acknowledging this difficulty, aur internal
mechanism for establishing and prcoulgating policies and procedures
on topical subjects such as travel moves very slowly. For example!
a. PUblic Law 89-516, which was approved oa 21 July
966 amended the Administrative Expenses Act of 1946 as
regards travel and transportation expenses of civilian
officers and employees.
b. The Director of the Bureau of the Budget, under
authority delegated to him by the President, issued Circular
Ed. ?46 on 12 October 1966 revising regulations then in
effect. The "applicability" paragraph of the circular
specifies that these regulations shall not apply to offi-
cers and employees transferred in accordance with the
provisions of the Central Intelligence Agency Act of 1949,
as amended.
e. The Agency on 15 March 1967 pUshed
a 25X1
notice that expires on 1 April 1968. The notice states that
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dt.
Lifcludes a list of"spectaldetermiztiom"
.11.1.0.1011?Nooktamagoamoreo.......
made for applying the provisions of the Circular "pending
publication of a revision of Part I of Attachment 3 to
.4446*ftamarrii.utekatialleNg.40.A0440.0.410%.44%taite4, 4 4i, 044 k .4100.&41..... .4(4a
The 'bile/ and Planning Staff of the Office of Finance is
maiwooggolnf - -ammopm,,,
responsible for drafting the necessary revisions of the
regulations but is Imetlreillgszellerable difficulty it
?
coordinating and Obtaining concurrences of various interested
74-110,004/041.. -.14,
Caa.....irltillUiLthidOeenAaMOIR051.10MintelelP?11,84ge8.
t note that the Inspector General has already received con-
Uinta of denial of entitlements that are like&ytpbe included in
.16.04010iliett.10,4016010019~0/16A7004 ,mt**-.40** ***
62.tleat9122."
6. We reviewed a memorandum forwarded from the Chief, Central
the Chi
**,
Policy and Planning Staff, on 11 January
id*******3**47046011.0m*S4i,*** ? * .***Mal*Nilit
ts subject was "Proposed Changes to Agency Travel Regulations .P
reportedly at the request of the Deputy
4016401/0014/10Cat. 41. At, 4-.1.. h0110.4.. .
Director of Finance, to summarize defects in or omissions from
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be collected now requires the personal sign-off of the NAM,
Director for Support.
d. There is vrtuali nothing in the regulation on the
use of and accounting for government travel requests.
a. There appears to be a regulatory void on approving
continuing advances (so-called revolving accounts) for travel.
This once was covered in regulation, and probably adequately,
but it disappeared in 1964 and has never been replaced.
f. The reporting of leave while in travel status bas
been troublesome for years (and the source of much ill feeling
.ftragoo"rnmalurmsorm.........."1".""""""waimar. xi.m.orr....ww-rAvuelown. -
on the part of travelers). The Chief, Central Travel Branch
reports that he now has a written directive from the Director
of Finance on this sUbject, but it is for his own guidance
and has not yet been incorporated into a procedural issuance.
tive Decisions on tions Concerning Travel
T. ?bars is no single point in the Agency to which techa
u.962.SteeL_on ravel _and tranuortItlonmay, be directed for 021
answer. Many of these questions are directed to
Central Travel branch, but its findings are only advisory. The
findings may be appealed (and often are) to a variety of officials
in hopes of reversal. We find appeals having been made to the
SSA the General Counsel, the Director of Personnel,
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Dire o for Support, the Inspector General, and the Executive
ller. Many of these claims involve very small
but mey cost hundreds or thousands of dr:07*es in
tine before th.1=-11,.11.rttled. There are
ntinue .o be claire in vhieh a specific voucher is
ed IS the vehicle for establishing a general principle, but
there is no central point designated as the repository of these
decisions of principle. In its absence, there viii continue to
be appeals, and reappeals on matters already authoritatively decided
in a claim involving some other eomponent.
8. The particularly troublesome cases are those arising from
s of Agency regulations that may be interpreted either
.A6
for or against the claimant and vhich, legally, could be decided
either vv. Even a patently unreasonable claim ie often difficult
to disprove?and to make the proof stick. These are a few of the
many examples that could be cited of claims that have tied us in
knots because of the leek of an effective mechanism for adjudicat-
ing them.
a. A claim by involving about $500 and
one by involving $283.05 post thousands
of dollars in time and in cable and dispatch costs before final
decisions were reached.
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b. Two cases
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travel from the Far East by way of E,
1nvo1ving return 25X1
have been under
appeal and review for months end are still unresolved.
c. A claim for approximately $100 by a senior employee
for per diem while attending a Civil Service school at
College Park, Maryland, in November 1566 hOlt cost the Agency
several tines that amount in reviewing it, has required
decisions from the General Accounting Office, and was finally
settled after about ten months.
Some of the claims we examined, particularly the last one cited,
of doubtful validity. The point is that the employees
4FAERNIMPRIMMONmasmor.l~prOpi-o,#.4,r4offa...A. - virmwellOPRIVAAt
valid, and there is no formally established
4.44404444441044414:4444.4ftwomor4r-mt.,4"110r.$4..,,,,-4444444 4-4,444.404,44,40,4444. 44 4
to which the employee may be directed to turn for authorita-
4"4",*
ice and on which the Agency may rely for arriving at final
9. The repatmexit of Defense h
c
such a ma &anima in its
L..444,44,
t ee, From what we can learn of the working%s
ee, i-_Lwar.L.t..c.U_5L:e1_ite.elaati.y.ee. We reviewed
an employee suggestion that such a conmittee be established within
CIA. The suggestion was not accepted. The turndown, which was
dated 10 May 1966 appears to us not very responsive to the basic
problens raised.
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in for Travel ani. Per Dien
10. There is little uniformity within the Agency on pernnt
for travel and of per diem at rates less than the established
maximums. These are some examples:
a. The Chief, FE Division, isa4 a written in
applicable to all Agency travelers* oni2ms,Aper d1em_rst4-4
limiting it to $9 less 35 _percent for
jaarters furnished. Central Travel Branch tried to hold all
personnel visiting that installation to the established rate.
It succeeded until a senior officer of the Office of Finance
*era. ? "-.,./11t
claimed a $16 per diem. The Director of Finance chose to
interpret the FE directive as applying only to employees clf
FE Division and approved his officer's claim for the bib?r
1,0*
rate.
b. The
of the Support Staff, Office of Training/
issued a memorandum dated 20 April 1967 stating that "the rate
for a round trip by POV between headquarters and
06.00." Again this has been interpreted as applying only
OIR personnel. Eaployees of other Agency components visiting
paid at varying rates: as approved by their
parent components.
c. A meeting was recently held at the
for briefings on new communications el nt.
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R.presentattvea of ell directorates attended. Each directo-
rate reimbursed its employees at a different rate than the
rates of the other three directorates--thisdespite the fact
that all representatives traveled to the same point spent
the same amount of time there, ate the same meals, and shared
similar tuartera.
d. In a recent inspection of the overseas stations
an Operating Division of the Clandestine Services we found
mileage being paid at rates ranging from a low of 60 to a
high of 120 at stations among which there was little difference
in the costs of operating a vehicle.
The approvals illustrated in the above examples allowed reiWburse-
manta ranging from little out of pocket to "all that the law
will allow." We are unable to see the rationality in a system
that permits sUth extremes to exist side by sda within a single
agency.
ions Concerning Travel Processing
U. We taw evidence of much confusion and a great deal of lost
-emalidmr?rm????????????1110.... ^
time resulting from lack of familiarity with changes In travel regu-
tions. new travel forms and the like. This is understandable in
010.1100?alds' 411.1.41,
VAVIIMV,V. --,9,,M.!Zik-Itt.,4^1,40,1,741 -as
f detailed guidance in regulatory issuances. We
considered suggesting that the Office of Training be instructed to
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offer a
SZCRIST
e on travel, which could be kept up to date
_.......a.ror.1.0219,4011111111111111=
periodic refresher courses. We abandoned that line when we learned
that the course once offered on Travel Procedures was discontinued
a couple of years ago because of a dearth of students.
12. What is the answer then? We think it lies in a well
ordered and vigorous attack on the whole range of problems amid-
,morreasariarsiorramineilinimissw?wromiwerwiPme
.111101..110ellM1.18611,12.841.111.- PRAPPWIP.Mq???????. ?
elated with travel processing. There have been sporadic attempts
at improving efficiency, and some of them have been quite success-
ful. The establishment of Central Travel Branch is a good exaleple.
Another is the resort to eomautedtravel, although this still Is
applicable in only a few areas. We believe it would be possible
Illaammommenvon.......eviummoso?gP
to extend commuted rates to cover most travel. The Office of Pinance
Valmiaasausiii1111.1.MIIIIIIIIN11~~0.0?0?11111111MIROKIMIPPle!.
boas tried to find more efficient ways of processing vouchers. One
ventsre involved auditing only. statistical movie of vouchers
It was found that this Approach was more expensive in
senior auditor and supervisory time than auditing all vouchers.
13. We discuss*with 0/W3 the merits of a
present travel process
oeedures and of an organized sttLor
the feasibility of broadening the applicability of commuted travel.
OMB representatives stated their belief that the dimensions of
the problem are such as to indicate the desirability of such studies.
The press of other more urgent business has precluded 0 takiug
.6104410tabWiturie.49mr-ra,. ^ .11.151,..16.7.11717174XZWAMPINAIV74.1110i4:4,48l,-7,7,7,..
th.1.%9E.. We believe that such studies are Fast d
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problems we encounter travel processing are chronic, and they
are unlikely to be eliminated or even reduced substantially by our
present slow-moving epparatua.
14. There exists in Central Travel Branch a amen nucleus
.1111"..-wawaMommiftediMmormemWOOMPilk...ftornw"Mot,441wm.,10,....1,p,,w,,AggNio,..444U4,4-__a_-,4,4,4wWvV,
of technical experts who have literally made study of travel
,
practices their major career pursuit.
ider them entirely
t to maks the studies proposed in the preeediag paragraph
and to provide the technical input essential to the effective
Weretion of a travel policy committee, which we are convinced
tgpospor--*
the Agency needs.
It is recozruended that:
No. 1.2
The Deputy Director for Support prepare and submit
to the Executive Director-Coeptroller for approval a
proposal for the establishment of a CIA Travel Policy
Committee, to which should be assigned responsibility
for:
a. ensuring that Agency travel regulations and
practices are in accordance with applicable lees and
with the implementations and interpretations thereof;
b. rea4zing Agency practices with respect to
travel with a view toward improving efficiency,
reducing coats, and eliminating inequities in
mpplication ofregulations;
e. providing authoritative guidance, both to the
claimant and to those processing the claim, on questions
pertaining to travel; end
d. adjudicating disputed claims.
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10. On the basis of these figures, after paying out 71.
m Ilion to ennuitents, the fund will still have an invested
principal of $76.6 million and FY 1960 will be the first year
in which this principal will have to be drawn upon to meet
expenses. These estimates are, of course, sUbject to maw
vsrtattons but it does appear reesonab4 certain that for the
next several years the fund vill have excess money to invest
and a long-range investment program should be established.
11. The present system for investing excess funds is for the
Chief of the Compensation and Tax Division to notify Monetary
Division that funds are available for investment after providing
any necessary reserve for annuity payments and expenses. Monetary
Division looks up the current over-the-counter prices of eligible
securities and selects those with the moet attractive yields. Not
having an actuarial projection of future fund regeiremente they
are not in a position to make firm recommendations as to specific
maturity dates but do try to distribute their maturities over
fairly broad range. These selections are discussed with their
Treasury Advisor, a cleared contact in the Investment Branch of
the Treasury Department to whom the Secretary of the Treasury hes
delegated his responsibility under P.L. 88-643 for approving all
investments made by the fund. With the advisor's concurrence, an
investment recomaendation or a list of reaymmended issues to choose
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from is forwarded to the Director of Finance for his epproval. The
approved purchase order is then forwarded to Treasury, Which executes
the order in the over-the-counter market and delivers the securities
to the Federal Reserve Bank of New York for safekeeping.
12. TO assure the prompt reinvestment of the interest
received on the fund's investments, arrangements have been made
with Treasury to automatically re-invest all such interest on
the day it is received in Treasury. The Director of Finance ban
delegated to Monetary Division the responsibility for selecting
the Treasury issue to be purchased after consultation with their
Treasury Advisor and for entering the purchase order with Treasury
in advance of the receipt of funds.
13. An Office of Finance Instruction prescribing proceduren
for administration of the fund has been in preparation for several
months but was not yet out for coordination at the time of our
inspection. We reviewed an early draft and found that the pro-
cedures proposed for processing investment transactions approximated
the system outlined above. Even though the existing system may be
very close to that which is eventually approved, we believe it
important that the procedures be formalized in an agreed and
approved written instruction at the earliest possible date.
Regarding the future requirements of the fund and the optimum
investment program, the following section, from PL 88-643 is pertinent:
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"Sec. 261. The Director shall prepare the estimates
of the annual appropriations required to be made to the
fund, and shall cause to be made actuarial valuations of the
fund at intervals of five years, or oftener if deemed
necessary by him."
14. In June 1965 the Secretary of the Treasury, in reapone
to a request from the Director of Central Intelligence, agreed to
nake available to the Agency the services of Mk. Cedric W. Kroll,
Government Actuary, who has been providing actuarial service for
the Foreign Service Retirement and Disability Fund for several
years. We have discussed with Mr. Kroll the present status of
our fund and the need for an actuarial valuation. He believes
that we can assume that the actuarial experience of our fund will
be so close to that of the Foreign Service Retirement and Disability
Fund that vs could apply their actuarial rates to our participating
personnel and develop a useful projection of the expected annuity
demands. The Director of Personnel states that his office can
provide the necessary statistics regarding ages, grades, salaries,
years of service, and age of dependents for all participating
personnel, both active and retired. As required by Sec. 261
quoted above, an actuarial valuation will have to be made before
October 1969, and we believe the projection of annuity requiremm
suggested by Mk. Kroll would be worth making at this time.
15. As regards a long-range investment program for the fund,
the above-mentioned projection will provide some guidelines as to
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which bond issues should be purchased for the fund during the next
several years during which receipts can be expected to exceed pay-
ments by rather vide margins. At Mt. Kroll's suggestion we dis-
cussed this problem with his superior, Mr. Edward P. Snyder,
Director of the Office of Debt Analysis. Mr. Solder suggested
that, rather than purchase various issues of outstanding govern-
ment bonds in the open market we should look into the possibility
of arranging for a "Special Issue" for our fund.
16. Mr. Snyder said that a Special Issue can be arranged by
administrative agreement, without legislation, and for all prat
tical purposes is an interestbearing account on Treasury's boo
1tEiame of our fund. All "purchasee" are at par; interest
is calculated from the date Treasury receives the funds; and with-
&evils can be node at per as needed. Interest is paid at a
negotiated rate based on the amounts involved and the length of
time they are expected to remain with Treasury. The Foreign
Service R Is D Fund has a Special Issue for its investments.
17. Such an arrangement would greatly simplify the account-
ing and investment problems of our fund; however, we understand
that at the time PL 86.643 was being drafted the question of a
Special Issue was considered and rejected because of the neee4p 7
for publicly identifying the Agency as the holder of the issue and
for disclosing the purpose for which it was created. We believe
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that this question should be re-examined to see if sore secure
arrangement can be worked out to enable us to Obtain a Special
Issue for our fund.
le. Since it will take sane time to obtain the actuarial
veivatinn suggested above, the present eystem of investing will
have to be continued. However, we suggest that Chief, Compensation
and Tax Division, establish a definite level (say $2,0,000) at
which funds in excess of foreseeable requirements will be auto-
matically started through the Investment process. According to
the Projected Estimate of Fund Activity, there will be no require-
ment for the withdrawal of any invested funds until 1980. It
would therefore seem prudent for Monetary Division to consider
only issues naturing after that date.
19. At some future date we might find it possible to turn
.1.11111.1M/1....11111????????????????????????-ry?????????11.
Administration of this fund over to the Civil Service Commission.
legislation and nany security problems would
have to be solved,but the Government would certainly save money
and we would be relieved of accounting, investing, and ming of
annuities to former employees and their survivors. The CSC has
at present something over 700,000 annuitants on it* rolls, and
the tranefer of our fund would be an insignificant addition to
its workload. For cover purposes, we are now using Civil Service
forma (envelopes letterheads, etc..) for communicating with our
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annuitants, The FBI has a special law for certain of its retirees,
and these cases are handled through the CSC system. The goal would
be to retain the benefits of our Retirement Act but to let the CSC
do the bookkeeping for us. We are not prepared to: recommend so
radical a step so early in our experience with the program, but
we do think it an idea that should be kept in mind. It should be
noted that a Presidential Committee has recommendol that all
0.1Ir
government retirement systems ultimately be merged, and Legislative
Counsel informs us that when our bill was being drafted we were
to egree that vs
of retirement systems
Va.."
20. Although the proc
riFSP.Oemet?MlnimaRmammr.
go along with any such future merger
first few years
have been rather informal, we believe that the fund has been
d and is now well invested. However, all
woww...4
our estimates point an imminent increase from the $20 million
now in the portfolio to Shout $36 million?to which will be added
an annual surplus of over $5 m13 On for a nuMber of years to
? The FY 1967 Projected Estimate of Fund Activity predicts
a principal fund of $77 million by 1960, and that sum may well be
exceeded. The number of annuitants and their total amnia benefits
may triple in the next three or four years. These factors point
up the need for a more formal method of administering the fund,
particularly the long-range investment program. In the section
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of this report devoted to Information Processing Systems we
have a recommendation for the establishment of a single computer
system for control of the statistics needed for administration of
the fund. The following recommendations are submitted not in
criticsm of past or present performance but in anticipation of the
needs of the future,
co t:
or of Finance:
a. Direct the Chief, Coensation and Tax
Division, to initiate investment action whenever
surplus funds exceed $250,000.
b. Upedite the issuance of the Office of
Finance Instruction prescribing procedures for
administration of the fund.
No. 13-t
c. Arrange for an actuarial valuation of the
fund with the advice and assistance of Mr. Cedric W.
Kroll of the Department of Treasury.
d. Investigate the feasibility of making secure
arrangements with the Department of Treasury for a
Special Issue for the CIA fund and report his find-
ings and recommendations to the executive Director-
Cemptr011er.
a. Prepare an interim investment program for
the guidance of Mbnotary Division based on the Fiscal
Year 1967 15-2rear Projection of Fund Activity.
f. Prepare a lonerange investment program
based upon the actuarial valuation recommended in
c. above.
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INFORMATION PROcEsSINGSYSTEM3
1. A report of survey of the Office of Finance :ould be
complete without mention of the applications of automatic
data processing to financial operations. This is not a propitious
time however, to inquire in any depth into the extent and appro-
priateness of programs to computerize financial operatione--nor,
for that matter, do we consider ourselves qualified to do so. The
Support Information Processing Staff (SIPS) is working on an inte-
grated system that will process and supply data on money, manpcower,
and material of interest to the Offices of Finance, Logistics,
Personnel, Training, and Security. The SIPS effort will require
many man-years of research; development of user specifications;
coordination, analysis, and programming; and development of special
equipuent. The goal is to have the Integrated Information Processing
System in operation by about 1970 or soon thereafter.
2. The Integrated Information Processing System will replace
many of the hand-record systema now in operation. Data on property,
obligations, advances, retirement, credit anion matters, insurance,
and perhaps several steps in travel, audit, and certification pro-
cesses will be handled by computers. It is now envisioned that the
system will include a data bank at headquarters which field stations
may query electronicelly, thus eliminating many hand records and.
manually-performed functions of field finance officers.
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3. From our admi edIy limited knowledge of the extent of
computer operations elsewhere in government, we have the impression
that CIA has been slow in exploiting the full potett1al of computers.
We et that one of the main impediments to more rapid prove!s
has been the endless squabbling over Who should control what in the
computer field. If this is so, then we regret to report that the
outlook is not mndla improved. There is still =eh squabbling iv
the form of finger-pointing and name-calling.
a. SIPS is criticized on the grounds that it is;
(1) Moving too slowly toward its eventual goal.
(2) Failing to seek the expert outside advice it
needs.
(3) Organizing a historical data bank rather than a
forward-looking management information system.*
(4) Concentrating on its goal of an integrated gystem
in operation in the early 1970's to the exclusion
of the needs of the Office of Finance for immedi-
ate"patches" on present systems.
Failing to meet the needs for immediate improvement
in data on costs of operations in tioutheast Asia.
(5)
*Nanagement information syatem" is a stock phrase widely in
use among those interested in the business applications of computers.
The phrase is loosely used and is subject to varying interpretations.
We have not had defined for us the kinds of data needed as inputs to
such a system, how the system would be composed, and the types of out-
puts that would be useful to management decision.
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b. The Office of Pinanca is criticised fOr fi1ing to
provide, within reasonable time limits, information on %mei
specifications and on other proposals being considered for .,he
Integrated Information Processing System.
c. The Office of Computer Services is critized for:
(1) Inaecuracies in reports it produces.
(2) Failures to meet reports production deadlines.
(3)
Obsession with the scientific uses of computers
at the expense of needed business applications.
4. There is some validity in all of these complaints: SIPS
441100.44.10.041.11.eas..
is moving alowly; Finance is slaw in making its contributions to the
,
integrated system; OCS is late in completing Finance reports and
they sometimes are inaccurate; Fr Division is hampered by lack of
updated costs on operations in Southeast Asia. The Office of F:inence
.........114.11???????????
does 'continue to do manually many things that could be couputer-
unnipulated.
5. We doubt, though, that things are as bed as they have been
averit...,
pictured to us. The only Finance operation that appeared to us to
be potentially in trouble beeause of lack of computerization is the
handling of records of annuitants under the CIA Retirement and Disability
Fund. The subsidiary records on the
xerticipents in the CIA 25X1
retirement system are now kept on computers from data supplied by
the Office of Personnel. The records on annuitants and survivors
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under the CIA system are kept marrinlly in the Office of Finance,
and the monthly checks are prepared individually. With only 119
annuitanto and survivors on the rolls, two Finance employees can
do the job by hand. As the number of annuitants rises, perhaps to
the statutory ceiling of Boo by 1974, continued manual administra-
tion of the records of annuitants vould require a sisesible increase
in the Fund staff. We believe that now is the time to combine the
records on participants and on annuitants into a single computer
system capable of serving the needs of both Personnel and Finan
recoend
No. 14
The Deputy Director for Support instruct the Directors
of Finance and of Personnel to devise, with the advice and
assistance of the Support Information Processing Staff, a
single computer program capable of providing all of the
statistical information needed for administratial of
participants in and annuitants of the CIA retirement
system.
a2
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