STATEMENT BY W. E. COLBY DIRECTOR OF CENTRAL INTELLIGENCE BEFORE HOUSE OF REPRESENTATIVES SELECT COMMITTEE ON INTELLIGENCE AUGUST 6, 1975

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 01484911
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 29
• Document Creation Date: December 28, 2022
• Document Release Date: August 7, 2017
• Case Number: F-2007-00094
• Publication Date: August 6, 1975

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Office of the Assistant to the Director
=(b)(3)
(Advance for Release on Delivery Scheduled for 10:00 a.m., EDT, on
Wednesday, August 6, 1975)
Statement
by
W. E. Colby
Director of Central Intelligence
before
House of Representatives
Select Committee on Intelligence
August 6, 1975
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Mr. Chairman:
At your request, I am here today to discuss the Central
Intelligence Agency itself, with particular emphasis on its budget
and financial procedures. The Agency, of course, rests on the
statutes passed by the Congress in the National Security Act of
1947 and the Central Intelligence Agency Act of 1949.1
The National Security Act of 1947 established the National Security
Council and, under it, the Central Intelligence Agency. The Agency's
mission was described, under the direction of the National Security
Council, in the following terms: to advise the Council; to make
recommendations for the coordination of the intelligence activities of the
departments and agencies; correlation, evaluation, and dissemination of
intelligence; performance ot services of common concern centrally; and,
in what was deliberately a broad grant of authority, the performance of
"such other functions and duties related to intelligence affecting the
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There have been certain other specific statutes covering CIA, such
as the CIA Retirement Act of 1964 and, of course, the amendment to
the Foreign Assistance Act passed in December 19(4, with respect to
CIA activities other than intelligence gathering. In an amendment to
the Law Enforcement Assistance Act passed in 1973, specific provision
was made that the Central Intelligence Agency not participate in any
LEAA assistance to local law enforcement bodies in the United States.
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national security as the National Security Council may from time to
time direct." The Act specifically provided that the Agency have no
police, subpoena or law enforcement powers or internal security functions.
The departments and other agencies of the Government, however, would
continue to collect, evaluate, correlate and disseminate departmental
intelligence, which should be open to the inspection of the Director of
the CIA.
CIA was conceived as a central agency drawing upon the other members
of the Intelligence Community, but having a unique capability to perform
certain of the missions expected. Its predecessor, the Office of Strategic
Services during World War II, was the model upon which it developed,
and it included intelligence collection, intelligence analysis, intelligence
production, and covert activities in the political and paramilitary fields.
The techniques of secret operations and on many occasions the specific
individuals and organizations with whom such operations must be
conducted are the same as those which provide secret intelligence. In
the earliest years of CiA, there was an attempt to conduct these in a
separate organizational compartment from the other work of CIA, but
General Walter B. Smith found that this produced friction, duplication
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and inefficiency, so he merged the functions of collection with these
other "functions and duties."
Mr. Chairman, this chart outlines the organization of CIA. I
believe most of the titles are self-explanatory. You will note that the
two staffs that support the Director's Community responsibilities are
separate from the rest of CIA. There is obviously a great deal of contact
and information flowing from CIA to these staffs, but they are separate
entities. In particular, we have made an effort to include within these
community-oriented staffs representatives of the other agencies in the
Intelligence Community.
The major work of the CIA is carried out in the four main Direc-
torates. I will be discussing their work with you in great detail in
executive session, including the numbers of personnel and the specific
programs. In line with my comments on Monday, I believe it
important that these matters be discussed in public session in broad
and general terms in order to give public awareness of our activities.
In order, their main functions are the analysis and production of finished
intelligence, the work of the Directorate of Intelligence; the conduct of our
clandestine overseas operations and the supporting structures necessary in
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the United States, in the Directorate of Operations; a special Directorate of
Science and Technology which combines the analysis of foreign information
in these important fields with research and development of new technical
systems for acquiring or analyzing information; and the last, the Directorate
of Administration, with the normal administrative services of communications,
personnel, finance, logistics, etc. Many of these "normal" aspects of
administration, of course, need to be done in somewhat special ways in
support of the clandestine operations and requirements of this Agency.
Mr. Chairman, this chart outlines the various functions carried
out in CIA. Intelligence is by far our major function these days, and
you can see that it is broken down into the collection of the types of
information noted, the processing of this information both technically
and intellectually by our corps of analysts, and the final production of
finished intelligence, i.e., the product which goes to the customer.
Whereas most of our final product does depend upon classified sources
and consequently is classified, we have made an eftort to publish in
unclassified form such material as we could. I have with me today
a collection of various of our unclassified publications for your inspection
and possible interest. These formal publications, and the much larger
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number of classified ones which I will show you separately, are supple-
mented by the briefings we provide within the Executive Branch and
to a number of the Committees of the Congress. In these briefings,
we do not discuss the details of our operations or the specifics of our
sources, but we do use the most sensitive intelligence in order to draw
together all information available to the United States Government on
some foreign question. This was the original concept of central intelli-
gence, and it has worked with great effectiveness in practice. it
means, however, that when you examine one oi our publications, and
especially our unclassified publications, the information therein also
depends upon the other military and civilian agencies contributing to
our total knowledge. It would be misleading to indicate that the intelli-
gence result available to us depended only on the investment made in
the CIA itself. The management functions of CIA are those normal to
any large organization, supplemented by CIA's and my role in the
Community as a whole. CIA also carries out centrally certain services
of common concern to the Community where it is more efficient to conduct
these under one roof than to establish duplicative organizations in each
member agency.
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The covert action mission has been mentioned betore, ot course.
Mr. Chairman, CIA was heavily engaged in this activity during
the days of massive confrontation of the 1950's and the period of
counterinsurgency in the 1960's. In recent years, however, the
change in the world situation has been such that CiA's activities in
this field have dropped to a very low percentage of our eftorts. I do
believe it important, however, Mr. Chairman, that the United States
retain this potential, as I could easily envisage further changes in the
world situation which could once again make it important that our
Government be able to help some group in a foreign land struggling
against a hostile or extremist group there, which could threaten the
satety and well being of tne United States; for example, through terrorism
or even nuclear proliteration.. I believe it important that our Government
in such cases have, as I have stated betore, some option between a
diplomatic protest and sending the Marines.
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Mr. Chairman, the CIA has been the target of a veritable torrent
of sensational charges. This is not solely a recent phenomenon, although
it certainly has enormously increased in these past few months. The
Rockefeller Commission examined one of these areas, i.e., whether the
CIA was engaged in a "massive illegal domestic intelligence operation."
I would respectfully refer you to page 10 of that Report for its overall
conclusions. The Commission stated that: "A detailed analysis of the
facts has convinced the Commission that the great majority of the CIA's
domestic activities comply with its statutory authority. Nevertheless,
over the 28 years of its history, the CIA has engaged in some activities
that should be criticized and not permitted to happen again." The
Commission said that some of these activities were initiated or ordered by
Presidents, either directly or indirectly, some fell within doubtful areas,
and some were plainly unlawful. The Commission noted that the Agency's
own recent actions have gone far to terminate the activities upon which its
investigation was focused.
I think this conclusion fairly states the true situation with respect
to the Agency. It has indeed 'done some things over its history that it
should not have done and that under current guidelines it will not repeat.
Mr. Chairman, in a community the size of CIA, I believe it highly
likely that a number of wrong things would be done over 28 years.
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When one adds the enormous challenges given to CIA, the climate
of opinion of the country during past periods, and the secrecy within
which CIA's activities must be conducted, I believe that the instances of
wrongful action were truly few and far between, both in the domestic
field and in the other areas of charges. That they were not more is
due, I believe, to the fundamental integrity and loyalty to American
principles of the employees of CIA over these years. These employees
have worked with little or no applause and under a great number of sensa-
tional attacks; they have worked in danger, on intellectually difficult
problems, and at the leading edge of technology. CIA personnel have
invented new ways of obtaining intelligence. They have boldly and
independently challenged interpretations of foreign events and weapon
systems by other departments. They have conceived and executed many
quiet, modest and effective actions in support of U.S. policy throughout
the globe. They are proud of their contribution to their country, they
seek anonymity rather than public appreciation, but they deserve the
country's thanks rather than the abuse they are receiving today. I
believe your investigation, Mr. Chairman, will satisfy you that this is
so and that CIA's positive accomplishments have been obtained with
great efficiency from modest investments. I would be disingenuous to
say that I welcome this process, but I do say that under our Constitution,
we will work constructively with you to show both the good and the bad.
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CIA BUDGET POLICIES AND PROCEDURES
The CIA has duties, responsibilities and authorities that differ in a
number of ways from other US Government agencies, Mr. Chairman, and
our financial procedures for dealing with the outside world are unusual.
But however unconventional and secret our activities may be, we are
very conventional in our internal budgetary practices and our financial
controls. I think you will find that many of the details I am about to
give you could as well describe any other Federal agency or department--
although I am inclined to believe that we may be somewhat more
conscientious about money matters than the average.
Our CIA budget system closely parallels that of all parts of the
Federal Government. For any one fiscal year, planning, budgeting,
approvals, appropriations and execution extend over a three-year
period. At any particular moment, we are therefore dealing with the
current year, the upcoming Budget Year, and the subsequent Program
Year. Our programs are developed internally, examined by OMB,
submitted to the President for his decisions, and then submitted to
Congress, where they are reviewed (and often cut) by the designated
subcommittees of the Appropriations Committees in both House and Senate.
PROGRAM PREPARATION
The budget cycle in CIA begins in January with the issuance by the
Comptroller of the Program Call, calling for estimates of resources
to be required during the fiscal year beginning 18 months hence
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and operating plans for the fiscal year beginning 6 months hence.
When the new fiscal year goes into effect, these lead times
will extend to 21 and 9 months respectively. In January 1975, for example,
a call was issued for program plans for fiscal year 1977 and operating plans
(based on the previously-prepared program plan) for fiscal year 1976.
The Program Call goes from the Comptroller to the Deputy Directors.
They distribute it to subordinate echelons with such supplementary guidance
and instructions as they deem appropriate and establish schedules for the
submission of data to allow time for their review and for compilation of an
aggregate presentation to be submitted to the Comptroller. During February,
March, and April program managers revise their previous estimates for the
fiscal year about to begin and develop preliminary estimates for the fiscal
year following, on the basis of discussions with other interested Agency
components and Community elements. Entries into the computer data base
are made during this time by components throughout the Agency. The
computers produce printouts which array the data for the current year
and the next two years for review. I have with me two Agency documents
that will give you some insight into the processes involved. One is a
training manual, which deals with a fictitious office, that explains budget
preparation. The other describes the computerized financial resources
system.
Computer programs are submitted in May to the Deputy Directors,
who review the requests of their subordinate units and conducts "hearings"
with program managers to validate the estimates. This permits each
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Deputy Director to develop an aggregate program which he can support
and defend. After this review process has been completed, the computer
data base is revised to reflect the Deputy Director's decisions. The
aggregate program for the Directorate is compiled and submitted to the
Comptroller early in June for the Program Review.
PROGRAM REVIEW
The smallest unit in our computerized accounting system is the FAN
(financial analysis number) account. There currently are about 2,100
FAN accounts, established to insure availability of planning and control
data for management. For in-depth analysis by upper-level management,
however, we look not at FAN accounts but at the next higher level of
aggregation--Resource Packages, which currently number about 275.
The Resource Package is the central element of the internal CIA
resource allocation system. Each Resource Package is a unit of
activity to which resources are assigned for the achievement of a particular
purpose or set of integrally related purposes. A Resource Package may be
an organizational element, an operational activity, a project, a function or a
group of related functions. It is chosen so as to give us the most meaningful
way of examining the package, its activities, and its resource requirements.
For the Program Review, components provide a brief summary descrip-
tion of each Resource Package, followed by descriptions of major activities
within the package, identification of major products and services, and
major consumers. Each package submission also includes an evaluation of
the accomplishment of each activity in the package through the previous year.
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Evaluations are required to relate accomplishments to objectives and, to
the extent practical, to the resources assigned. Disappointments, failures,
or shortfalls and corrective actions taken or to be taken are described, as
well as notable successes achieved. Reasons for year to year differences
are spelled out, and any resource implications for the future which will
follow from program decisions are identified.
The computerized accounting system arrays the financial data on all
Resource Packages and summarizes it in three different ways:
-- Organizationally. By Office, Division or Staff and by the
four Directorates which are our major subelements
-- Functionally. By the nature of the activity--for example,
clandestine collection, overt collection, information processing,
production of finished intelligence, and communications.
-- and by "object classes" similar to those used throughout
the Government to designate salaries, fringe benefits, travel,
utilities, and so forth.
The Comptroller reviews the personnel positions and dollars requested
for each Resource Package, considering the functions performed and projected
in relation to past performance and to relative importance as a part of the
� broader Directorate and Agency programs. The Agency program is then
compiled as a package-by-package summary that includes both the positions,
and dollars requested by the components and the positions and dollars
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recommended for each package by the Comptroller. The Comptroller often
recommends position and dollar levels lower than requested by the Directorates.
The composite program is in book form that this year runs to 201 legal-sized
pages including both statistical data and textual treatment of the problems
and issues for the two years under discussion. In mid-July, it is presented
to the Management Committee which is made up of the Deputy Directors and the
heads of Independent Offices reporting directly to me.
The Management Committee reviews and discusses the issues with me,
often debating the recommendations of the Comptroller. The Deputy Directors
justify and defend their original requests or agree to adjust them in light of
overall requirements. Within a day or two after this meeting, I meet with
the Comptroller and his staff for a detailed review of the resources requested
and recommended. Final decisions are reached during this review and
become the Directorate "marks" for the fiscal years under consideration,
in the current case FY 1976 and 1977.
The Comptroller immediately prepares a financial guidance letter
from me to each of the Deputy Directors. These letters establish the program
levels for funds and positions within which the Directorates must operate
during the operating year and make plans for the budget year. Usually
the appropriation for the operating year and OMB guidance for the program
year will not have been received before these letters are issued and the
instructions have to be qualified accordingly. The obligation rate for the
operating year is controlled by the continuing resolution passed by the
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Congress until the appropriation has been received, while the levels estab-
lished in the financial guidance memorandums are used as the basis for
preparation of the OMB budget.
In addition to establishing position and fund levels, the financial
guidance letters place restrictions upon the authority of the Deputy Directors
to reprogram between approved programs; identify certain key programs
representing major investments or activities in which I have a particular
interest; require supplemental reporting on certain specifically described
types of actions; and assign responsibility and due dates for the review
and study of organizational or substantive issues. They also contain a
paragraph requiring that I be notified in advance of any planned endeavors
that carry a significant risk of embarrassment to the Government in general
or the Agency in particular. The latter provision was first spelled out in
�this memorandum, drafted by me when I was Executive-Director, which
also details a number of the other general conditions that govern program
execution. It replaced an earlier system of levels of approval determined
by the amount involved, as in many cases a $5 thousand expenditure could
be more dangerous than a routine $5 million one.
During August the components revise the computer data base and the
supporting narrative as necessary to incorporate the newly-made decisions
into the development of budget estimates for the next year. These are
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submitted early in September to the Comptroller, who compiles the Agency
budget request for submission to OMB by 1 October. The OMB examiner
reviews the Agency budget, selecting issues for further examination.
During late October and November he conducts detailed hearings on each
selected issue with the operating officials of the responsible components.
He can and does ask for and receive detailed information on any aspects of
our activity which interest him. He then makes his recommendations to his
own chain of command, and the review and decision process proceeds through
OMB to the President and thence to Congress in the course of the year.
THE OPERATING YEAR
While budgets and program plans for the future are being
prepared and reviewed, we are of course also executing a budget
already presented to Congress. Each month, the computer system
produces reports which show the status of obligations to date and
provide projections to year end based on that experience. These
reports are reviewed by the Comptroller; after the first quarter
of the fiscal year has passed and some trends have been established,
the Comptroller and his staff meet monthly with the Deputy Directors
and the Director of Finance.' At these meetings, the overall status
of obligations is compared with pre-planned rates, reasons for
unexpected deviations are examined, and potential shortages and
surpluses in individual components are identified and discussed.
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Throughout the year, new requirements develop--because of
a change in world conditions, a new technological development, or
a change elsewhere in the US Government such as the passage of
new legislation affecting the rules under which Federal Departments
and Agencies conduct their programs. Legislative requirements
are clearly obligatory; last year, for example, the resource system
had to adjust to a limit on travel expenditures that was imposed
and subsequently lifted and to the new demands of the Freedom of
Information Act. Some world events also present us with unanticipated
financial requirements that are nondiscretionary--for example, the
turn of events in Southeast Asia last spring. Other new require-
ments are examined in terms of their consistency with the Agency's
charter, their desirability, their priority in competition with other
demands, and their urgency. Those which emerge from the examina-
tion as the most worthy of immediate consideration on all counts
are then looked at in the light of funds that can be made available within
the limits of existing policy guidance from the White House and our Congressional
oversight committees.
As I am sure you can appreciate, the CIA has somewhat more need for
financial flexibility than the average Government agency. We are confronted
from time to time with requirements or opportunities of great urgency; if we
are offered a document of tremendous intelligence value, we cannot tell the
seller to return next year when we have had an opportunity to budget for it.
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And we cannot ask the Congress to vote a supplemental appropriation
without attracting exactly the sort of unwelcome attention from abroad
that we are anxious to avoid. We can sometimes cover relatively small
requirements by curtailing expenditures on other, lower priority
activities. But our budgets are tightly drawn and leave us relatively
little room for maneuver. Thus arrangements have been in existence
for many years with OMB and the Appropriations Committees of the
Congress to permit us to obtain additional funds for purposes approved
at the appropriate policy levels when we believe additional money is
necessary and OMB concurs. These are, of course, funds appropriated
in accordance with law, and our oversight committees are kept informed
on a current basis of all transactions from them.
After each monthly Comptroller's meeting, the Comptroller advises
me of the current status of our financial accounts, his recommendations for
funding urgent new needs, and the concurring or differing opinions of the
four Deputies. I make the final decision on any large sum of money, and
that decision is conveyed to the Comptroller and the Deputies and reflected
in the financial accounting system.
Our need for financial flexibility is, of course, a reflection of our
need for program flexibility. We cannot simply adhere to a rigid plan
when the world around us is changing, but neither can we permit
ourselves to simply react to events without frequently taking an overall
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look at ourselves. Each Directorate therefore conducts program reviews
during the year, in which each Deputy sits down with his subordinates
and discusses progress to that time and plans for the remainder of the
year. The timing of these reviews varies--the Operations Directorate
and the Intelligence Directorate have semi-annual reviews, the Science
and Technology Directorate follows a quarterly schedule, and the
Administration Directorate has its conclave every two months. I am
kept informed of all significant developments and proposed changes in
approved plans.
CONTRACTING AND PROCUREMENT
A substantial share of the Agency's budget goes for procurement.
The normal procurement authorities pertaining to the Agency are the
Federal Property and Administrative Services Act of 1949. In addition,
the CIA Act of 1949 authorizes the expenditure of funds without regard
to law and regulation for objects of a confidential, extraordinary or
emergency nature, subject only to personal certification by me. As
indicated in the Headquarters regulation I have here, which we have
declassified for this occasion, the accounting procedures within the
Agency for our confidential funds are every bit as rigid as those for
what we call "vouchered" funds The distinction lies entirely in the
fact that I am authorized by law not to provide the detailed certifying
documents to authorities outside CIA for our confidential expenditures.
And you will note, if you read the regulation, that it imposes on every
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Agency employee a responsibility for bringing any instance which appears
to involve possible misuse of funds to the attention of either his own chain
of command or the Inspector General.
A number of management controls have been established within the
Agency to insure that our contracting is carried out according to the intent
of Congress. Briefly these are:
-- Publication of procurement regulations and handbooks to
be followed by our contracting and technical personnel
in effecting procurements.
-- The establishment of technical requirements and review
boards both at the office and directorate levels to review
proposed procurements.
-- Establishment of an Agency Contract Review Board to
examine the total procurement process prior to the contract
award of all major procurements.
Examination and audit of industrial contractors' proposals
and cost records to insure reasonable prices and protection
of Agency funds.
-- Management audit and review of the entire Agency procure-
ment process by the Inspector General's Audit Staff.
Responsibility for production and services procurements, Federal
Supply Schedule items and purchase orders is centralized in the Procure-
ment Division in the Office of Logistics. For research and development
procurements, the Director of Logistics has established a decentralized
procurement system consisting of contracting teams serving each Directorate.
A Procurement Management Staff functions as the overall point of coordination
for the creation and maintenance of uniform policies and procedures; the
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chief of this staff serves as the Agency representative on various governmental
committees concerned with procurement such as the Commission on Government
Procurement and the Executive Subcommittee of the Committee on Government
Patent Policy.
The Agency is authorized to undertake procurements by formal
advertising or by negotiation. Negotiation has normally been the most
practicable method, given the nature of our business. We therefore place
great emphasis on source selection procedures, emphasizing competition
as much as practicable. Our list of qualified sources currently includes
more than 2,200 contractors beyond those dealing in GSA Federal Supply
Schedule items. In the last couple of years, over half our funded procurement
actions and about 30 percent of the total dollars obligated were on a competitive
basis. Our contracts conform to all the legal requirements of the Armed
Services Procurement Regulations. Contractor audits, carried out by the
Commercial Systems Audit Division, apply the standards of the Defense
Contract Audit Agency, with which we maintain direct liaison. If you
want additional detail on our contracting procedures, you will find it in
this paper, which was prepared a year ago in response to a question from
a Member of Congress. I also have the specific guidelines for procurement
of automatic data processing equipment, supplies and services used by the
Office of Logistics here if you would like to take a look at them. And, as
further examples of our conformity to regular Government practice
wherever possible, I also brought along copies of a couple of Agency
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statements from the Federal Register on our procedures for implementation
of the National Environmental Policy Act and some of our Headquarters
regulations dealing with personnel matters. We are equally careful to
conform to all Government rules and regulations when we carry out
procurement actions on behalf of other Government agencies under the
provisions of the Economy Act.
PROPRIETARIES
There is yet another area of our financial activities that has attracted
some recent public attention and has been the subject of considerable
misinterpretation. I refer to apparently commercial entities that are in
reality controlled by the Agency--entities we call proprietaries. Such
companies provide cover and support for clandestine activities and enable
us to carry out administrative tasks discreetly.
Operating proprietaries are formed, operated, and eventually
liquidated according to specific regulations and under close control by
high Agency officials. All projects must be approved by the appropriate
Deputy Director, and projects of special import also come to me for a
further okay. For each project an administrative plan is required, which
must have the concurrence of several of our highest Agency officials,
including the General Counsel and the Director of Finance. These projects
are subject to annual review and evaluation as part of our regular budgetary
process. All expenditures and reimbursements must be approved by the
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senior operating and finance officers, and regular audits are performed
by our audit groups.
A very few of our former proprietaries, such as Radio Free Europe
and Air America, have been fairly large entities. However, the vast
majority have been and are small, usually having fewer than ten employees.
They are, of course, different from conventional business activity, in
that their very purpose is concealment of Agency people or activities.
They engage in activities of limited economic significance, purposely
providing little or no competition with private enterprise. They must
nevertheless appear to conform to normal business practice and to have
the normal business accounts, contracts, etc. When they own property
or assets, appropriate secret trust agreements provide that the ultimate
legal ownership remains with CIA. Proprietaries comply with all applicable
Federal and State financial laws and regulations, including payment of
proper taxes and fees and conformance with licensing and other legal
commercial requirements.
Proprietaries use revenues to offset operating costs, but most
have been unprofitable, requiring continued support through our regular
budgetary process. Only two proprietaries ever made significant profits.
One was Air America, now being disposed of, which provided cover and
otherwise supported our efforts in Southeast Asia Its net assets are
being turned in to the Treasury. The other, remaining, is a financial
enterprise which enables the Agency to administer certain sensitive
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trusts, annuities, escrows and insurance arrangements without attribution
to the Agency. It enables us to insure with a controlled company some of
our activities we could not expose to regular insurance companies. It
enables us to pay annuities to individuals whose links with the US
Government must remain secret. In both of these cases, in the past,
profits were retained for use by the proprietary companies. By 1973,
accumulated profits amounted to a considerable sum, so what was excess
to likely requirements was reported to the Appropriations and Armed
Services Committees and used to reduce the amount appropriated. Our
General Counsel has ruled that this did not constitute the full appropriations
process, however, so this procedure has been abandoned and subsequent
profits have been and will be delivered to the Treasury.
I foresee a continuing need to use the proprietary mechanism to
further accomplishment of Agency operations. In the past nine years,
however, we have reduced the number of proprietaries by about 50 percent,
and they will be limited to those situations where they are the only, or
clearly the best, approach.
FINANCIAL PROCEDURES AND CONTROLS
To complete the picture of our internal mechanisms for handling
financial transactions, I must touch briefly on the activities of the Office
of Finance, the Audit Staff and the General Counsel. It is the Director of
Finance rather than the Comptroller who is responsible for most aspects
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of financial administration. We do not handle money loosely. We may
procure the particular kind of currency we need in somewhat unorthodox
ways and deliver it in the "little black bag" so popular among fiction
writers, but expenditures for even the most sensitive operations are
backed up by an array of receipts, vouchers, certificates, etc. A key
element of the Agency system for financial administration is the require-
ment that proper authority must exist for every transaction. Each
transaction is subject to review and approval by an "Approving Officer";
in addition, all claims and vouchers for payment and all accounting for
advances must be certified as correct, in accordance with Agency
regulations and in conformance with applicable Federal and State laws,
by an authorized Finance Certifying Officer independently appointed by
the Director of Finance. Finance is responsible for the accounting system
which reflects the status, use, and accountability for all funds, property,
and other assets entrusted to the Agency. This system is consistent with the
principles and standards prescribed by the Comptroller General. Finance
also handles all payrolling and disbursing functions, purchases foreign
currencies and audits contracts with commercial firms.
Financial and selected program reviews of Agency components and
activities are conducted by the Audit Staff, which is organizationally part
of the Office of the Inspector General but reports directly to me rather
than to the IG Made up largely of people hired from outside the Agency,
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one-third of whom are Certified Public Accountants, the Audit Staff conducts
annual reviews of all major activities at CIA headquarters and in the field.
Smaller activities are audited on a two- or three-year cycle. The audits
are conducted in conformance with policy guidelines set forth in Federal
Management Circular 72-3, General Accounting Office Standards for Audit
of Governmental Organizations, Programs, Activities, and Functions, and
standards issued by the American Institute of Certified Public Accountants.
The audits determine whether financial operations are properly conducted
and in compliance with applicable laws and regulations, whether operations
are being conducted efficiently and economically, and whether desired
objectives are being achieved.
The Office of the General Counsel also plays an important role in the
financial processes of the Agency. Proposed expenditures are submitted to
that office by Finance Certifying Officers and others for legal rulings, which
are written at the rate of hundreds each year. In this respect the General
Counsel serves the same role for Agency Certifying Officers as does the
Comptroller General for Certifying Officers in other agencies.
As I hope all of the foregoing makes clear, we are careful with the
taxpayer's money. Our budgeting system works well. Our internal control
systems are strong and getting stronger. In accordance with recommendations
of the Rockefeller Commission, I am currently in the process of expanding the
staffs of both the Inspector General and the General Counsel. And I can
assure you that the fact that we do have certain exemptions from normal
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Government procedural requirements makes me acutely aware of my
unusual responsibilities and especially careful to keep the Agency's
financial house in order.
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The Central Intelligence Agency
Approved for Release: 2017/01/18 C01484911
INTELLIGENCE
COMMUNITY STAFF
AUDIT
STAFF
DIRECTOR OF
CENTRAL INTELLIGENCE
DEPUTY DIRECTOR
NATIONAL
INTELLIGENCE OFFICERS
INSPECTOR
GENERAL
GENERAL
COUNSEL
LEGISLATIVE
COUNSEL
COMPTROLLER
DIRECTORATE OF
INTELLIGENCE
DIRECTORATE OF
OPERATIONS
DIRECTORATE OF
SCIENCE & TECHNOLOGY
DIRECTORATE OF
ADMINISTRATION
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- Approved for Release: 2017/01/18 C01484911
CIA FUNCTIONS
INTELLIGENCE
COLLECTION
� � Overt
� Technical
� Clandestine
� Counter Intelligence
PROCESSING
� Photographic
� Electronic
� Data Storage
� Analysis
PRODUCTION
� Political
� Economic
� Military
� Scientific
� Biographic
SUPPORT
MAN AGEM ENT
SERVICES
COM MUNICATIONS
COVERT ACTION
POLITICAL
PARAMILITARY
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