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(osutr) Altchd are ikennrerd atem for ou es tallishesd

Prevdune (adit peurd 1 Vonh 1960-30Spt. 19

APF-B-1

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1. sfter the issonce in Jenaary 19e of the cepore of Aulit or projegt Fauuraa for tho period 1 Karch l9eo - 30 Narch l9ol, the Tinsinga vore aie cacsei by tha leputy Director/saryort,-Cocotroller, Chtef, koiis Staff, eod the Cier, Technical servicoo Sivlsioa. As n result of the clecussien, I vas siven the esaigcont of rovisving the uecounting procetures than in efreet, sni revicing thea to proviáe contrel of cach diabarzed toier tha sattorities preseribed for-lkulakà.

2. It sas founi in tho reviev that tho docuntatira in uso vec fer the rost part serficlent for tho nenagcoone of fiais diabareed, end it vaa pecessary galy to eatablish proper aecownting staniards to de spplted at the vericue pointo of ccoh ececontability.—Aeeo aceomting sterdlards have reea. remuced to a vritten proceávre io the fora or a Piscal amx. is theca fuis are disbursed oaly ty direotion oc the Toebnioal Barvices Division,:the Eanascxnt of ead responsibility for those tusis by Tad io Ne baoie tenet erond vaich tho Fiseal Anoex vas vritton.

3. Ia éstahltebins the controls provlcod by the Fiscal Annex, It vill be necessory to enalyss pest trannaatices ia oréer to brlog into the control rocords Who unowns a? eash dlsoureed but not yat accountok for. iheo thess asounts have boea dstarsicod, it is-tugcosted a scbeãulo be prpared to support tho ioitial estries to the control recoria. .Ghe sotedulo sdould reiloot tha wrounto bold by each grantee, projeet, and cutoout, ¿áentifiad ty your ceb-projeet éesisretions. it is requestod that a copy or the sebedule ba furxiehed to the Fimbce Divisica. ehan th tssccoutel for cash lald ty centeos, projecta cnd cut-outs lus boen éeterainel aad entered in tha control roeores, sebsecuoao trasetions vill bo wubleet to routine hoonlice. It la erzheasietd tht hplementatloa or the Fiocsl Anses procelucva should be eccopltshed Ln the reath of Say 19te as it is rot cepandont tqco corgletien or.the analysis of past tranacttons.

h. ao asctrrent vao facilitated to a ceasicerkle dese ty tho friendly cooperstica snl asnistonco er lecora.l In cur luat diccuzaion cn 9 July lauz, theso centléhen esparessud the cptaion, vith tho excoptia o2 walorecoen prohleno, toe Fiocal /apex provides ths pecoseary Gdioolises for dfacharglng the ciaaoial taneqaacut roepoasibilittes

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inhoreat in the disbursezent of fuale umder the MULiRA cutborities. khon unforeseen prcblens erise they vill be hanaled on a éase-by-cese basig,-It is planned to vork closely in the.futue with heosrs. and others of your stafr enzeged in. the firancial-panagement of thio to provido vhataver techaicel onsistonee is necessary.

5. This remorandum 1s dolivered by bara due to tho censitivity of the activity and the dosire to implevont the Fiscal Annex procedures as soon as poseible. After your approval it is supéested that the Fisoal Annex be.dee livered by hand to tho underoignoà for further delivery to the Chfef, Finane Divisioa and the SSA/DDS.

Chier, Cperations and Liaicon Finance Divioion

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1.. BACKGROUNO ARD AUTDRIIY

A. Cn 6 June 1952, the Project Peview Cornitteo aporoved the DD/P/Tss Reseorch Propren. The FPC epyroval authorized tho Director of Rescareh, at his ciseretioa and vith the approval of the Research Chairman, to obligato recearch fuois anl to appoitios then csong iniivldual rescareh projecta, such projocts to be cubjact to tbe ususl Agoncy procedues end adairtotrative controls.

B. Rowever, in a mccoranouas to tho Do/A, cated 13 April 1953, the pCI recogaized that tho ultra-sensitive naturo of certein rerearch projects in the Fozeoreh Progran precludes-tre handling of these projects by reans of usval ciroct contractual relstiooshipIn crder to conceal U Coverment int in or sooosorehiy of cuch projects the DéI resorenlhum authorized the Techaical Ssrvices Divisioa to consunte agreepents vith othera to nct as ostensiblo principals or cut-outs in cévelcping wnd maintaiaing the deaired relatiannnipo vith crganizations engaged in research in thoso ultra-sensitive erees or interest to TD. The ultra-sensitive. portion or the Recesrch Programn ves 1dontifiea in the DCI momoranda by tha eryptonyn M/RA.

C. Tho purpose of-this paper is to estadlieh procedures for tho control and finaneial edninistration of funis aávanced or disbursed on behalf of ILTRA activities.

D. For the purposes of this paper, the folloving definitions vill apply:

PECJsoTOporational activity subjoct to fornal Agercy approval procedurea to which funds and other resources are allotted for use in porforioncs, establisheã by WD or othor elcsento for tha cupport ineluding fuplag of MULTRA-activity.

Cr-oufr --Entity or individval yeed hy Tsp for colo purposo or providing covert fumding channel Por KUa activity.

cRanrss - utimate recipient of funds foy research providod unãer. MULTRA ectivity.

11. AOESUY CONEROL CF FUNDS

A. Thá degce of coatrol to be ezeraieed dy tho Agency over funds aã- vaneol veter procraa kUlaãa, and the point at vhieh occountabilièy for these funãl 1a ralinqaiehed shall bo deterinoā by the Agesey rolationship with cleneots rolding oueh fuads. Furds edvancod to ani hold by cut-outs, an entity under the control of any ¿eney corgenent, ond other Coverment Agencios are coa:iceral to ka vithin tho cantrol cf. the /geney anl vill bo so trosted 1n. Armey rąeonls. Prds rdvaneeu or rusoed to non-Agonoy porsonnel engaged in ressarch nre considered to be crants ani vill bo charged to costs uoon ovidenco the funda have been paesed to ihe craateé. Control over Nuds hold by grznteea vill bo ceereisod throuh tho vso of zocorendua ececuoto.

FISCAL ANMEX HKULERA

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A. Budget proposels fron prospective grantees will be reviewed by the: responsible Branch Chier end forvarãed by ronorandun to the Chief, Techntcal Services Division. This kezorandum vill include a statemont rogording the type and depth of accounting expected from the crantce and the frequency of such accountinga. After approval by the Chier, TSD, tho arount of the budget proposel vill be obligated.on tho.allotoent recoris maintained by TSD.

B. The Technicel Services Division 1s authorized to ndvance funds diroctly to granteea, to cut-outs, or to funding rechanicms (projecta) under the control of To or other Agency corgonents, in asounts consistent with requirements stated in the budget proposals. At the discretion of the Chief TSD, or his designce, fudo may bo advenced:in the totaltamounto of buáget proposals but should be. limited to partial amounts in those instances where the rclationsbip with the grantce.permits.

Since the Agency relationship vith each project in ths MULTRA activity largeiy determinos tho choice of:funding mothods to ba usod, this relationship vill govern the accounting treatment to be civen advances and accountings Tho eccounting treatment vill be based on the folloving general precepts:

A. Mmorandu eccountability for funds passed directly or indirectly to grantees vill ba dropped upon zecoipt of evidence thst tha funda have boen used for.the purposso-intended.

B. Acconntability for funás passed to projeets under the control of TSD or other Agency coaponento for the purpose of funding grantees vill follow tho tranefer of such funôs, and vill be drcppeà upon receipt of ovidence the funds-have been passod to a grantee or otherwise accounted for.

C. Accountability by cut-outo for funds passed to then will be dropped upon receipt or cvidencethat the cut-out has passed the funds.to the projeat.

D. Clains for reinbursement of dioburcements mde fron fuda belonging to à project, another entity, or-an ináividual, will. be. charged to costs when patd and no follow-up will. be required other than evidence that the payee. actually roceived poytent.

Finanoinl Alniniotration of MULTRA funda under cach of the circumstonces cited in Para, IV, A through C ebove are further delineated 1n attachrents A through C.

III. APPAOVAIS

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Whero tho relationship betvcen tho Agency and the exantee is such as to poràit direet pssovge of the funls to the srantoe, it is prosumed the funds are vithin tho efzective coatrol of the Agency until uttltzed. Eovever, sinee these funds aro in fect crante, nororandum accountsbility only vill te raintaired ani vill be dropped upon receipt froa the projact of evideneo that the funds have been used for the purpose intonded.

II. PENCIAL. ANMINISTRATION

A. Memorandua control records vill be reintsined in TSD to reflect the etatus of all funds edvancod to each grantee.Bach record will. reflect the cryptonya or other identification assigned to tho project cnd vill have Jcoluras entitled Pecorling Date, Transaittel Letter Date, Advancas, Aecountings end Hlance. The record kill bo posted in the Advanees coluan vith amounte passed to the grentee, and in the nccounitings colien uith amounts disbursed as shovn on approved accountinss-fron the grantee. Acccuntinss will bo roe vieved and, if deered satieractory, ayproved by the chief of the responstble branch prlor to recorling in the control record.  If the eccounting inforentior is incluaed in progress or\_operating reports, a certicication froa the chier of tho respoasible bronch refleeting the rrount expenled my bo used in lteu of en ccoounting. In those instanees whero a Erantce failo to subnit and chlig efforto have teen raãs to cbtain an eecounting, tho responsible Braneh Chier ray preporo a rerorardun to tho Chief, Technical Sorvicea Diviston requesting his approval for write-orf-of the enount involved. This ncrorapdum will rorlec the fellow-up aotion previously taken and tho reason(s) vhy the Branch Catof feels further cction is considered uoeless. When approved tha meaorendun vill bs used ia.lieu of an accouuting from the grontze.

B. Tho resporstbla branch of T3o vill prepare aed forward to the zinance. Divisfon a ceparate "ctatenent" for esch cccounting received, téentiriod to the appropriate grantco.- Tbe stateaent may be in the fone of/á mesoranáum to tho Auchorlzed Certifyinz Orlicer-refleeting tha uco and status or fwida beld by the grantee, enlyill contain tho certificate of tha chief of the responoitle branch that ['I eertiry that to tho beot of ry knovledga ant belter tho wount shovn above vas dichurood to or wed for Ageney authorized activities and pervieea er raterial have been received, and furthor advances es ney be direotod by tho Ageneyrere warranted...The.cocurents upon which this state. ront 1o besed ore meiutainet in tho files cf TsD for cecurity reasons ani vill be Dauo eveilable for review by the Cortifying Officer at hio request."

C. The Finaneo Dvioion Certifying Ofricer 1o etpovered to accept the state.sent in paragroph Il B cbovo for the cropnts shoan thorein as the basis for ontries to tho pemoronica sccounts subjoct to bis luter exanination of tho grentee accounting caintained in tho filos of Pap.

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A. Accoontability for funds paosed through projects under the control of TuD or other Agoney corpononts vill follow the transferd cuch funas, and vill be dropped only vhen tha fuls have been eccounted for or passed to an entity over vhich ths Agency exorcises no control. Agency coaponents controt ling such projecto vill to directed to funish TSD and Finance Divisien with docuentory evidence of cach such trensfer pade on beholr of lsulana.

B. Control of the noverent of sueh funis rests vith TD cni eppropriate coatrol snl neroranlua records vill bo ritatained vithin zsD to indioate the status of theao funis at all tioos for managonent ond auiit purposes.

A. Advences mude to projecta or otber entities under Agoncy control foz puposea of funling MUlgaA annteas rust te clearly identified es cucb, in oroor to scpareto then fron eavanccs proviced tor the operation of the project. Thus MUlaRA funis edvanced to fuviing cntities vill bo treated es finds in tronoit ond accountability ror these funds vill be maiatained until roceipt of evidenoo that tho funis havo been pessod to tho granteo

D. Projects or other Agancy entittes vill bo dirocted to furnish Tep end Pinance pivision vith Cooumentory evidenco of each disburscment mada to Grantees du boholt of MLSRA.

C. Controt records vill be raintained fn TeD to reflect the status of all fuds odvapcol to Agonay entities ror funding MoJEa crentees. Each recorl vill reflect the cryptonyn cosigped to tls entity holding the fumde and will have columns entitloa Recorling Date, Granteo. Mentification, Transnittal Letter Date; Mivances,-Accountingo, end-Bolanee.. The record vill ba pouted in the Aávances.Colucn vith wrounts. pasced to.the project end in tho Accountinga colun vith arounto.dtsbursed to llEaRA grantoes as showm on approved occountings froa the projeet; -Accountings vill bo reviaved ai, if oatisrsctory, approved by the chtef of tho rosyonsihie branch prior to thoir being rocoried in the coatrol record.

D. Tho reoponatble braneh will prepare.a separate staterat for attech ment to oach crch accouting. - The stuterent ray be in the form of a pocoranlua to tho Authorised Certifyina Qrffcer end vill contain tho certifieate of the chiof of the responsiblo branch thst "I cortiry that to the teat of ry knovled:o and beliel, tho erount(a) attrtbuted to IsulRA on the attached accountiag; vere dishrces at Agenoy cirection to authorized cetivities, corvieoo li/or muteriel have becn rooaived, cnd further ndvances ao mmy bo direoted by tho Ageney eao varrunted."

ACCOUNTEG FOR MULORA YUIDS TRARNMITTED THRCUGI PROJSCTS UDER AGENCY

Attechrent B

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E. The Autkorlzed Certilsing Cfiscer is smpevered to sccopt the etetesant in pora li D etova for tho esounts tharain as the tasia for ehtriee credttiog ths sccosnh of ths projoct vhich transaitted the Oude ced ter rekise opprorrieto cost ontrlae. Concerronsly the Certiryieg Cllicer vill recoro vhs axouats in the teneranáva ceecant or tao areutee vhsto. hher will bo banslod es aivsaces to Ereatees as dororibed in attaobrent A.

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1. CERAL

A. Funds edvuced to ani hold by cut-outs for tho purposo of fuonliog tqleà grentess are coasiderel to bo vitdin tho conerol of the Aceney ant vill te so treated vithin Ageney roeoróe.ácconntsbillty for sueh Öuis.vill follov tho transfer of the funla ani vill do Cropped oaly vhen funds have tosn cccownted for-or passed-to a granteo.

B. Agroerents sade uith cut-cuto vill to reduced to vritiogt vill contain the besic clepenta o? a contract, inolulins the fea to be paiá by the Acaneyt vill provide for firznetal repores as proscribed by tho Agency anl vill provida that cny wuzsd fanta ero the progerty oc tha Agancy.

C. Anecoy Tunds advanced to cct-outs vill te doposited to bank eccounts established for tho sole nvrpoce\_or recoiving and diabursing Ageney. furala. Tho cut-out vill czeoute a Dooleratioa of Trust- thst the funds theraia ere the property or the, Uhited Statea Coverrzeont.

D. Appropriato control records for rensgemert ant aulit purpoces vfll be maintainel at all titeo vithtn TsD to inaicste the otatus or fundo aávanccd to cut-outs.

. A. Fiumda advarced to cut-outs vill be teated as funds in trensit and accountability Tor thesé funis will to mintained until receipt of evicenco that tho fuãs have been passed to tho graateo. Pequeats for. edvences vill inlicato to crount of the advanco-vhteh vill be passed to the grantee ad the arount which vill be retained by the cut-out as Zoes.

r p. Cut-outs vill bo directet to cubolt a report at loest quarterly wefleeting the atatno or ell fwsis cdvenced by-ths Acency.  Te roport vill refleet tho cisbureopcats ilentified to spocirie &xeuteeo end/or projecta, and tho balance on hand st the-end of tho pertod.: Tho cut-out cocovting vill rernin In tho fileo of Too.A pketostatie copy or the bonk stateront togother vith cooios or the caneellea checka vill be subndtted os soon as ponsitlo orter thoir roceipt by the cut-out.

C. Jalfviául control recordo-vill ba ciatotned in TsD to reflect the : otutuy of ell fuais sdvumncod to cut-outs ror lsUlzla octivitico. Boch redord vill nalcet tho are or crpptonya-aosigped to the ect-out el vill hava colwana cntitlod Recording Dato, Gronteo-Tcentirieaticn, Transnittol Iotter

Attachrant C.

FOLTRA FUDO PASSED TECUOE CUT-COT3

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Eatstlish I Cantenl Redpe phuts
fllallEibi A ab C B

This centeil wiee be dehiad fae amenir adnsre, phoving date, sur piaget when fit aie pissed by cuthal This cartil mild be cnedded onthe bonn af Capero af bank ptitinunto wad Caneccad chekes w Capino af Monthly Feneneire stelemento or reccpto feni the Catlrgts

etaslih Cantenl plut we eab puh torayit faedee to phaw date annditlaul cr as af esed advenet finu Cat ant Crelid thi. Carlese mih aecdetnge

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11 Repreonto enidenee fere Cut ant (caneelie cherk on Zenoneend Staloment) thid furds hene leeen prceel te Gevtege.

2/ beervntir necrel fenm lerenge an Cutifierl by hespeneitl affienne that fuats hene ecen ppent fae intealel preprse ond prteifretary Dereers heire keew pryremel.

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3

Supprtd by hu tneng cheik to dnt aut

(2/ Suppnited ly canecsae cheek to. Callinl ar fenansial ptulcnuet Po tt Wee recelpt from Culsat
3/ dimld reeancile to Cash an hrnl hed bey cad ect.

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23 January 1964.

MEMORANDUM FOR: Chief Support, TSD

ATTOITION: Mr. A

1. Subject MKULTRA vouchers on 21 January 1964, vo,f/3088.(\$4,500), and //28942 (\$8./68) were adjustcd by transfer from the.142.9 account to the 0/2.9 account. In the future it is roquested that similar vouchers contain the crypto of tho funding mechanism to be used as originally roquested and shown on the sample vouchers furnished to your office.

2. The last tuo vouchers submitted for.MKULTRA.sub project ll0, invoices 9 and 10. vere subiitted on Request for-Advence forms.and not Request for Payrent forms' as the payment requiros.

3. Due to the complexity of MKULTRA's program, you aro kiudly requested to use care in preparing vouchers for their submission to this offico.

APF-B-9