Mgt and Internal Control 1.4 Flashcards
The purpose of the Federal Managers’ Financial Integrity Act of 1982 are to prvent waste or misuse of agency funds or property and to asure the accountability of what?
Assets
What is the name of the Department’s internal control effort?
Managers’ Internal Control Program
What do intrnal controls reasonably ensure?
Programs achieve intended results.
Resources are used efficiently
Programs/resources are protected from waste, fruad, and mismanagement.
Laws and regulations are followed.
Financial reporting is reliable and accurate.
What agency issues “Standards for internal Control in the Federal Government”?
Government Accountability Office (GAO)
Segregation of duties is a part of which internal control standard?
Control Activities
The Integrity Act report must include agency plans to correct what type of weakness?
Material weakness.
Who decides whether a weakness is material enough to warrnt reporting as a “material weakness” to the next higher level?
It is a Management Judgment.
What should be the last milestone of the corrective action plan for each material weakness?
Correction Validation
The DoD coponent head’s Statement of Assurance must take one of how many forms?
Three
How many standards are there in GAO Standards of Internal Control?
Five
For what program is the full scope of management responsibility defined in DoD instruction 5010.40?
DoD’s Managers’ Internal Control Program
When a DoD component head provides a Statement of Assurance that the component’s controls are in place and achieving their intended objectives, is this a statement of absolute assurance or reasonable assurance?
Reasonable Assurance
What circular has the title Management’s Responsibility for Internal Control?
OMB Circular A-123
What is the title of OMB Circular A-136?
Financial Reporting Requirements.
Under the concept of internal controls, Internal control is a system of guidance, instructions, regulations, procedures rules or other organization instructions intended to determine the method to be employed to do what?
to carry out mission or operational actions or objectives and ensure that programs achieve intended results.
Ref 1.4.5
The first line of defense in safeguard assets and prventing and detecting errors and fraud is called what?
Internal controls
The plan or organization, methods and procedures adopted by management under the concept of internal controls provides what?
Reasonable assurance that the objectives of 31 USC 3512 FMFIA are met.
What is FMFIA?
Also known as 31 USC 3512 Federal Manager’s Financial Integrity Act of 1982.
Under OMB Circular A-123, internal controls should be what part of the entire cycle of planning, budgeting, management, accounting and auditing?
Internal controls are an integral part of the entire FM cycle.
Internal controls should support the _____ and the ____ of every step of the process and provide _______feedback to management?
effectiveness; integrity; continual feedback.
Ref 1.4.5 Concepts of Internal Control
DoDI 5010.40 Title is what?
Managers’ Internal Control Program.
What two requirements for the head of each executive agency are part of an annual report on internal controls under Section 2 of the FMFIA?
1) a statement on whether there is reasonable assurance that the agency’s controls are achieving their intended objectives and 2) a report on material weaknesses in the agency’s controls.
ref 1.4.7
Under FMFIA, who is responsible for establishing guidless for executive agencies to apply in evaluating their systems o internal accounting and administrative control?
Director of the Office of Management and Budget
Under FMFIA, who is required to evaluate internal accounting and administrative control annually and submit a report to Congress?
Head of Each Agency
Ref 1.4.7
What is the title of OMB Circular A-123?
Management’s Responsibiity for Internal Control
Ref 1.4.8
OMB Circular A-123 responsibilities include developing and _______ internal controls.
Develop and implement internal control.
Ref 1.4.8
OMB Circular A-123 responsibility includes assessing the __________ of internal controls.
Adequacy
Managements Responsibility is to ______needed improvements to internal control under which circular?
Identify OMB A-123 Management’s Responsibility for Internal Control.
What kind of action is part of Internal Control Responsibility?
corresponding corrective action.
Ref 1.4.8
OMB Circular A-123 emphasizes that internal controls is a means of managing ______ associated with Federal Programs and operations.
Risk.
ref 1.4.9
Internal Control Objectives provide reasonable assurance that program achieve _____ results
Intended
Internal Controls objective provide reasonable assurance that resources are used ______.
Efficiently.
Ref 1.4.10
Internal Control Objectives provide reasonable assurance that what are followed?
Laws and regulations
Ref 1.4.10
Financial reporting is reliable and accurate is a ________ _________ under the objectives of internal control?
Reasonable Assurance.
Ref 1.4.10
GAO governs ________ for Internal Control
Standards
Ref 1.4.11
GAO standards for Internal Control is known by which acronym?
CRIME:
Control Activites, Risk Assessment, Information and Communications, Monitoring, and Environmental Controls
What GAO Standard for Internal Control is the foundation of all other standards?
Positive control environment because it provides discipline and structure and establishes the climate influencing the quality of the internal control.
Ref 1.4.11
In assessing and improving internal controls, management evaluates and reports deficiencies based on what criteria?
general internal control or financial reporting internal controls.
Ref 1.4.13
What are the two categories of general internal control deficiencies?
Reportable Condition (internally tracked) and Material Weakness (reported outside agency)
Ref 1.4.14
Name the three Financial Reporting internal control deficiencies categories.
Control Deficiency (control does not allow prevention or detection on a timely basis), Reportable Condition (control effects the reliability of meeting gaap or contributes to mistatement ), and Material Weakness (high likelihood that a control did not prevent or detect misstatements in financial statements). Ref 1.4.15
Who decides if a matter is a material weakness under the general criteria?
Agency Head and this is a judgement call and happens when agency head decides to report the weakness outside of the agency.
How does OMB define a general material weakness?
One for which the agency head determines is significant enough to report outside the agency.
Ref 1.4.17
When should managers consider reporting a weakness to the next-high level?
If higher level can help resolve the problem
Ref 1.4.17
DoD Instruction 5010.40 covers 5 ______ for managing internal controls.
Procedures
Ref 1.4.21
Name the five procedures covered in DoD Instruction 5010.40
Establish Internal Control Process Segment into Assessable Units Evaluate Effectiveness of Internal Controls Correct Material Weaknesses Report on Internal Control Program
Ref 1.4.21
What is the concluding step to the control process procedure of establishing an internal control process?
reporting of management opinion about the effectiveness of its internal controls.
Ref 1.4.21
What is an assessable unit WRT control procedures?
Any division along org, functional, programmatic, or other lines capable of being evaulated.
ref. 1.4.21
