RME 4 15

Question 1

What is Internal Control?

Answer 1

is a system of guidance, instructions, regulation, procedures, rules, or other organization instructions intended to determine the methods to be employed

[to carry out MISSION or operational actions or objective, and ensure that programs achieve intended results].

Also, serves as the first line of defense in safeguarding assets and preventing and detecting errors and fraud.

Question 2

Comptroller General Standards of US

Answer 2

=Head of GAO

works for Congress

Question 3

What does Internal Control support?

Answer 3

support the effectiveness and the integrity of every step of a process and provide feedback to management; they are the rules, procedures, techniques, and devices employed by managers to ensure that what should occur in their daily operations does occur on a continuing basis.

Question 4

What are the Internal Control guidance?

Answer 4

1. Federal Managers’ Financial Integrity Act (FMFIA) of 1982
2. OMB Circular A-123, Management’s Responsibility for Internal Control
3. Standard for Internal Control in the Federal Government (Green Book)
4. DoD Managers’ Internal Control Program, DoD 5010.40

Question 5

What is Federal Managers’ Financial Integrity Act (1982)?

Answer 5

• 31 USC 3512
• establishes the legal framework for internal control in the Federal Government
• prevent waste/misuse of agency funds and property
• assure accountability of ASSETS
• Requires ongoing evaluations and reports of the adequacy of the systems of internal accounting and administrative control of each Executive agency.

Question 6

Per FMFIA of 1982, each Executive agency shall provide reasonable assurance that:

Answer 6

1. obligations and costs are in compliance with applicable law;
2. funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or misappropriation, and
3. revenues and expenditures applicable to agency operations are property recorded and accounted for to permit the preparation of accounts and reliable financial and statistical reports and to maintain accountability over the assets.

Question 7

What does the section 2 of the FMFIA requires that annually the head of each Executive agency submit to the President and the Congress?

Answer 7

1. a statement on whether there is reasonable assurance that the agency’s control and the Congress
2. a report on material weaknesses in the agency’s controls.

Question 8

What is the Director of the Office of Management and Budget?

Answer 8

establish guidelines for Executive agencies to apply in evaluating their systems of internal accounting and administrative control.

Question 9

What are the Head of Each Agency’s responsibilities?

Answer 9

1. evaluate internal accounting,
2. administrative control annually and
3. submit report to Congress and the President.

The reports, excluding classified information, are to be available to the public. FMFIA also requires that material weaknesses be identified, tracked, and corrected.

Question 10

OMB Circular A-123 emphasizes that internal control guarantees:

Answer 10

• Neither the success of agency programs, nor the absence of waste, fraud, and management
• but is a means of managing the RISK associated with Federal programs and operations.

Question 11

The GAO Green Book defines Internal Controls as an integral component of an organization’s management that provides reasonable assurance that the following objectives are being achieved:

Answer 11

•1. effectiveness and efficiency of operations including the use of the entity’s resources;
•2. reliability of financial reporting, including reports on budget execution, financial statements, and other reports for internal and external use;
and
•3. compliance with applicable laws and regulations
• Programs achieve intended results

Question 12

What is the GAO standards for Internal Control - Positive Control Environment?

Answer 12

A positive control environment is the foundation for all other standards. It provides discipline and structure and establishes the climate that influences the quality of internal control.

Question 13

What is the GAO standards for Internal Control - Risk Assessment?

Answer 13

is the identification and analysis of relevant risks associated with achieving the objectives,

[such as those defined in strategic and annual performance plans developed under the Government Performance and Results Act (GPRA).]

Question 14

What is OMB Circular A-123?

Answer 14

provides guidance to Federal managers on improving the accountability and effectiveness of Federal programs and operations by establishing, assessing, correcting, and reporting the internal control.

o Report annually on internal control. Reports submitted under FMFIA must include a statement on the conformance of the respective agency’s accounting system with standards prescribed by the FASAB.

Question 15

What is The Green Book?

Answer 15

provides the overall framework for establishing and maintaining internal control and for identify and addressing major performance and management challenge and areas at greater risk of fraud, waste, abuse, and mismanagement

Question 16

What is the DoD Managers’ Internal Control Program, DoDi 5010.40?

Answer 16

provides guidance for DoD management to apply in reviewing, assessing, and reporting on the effectiveness of internal controls within their respective organization.

o Primary responsibility of internal control rests on management

Question 17

What is Control Environment?

Answer 17

includes integrity, ethical value of management and staff, management’s commitment to competence, and the manner in which the agency delegates authority and responsibility throughout the organization.

Question 18

What is a Correction Validation?

Answer 18

milestone that evaluates and certifies the effectiveness of the corrective action.

Question 19

What are the 3 Statement of Assurance?

Answer 19

1. Unqualified statement of assurance
2. Qualified statement of assurance
3. Statement of no assurance

Question 20

What are the OMB Circular A-123 Internal Control Responsibilities? OR

OMB Circular A-123 requires agencies and individual Federal managers to:

Answer 20

1. Develop and implement internal control
2. Assess adequacy of internal control
3. Identify needed improvements
4. Take corresponding corrective action
5. Report annually on findings on internal control
   (Reports submitted under FMFIA must include a statement on the conformance of the respective agency’s accounting system with standards prescribed by the FASAB)

Question 21

OMB Circular A-123 emphasizes that internal control guarantee neither the __________ nor the __________ but is a mean of managing ___________

Answer 21

1. success of agency programs
2. nor the absence of waste, fraud, and management
3. risk associated with Federal programs and operations.

Question 22

In Assessing and Improving Internal Control, management evaluates and reports deficiencies based on what criteria?

Answer 22

1. General internal control, OR

2. Internal control associated with financial reporting.

Question 23

What is the name of the Department’s Internal Control effort?

Answer 23

Managers’ Internal Control Program

Question 24

The purposes of the Federal Manager’s Financial Integrity Act of 1982 are to prevent waste or misuse of agency funds or property and to assure the accountability of what?

Answer 24

Assets

Question 25

GAO governs ______________ for Internal Control

Answer 25

Standards

Question 26

What are Material Weaknesses? List the 4.

Answer 26

• Deficiencies in which internal controls, or compliance with them,
• Do not provide REASONABLE ASSURANCE that the objective of the Internal Control Program are being met.
• In effect, the weakness results from internal control that are not in place, not used, or not adequate.
• That require the attention of the next-higher level of management. Whether a weakness is material enough to warrant reporting to a higher level is a management judgment.

Question 27

The general Statement of Assurance will include the following:?

Answer 27

• Reasonable assurance that the agency’s controls are achieving their intended results
• Summary of material weaknesses and non-conformances; and
• Summary of corrective action plan

Question 28

What is Control Activities?

Answer 28

are the policies, procedures, techniques, and mechanisms that ENFORCE MANAGEMENT’S DIRECTIVES, such as the process of adhering to requirements for budget development and execution.

Ex: SOD, periodic password changes, access to and accountability of resources, restricting data access to essential personnel, separate storage of cash and sensitive document.

Question 29

What is an Assessable Unit (AU)?

Answer 29

is any organizational, functional, programmatic, or other applicable subdivision, capable of being evaluated by internal control assessment procedures.

An assessable unit should be a SUBDIVISION of an organization that ensures a reasonable level of internal control to allow for adequate control analysis.

Question 30

What are the 2 General Internal Control Deficiencies?

Answer 30

1. Reportable Condition

2. Material Weakness

Question 31

What is Reportable Condition?

Answer 31

a control deficency or combination of control deficiencies that in management’s judgement represent significant deficiencies in the design or operation of internal control that could adversely affect the organization’s ability to meet its internal control objectives.

Question 32

What is Material Weakness?

Answer 32

a reportable condition that the agency head determines to be significant enough to be reported outside the agency…

Question 33

What is Control Deficiency?

Answer 33

when the design/operation of a control does NOT allow management/employees to prevent or detect misstatements on a timely basis.

Question 34

The Statement of Assurance reports what contents?

Answer 34

• Cover Memo
• Explicit Level of Assurance
• Description of Evaluation
• Uncorrected Material Weaknesses
• Corrected Material Weaknesses/Validation Milestone