PFMC Study Notes (Week 3-Internal Controls)2023

PFMC Study Notes (Week 3-Internal Controls)2023Assessable Unit (AU) What is the basic segment for which internal controls are evaluated, capable of being evaluated by internal control assessment procedures? Internal Control What is the organization, policies, procedures, and instructions adopted by management to reasonably ensure mission or operational objectives are met, programs achieve intended results, and managers safeguard the integrity of their programs? Internal Control Assessment What is a documented review performed to determine whether internal control techniques are effectively implemented to accomplish administrative, operational, and mission objectives? Management Control Plan (MCP) What is a written plan that details the AU's inventory and is updated annually Managers' Internal Control Program (MICP) What is the formal effort of an organization to ensure that internal control systems are working effectively? Reasonable Assurance What is a judgment that an organization's systems of management control are operating in a manner that achieves FMFIA objectives? Statement of Assurance (SoA) What is an annual assessment that provides leader's explicit level of assurance on whether the internal controls are effective? 1982 Federal Managers Financial Integrity Act (FMFIA) What act/law was passed to: Ensure Federal agencies establish, assess and report on their internal control programs, processes and systems 1990 Chief Financial Officer's Act What act/law was passed to: - Require agencies to establish and assess internal control related to financial reporting. - Require the preparation and audit of financial statements. 1996 Federal Financial Management Improvement Act (FFMIA) What act/law was passed to: Require agencies to have FM systems that comply with the Federal FM systems requirements at the transaction level. The Government Accountability Office (GAO) - Established by The Federal Managers' Financial Integrity Act (FMFIA) of 1982 - Defines the minimum level of quality acceptable for internal control in government - Provides the basis against which internal control should be evaluated GAO Standards 1. Control Environment 2. Risk Assessment 3. Control Activities 4. Information/Communication 5. Monitoring 1. Control Environment Which GAO Standard is the following: - A positive control environment, is the foundation for all other standards Provides: - Discipline, structure, and a climate influencing the quality of internal controls - Integrity and ethical values - Commitment to competence