Agencies gear up for deadlines on internal controls
- By Mary Mosquera
- Feb 09, 2006
Agencies are expected by March 31 to submit to the Office of Management and Budget a summary of their test plans to prove they have effective internal controls for financial reporting.
OMB is requiring under its revised Circular A-123 that agencies implement internal controls, and be able to document them and ensure their effectiveness in a management assurance statement to be submitted by June 30. The management assurance statement, to accompany each agency's fiscal 2006 financial report, will detail major weaknesses and corrective actions to address them.
The goal is to produce accurate and timely financial information for day-to-day use in making decisions, said OMB controller Linda Combs. Internal controls will foster transparent reporting and accountability, which should translate into efficiencies and savings
. The focus on internal controls, accountability and reducing risk has already reaped benefits, she said.
'Internal controls are not just for financial managers but program managers. You are putting in mechanisms that will guarantee results throughout your organization,' she told federal financial professionals today at a presentation sponsored by the Potomac Forum Ltd. in Washington.
Circular A-123 is similar to management compliance requirements for private corporations under the Sarbanes-Oxley Act, passed in the wake of corporate fraud scandals at Enron and WorldCom.
Internal controls are processes to measure the effectiveness and efficiency of operations, liability in financial reporting and compliance with regulations. An example of an internal control would be performing routine reconciliation and analysis of accounts monthly instead of just quarterly or annually.
Key to successfully implementing internal controls is 'setting leadership tone at the top,' Combs said.
'Support has to come from top leadership. If it is not, I need to know about it,' she said, adding that she has received just one call on that subject, which has been remedied. She did not identify the agency.
OMB has provided guidelines to help agencies put internal controls in place and will send out additional clarification as agencies need it. OMB also will make house calls help agencies with A-123 challenges, she added.
Last year, for the first time, all major agencies met the accelerated schedule for reporting their year-end financial statements by Nov. 15. Additionally, 19 agencies achieved clean audits and had 70 percent fewer major financial weaknesses, she said.
Mary Mosquera is a reporter for Federal Computer Week.