Seventeen (17) Principles of Internal Cont. 1

2 New Gov’t Internal Control Standards

3 Prior and Revised OMB A-123 Internal Controls Prior A-123 Revised A-123

4 DoD Material Weaknesses - Fin. Reporting Material Weakness Year Identified DoD ComponentsCorrective Actions Target Correction Year Department’s current business processes, policies, and internal controls do not provide reliable, accurate, and verifiable financial statements. FY 2011Department-wide Implement established guidance to enable Components to improve their processes, systems, and controls. FY 2017 * Source: U.S. Department of Defense Financial Report FY 2015, FMFIA Section 2, Table 2b-1, Non-Financial Operations

GAO FAM 5 Why is it important?  Provides financial reporting controls and a methodology for testing those controls  Focuses on evaluating the effectiveness of the design and operation of financial reporting controls  Incorporates a top-down, risk-based approach that considers materiality and significance in determining effective and efficient financial reporting controls  May be used as a basis for the independent evaluation of a Federal agency’s internal control system over financial reporting required by FMFIA, FIAR Who should use it?  DoD financial and systems management to test financial reporting operations controls

6 DoD Material Weaknesses - IT Material Weakness Year Identified DoD ComponentsCorrective Actions Target Correction Year DoD financial and business management systems and processes are costly to maintain and operate, are not fully integrated, and do not provide information that is reliable, timely, and accurate. FY 2010Department-wide Complete relevant FISCAM testing, implement process standardization, and ensure compliance with information systems requirements in order to achieve FISCAM control objectives. FY 2020 * Source: U.S. Department of Defense Financial Report FY 2015, FMFIA Section 2, Table 2b-1, Non-Financial Operations

GAO FISCAM 7 Why important?  Provides information System (IS) controls and a methodology for testing those controls  Focuses on evaluating the effectiveness of general and application controls  Incorporates a top-down, risk-based approach that considers materiality and significance in determining effective and efficient IS controls  May be used as a basis for the independent evaluation of a Federal agency’s information security program required by FISMA, FFMIA, FIAR Who should use it?  DoD financial and systems management to test general and application controls

8 Integration of Financial Reporting and IT Financial Reporting Objectives Collaborate on Ops and Cyber IC Objectives Mission Accomplishment is an Operations and IT Team Effort! Achieve: Operations Effectiveness and Information Assurance