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CDFM, Module 1.4 QUESTIONS WITH ANSWERS.
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CDFM, Module 1.4 QUESTIONS WITHANSWERS.
Internal Control Program ANS -The DOD established this to comply with the requirements of the Federal
Managers' Financial Integrity Act of 1982 as codified in 31 U.S.C. 3512.
DOD defines internal controls as ANS -"the organization, policies, and procedures that help program and
financial managers to achieve results and safeguard the integrity of their programs."
Federal employees must ensure that government resources: ANS -Are used efficiently and effectively to
achieve intended program results. Are used in a way that is consistent with the agency's mission; is in
compliance with law and regulation; and minimizes potential for waste, fraud, and mismanagement.
Federal Managers' Financial Integrity Act of 1982 (FMFIA) ANS -Amended the Accounting and Auditing
Act of 1950 to require Federal agencies to establish internal accounting and administrative controls that
make it easier to: Prevent waste or misuse of agency funds or property; assure the accountability of
assets.
FMFIA of 1982 required OMB Director to: ANS -Establish guidelines for internal controls program.
FMFIA of 1982 required the head of each agency to: ANS -Evaluate internal controls annually and 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.
OMB Circular A-123 ANS -Requires agencies and individual Federal managers to: Develop and implement
cost-effective internal controls for results-oriented management; Assess the adequacy of internal
controls in Federal programs and operations; Identify needed improvements; Take corresponding
corrective action; Report annually on internal controls.
Internal controls are the organization, policies and procedures used to reasonably ensure: ANS -
Effectiveness and efficiency of operations; Reliability of financial reporting; Compliance with applicable
laws and regulations
Internal controls over financial reporting are designed to provide _____ ______ about the following
items: ANS -Reasonable Assurance. All reported transactions actually occurred during the reporting
period; All assets and liabilities have been reported and assets are properly valued; All assets have been
safeguarded against fraud and abuse; The financial report is presented in the proper form and required
disclosures are present.
Internal controls guarantee... ANS -Neither the success of the agency programs, nor the absence of
waste, fraud, and mismanagement, but they are a means of managing the risk associated with Federal
programs and operations.
GAO (Government Accountability Office) Standards for Internal Controls in the Federal Government ANS
-Control Environment; Risk Assessment; Control Activities; Information and Communications;
, Monitoring. The five GAO standards define the minimum level of quality acceptable in government and
provide the basis against which internal control is to be evaluated.
Control Environment ANS -Management and employees should establish and maintain an environment
throughout the organization that sets a positive and supportive attitude toward internal control and
conscientious management. A positive ___ ___ is the foundation for all other standards.
Risk Assessment ANS -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), and forming a basis for determining how risks should
be managed.
Control Activities ANS -The policies, procedures, techniques, and mechanisms that enforce
management's directives, such as the process of adhering to requirements for budget development and
execution. They help ensure that actions are taken to address risks and are an integral part of an entity's
planning, implementing, reviewing, and accounting processes to ensure stewardship of government
resources and achieve effective results.
Information and Communications ANS -For an entity to run and control its operations, it must have
relevant, reliable, and timely communications relating to internal as well as external events.
Monitoring ANS -Should assess the quality of performance over time and ensure that the findings of
audits and other reviews are promptly resolved. It is performed continually and is ingrained in the
entity's operations.
Continuous ___ and ____ provides the basis for the agency head's annual Integrity Act assessment and
report. ANS -Monitoring; evaluating
Management has primary responsibility for monitoring and assessing controls, and should use other
sources as a supplement to, not a replacement for, its own judgment. Sources of information include:
ANS -Knowledge gained from the daily operation of agency programs and systems; Management
reviews that assess management controls; IG and GAO reports, including audits, inspections, reviews,
and investigations; Program evaluations; Audits of financial statements conducted pursuant to the Chief
Financial Officer's Act; OMB Circular A-127 reviews of financial systems; Program Assessment Rating
Tool (PART) assessments; Computer Security Act of 1987 (40 U.S.C. 759) and OMB Circular A-130
"Management of Federal Information Resources"; Reviews of systems and applications; GPRA annual
performance plans and reports; Congressional committee reports; Results from tests of key controls
performed as part of the assessment of internal control over financial reporting conducted in
accordance with appendix A of A-123.
A deficiency should be reported if ANS -It is or should be of interest to the next level of management.
The determination of materiality is ANS -Management's judgment.
Deficiencies are evaluated and reported based on whether they relate to ANS -(1) General internal
controls, or (2) internal controls associated with financial reporting.
Deficiencies are described as either ANS -A material weakness or a reportable condition.
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