What is the purpose of this chapter? This chapter presents policies
and responsibilities associated with the Service's management control
1.2 To whom does
this chapter apply? This applies to all employees,
supervisors, and managers in the Service.
What are our management control objectives? The objectives
are to reasonably assure that programs achieve their intended results;
resources are used consistent with the Service's mission; programs and
resources are protected from waste, fraud, and mismanagement; laws and
regulations are followed; and reliable and timely information is obtained,
maintained, reported, and used for decisionmaking. Management controls do not
guarantee that these objectives can be reached; they are, however, a means
for managing risks associated with programs and operations.
1.4 What is the
scope of the management control program? Management controls
apply to all Service policies, programs, and operations, both financial and
1.5 What is the
Service policy for the management control program? The
Service assesses the adequacy of management controls by continuous monitoring
and periodic evaluations. Available sources of information for this
assessment include management knowledge gained from the daily operation of
programs and systems; management control reviews; final audit reports;
management reviews; program evaluations; and annual performance plans and
reports. Service managers are expected to provide reasonable assurance to the
Director that the objectives of management controls are met annually. As
required by the Department, Senior Executive Service employee performance
plans should include performance elements linked to the achievement of the
Department's accountability and integrity goals.
1.6 What are the
authorities that directly apply to this program?
Federal Managers' Financial Integrity Act of 1982.
Management and Budget Circular No. A-123, Management Accountability and
Control, revised June 21, 1995, and any subsequent publications.
U.S. General Accounting Office Standards for Internal Control in the Federal
Government, GAO/AIMD-00-21.3.1, dated November 1999, and any subsequent
Part 340, Departmental Manual, Management
Accountability and Control, dated February 7, 2000, and any subsequent
A-127, Financial Management Systems.
A-130, Management of Federal Information Resources
and Service Program Guidelines.
1.7 How are
management control terms defined?
System Nonconformance. A situation in which the design
procedures and/or the degree of operational compliance does not provide
reasonable assurance that the accounting system conforms to Federal
Accounting Standards Advisory Board-issued accounting standard(s) and other
related requirements. (340 DM 2)
A major program, administrative activity, organization, or functional
subdivision that requires one or more separate systems of controls.
Components are listed in the Service's annual Management Control Review
Controls. The organization, policies, and procedures used to
reasonably ensure that programs achieve their intended results; resources are
used consistent with the Service's mission; programs and resources are
protected from waste, fraud, and mismanagement; laws and regulations are
followed; and reliable and timely information is obtained, maintained,
reported, and used for decisionmaking. (OMB Circular A-123)
Review. A systematic examination of a component to determine
if adequate management controls exist and if they are effective.
Review Priorities. An annual compilation of components for
review. Current priority ratings, previous reviews, planned reviews, and the
Responsible Official are included in the document.
Review Process. Consists of:
Establishing and updating the Management Control Review Priorities each
Providing training to conduct management control reviews, as needed.
Assessing the adequacy of management controls by continuous monitoring and
Reporting the status of management control reviews and control weakness
correction, and reporting results in review reports and Assurance Statements
in accordance with Departmental guidelines.
Monitoring corrective actions until they are completed.
Control Standards. Standards issued by GAO, OMB, and other
authorities for particular functional or program activities, such as the
Federal Acquisition Regulations.
H. Management Control System.
Event cycles, risks, control objectives, and controls. Each component should
have a control system in place prior to review.
An event cycle is a significant area or a series of related steps that make
up a separate process within the component. Each event cycle promotes the
overall goal of the component. Each component has one or more event cycles.
Risk is the probability of an unwanted occurrence within an event cycle.
Control objectives are the specific ends to be achieved by controls.
Controls are the techniques, management processes, and documents necessary to
accomplish control objectives or to reduce risk of unwanted occurrences to
acceptable levels within an event cycle. Examples of controls include work
activity guidance, passwords to limit access to data, written delegations of
authority, documentation of policies, processes and procedures, and
segregating sensitive duties among several individuals.
A deficiency that would be of significance to the Secretary, and is included
in management control review reports and assurance statements to the
Department. The deficiency is reported through the chain of command.
Supervisors should consider the following questions in determining whether or
not to report the deficiency to the next management level:
Could this problem lead to a serious injury or loss of life?
If the problem is fixed in my part of the organization, is there a good
possibility that the same problem may exist in other parts of the
organization (office, area, Region, bureau, Department)?
Is there a likelihood that higher levels of management may get questions from
Congress or the media about the problem?
Is it going to take more than 3 months to correct the deficiency
(deficiencies that take longer to correct should be reported to the next
Was there a significant loss of Government resources? Is there a potential
for significant resource loss?
Was there a significant financial loss either through misuse of appropriated
funds or under collection of revenues? Is there a potential for a significant
Were laws broken or regulations ignored?
Could the Department have any potential liability to employees or to third
parties as a result of the deficiency?
Were there ethical violations by organizational personnel?
Was inaccurate information reported upon which management or third parties
Could this problem lead to an audit qualification on a financial statement?
The Department's Management Control and Audit Follow-up Council uses the
following criteria for reporting deficiencies as material weaknesses:
Conditions that could endanger the health or safety of employees or the
Conditions that could lead to substantial damage or loss of a significant
public asset or natural, biological, cultural, or historical resource.
Conditions that could significantly impair the fulfillment of the
Department's or Service's mission.
Conditions that indicate systemic deficiencies across bureaus or in the
Department's central support systems.
Conditions that could lead to inaccurate or incomplete information being
provided in areas of major importance to operations or policy.
Conditions that result in an audit qualification on a financial statement.
Assurance. A satisfactory level of confidence that controls
are in place and are working efficiency and effectively to achieve program
objectives, and are safeguarding Government resources given considerations of
costs, benefits, and risks.
Process of verifying compliance with existing control procedures to determine
if the controls are operating as intended. Testing methods include records
review, observation, tracing transactions, and interviews.
Who has responsibility for management controls?
A. General. Supervisors
and managers are responsible for establishing, maintaining, evaluating,
improving, and reporting on management controls for their assigned areas.
Employees are responsible for monitoring management controls, reporting
weaknesses to supervisors, and assisting as appropriate in the improvement of
is responsible for establishing and maintaining a management control review
process within the Service. This includes allocating resources to evaluate
management controls and providing reasonable assurance to the Assistant
Secretary - Policy, Management and Budget that the objectives of management
controls, as described in OMB Circular A-123
and the Federal Managers' Financial Integrity Act, are met.
C. The Assistant Director
- Budget, Planning and Human Resources is responsible for
designating the Service Management Control Coordinator; providing appropriate
guidance to employees, supervisors, and managers on management controls; and
coordinating the Service's management control review process for the
Officials are Assistant Directors, office chiefs who report
to a Director or to a Deputy Director, and Regional Directors. These
officials are responsible for:
Designating a management control coordinator for the Assistant Directorate or
Making sure that employees are knowledgeable of management controls and
participate in their continuous monitoring and improvement.
Participating in reviews or providing adequate resources for the conduct of
Determining, on an annual basis, which programs or administrative functions
should be considered priorities for control reviews, including scheduling
components for review.
Overseeing the control review process in their respective areas, including
selecting review team members; making sure team members are trained;
confirming that control systems are adequate and properly documented;
approving testing plans as needed; maintaining review documentation; making
sure that scheduled reviews are conducted on time; reviewing results;
reporting significant and material control weaknesses to the Director;
establishing and/or approving recommended corrective actions and completing
them as scheduled; and submitting required reports on time.
Providing Annual Assurance Statements to the Director.
E. Division and Office
Supervisors are responsible for:
Providing management control review priorities input to their Responsible
Conducting or participating in management control reviews upon request of
their respective Responsible Official, including preparing review reports and
reporting any significant and material control weaknesses.
Providing progress information during the fiscal year on management control
reviews and management control weakness correction.
Providing input for the Annual Assurance Statement.
Completing corrective actions as scheduled.
F. The Service
Management Control Coordinator, Division of Policy and
Directives Management, is responsible for providing technical assistance,
coordination, and review regarding the management control review process
Coordinating the annual management control review priorities submission.
Supplementing Departmental procedures when necessary and preparing Service
procedures for the management control review process.
Meeting with reviewers early in the annual review cycle to provide
appropriate training as needed to conduct reviews.
Reviewing proposed testing plans for appropriateness and adequacy of planned
Monitoring completion of reviews for the Director.
Reviewing control reports to ensure that reports contain adequate information
and significant weaknesses and material weaknesses are reported.
a detailed examination of documentation and work papers for a sample of
control reviews, if necessary.
Advising Service management and Departmental officials on the status of
management control matters.
completion of planned corrective actions, and verifying the completion of
corrective actions for material weaknesses.
Preparing the Director's Annual Assurance Statement to the Department.
Management Control Coordinators are responsible for:
Providing coordination and liaison between their Responsible Official,
division and office chiefs, other coordinators, review teams, and the Service
Management Control Coordinator.
Knowing the Service's management control process and procedures, and advising
and instructing staff in their program areas as needed.
Coordinating the selection of review teams for their respective Responsible
Official and providing assistance to team members regarding the conduct of
Participating in the training of review team members, as needed.
Serving on review teams, as assigned.
Reviewing testing plans for the Responsible Official before the plans are
finalized for use by the review team.
Coordinating the final review report for the Director's signature and
assisting in the submission of the Responsible Official's Annual Assurance
Coordinating responses to document the completion of planned corrective
Management Control Review Teams are responsible for conducting
management control reviews in accordance with Departmental and Service
procedures. This includes developing review plans, data collection
instruments, and testing controls over high risk areas at a sufficient number
of locations that are representative of the Service. Also, these teams are
responsible for preparing reports that summarize the scope of the review and
review results, and identify control weaknesses and actions to be taken to
correct them, and recommend potential material weaknesses for further
consideration and decision.