OMB A123 Update CRT April 20 2015 Mike

OMB A-123 Update CRT April 20, 2015 Mike Wetklow Office of Federal Financial Management Office of Management and Budget 1

Internal Controls • • • 1981/1982/1983 – − OMB Issued Circular No. A-123, Internal Control Systems and Internal Control Guidelines − Federal Managers Financial Integrity Act 1986 – OMB Required Management Control Plans to guide efforts 1995 – OMB updated A-123, Management Accountability and Control to reflect GPRA, CFO Act, IG Act 2004 – OMB updated A-123, Management’s Responsibility for Internal Control and added Appendix A, Internal Control Over Financial Reporting OMB’s vision for 2015 Update – transform and evolve existing internal control compliance frameworks so that it creates a more value added, integrated, risk based, and less burdensome set of requirements for agencies. The revised guidance will: − Clarify technical terminology to help program managers better understand implement internal controls − Introduce ERM concepts as defined by the COSO framework − Replace “check the box” compliance approach with risk management-based approaches to support agency missions − Streamline assurance statement reporting − Build on successful implementation of internal controls over financial reporting − Be put out for comment in Spring 2015 with an implementation date of 2016 2

ERM and Internal Controls A-123 Future State Governance A-123 Current State ERM Internal Controls Source: COSO 3

ERM and Internal Controls Source: COSO 4

Streamlining Assurance Statements 5

Additional Considerations • Corrective Actions • Service Organizations • Internal Controls in Disaster Situations • Fraud • Internal Controls over Financial Assistance (i. e. , Grants) • Appendix A 6