Federal Managers' Financial Integrity Act Section 2
The Federal Managers’ Financial Integrity Act (FMFIA) requires agencies to establish internal control and financial systems that provide reasonable assurance of achieving the three objectives of internal control, which are:
- Effectiveness and efficiency of operations;
- Compliance with regulations and applicable laws; and
- Reliability of financial reporting.
FMFIA requires the agency head to provide an annual Statement of Assurance on whether the agency has met these requirements. The Office of Management and Budget (OMB) Circular A-123, Management’s Responsibility for Internal Control, implements the FMFIA and defines management’s responsibility for internal control in federal agencies. FMFIA requires agencies to establish internal control over their programs, financial reporting, and financial management systems.
Accordingly, GSA conducted internal control reviews of agency program components to verify that all significant risks are identified, tested, evaluated, and mitigated timely and effectively. These reviews also confirm that audit findings are addressed in a timely and effective manner and corrective action plans are implemented. For FY 2012, GSA provides assurance on the effectiveness of the internal control over operations, management systems, and financial reporting with consideration to all internal and external reviews of the agency. The Summary of GSA's Financial Statement Audit and Management Assurances table is provided in the Other Accompanying Information section of this report.
In FY 2012, GSA strengthened management practices and internal controls to assure the integrity of its programs, operations, and business and financial management systems. This effort included an increased focus on risk management and risk analysis on all programs. GSA completed all the requirements of OMB Circular A-123; the Office of Federal Procurement Policy’s (OFPP) Memorandum entitled, Conducting Acquisition Assessments under OMB Circular A-123; the FMFIA; OMB Circular A-127 Financial Management Systems; the Federal Financial Management Improvement Act (FFMIA); and the Federal Information Security Management Act (FISMA) as the foundation of effective management operations and internal controls.
GSA management strengthened financial and operational controls by implementing new policies and procedures related to management and approval of conferences and award ceremonies; personnel compensation; and recruitment relocation and retention incentives.
The Procurement Management Review (PMR) team collaborated with the Office of the Chief Financial Officer A-123 Internal Control Review team to jointly conduct financial and acquisition reviews in several regional offices. Some of these PMR reviews assessed the effectiveness of the specific control deficiencies identified by GSA external auditors. By analyzing activities from both an acquisition and financial perspective, GSA addressed control issues that involved financial and acquisition functions. As these reviews were completed, results were presented to management through the GSA Management Control and Oversight Council as the basis for determining the state of management assurances. Any identified control deficiencies are tracked through a database application and monitored for timely and accurate implementation of corrective actions.
GSA can provide reasonable assurance that internal controls over financial reporting are operating effectively and that there are no material weaknesses relating to the design or operation of internal controls over financial reporting.