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Financial Management: Effective Internal Control Is Key to Accountability

GAO-05-321T Published: Feb 16, 2005. Publicly Released: Feb 16, 2005.
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Highlights

Internal control is at the heart of accountability for our nation's resources and how effectively government uses them. This testimony outlines the importance of internal control, summarizes the Congress's long-standing interest in internal control and the related statutory framework, discusses GAO's experiences and lessons learned from agency assessments since the early 1980s, and provides GAO's views on the Office of Management and Budget's (OMB) recent revisions to its Circular A- 123. GAO highlights six issues important to successful implementation of the revised Circular, specifically, the need for supplemental guidance and implementation tools; vigilance over the broader range of controls covering program objectives; strong support from managers throughout the agency, and at all levels; risk-based assessments and an appropriate balance between the costs and benefits of controls; management testing of controls in operation to assess if they are designed adequately and operating effectively; and management accountability for control breakdowns. Finally, GAO discusses its views on the importance of auditor opinions on internal control over financial reporting.

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Topics

AccountabilityAccounting systemsAuditing proceduresCost analysisFinancial managementInternal controlsReporting requirementsStandardsFinancial reportingFederal agency accounting systems