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A U D I T / T A X / A D V I S O R Y / L I N E O F B U S I N E S S

DOI Annual Business Conference


Audit Approach to
OMB Circular No. A-123
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Agenda
Auditors objective
Consolidated level procedures
Bureau level procedures
Assurance statement procedures
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Auditors Objective
Test for compliance with Federal Managers Financial
Integrity Act (FMFIA) of 1982
OMB Circular No. A-123, Appendix A provides guidance for
the internal control over financial reporting of FFMIA
Utilize managements documentation to assist in
understanding financial reporting processes
Consider internal control test results


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Consolidated Level Procedures
Gain an understanding of managements process
Verify establishment of senior assessment team, its authority,
and members
Verify appropriateness of significant financial reports selected
Assess reasonableness of materiality assessments for each
significant financial report
Verify significant accounts, major transaction cycles, and the
relevant financial report assertions are identified and included
For each significant financial report
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Bureau Level Procedures
Inspect a sample of bureaus control
documentation to verify that it includes controls at
the:
Entity level
Control environment, risk assessment, monitoring, control activity,
and information and communication processes
Process, transaction, and application level

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Bureau Level Procedures
Inspect a sample of the bureau control
documentation for consistency with CFO Councils
Implementation Guide
Controls to mitigate the risk of financial statement errors
Data characteristics: source; receipt; processing; and
transmission
Supervisor review; process and calculations performed in
preparation of financial reporting; and process outputs
Use of computer application controls and controls over
spreadsheets used in the preparation of financial reporting
Identification of errors: types of errors found; reporting
errors; and resolving errors
Ability of personnel to override the process or controls

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Bureau Level Procedures
Inspect a sample of the internal control testing
documentation to verify that it includes
Managements assessment of the design of key controls
Nature, timing, and extent of testing of key controls
Assessment of operating effectiveness of key controls
tested
Response and conclusions for deficiencies identified
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Assurance Statement Procedures -
Bureaus
Read bureau assurance statement for conformance
with Department guidance
Based on Department materiality
Compare managements and auditors testing results
to bureau assurance statement to verify that:
Managements results support the assurance statement
Management identified all material weaknesses
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Assurance Statement Procedures -
Consolidated
Inspect the assurance statement to verify that it
includes:
Results of the bureau level assurance statements
Any material weaknesses that are identified
Statement of managements responsibility for
establishing and maintaining adequate internal controls
Statement identifying OMB Circular A-123 as the
framework used by management to conduct the
assessment
An assessment of the effectiveness of the agencys
internal control