SECNAVINST 5200 - Navy Issuances

SECNAV M-5200.35JUNE 2008Introduction to the DON Managers’ Internal Control (MIC) ProgramThe Assistant Secretary of the Navy (Financial Management and Comptroller)(ASN(FM&C)) is responsible for preparing and compiling the annual Statement ofAssurance (SOA). This responsibility is delegated by ASN(FM&C) to the Office ofFinancial Operations (FMO) and is described in detail in the Secretary of the Navy(SECNAV) Instruction 5200.35E, and SECNAV Manual 5200.35. Information regardinginternal controls, to include both control deficiencies and control-relatedaccomplishments, is collected through two main venues:1) The DON’s Major Assessable Units (MAUs) receive internal controlcertification statements from their subordinate units, and in turn submit certificationstatements up to ASN(FM&C) through FMO. This “self-reporting” of control deficienciesenables commands to demonstrate effectiveness of their control environments andactivities, and indicate the findings of their control assessments.2) Complementing the self-reporting of control deficiencies, FMO meets quarterlywith the Naval Audit Service to review audit reports from the Government AccountabilityOffice (GAO), the Department of Defense (DoD) Inspector General and the Naval AuditService. This review helps identify control deficiencies and utilizes a systematicmethodology to determine materiality and potential for inclusion in the SOA.For both self-reported material weaknesses and those stemming from audit reviews,FMO works with the DON’s MAUs to develop, document and monitor corrective actionsand milestones in accordance with Department of Defense Instruction (DoDI) 5010.40and other applicable guidance.FMO references the DoD “Systemic Weaknesses” identified by the Office of the UnderSecretary of Defense (Comptroller) (OUSD(C)) in the annual DON SOA. DON controldeficiencies are mapped to corresponding DoD weaknesses to identify any correlationbetween these issues.In addition to the certification statements received through the two venues describedabove, the annual SOA includes a separate certification statement on Internal ControlsOver Financial Reporting (ICOFR). In December 2004, the Office of Management andBudget (OMB) released a revised version of OMB Circular A-123, Management’sResponsibility for Internal Control, which included a new appendix (Appendix A), thatstrengthens the requirements for conducting management’s assessment of internalcontrol over financial reporting.In 2005, OUSD(C) revised DoDI 5010.40 to incorporate the new OMB Circular A-123requirements and provided annual implementation guidance. Specifically, DoDcomponents and agencies are directed to prepare and maintain process flowcharts,5