Statement of Assurance (SoA) Terms

(per DoDI 5010.40, Managers’ Internal Control (MIC) Program Procedures)

Assessable Unit
Any organizational, functional, programmatic or other applicable subdivision of an organization that allows for adequate IC analysis. An assessable unit’s functions include the documentation, identification, and insertion of controls associated with a specific sub-function in order to mitigate identified risk. The assessable unit is required to have an appointed and adequately trained assessable unit manager.

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Control Deficiency
The design or operation of a control that does not allow the organization to prevent or detect misstatements on a timely basis or to accomplish the mission objectives.

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Financial Statement Reporting Entity (FSRE)
An entity assigned by either the Office of Management and Budget (OMB) or the DoD to produce and provide to OUSD(Comptroller) stand alone, financial statements, both quarterly and annual.

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Internal Controls
The organization, policies, and procedures that help program and financial managers achieve results and safeguard the integrity of their programs.

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Internal Control Assessment
A documented evaluation on the effectiveness and adequacy of the system [of internal controls] to meet the mission objectives, implemented in a cost effective way.

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Internal Control Assessment (Overall)
An assessment of the internal control effectiveness for the functions under the Federal Manager’ Financial Integrity Act (FMFIA). The overall process includes all programs, activities, and operational areas [i.e., the Internal Control Reporting Categories defined in DoDI 5010.40].

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Internal Control Assessment (ICA) Internal Control Over Financial Reporting (ICOFR)
An assessment of the effectiveness of internal controls over financial reporting which closely follows the guidance in Appendix A of OMB Circular A-123 and MIC Program Annual Guidance provided by OUSD(Comptroller).

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Material Weakness
A specific instance of a failure in a system of control or lack of control that would significantly impair fulfillment of agency’s mission, violate statutory or regulatory requirements, or significantly weaken safeguards against waste, loss, unauthorized use or misappropriation of funds, property or other assets. The material weakness may present a major impact to the environment, safety, security, or readiness of the command. For financial reporting, this would include a reportable condition or combination of reportable conditions that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.

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Reasonable Assurance
An informed judgment by management as to the overall adequacy and effectiveness of internal controls based upon available information that the systems of internal controls are operating as intended.

There are three possible assurance statements:

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Reportable Condition (Overall)
A control deficiency (or combination of deficiencies) that in management’s judgment, should be communicated because they represent significant weaknesses in the design or operation of internal controls that could adversely affect the organization’s ability to meet its internal control objectives.

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Reportable Condition (ICOFR)
A control deficiency (or combination of deficiencies) that adversely affects the entity’s ability to initiate, authorize, record, process or report external financial data reliably according to generally accepted principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements, or other significant financial reports, is more than inconsequential will not be prevented or detected.

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Risk
The possibility an event will adversely effect the achievement of internal control objectives and result in the loss of Government resources or cause an agency to fail to accomplish significant mission objectives through fraud, error, or mismanagement.

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Systemic Weakness
A specific instance of a failure in a system of control or lack of control that is pervasive within the DoD and materially affects ICs across organizational and program lines, usually affecting more than one DoD and OSD Component.
Note: A systemic weakness is determined by the PSA with functional responsibility for the area in question.


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