COMDTINST 5700.10
4. BACKGROUND. The Budget and Accounting Procedures Act of 1950 requires Federal managers
to establish and maintain adequate systems of internal control. Because of numerous instances of
fraud, waste, abuse, and mismanagement, Congress passed the FMFIA of 1982. This Act requires
the Head of each Agency to conduct an annual evaluation of its internal controls (Section 2) and
financial management systems (Section 4) and report the results to the President and Congress.
OMB Circular A-123 (revised December 21, 2004) establishes government policy on internal
controls and assigns management the responsibility for establishing, maintaining, reviewing, and
improving systems of internal control. The DHS Financial Accountability Act of 2004 reinforces the
importance of internal control by requiring an annual DHS management statement on internal
control and an independent audit of that statement starting in Fiscal Year 2006.
5. POLICY.
a. Although internal control encompasses all CG functions, the initial focus of this Instruction is on
internal control over financial reporting. This is because of the high level of emphasis placed on
internal control over financial reporting by references (b) and (c). At a subsequent date this
Instruction will be revised to reflect the broader scope of internal control over all CG operations
and compliance with laws and regulations.
b. CG policy requires compliance with the requirements of references (a), (b), and (c). All levels of
management in the CG are responsible for ensuring that resources of every kind under their
purview are used efficiently and effectively, and that programs and functions/activities are
discharged with integrity and in compliance with applicable laws and regulations. Internal
control mechanisms employed by CG managers will provide reasonable assurance that the
following objectives are met:
(1)
Resources are efficiently and effectively managed;
(2)
Applicable laws, regulations, and policies are observed;
(3)
Financial and all other resources are safeguarded from unauthorized use or disposition;
(4)
Transactions are executed in accordance with authorizations; records and reports are reliable
(accurate and timely information is obtained, maintained, reported and used for decision
making); and
(5) Financial systems conform to government-wide standards and appropriate internal controls
are applied to all system inputs, processing and outputs.
c. CG managers at all levels shall incorporate internal controls in the strategies, plans, guidance
and procedures that govern their programs and functions/activities. Internal controls shall be
consistent with standards listed in enclosure (3) which are drawn in large part from the
"Standards for Internal Control in the Federal Government", issued by the Government
Accountability Office (GAO).
d. CG managers will continuously monitor, evaluate and improve the effectiveness of internal
controls associated with their programs and functions/activities. Annual evaluations conducted in
accordance with this Instruction will provide the basis for an annual certification by the
Commandant on the adequacy of internal controls in the CG.
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