COMDTINST 5700.10
6. DISCUSSION.
a. Federal policymakers and program managers are continually seeking ways to better achieve
agencies' missions and program results; in other words, they are seeking ways to improve
accountability. A key factor in helping achieve such outcomes and minimize operational
problems is to implement appropriate internal controls. Effective internal control also helps in
managing change to cope with shifting environments and evolving demands and priorities. As
programs change and as agencies strive to improve operational processes and implement new
technological developments, management must continually assess and evaluate its internal
control to assure that the control activities being used are effective and updated when necessary.
b. Internal controls are tools such as organization structure, policies, processes and procedures
which enable managers to achieve desired results, safeguard assets, and maintain the integrity of
their functions/activities. Implementation of internal controls should be an integral part of the
entire cycle of planning, budgeting, management, accounting, and auditing. FMFIA requires that
agency heads report annually on their controls. Effective in FY06, the DHS Financial
Accountability Act further requires that an audit be conducted of the DHS annual assurance
statement on internal controls over financial reporting.
c. Internal controls are essential to all CG financial and operational processes. They are essential
to financial reporting because of the need for reliable information to make sound financial
decisions and to provide accurate and reliable financial data to external users. They are essential
to operations because of the need by CG Commanders to effectively employ operational
resources based on reliable performance reporting by field units. Finally, because the CG is a
government entity, it must have effective controls in place for compliance with all applicable
laws and regulations.
d. A key element for an effective system of internal control is the identification of control
objectives. Control objectives are performance goals for specific processes that must be
achieved in order for the CG to accomplish its mission with an acceptable level of risk. Internal
controls must be designed to achieve specific control objectives.
e. There are three basic requirements for effective internal controls:
(1) They must be in place;
(2) They must be adequately designed to meet the control objective;
(3) They must be operating effectively, as measured against the control objective.
If any one of these requirements is not met, a control can not be effective.
f. In order to establish and maintain effective internal controls, managers must continually monitor
and evaluate their internal controls. The objective of such monitoring and evaluation is to verify
that the essential control requirements listed above are being met. Internal control evaluations
can be performed using a variety of existing information sources, including management
reviews, audit reports, and annual reviews conducted in connection with the Federal Information
Security Act (FISMA) and OMB Circular A-130, Management of Federal Information
Resources. Where existing information sources do not provide sufficient evidence for an
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