text: Management Internal Controls
  The ability of commanders and managers at all levels to detect, or be aware of, management control
  weaknesses and take corrective action is a fundamental principle of the Federal Managers Financial
  Integrity Act (FMFIA) and Management Control.
  Key Management Controls
  7-11. Key management controls are those controls that are absolutely essential to ensuring that critical
  processes operate as intended and that resources are safeguarded from fraud, waste, and misuse. HQDA
  functional proponents are responsible for identifying key management controls based on risk.
  Separation of Duties
  7-12. To reduce the risk of error, waste, or wrongful acts, or to reduce the risk of those acts going
  undetected, no one individual should control all key aspects of a transaction or event cycle. Rather, duties
  and responsibilities (e.g., authorizing; approving and recording transactions; making payments; preparing
  checks and check payments; certification of funding; reviewing and audition) should be assigned to
  separate individuals to ensure that effective checks and balances exist to minimize risk of loss to the
  government to the greatest extent possible. Appropriate separation of duties is not always practical or
  possible due to time constraints, manpower shortages, or the use of automated systems. The commander
  shall be aware of situations where valid, long-standing separation of duties cannot be achieved, recognize
  that internal controls have been weakened as a result of such, and make every effort to compensate for loss
  of the internal control. Unique situations resulting in an inability to separate appropriate responsibilities
  shall be reported to the applicable DFAS or Service commander, together with a request for a waiver and
  recommendations for compensating for the loss of the internal control.
  ESTABLISHING ACCOUNTABILITY AND STEWARDSHIP
  7-13. Since the enactment of key FM reforms, the Army has made substantial progress in improving FM
  practices. The FM community has to address the following requirements for establishing critical
  accountability and fiscal stewardship for the Army:
  * Transforming FM to embrace an enterprise mindset.
  * Transforming FM staffs and units and their business practices.
  * Improving financial reporting to achieve auditable financial statements.
  * Modernizing FM systems.
  * Monitoring remaining internal control weaknesses until corrected.
  * Building a competent and trained FM workforce for the future.
  7-14. As indicated by the DODIG report of internal controls over payments made in Iraq, Kuwait, and
  Egypt, the Army and the FM community must make improvements in checking high risk areas. The
  vignette below describes the impact of weak internal controls on theater financial management operations.
  Vignette: DODIG Report of Internal Controls Over Payments Made in Iraq, Kuwait, and Egypt
  (May 2008)
  Background. Between April 2001 and June 2006, the Army made 183,486 commercial and
  miscellaneous payments, totaling $10.7 billion from seven (7) Army contingency disbursing
  stations in Iraq, Kuwait, and Egypt. The Defense Criminal Investigative Service determined that
  there had been only a limited review of completeness, accuracy, and propriety of these payment
  vouchers and that the potential existed for fraud, waste, and abuse. As a result, DODIG reviewed
  the payment vouchers to determine whether internal controls over the payments supporting
  Global War on Terror provided reasonable assurance that payments were properly supported and
  recorded.
  Results and Management Comments. Department of Defense (DOD) did not have adequate
  guidance to support financial operations in supporting military finance operations. DOD did not
  have adequate internal controls over funds disbursed by contingency disbursing stations.