text: Management Internal Controls
  Methods for evaluating controls
  7-37. There are two ways to evaluate controls:
  * Use of the checklist. HQDA functional proponents publish checklists as an appendix in the
  governing Army regulation.
  * Use of existing management review process (alternative method). Existing reviews/inspections
  meet, or can be modified to meet, the requirements of an internal control evaluation. These either
  can be specific functional reviews/inspections (i.e. Information Assurance) or can be generic
  (use of Inspector General inspection or a command inspection program).
  7-38. Scope of the evaluation must be determined in terms of number of records and timeframe. Testing
  methods can be an observation, interview, documentation review, or a simulation. The evaluation must
  include the functional proponent conducting the evaluation, the method used to conduct the evaluation,
  describe any internal control deficiencies that are detected, and the corrective actions that are to be taken.
  All evaluations must be certified by the AUM.
  REPORTING, CORRECTING, AND TRACKING MATERIAL WEAKNESSES
  7-39. After assessments are performed and corrective actions are in place, the importance of keeping track
  of the weaknesses found and the understanding of the many reports during the different processes, has a
  major impact on the financial manager capability to inform the commander of the organization status and
  responsibilities.
  Reporting
  7-40. Once a weakness is identified, a determination of whether or not it is a material weakness has to be
  made. Material weaknesses are the absence or ineffectiveness of controls that must be corrected and
  warrants the attention of the next level of command. Detailed guidance on reporting requirements is
  provided in the DASA-(FO) instructions for the annual assurance statement. Factors that should be
  considered in the determination of material weaknesses:
  * Actual or potential loss.
  * Sensitivity of the resources involved.
  * Magnitude of personnel, funds, property, or other resources involved.
  * Media interest or adverse publicity.
  * Congressional interest.
  * Diminished credibility or reputation of the command.
  * Impairment of mission.
  * Violation of statutory or regulatory requirements.
  Correcting And Tracking Weaknesses
  7-41. Each material weakness reported must include a plan of corrective action, which includes verification
  that the weakness is corrected. Reporting commands are responsible for tracking weaknesses to ensure that
  corrective actions are completed and the weakness is resolved.
  Annual Statement of Assurance
  7-42. The ASA (FM&C) is required to prepare an annual statement of assurance on internal control over
  financial reporting. The annual statement of assurance provides an objective assessment of internal
  controls. The statement is supported by annual feeder statements received from subordinate commanders.
  These statements represent a personal certification of the commander on the effectiveness of internal
  controls within their respective organizations. At a minimum, the assurance statement will consist of a
  cover memorandum that includes:
  * The operational and administrative statement of assurance required by the FMFIA.
  * The internal controls statement must take one of three forms: