text: Chapter 7
  ARMY MANAGEMENT RESPONSIBILITY FOR INTERNAL CONTROLS
  7-3. The Army is required to develop and maintain effective internal controls over all its programs.
  Commanders and managers at all levels must understand the importance of evaluating their internal
  controls in an objective manner and sharing the results with others. Internal controls are the policies and
  procedures used every day to ensure the Army achieves its planned objectives of effective and efficient
  operations, reliable financial reporting, and compliance with applicable laws and regulations. Internal
  control standards encourage appropriate use of Army resources and deter fraud, waste, and abuse. Army
  commanders and managers are responsible for ensuring that effective internal controls are developed,
  implemented, documented, and assessed for all programs. Additionally, Army commanders and managers
  must identify required improvements, take corrective actions, and report internal control issues through the
  annual management assurance statement.
  7-4. Leadership is crucial to implementing management controls. Leaders must stress the importance of
  effective and efficient internal controls to their mission, ensure their staffs understand their responsibilities
  in the process and demand integrity in the reporting of internal control problems and the corrective actions
  taken to resolve them. An overarching aspect of management responsibilities is for the Army to take
  prompt and effective actions to correct weaknesses.
  KEY MANAGERS’ INTERNAL CONTROLS CONCEPTS
  7-5. Each FM manager should be aware of the different concepts that relate to the managers’ internal
  control program. The understanding of each area will improve the application of controls and monitor tools.
  Stewardship
  7-6. Stewardship is the Army’s responsibility to the American people to manage and properly utilize the
  resources provided to the Army in a manner that reflects and matches the trust and confidence in which
  those resources are given. Stewardship is a principle of FM and is further defined in chapter 1.
  Internal Controls
  7-7. Internal controls are an integral component of an organization’s management that provides
  reasonable assurance that the following objectives are being achieved:
  * Effectiveness and efficiency of operations.
  * Reliability of financial reporting.
  * Compliance with applicable laws and regulations.
  * Prevention and deterrence of fraud, waste, and abuse.
  7-8. Internal controls are an inherent component of operations. It is not a onetime event, but a continuous
  process of actions and activities that occur throughout an organization’s operations. People are a key
  component of an effective internal controls program. The responsibility for good internal controls rests with
  commanders and managers. Commanders and managers set the objectives, put controls in place, and
  monitor and evaluate the controls. All personnel in the organization play important roles in making it
  happen.
  Reasonable Assurance
  7-9. Reasonable assurance refers to a satisfactory level of confidence that management controls are
  adequate and are operating as intended. Reasonable assurance recognizes that there are acceptable levels of
  risk that cannot be avoided because the cost of absolute assurance would exceed the benefits derived.
  Material Weaknesses
  7-10. The absence or ineffectiveness of management controls constitutes a management control weakness
  that must be corrected. Whether the weakness is serious enough to be considered and reported to the next
  level of command is a management decision based on criteria established in applicable Army regulations.