Aligning Internal Controls and Enterprise Risk Management Frameworks
Federal CFO insights
Many Federal government agencies have successfully developed and implemented internal control frameworks that are now required by congressional mandates. However, the ultimate objective of effective internal controls is to help the agency achieve its mission, including desired outcomes at the best value for taxpayers. Chief Financial Officers (CFO) are usually the spearhead for determining how robust and effective internal controls will efficiently harmonize with mission oriented processes, systems and people. Complicating this goal is the often heard lamentation that cost cutting demands have resulted in CFOs not making the needed investments for improving key components of the internal control framework such as financial systems, internal control redesign, workforce performance and better governance. Not to be overlooked is the perennial pressures on CFOs to adjust to the ever changing political environment and increasing public scrutiny. Taxpayer focus on government spending versus outcomes is at an all-time high and the CFO is the agency’s best line of defense and champion for addressing these challenges.
The CFO should have a well thought out strategy for rationalizing the design of internal controls. Given that consideration of risk is the primary design criteria for internal controls, CFOs should fully leverage the organization’s Enterprise Risk Management (ERM) framework and risk assessment results to routinely assess the effectiveness of existing internal controls and provide a basis for moderating their design for optimum cost and efficiency. Another primary consideration is change in the organization’s mission and overall risk environment which are often key drivers for identifying and assessing the broad range of risk that the organization must effectively manage.
This article will provide Federal CFOs with a helpful approach to consider for aligning the agency’s Internal Control Framework with the results of its ERM program. Download the article to learn more.