The Department of Defense (DoD) is in a race to achieve audit readiness by the end of fiscal year (FY) 2017.  To effectively sustain auditability, each DoD component must be able to implement a comprehensive Managers’ Internal Control Program (MICP) in accordance with DoD Instruction 5010.40, which is designed to establish effective and efficient internal controls over financial reporting (ICOFR), internal controls over operations (ICOO), and internal controls over financial systems (ICOFS) across all levels of an organization. The annual MICP assessment cycle supports audit sustainment and lasting financial management reform by providing the framework to:
• Develop a comprehensive annual internal control assessment plan and risk assessment.
• Identify key personnel to lead and support program implementation.
• Document processes and internal controls.
• Assess and align risks with mission priorities.
• Test design and operating effectiveness of key controls.
• Develop, execute, and monitor corrective action plans (CAPs) for remediating deficiencies.
However, as stated in Asif A. Khan’s May 2014 testimony before the Committee on Homeland Security and Governmental Affairs, U.S. Senate, there are concerns as to whether an environment of audit sustainability without effective processes, systems, and controls can be maintained. Historically, financial improvement and audit readiness (FIAR) efforts across the DoD have been focused at the departmental and headquarters levels. To achieve and sustain auditability beyond FY 2017, each component must expand the scope of its FIAR efforts to encompass all levels of the organization to mitigate risk, remediate deficiencies, and ultimately realize a mature control environment.  Download the White Paper