This is historical material, "frozen in time." The web site is no longer updated and links to external web sites and some internal pages will not work.
OMB Circular No. A-123
II. ESTABLISHING MANAGEMENT CONTROLS
Definition of Management Controls. Management controls are the
organization, policies, and procedures used by agencies to
reasonably ensure that (i) programs achieve their intended results;
(ii) resources are used consistent with agency mission; (iii)
programs and resources are protected from waste, fraud, and
mismanagement; (iv) laws and regulations are followed; and (v)
reliable and timely information is obtained, maintained, reported
and used for decision making.
Management controls, in the broadest sense, include the plan of
organization, methods and procedures adopted by management to
ensure that its goals are met. Management controls include
processes for planning, organizing, directing, and controlling
program operations. A subset of management controls are the
internal controls used to assure that there is prevention or timely
detection of unauthorized acquisition, use, or disposition of the
Developing Management Controls. As Federal employees develop and
execute strategies for implementing or reengineering agency
programs and operations, they should design management structures
that help ensure accountability for results. As part of this
process, agencies and individual Federal managers must take
systematic and proactive measures to develop and implement
appropriate, cost-effective management controls. The expertise of
the agency CFO and IG can be valuable in developing appropriate
Management controls guarantee neither the success of agency
programs, nor the absence of waste, fraud, and mismanagement, but
they are a means of managing the risk associated with Federal
programs and operations. To help ensure that controls are
appropriate and cost-effective, agencies should consider the extent
and cost of controls relative to the importance and risk associated
with a given program.
Standards. Agency managers shall incorporate basic management
controls in the strategies, plans, guidance and procedures that
govern their programs and operations. Controls shall be consistent
with the following standards, which are drawn in large part from
the "Standards for Internal Control in the Federal Government,"
issued by the General Accounting Office (GAO).
General management control standards are:
Compliance With Law. All program operations, obligations and
costs must comply with applicable law and regulation.
Resources should be efficiently and effectively allocated for
duly authorized purposes.
Reasonable Assurance and Safeguards. Management controls must
provide reasonable assurance that assets are safeguarded
against waste, loss, unauthorized use, and misappropriation.
Management controls developed for agency programs should be
logical, applicable, reasonably complete, and effective and
efficient in accomplishing management objectives.
Integrity, Competence, and Attitude. Managers and employees
must have personal integrity and are obligated to support the
ethics programs in their agencies. The spirit of the
Standards of Ethical Conduct requires that they develop and
implement effective management controls and maintain a level
of competence that allows them to accomplish their assigned
duties. Effective communication within and between offices
should be encouraged.
Specific management control standards are:
Delegation of Authority and Organization. Managers should
ensure that appropriate authority, responsibility and
accountability are defined and delegated to accomplish the
mission of the organization, and that an appropriate
organizational structure is established to effectively carry
out program responsibilities. To the extent possible,
controls and related decision-making authority should be in
the hands of line managers and staff.
Separation of Duties and Supervision. Key duties and
responsibilities in authorizing, processing, recording, and
reviewing official agency transactions should be separated
among individuals. Managers should exercise appropriate
oversight to ensure individuals do not exceed or abuse their
Access to and Accountability for Resources. Access to
resources and records should be limited to authorized
individuals, and accountability for the custody and use of
resources should be assigned and maintained.
Recording and Documentation. Transactions should be promptly
recorded, properly classified and accounted for in order to
prepare timely accounts and reliable financial and other
reports. The documentation for transactions, management
controls, and other significant events must be clear and
readily available for examination.
Resolution of Audit Findings and Other Deficiencies. Managers
should promptly evaluate and determine proper actions in
response to known deficiencies, reported audit and other
findings, and related recommendations. Managers should
complete, within established timeframes, all actions that
correct or otherwise resolve the appropriate matters brought
to management's attention.
Other policy documents may describe additional specific standards
for particular functional or program activities. For example, OMB
Circular No. A-127, "Financial Management Systems," describes
government-wide requirements for financial systems. The Federal
Acquisition Regulations define requirements for agency procurement