Appendix B: FMFIA OMB Circular A-123 Definitions and Reporting Requirements
USAID uses the following FMFIA related definitions when determining the most appropriate characterization of a control deficiency.
FMFIA OMB Circular A-123 Definitions and Reporting Requirements
| Deficiency Type |
Definition1 |
| Control Deficiency (FMFIA Section 2—Operations and Internal Control over Financial Reporting) |
Control deficiencies exist when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A design deficiency exists when a control necessary to meet the control objective is missing or an existing control is not properly designed, so that even if the control operates as designed the control objective is not always met. An operation deficiency exists when a properly designed control does not operate as designed or when the person performing the control is not qualified or properly skilled to perform the control effectively. |
| Reportable Condition (FMFIA Section 2—Operations and Internal Control over Financial Reporting) |
Operations – A control deficiency, or combination of control deficiencies, that in management’s judgment, should be communicated because they represent significant weaknesses in the design or operation of internal control that could adversely affect the organization’s ability to meet its internal control objectives.
Financial Reporting (Appendix A to OMB Circular A-123) – A control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles (GAAP) such that there is more than a remote2 likelihood that a misstatement of the entity’s financial statements, or other significant financial reports, that is more than inconsequential will not be prevented or detected. |
| Material Weakness (FMFIA Section 2—Operations and Internal Control over Financial Reporting) |
Operations – Reportable conditions in which the agency head determines to be significant enough to report outside of the agency.
Financial Reporting (Appendix A to OMB Circular A-123) – Reportable condition, or combination of reportable conditions, that results in more than a remote2 likelihood that a material misstatement of the financial statements, or other significant financial reports, will not be prevented or detected. |
| Non-Conformance (FMFIA Section 4) |
Instances in which financial management systems do not substantially conform to financial systems requirements. Financial management systems include both financial and financially-related (or mixed) systems. |
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