State Assessment of Internal Controls Final Report, May 2007

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II. POTENTIAL USES BY STATE AND FEDERAL STAFF

States can view completed internal control Instruments as living documents, making revisions as circumstances, conditions, and risks change. The CCB views the State Internal Control Self-Assessment Instrument as a promising tool for both State and Federal managers. The Instrument provides the CCB and States with a systematic method for reviewing and documenting the adequacy of a State’s internal control system, by identifying internal control weaknesses, and providing documentation of findings, and possible corrective actions. The CCB believes this Instrument can complement other Federal activities aimed at helping States become more vigilant and prevention-oriented in an overall effort to reduce errors that could result in improper payments.

A. Benefits of the Instrument

ACF Regional Office program specialists and grants officers, along with representative from nine States/Territories and WRMA, were an integral part of the development and piloting of the Instrument. The State and Federal Project Teams who participated in the pilot identified the following benefits of the Instrument implementation process:

1. Benefits to States

• Enables the States to evaluate their internal controls against GAO standards;
• Can be adapted for use in other program areas;
• Combines into a single document a wide variety of information that can be used to monitor internal controls and prevent errors that could result in improper payments;
• Documents areas needing ongoing monitoring or other corrective action activities;
• Can become a “virtual document” that continually updates through hyperlinks to the State’s Internet or Intranet site each time the State changes supporting material;
• Addresses the core processes affecting the child care program, when used in conjunction with the State Plan;
• Documents when necessary internal controls exist and function adequately to minimize the risk of errors that could result in improper payments; and
• Can be adapted to meet the unique requirements of a particular State and adapted to other State programs.

2. Benefits to ACF Staff in Regional Offices

• Assists States in performing oversight and supporting the CCDF program;
• Identifies areas for technical assistance with States, individually or in regional meetings;
• Highlights areas that States identify as weaknesses, which when combined with the State Plans, audits and other reports, can develop and support corrective actions; and
• Provides a vehicle for sharing of best practices both within and across Regions.

This Instrument can be a major source document for multiple parts of the organization and benefit a broad range of program areas. Exhibit 1 provides an example of how Kentucky used hyperlinks for documentation sources in Column 3 so that when a part of the organization updates its documents, it can simultaneously update the Instrument. Kentucky also used Column 4 from the Instrument to explain how the State will address an area or take a corrective action if needed.

Exhibit 1. Use of Hyperlinks & Follow-up as Documentation

The following chapter describes in more detail the methodology used to develop the initial draft Instrument.

Posted January 31, 2008