Which circular covers Management's Responsibility for Internal Control?

Which circular covers Management's Responsibility for Internal Control?

• A. OMB Circular A-11
• B. OMB Circular A-76
• C. OMB Circular A-136
• D. OMB Circular A-123

Answer: (D)

The concept being tested is which guidance directs management to take responsibility for establishing and maintaining internal controls. OMB Circular A-123 explicitly requires agency leadership to design, implement, and monitor internal controls that provide reasonable assurance of achieving objectives, safeguarding assets, producing reliable financial reporting, and complying with laws and regulations. It also mandates annual assessments of internal control effectiveness and remediation of any significant deficiencies, aligning with the Federal Managers’ Financial Integrity Act and the GAO’s Green Book standards. The other circulars address different areas: A-11 covers budget formulation and execution; A-76 deals with competition for government services; A-136 provides guidance on financial and performance reporting. Thus, the circular that centers on Management’s Responsibility for Internal Control is A-123.

The concept being tested is which guidance directs management to take responsibility for establishing and maintaining internal controls. OMB Circular A-123 explicitly requires agency leadership to design, implement, and monitor internal controls that provide reasonable assurance of achieving objectives, safeguarding assets, producing reliable financial reporting, and complying with laws and regulations. It also mandates annual assessments of internal control effectiveness and remediation of any significant deficiencies, aligning with the Federal Managers’ Financial Integrity Act and the GAO’s Green Book standards. The other circulars address different areas: A-11 covers budget formulation and execution; A-76 deals with competition for government services; A-136 provides guidance on financial and performance reporting. Thus, the circular that centers on Management’s Responsibility for Internal Control is A-123.