Appendix A to Circular A-123 Provides an Opportunity to Add Value in Agency Reporting

The flexibility introduced in the Office of Management and Budget (OMB) Appendix A to Circular A-123 (A-123A) provides an opportunity for agencies to change the compliance testing methodologies toward a systematic program, which is aligned with identified risks and adds value through the mitigation of those identified risks. 

Agencies are no longer constrained to focus testing on financial reporting controls. Rather, agencies are now encouraged to identify and assess the effectiveness of controls across the enterprise which have been developed and implemented to mitigate agency identified risks over the reliability of data included in significant reports used by management for decision-making. This allows the agency to understand the eco-system of internal controls over reporting to build a deliberate plan that adds value through controls and assessments around the agency’s most significant processes and risk areas. By looking at the entirety of agency reporting and not just financial reporting, leaders may find reporting that is required but does not add value to understanding the mission and also areas where adding controls will allow the agency to have more control over its data.