Page 36 - Financial Report 2020

PRIVACY AND CIVIL LIBERTIES OVERSIGHT BOARD

Enterprise Risk Management, Internal Controls System, and Implementation of
Federal Managers’ Financial Integrity Act
Guidance for implementing FMFIA (31 U.S.C. 3512) is provided through OMB Circular A-
123, Management’s Responsibility for Enterprise Risk Management and Internal Control.
PCLOB took into consideration the best practices set out by the GAO as well as the guidance
provided by the OMB when developing the agency’s Internal Controls Framework (“ICF”)
Manual, issued in February 2019 with the goal of ensuring sound financial and non-
financial risk management while accounting for the PCLOB’s small size and limited
resources. The ICF Manual sets out the agency’s oversight role and strategic decision-
making over enterprise risk management and policies and procedures for establishing,
assessing, correcting, and reporting on internal control.

To ensure the agency continues to maintain a robust internal control framework and
continue meeting the guidelines established in the ICF Manual despite its small size, PCLOB
outsources with an independent contractor to provide internal controls support services,
such as risk assessment, testing, and remediation, with oversight from the Chief Financial
Officer.

In FY 2020, the first evaluation of the internal controls and assessment of risks over
program operations was performed. The Board documented its key controls to address
risks and assessed the design and operating effectiveness of these controls through
detailed test procedures. The Board also tested the operating effectiveness of control
activities that were found to be deficient in prior assessments. The PCLOB Chief Financial
Officer analyzed the magnitude of internal control deficiencies, both individually and in the
aggregate, to determine whether a material weakness existed in the financial reporting
processes.

In summary, the agency’s internal control program is designed to ensure compliance with
the requirements of the Federal Managers’ Financial Integrity Act and other federal
regulations.

Payment Integrity Information Act

PCLOB is a small agency operating under one program, with no activities that are
susceptible to the threshold amounts stated in the Payment Integrity Information Act of
2019 (“PIIA”), which amended requirements stated by the Improper Payments Information
Act of 2002, the Improper Payments Elimination and Recovery Act of 2010, Improper
Payments Elimination and Recovery Improvement Act of 2012, and the Federal Improper
Payments Coordination Act of 2015. By definition, significant improper payments are
defined as gross annual improper payments exceeding both 1.5 percent of program outlays
and $10 million of all program or activity disbursements made during the fiscal year
reported or $100 million (regardless of the improper payment percentage of total program
outlays). The Board performs a risk assessment at least once every three years with the

FY 2020 AGENCY FINANCIAL REPORT 27