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Navigating the revised Green Book
Meeting the new internal control standard
Full implementation of the revised Green Book standards will allow CFOs to take a fresh look at their risk and control measures.
The Green Book
Quietly, the standards governing federal agencies' compliance with the Federal Managers Financial Integrity Act (FMFIA) have undergone a revision. At the end of the 2014 fiscal year (FY), as agencies made preparations for year end, the Government Accountability Office issued a broad revision to its Standards for Internal Control in the federal government, also known as the Green Book. As a result, executive branch agencies must examine their FMFIA programs to assess compliance with these updated internal control standards beginning in FY 2016.
Although implementation of the new standard can pose many challenges, full implementation of the revised Green Book standards will allow chief financial officers (CFOs) to take a fresh look at their risk and control measures to identify efficiencies, reduce redundant controls, and simultaneously make large strides in reducing risk exposure, especially with consideration to fraud risks.
The path forward
While adopting the revised Green Book will likely pose some challenges in the short-term, the more robust requirements and control environment considerations will enable a more effective and efficient government that can more readily demonstrate its stewardship of tax payer dollars.
As CFOs design their programs in response to the Green Book revisions, they should consider the intent and purpose behind each principle to unlock the full value as envisioned by GAO. In response to the revision, CFOs should reevaluate their chosen control and risk mitigation strategies to identify areas of redundancy and showcase the internal control program’s ability to increase efficiency, while simultaneously increasing oversight. Adoption represents a unique opportunity to take a fresh look and set the tone for agency risk management well into the next decade.