TREASURY DIRECTIVE 40-04

DATE: October 31, 2022

SUBJECT: Treasury Internal Control Program

  1. OVERVIEW. The Department of the Treasury's Internal Control Program (TICP) is a program mandated by statute and regulation for implementation by each Treasury component to ensure that operational, financial, program and administrative internal controls provide a level of assurance toward operational and fiscal effectiveness and efficiency. The basic principles of the TICP are: 1) maintaining a culture of continuous business process improvement, self-reporting of internal control deficiencies, and appropriate corrective action; identification/mitigation of risk before it negatively impacts the mission; 2) maintaining an open communication framework between a component's leadership, its appointed TICP coordinator, and key stakeholders. TD 40-04 authorizes the issuance of Treasury Directive Publication (TDP), “Treasury Internal Control Program,” which describes in further detail the guidance and implementation requirements outlined in this Directive.
  2. PURPOSE. This Directive ensures that an appropriate internal control program is operational for all bureaus and reporting entities in the Department. It implements applicable statutes, regulations, and other guidance related to internal controls.
  3. SCOPE. This Directive applies to all bureaus, offices, and organizations in the Department of the Treasury, including the Offices of Inspector General within the Department. The provisions of this Directive shall not be construed to interfere with or impede the authorities or independence of the Department’s Inspectors General.
  4. POLICY. Treasury’s policy is to improve and maintain the accountability and effectiveness of internal controls for all programs and operations within the Department and ensure compliance with laws and regulations.
  5. RESPONSIBILITIES.
    1. The Secretary of the Treasury (“Secretary”) serves as the highest authority for reasonable assurance of internal control throughout the Department. The Secretary certifies and signs the annual Statement of Assurance and related required reports.
    2. The Assistant Secretary for Management (ASM) oversees all activities related to the internal control systems of the Department and ensures the proper and timely completion of reporting requirements related to internal controls.
    3. The Deputy Chief Financial Officer (DCFO) will:
      1. 1) Coordinate, monitor, manage, direct, and evaluate internal control efforts within the Department, including department-wide efforts under FMFIA, FFMIA, GAO Standards for Internal Control, and OMB Circular A-123;
      2. 2) Ensure that each bureau and reporting entity establishes a control-conscious environment that provides a disciplined atmosphere in which managers are aware of the need to establish systematic controls, monitor their application, and periodically review their effectiveness;
      3. 3) Provide oversight and guidance to the bureaus and reporting entities concerning the maintenance of effective controls;
      4. 4) Coordinate receipt of reports from the Department’s Inspectors General and transmission to Congress, as required by Section 5 of the Inspector General Act of 1978, as amended; and
      5. 5) Make recommendations to the ASM, bureaus, and reporting entities regarding the adoption, revision, and implementation of new and revised principles, standards, and policies governing internal control systems, accounting systems (with the assistance and technical expertise of the Office of the Fiscal Assistant Secretary for matters related to government-wide accounting and reporting), and financial assistance administration within the Department.
    4. Bureau Heads, the Offices of Inspector General, and officials designated will:
      1. 1) Take all necessary steps to create an environment within their respective organizations to ensure operational efficiency and adherence to all applicable statutory and regulatory standards related to internal controls, accounting, and financial assistance;
      2. 2) Provide information, data, reports, and assurances, as necessary, to the DCFO that all internal controls and financial management systems within their respective organizations adhere to applicable statutory and regulatory standards;
      3. 3) Ensure timely completion of corrective actions for identified control deficiencies; and
      4. 4) Ensure that all employees are aware of expectations, appropriately trained, and are subject to appropriate performance standards related to internal controls.
  6. AUTHORITIES.
    1. Federal Managers Financial Integrity Act of 1982 (FMFIA), (Public Law 97-255)
    2. Chief Financial Officers Act of 1990 (Public Law 101-576)
    3. GPRA Modernization Act of 2010 (Public Law 111-352)
    4. Federal Financial Management Improvement Act of 1996 (FFMIA), (Public Law 104- 208)
    5. Federal Information Security Modernization Act of 2014, P.L. 113-283
    6. Payment Integrity Information Act of 2019 (PIIA) (Public Law 116-117)
    7. Title 2 of the Code of Federal Regulations (2 CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR PART 200)
  7. REFERENCES.
    1. OMB Circular No. A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control (as revised) and Appendices:
      1. 1) Appendix A (Management of Reporting and Data Integrity Risk),
      2. 2) Appendix B (Improving the Management of Government Charge Card Programs),
      3. 3) Appendix C (Requirements for Payment Integrity Improvement), and
      4. 4) Appendix D (Compliance with FFMIA)
    2. CFO Council, Implementation Guide for OMB Circular A-123
    3. "GAO Standards for Internal Control in the Federal Government" (as revised)
    4. OMB Circular A-136, “Financial Reporting Requirements” (as revised)
    5. Reports Consolidation Act of 2000 (Public Law 106-531)
  8. CANCELLATION. Treasury Directive 40-04, "Treasury Internal Control Program," dated July 12, 2017, is superseded.
  9. OFFICE OF PRIMARY INTEREST. Office of the Assistant Secretary for Management, Office of the Deputy CFO.

 

/S/
Anna Canfield Roth
Acting Assistant Secretary for Management