DOD Existence and Completeness Initiative Amber Barber March 16, 2010 NPMA National Capital Area Conference

Who We Are Property & Equipment (P&E) Policy Office Our Mission: Office of the Under Secretary of Defense, Acquisition, Technology & Logistics (OUSD, AT&L), Acquisition Resources & Analysis (ARA), Property & Equipment (P&E) Policy Office Our Mission: To establish policies and support business process development that enables military services and defense agencies to provide more accurate and reliable information to senior leaders to support management decisions at an enterprise-level.

Overview What is “Existence and Completeness”? What is the intent? How is the DOD approaching this effort? What support can each Military Service expect? Why is the E&C initiative beneficial? What we have done so far and the results!

What is Existence and Completeness? The President’s Management Agenda (FY2009) Increase from 13 to 21 the number of agencies earning clean audit opinions and reduce the number of repeat material weakness to 10 percent. Congressional Interest in Audit Readiness DoD currently projects audit readiness in 2016 Memo from USD(C) and USD(AT&L) dated August, 2009 Demonstrate that mission-critical assets are properly accounted for in accountable systems Marked the official beginning of the E&C efforts Definition Existence – “Book to Floor” The records in our accountable systems match a physical asset Completeness – “Floor to Book” Each physical asset has a record in an accountable system

How is the DOD approaching this effort? Financial Improvement and Audit Readiness (FIAR) Plan Identify assets with “quick win” characteristics High profile; high net book value Advanced controls and management procedures Incorporate the “quick wins” in the Financial Improvement Plans (FIPs) Complete auditablility assessments of the “quick win” assets by FY2011 Goals Demonstrate assets are being properly accounted Identify process, system, or control improvements Move significantly toward audit readiness Gain public confidence

DoD Assets Quick Win Assets by Service Quick Win data is based on Net Book Value data available in Capital Asset Management System-Military Equipment and the latest report from USAF. This does not include modifications or group and composite values which are included in the DoD Financial Statement. 6

Support to the Department P&E Policy has committed to aiding the Department Working with OSD(C) to clarify requirements and definitions Providing independent testing of auditability Site visits Testing by sampling Aiding in the preparation of audit assertion packages Developing “tiers” of supporting documentation Continuing work with the FIAR committee and subcommittee Providing feedback on FIAR plan and FIP submissions Coordinating with OSD(C)

Why is the E&C effort beneficial? There are GOOD THINGS happening in the Department that are being overlooked Air Force has provided the first field opportunity Each site provided access to the “quick win” assets Supporting documentation was evaluated for completeness ALL field sites were 100% accurate with E&C! The methods used to prove E&C for the “quick wins” can be applied for other assets Lessons learned will aid Enterprise Resource Plan (ERP) system development Management can use the information from this effort to promote audit readiness and reach an unqualified opinion All efforts lead to sustainability of successful accountability

Challenges DoD Definition of Inventory “Transaction Based” approach versus traditional schedule based Difference between inventory action and inventory report Meeting accounting and accountability requirements Pursue ERP solutions to ensure all requirements are addressed Lacking clear guidance on reporting full cost, deployed asset treatment, preponderance of use Work with USD(C), DOD Components, and Accounting and Auditing Policy Committee (AAPC) for continuous Federal-wide improvements and clarifications

Where do we go from here Expansion of the E&C Initiatives to physical testing throughout the Department Define the next group of assets for testing, perhaps GFP Application of lessons learned to develop better internal controls Cleaning the books of errata and fine tuning the financial statements

For general questions and information, visit our website: Questions? Comments? Contact us at: 703-604-6350, ext 105 Amber.Barber@osd.mil For general questions and information, visit our website: http://www.acq.osd.mil/pepolicy/ Thank You! 11