1. Tri-annual Review (TAR) and The Audit Relationship

2. Agenda Introduction Goals and Objectives Importance
Regulatory Alignment
FMR specifics
Tri-Annual Review and the Audit Relationship
Take Away Application and Tips
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3. Introduction
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4. Goals and Objectives
At the conclusion of this hour each participant should be able to:
Discuss the importance of Tri-Annual Review or Joint Review Program
Discuss Tri-Annual Review and other regulatory relationships
Discuss conceptually how a Tri-Annual Review is conducted
Discuss how it ties to a Independent Auditor’s assessment
Have concepts you can take away and implement at home station
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5. Importance
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6. Importance This was developed by OSD (c) for ASMC and other briefings.
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7. Importance
Audit Risk = Inherent Risk (IR) X Control Risk (CR) X Detection Risk (DR)
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8. Importance Senior Leadership Regulatory Audit
Good use of Taxpayers Funds
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9. Regulatory Alignment Financial Statements CFO Act
Sarbanes Oxley-Section 404
OMB A-123
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10. FMR Specifics
DoD R, Financial Management Regulation, Volume 3, Chapter 8
Standards for Recording and Reviewing Commitments and Obligations
Section 0804 Triannual Review of Commitments, Obligations, Accounts Payable and Accounts Receivable
Internal Control Process to validate Bona Fide Needs of Appropriations charged
Internal Control Process to ensure compliance with United States General Ledger Standard Financial Information Structure Transaction Library
Internal Control Process to ensure Commitments, Obligations, Expenditures are valid and accurate
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11. TAR and Audit Relationship
Section 0804 Triannual Review of Commitments, Obligations, Accounts Payable and Accounts Receivable
Internal Control Process to validate Bona Fide Needs of Appropriations charged
Internal Control Process to ensure compliance with United States General Ledger Standard Financial Information Structure Transaction Library
Internal Control Process to ensure Commitments, Obligations, Expenditures are valid and accurate
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12. TAR and Audit Relationship
Audit Risk = Inherent Risk (IR) X Control Risk (CR) X Detection Risk (DR)
Beginning with the Financial Statements and ask the question: What is the risk of a material misstatement on each line within the respective Agencies reported Financial Statements?
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13. TAR and Audit Relationship
Financial Audit Manual
Government Audit Standards
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14. TAR and Audit Relationship
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15. TAR and Audit Relationship
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16. TAR and Audit Relationship
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17. TAR and Audit Relationship
This was developed by OSD (c) for ASMC and other briefings.
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18. Importance Senior Leadership Regulatory Audit
Good use of Taxpayers Funds
Help in current year and with other re-programming needs
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19. St. Michael’s Experience
Relationships are Key
Commander
Funds Holder
Contracting Officer (Warranted 1102)
Contracting Officer’s Technical Representative
Program Manager (Govt)
Program Manager (Contractor)
Task Order Leadership (Govt)
DFAS
Most have a policy, but not Agency specific
Some have instructions or a SOPs, but very few outside the financial shop have seen it (even fewer know how it works)
Every 90 days something is done – but is it the same? Are the same people involved?
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20. St. Michael’s Experience
Step 1: Establish a single point of contact to be your Triannual or Joint review person or additional duty
Step 2: Draft your awareness campaign (and why it’s important), Agency policy, conduct an end-to-end work flow diagram with swim lanes (relationships), and begin organizational change (ADKAR)
Step 3: Circulate your draft amongst key relationships (swim lanes) and seek input (relationships); ADKAR
Step 4: Establish Commander/Director Memorandum of Understanding (MOU) with those offices in the flow diagram/swim lanes; continue ADKAR
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21. St. Michael’s Experience
Step 5: ADKAR moves to the forefront and training program begins
Step 6: Execute policy and instructions through quarterly scheduled reviews. Place TAR onto the Command Calendar for the next 24 months
Step 7: Conduct AAR with those in the end-to-end flow diagram, make improvements, adjust policy, instructions, and SOPs.
Step 8: Move from K to building A
Step 9: Seek out your R and begin to control/solidify your processes (Automation-ADOBE-Dashboards)
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22. Additional Tips That Work
Current OSD March 2016 Guidance has some testing requirements
Training (Knowledge and Ability)
TAR quality assurance review
Follow up—Follow up---Follow up
Provide examples of acceptable and unacceptable remarks:
Remarks must be of a nature that explains specific actions
What documentation is obligation waiting on (i.e. receiving report, invoice, etc.) to process payment?
Estimated liquidation date (based on input from vendor, DFAS, etc.)?
Contact information of the person performing validation, and follow-up if awaiting update/documentation from other organizations
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23. Additional Tips That Work
TAR quality assurance review
Accountability/Unacceptable remarks:
Use those relationships
Use the MOUs and Command(U)
Some popular vernacular we removed:
Simply stating “valid” or “valid per Mr./Ms. Smith”
Obligation is still valid / Obligation is to cover XXXX
Awaiting final payment OR still researching
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24. Additional Tips That Work
Establish an annual plan reviewing ULOs in line with TAR periods
Start with oldest FYs and work backwards
Review largest dollar amounts
Attack amounts less than $1,000 for de-obligation since no MOD is required by contracting
Follow-up – Follow-up – Follow-up
Adequate documentation
Open Lines of Communication
Relationships are key…collaborate commitments and obligations to determine the validity of the sufficiency funding level to support the bona fide need for the outstanding goods and services
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25. Summary and Review Today we discussed: Tri-Annual Review Importance
Tri-Annual Review and other Regulatory Guidance
Tri-Annual Review relationship with Independent Auditor’s Assessment
Tri-Annual Review Tips
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26. QUESTIONS?
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27. St Michael’s TAR Process Backup Slides
9/20/2018
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28. Appropriation Life-Cycle
TAR Terms
Current Year Funds - Verification of the continuing bona fide need for goods and services that have not been delivered to minimize invoicing in future years.
Expired Year Funds – Ensures de-obligation of expired funds no longer valid. Expired funds are not available for new obligations. Both the obligated and unobligated balances of expired appropriations must be available for recording, adjusting, and liquidating obligations properly chargeable to that account.
Cancelled Year Funds – Verifies canceled funds to return to the Treasury. Operation and Maintenance appropriations are available for obligation for one fiscal year, available for expenditure for the next 5 fiscal years, and canceled at the end of the fifth year after expiration of the appropriation. Canceled funds are not available for expenditure for any reason. However, if still valid the funds will be charged to any current appropriation account for the same purpose. Therefore a solid TAR will eliminate canceled funds.
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9/20/2018

29. Appropriation Life-Cycle
TAR Terms Cont.
Commitment – administrative reservation of funds
Obligation – an order placed with a vendor to furnish supplies and services
ULOs – Un-liquidated obligations. (Unpaid, invalid, dormant, etc.)
Expired – An appropriation with incurred obligations can still be paid out of the appropriation with no new obligations incurred. Upward and downward adjustments can be made, subject to applicable limitations by HQ SOCOM and Congress. Expired years last five years.
9/20/2018
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30. Appropriation Life-Cycle
TAR Terms Cont.
Accounting Stages
Disbursement Accounting
Commitment
Obligation
UOO – Undelivered Orders Outstanding
AEU – Accrued Expenditures Unpaid
AEP – Accrued Expenditures Paid
Reimbursement Accounting
UFCO – Unfilled Customer Orders
FCOU – Filled Customer Orders Uncollected
FCOC – Filled Customer Orders Collected
9/20/2018
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31. Appropriation Life-Cycle
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9/20/2018

32. ODL – Open Document Listing
Tri-annual Review – Partial Checklist Example
FMA Guidance
Yes No
N/A
Date Completed
Have TAR lines been received from DFAS within FMSuite Correctly?
Have applicable lines been distributed from FMSuite to Fund Holders/Resource Advisors in a timely manner?
Do you have adequate supporting documentation to forward to DFAS for obligation/de-obligation action?
Have TAR files received back from FH/RA been completed? (Ensure all lines have valid base codes, remarks, obligation and de-obligation amounts and attached supporting documentation in FMSuite)
Has follow-up been done to ensure DFAS processes requests in timely manner during next reporting period?
Funds Holder/Resource Advisor Guidance
Are you maintaining all commitment and obligation documentation generated for your organization?
Do you understand all applicable documents? If not, have you contacted your FMA/Budget/Contracting office for required guidance and training?
Does each accounting line reflect the correct line of accounting (LOA), stage of accounting, and dollar amount compared to supporting documentation?
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9/20/2018

33. TAR Guidance
FMR – DoD Financial Management Regulation R, Vol 3, Chap 8 and DFAS-DE G
DoD’s Goal – Increase DoD’s ability to use available appropriations before they expire and ensure remaining open obligations are valid and liquidated before the cancellation of the appropriation.
Tri-Annual Review (TAR) Requirements – All commitments and obligations shall be reviewed, whether current or dormant, at least annually in order to substantiate the year-end certification requirements.
TAR Reporting Periods -
Oct-Jan all canceling funds
Feb-May - all expired funds
Jun-Sep all current funds
9/20/2018
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34. Steps To Clear UOOs
FHs/RAs initiate a written consent of funds to be de-obligated to contracting for funds less than $1,000 then;
Contracting officer sends form letter to Vendor for contract validity
If contract completed & funds remain over $1,000 then;
Contracting does MOD for residual balance over $1,000 on contract
Remaining funds are identified in a standardized form letter to accounting requesting to de-obligate funds then;
Finance de-obligates funds (notifies DFAS then;
Fund line is zeroed out for positive TAR reporting
9/20/2018
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