1. Sandhills Chapter Audit Update 23 August 2017
Accountability & Audit Readiness: Sustaining Army’s Strength
Office of the Assistant Secretary of the Army (Financial Management & Comptroller)
(OASA(FM&C))

2. Army Full Financial Statement Critical Capabilities Progress
Army Progress – OSD Critical Capabilities – As of 10 August 2017
Army General Fund
Full Financial Statement Audit Readiness
Army Working Capital Fund
Full Financial Statement Audit Readiness

3. Audit Lifecycle Continuum
Expected Audit Opinion
Disclaimer
Adverse
Modified
Unmodified**
Complete Army
Universe of
Transactions
Balance Cash Account with Treasury
Support System Adjustments
Universe of Transactions
Support for Transactions
Standard Business Processes
Posting Logic & Adjustments
Audit Opinion
Alignment of Service Providers
Accountabilty and Valuation of Assets and Liabilties
Audit
Assess
Sustain!
Demonstrate
Audit Readiness
Develop*
System
Controls
Annual Internal Control Over Financial Reporting (ICOFR) Activities (OMB A-123)
Effective systems,
People and Efficient Processes
Army’s current opinion lags behind it’s progress moving forward in audit, currently Army has received a disclaimer for FY15 and FY16, it is expected that the outcome of the FY17 will also be a disclaimer
Internal Controls
Audit Findings
Control
Optimization
and
Realization
Governance & Management
Service Providers
*Critical Capabilities (deal-breakers) identified by the Office of the Under Secretary of Defense (Comptroller) (OUSD(C) to undergo an audit
** Successful Audit (unmodified opinion) may take many years for agencies as large and complex as Army
Current Army Activities

4. Army Approach to Auditability
The Army has taken a progressive approach to full financial statement auditability aimed at continuously increasing momentum towards full financial statement audit
In FY15 and FY16, Army underwent audits of our Schedule of Budgetary Activity (SBA)
In FY17, Army moved to audit of the full Statement of Budgetary Resources (SBR)
The Army is also currently undergoing audits of two major asset groups: General Equipment and Operating Materials and Supplies
Army is only Military Department undergoing a full SBR audit
The Army believes strongly that meaningful progress is spurred through the rigor of audit scrutiny

5. Army Approach to Auditability (Continued)
The Army continues to remediate FY15 & FY16 audit findings
A thorough prioritization assessment was conducted and each finding was assigned to an accountable Corrective Action Plan Development Owner
Corrective action plan progress is tracked and reported to Army leadership bi-weekly by Senior Responsible Officials
The Army established the Business Mission Area Champion (BMAC) audit committee to provide strategic oversight for Army audit readiness efforts
The BMAC was established to ensure accountability at the highest levels and within the organizations with direct control over areas critical to audit success

6. FY17 Audit Priorities Universe of Transactions and Reconciliations
Budget Execution
and
Improvement
Asset
Valuation
Posting Logic
and Data Categorization
Universe of Transactions and Reconciliations
Existence
Completeness
Fund Balance
with
Treasury
(FBwT)
Environ-mental and
Disposal (EDL)
Journal
Vouchers
Information Technology General
Controls
(ITGC)

7. Expectations for FY18 and Beyond
KPMG expects to issue the FY18 audit requests in January
KPMG is making connections between the SBR and Balance Sheet line items
Anticipate similar walk-throughs and focus on internal controls and substantive testing
First time audit of the Balance Sheet - auditors will be in learning mode

8. Expectations for FY18 and Beyond (Continued)
Integration of Property, Plant & Equipment (Real Property and General Equipment), Inventory & Related Property (Operating Materials & Supplies) and Environmental and Disposal Liabilities into KPMG’s annual audit plan
Expect to see frequent visits to FORSCOM, IMCOM, ARNG, USAR, PEOs, Depots, etc. sites to conduct business process interviews, conduct existence and completeness testing, and perform internal controls testing

9. Challenges
Though Army remains committed to achieving audit success, some significant challenges remain:
Fiscal Uncertainty
Audit requirements compete for resources alongside weapons systems and readiness activities
Complex system environment
Number of legacy systems and interfaces results in significant reconciliation issues
Numerous system changes need to occur in GFEBS to support auditability.

10. Challenges (Continued)
Significant challenges remain:
Building and sustaining a culture of auditability:
Audit is not always viewed as a “Warfighting” need
Increase participation in leadership and governance support, starting with the “tone at the top”

11. The Way Ahead
Complete an audit of the full Statement of Budgetary Resources in FY17
Continue to hold ourselves and our teams accountable for corrective actions
Continue to enhance partnerships with stakeholders
Maintain central location for data to support reconciliation of financials with feeder systems
Enhance governance, outreach and communications

12. The Way Ahead (Continued)
Establish and implement strong internal controls for the physical inventories of assets
Complete validation and execution of FY15 - FY17 corrective action plans
Continue to standardize business processes
Expand technical skills for a proficient work force

13. Questions / Comments