1. A Controls Perspective
Property Management…
A Controls Perspective
Mr. Ken Miller
Mr. Bobby Garrett
For: Ms. Amber Propert
OUSD(AT&L) P&EP
28 November 2018

2. Policies for Property Manager Internal Controls Overview Evaluation
Agenda
Policies for Property Manager
Internal Controls Overview
Evaluation
Lessons Learned

3. “Quack” Quiz #1
Internal control is a process designed to provide reasonable assurance regarding the achievement of which objective?
a. Effectiveness and efficiency of operations
b. Reliability of financial reporting
c. Compliance with applicable laws and regulations
d. All of the above

4. DoD Preparing for Audit
DoD must be audit ready by 2017 (Congressionally mandated)
Existence and completeness and property accountability are key factors to supporting audit readiness goals
Accounting, logistics, and property communities should be working together
Potential to broaden – every federal agency is subject to CFO Act…
Former Secretary Panetta on audit readiness
“…this is a priority for me and will be an “all hands” effort across the Department.”
- Secretary of Defense Memo dated October 13, 2011
Secretary Hagel recognizes accountability as a key to audit readiness:
“All institutions must be accountable. Elected officials are accountable. We’re all accountable.”
- Defense Audit Readiness News, March 2013

5. Foundation for Effective Property Management
Process Improvement
Processes
People
Policies
Property management is founded on approved policies, well-trained people, strong business processes & internal controls, and evaluation with corrective actions.

6. Elements of Policy Define roles and responsibilities
Define property management parameters
Establish when accountability starts and ends – product life cycle
Set forth physical inventory procedures and timing
Talking points… When establishing policy need to address:
Who
What
When
Why
Where
How
Policies cannot be static…
They must change as regulatory and business environment changes

7. Policies – Example: DoD 5000.64
DoD Instruction utilizes key concepts to provide structure for the Department’s property accountability
Defines various property classifications
Real property
Personal property
Government Furnished Property (GFP)
Contractor Acquired Property (CAP)
IT assets with Personally Identifiable Information (PII)
Supporting Documentation
Acceptable documentation:
Purchase invoices
Sales and procurement contracts
Receiving documents
Physical Inventories
Conduct inventory every 3 years or less
98% physical inventory accuracy rate
Endorses and identifies necessary tools
Accountable Property System of Record (APSR)
Accountable Property Officer (APO) Guidebook (Draft)
PII isn’t a property class
Change “being drafted” to (draft)

8. People – Considerations for Property Accountability
Accountable Property Officers (APOs): POC responsible for overseeing property accountability however not a “one person” function
Cooperation throughout the entire organization is required to ensure successful property management
Requirements
Establishment of Property Manager function requires:
Senior leadership support
Training
Culture of accountability
Resources
Demonstrated “expertise” (no “newbies”)
Process improvement leadership
Roles
Responsibilities of Property Manager include:
Lead by example
Record procured property
Identify underutilized or unneeded assets
Ensure effective processes for strong accountability
Reconcile APSRs with physical inventories
People:
Need function that is accountable for accountability of property
To be successful, this function must have the full support of senior leadership & position must be perceived as critical
Instill a culture of accountability for property, always know what stuff you have, where it is, who’s responsible
Persons performing roles must be adequately trained in property and accountability
Serves as change agent for improving accountability & sharing/implementing best practices

9. Information Systems Controls
Process Overview
Consists of manual procedures, systems, and control environment.
Takes the policies of the organization and put them into practice
Control Environment
Operating Controls
Information Systems Controls

10. Types of Internal Controls
Preventive Controls
Definition: Aim to deter the instance of errors or fraud before they occur.
Examples: -Locks
-Passwords
-Thorough Doc. & Policy
Detective Controls
Definition: Identify undesirables occurrences after the fact
Examples: -Random Physical Inventory
-Internal Audits
-Peer Reviews
Corrective Controls
Definition: Correct errors found by the detective controls
Examples: - Process to resolve error off of error reports
- Moving pilferable items to secured area

11. Operating Controls Receive Operate Dispose
Operating Controls- Controls over the day-to-day operations throughout an asset’s life cycle
Control Consideration - Asset’s Life Cycle
Receive
Right Asset?
Adequate Supporting Docs?
Timely Entry Into System?
Operate
Physical Inventory
Custodial Changes
Missing Asset Root Cause Analysis
Unique Marker/Label
Dispose
Approved?
Timely System Update?
Documentation
Lost/damaged /destroyed research

12. Information System Controls
INFORMATION SYSTEM SECURITY
General Controls
Business Process Application Controls
Controls Over All Systems: * Security Policies
* Access Control
* Segregation of Duties
* Contingency Planning
Discuss
FISCAM Controls Assessments
SSAE 16 Reviews – in order to rely upon controls
Controls associated with Individual Applications: * Completeness
* Accuracy
* Validity
* Availability
Most federal operations are supported by automated systems and electronic data

13. Evaluate Controls – Continuous Process Improvement
Routine monitoring necessary to ensure controls are effective
Error reports
Results of audit (Notice of Findings & Recommendations)
Lost or missing items
Understand & Document Existing Environment
Perform Testing
Implement Corrective Action Plans
Evaluate Effectiveness of Corrective Actions
Controlled Operating Environment
Evaluating Effective Controls
Read Documentation
Interview Process Owners
Create Flow Chart
Develop Test Plans
Perform Testing
Evaluate Test Results
Present Test Results
Develop Corrective Action Plans
Implement Corrective Action Plans
Did Corrective Action Plans work?
Correct Weaknesses
Continue to Monitor

14. “Quack” Quiz #2
Segregation of duties reduces the risk of errors and irregularities. 
True
False

15. Accountability is everyone’s responsibility
Lessons Learned
Effective property management is not only good for property accountability but also supports organizational audit readiness
Partnership and communication between property managers, financial and logistics community is key
Senior management support is critical for effective property management
Effective property management is a function of sound policies, diligent property managers, internal controls, and evaluation
Accountability is a management practice not a records and reporting action
Accountability is everyone’s responsibility

16. “Quack” Quiz #3
Internal controls guarantee the accuracy and reliability of the accounting records. 
True
False

17. Thank You! Questions? Comments? Contact: Amber Propert
Ken Miller
Bobby Garrett
For general questions and information, visit our website:
Thank You! 17