1. Office of the Under Secretary of Defense (Comptroller) Financial Improvement and Audit Readiness Directorate
DoD Financial Improvement and Audit Readiness (FIAR) Plan A process for improving financial information in support of the Warfighter
Presented By: Mr. Robert McNamara, Acting FIAR Director, OUSD(C)
March 9, 2006

2. Agenda Overview of the FIAR Plan and how it differs Accomplishments
How the Plan is:
Constructed
Integrated
Executed
Monitored
Accomplishments
Next steps
Why the Plan will succeed

3. Overview of the FIAR Plan
Comprehensive, integrated Plan that identifies, prioritizes and assigns accountability to:
Deficiencies, both financial and operational, that affect the Department’s ability to produce quality financial information
Corrective activities
Revising policies
Improving processes and procedures
Assessing risks, and improving and testing controls
System solutions (changing existing or deploying new systems)
Enhancing Human Capital (e.g., certifications, training)
Dependencies integrated across Components and business operations
Opportunities for Collaboration to expedite change and minimize cost
Resource requirements to fund improvements

4. How the Plan Differs Supported and monitored by DoD senior leaders
Deputy Secretary of Defense (DEPSECDEF) made its development and implementation a DoD priority
Military Department Secretaries and Defense Agency Directors coordinate and approve the Plan
DEPSECDEF and Business Systems Management Committee receive quarterly updates, and USD(Comptroller) provided monthly progress reports
FIAR Committee, chaired by DCFO, decides Plan development and implementation steps, and monitors progress
Day-to-day management and oversight conducted by a dedicated OUSD(C) office of SMEs and supported by contractors and a powerful web-based tool

5. How the Plan is Constructed - COMPOSITION
The FIAR Plan consists of:
14 FIAR key milestone plans setting critical paths
5 phase process
A-123 requirements
13 Component Financial Improvement Plans containing tasks essential to accomplishing FIAR key milestones
Business Transformation (ETP) solution key milestones

6. 14 Key Milestone Plans - COMPOSITION
Focus Areas Key Milestone Plans
Environmental Liabilities Military Equipment
Medicare-Eligible Retiree Health Care Fund - Real Property
Other Key Milestone Plans
Fund Balance With Treasury (also a Priority)
Account Receivable - Accounts Payable
Other Liabilities - Other Assets
Cash and Other Monetary Assets
Inventory and Operating Materials and Supplies
Personnel Obligations
Other Military Retiree Health Care
U.S. Marine Corps

7. How the Plan is Integrated
Enterprise
Transition Plan and
Initiatives
DoD
FIAR Plan
Roadmap to
Financial
Improvement and
Auditability
Component
Improvement
Plans
Transition
OIG
Assessment
and Audit
Integration
Facilitated by
Web-Based FIAR Planning Tool

8. How the Plan is Executed – PHASED METHODOLOGY
Discovery &
Correction
Validation
Assertion
Assessment
Audit
Discovery & Correction: Deficiencies identified, corrective action plans added to FIPs in FIAR Planning Tool, progress tracked, and deficiencies corrected
Validation: Management confirms corrective actions completed successfully
Assertion: Management asserts to OIG the reliability of financial information
Assessment: OIG performs limited review of controls and procedures to determine if ready for full audit
Audit: OIG audits the organization’s financial information

9. How the Plan is Monitored - TRACKING PROGRESS
Plan presently consists of over 1,800 key milestones within 14 key milestone plans (complex Plan)
Components report monthly progress on current and subsequent quarter’s key milestones
Not Started
On Schedule
Completed
Behind Schedule - requires identification of issue and get-well plan
Not Completed - requires explanation and get-well plan with revised date
Currently tracking progress on 191 key milestones for FY 2006, Quarters 2 and 3
Quarterly accomplishments are provided to DEPSECDEF, DBSMC, USD(C), DCFO, FIAR Committee and OMB

10. Accomplishments to Date
Completed and documented the baseline for DoD military equipment
Army, Navy and Air Force completed environmental liability estimates for DERP sites
Navy completed the identification of ships and submarines requiring environmental liability estimates
Air Force General Fund Balance with Treasury ready for audit
DLA completed a worldwide inventory of its fuel sites to improve its real property records
Corps of Engineers FY 2006 financial statements ready for audit

11. Projected Accomplishments
Achieve favorable audit results:
Air Force General Fund Balance With Treasury
Corps of Engineers financial statements
Complete Management Assertions:
Army and USMC General Fund Balance with Treasury
Army General Fund Cash and Other Monetary Assets
Navy Environmental Liabilities for nuclear ships and submarines
Update Military Equipment baseline and report on June 2006 financial statements
Reengineer business and financial real property CIP processes

12. Next Steps
Develop coordinated, single Real Property Transformation Plan for both financial and business improvement and modernization
Refine current key milestone plans
Identify critical path key milestones, fill gaps and level-set
Integrate OMB Circular A-123 Appendix A requirements
Expand and automate integration with Business Transformation solutions
Expand:
Vertical integration (threads) between plans
Identification and alignment of dependencies
Partnership and engagement of functional/business operation communities

13. Next Steps - Continued Develop DoD-wide audit strategy
Begin independent verification and validation (IV&V) of specific key milestones
Expand Plan for opportunities to improve financial and business data needed by decision-makers
Improve alignment of Component FIP tasks to ensure successful completion of Plan milestones
Determine FY 2008 President’s Budget FIAR Plan resource requirements
Prepare and issue the September 2006 version of the Plan

14. Why the Plan will Succeed
Senior leadership is engaged and monitoring progress
Functional/operational communities are involved
Incremental strategic approach
Dedicated office/staff and support resources
DoD-wide standard use of state-of-the-art plan management technology
Plan assists in budgeting, justifying and acquiring funds for financial improvement activities

15. For Additional Information
FIAR Directorate, OUSD(C), website:
DoD Business Transformation Agency website:
FIAR Planning Tool help address:
FIAR Directorate telephone number:

16. BACKUP

17. Challenges
DoD financial improvement encompasses an unprecedented scope and complexity:
Over 3,000 worldwide facilities
Over 4,000 IT systems
3 million employees
5.2 million inventory items
$1.3 trillion in Assets
$1.9 trillion in Liabilities
$635 billion in operational costs

18. FIAR Planning Tool Web-based Profile and password controlled
Over 600 users
DoD-wide standard use
Used by/for:
FIAR Plan
ETP
A-123
Component FIPs
Communication

19. FIAR Planning Tool - Monthly Reporting
Web-enabled progress reporting
Status for prior month reported by 3rd work day of following month
Process documents status, management decisions, and changes to Plan
Provides “audit trail”

20. FIAR Plan Quarterly Progress Report
Highlights progress and slippage
Provided to DoD senior leaders and OMB

21. Projected Balance Sheet Accomplishments
Military Equipment - Baseline
Army 7.5% of assets
Navy 11.1% of assets
Air Force 7.4% of assets
2007
Liabilities
Assets
2005
Environmental Liabilities
Army 2.4% of liabilities
Navy 0.7% of liabilities
Fund Balance With Treasury
Army 7.4% of assets
Air Force 5.0% of assets

22. Projected Balance Sheet Accomplishments
Military Equipment – FASAB Compliant
Army 7.5% of assets
Navy 11.1% of assets
Air Force 7.4% of assets
Real Property
Army 1.8% of assets
Navy 1.6% of assets
Air Force 1.8% of assets
Fund Balance With Treasury
Navy 6.9% of assets
Air Force 5.1% of assets
Environmental Liabilities
Army 2.4% of liabilities
Navy 1% of liabilities
Air Force 0.5% of liabilities
2010
2007
Liabilities
Assets