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Workshop Session I
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Dave McDermott Acting Director, FIAR, OUSD (C)
DoD Audits and Financial Improvement and Audit Readiness (FIAR) Dave McDermott Acting Director, FIAR, OUSD (C)
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Financial Improvement and Audit Readiness Plan Overview
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Goals Prepare the Components and the Department for successful audits
Improve financial information and reporting
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The FIAR Plan employs an incremental, prioritized approach to:
Improve policies and processes, Strengthen internal controls, and Resolve material weaknesses Learn from other’s approaches, challenges, and success in synch with Enterprise Transition Plan solutions.
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Challenges DoD financial improvement encompasses an unprecedented scope and complexity: Over 3,000 worldwide locations Over 4,000 IT systems 3 million employees 5.2 million inventory items $1.4 trillion in Assets $2.0 trillion in Liabilities $581 billion in operational costs
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Consolidated Balance Sheet
Assets Fund Balance with Treasury $327B - 24% Cash & Other Monetary Assets $2B - <1% Accounts Receivable $11B - 1% Inventory and OM&S $232B - 17% Real Property $100B - 7% Military Equipment Valuation $ % Other Assets $29B - 2% Liabilities Accounts Payable $29B - 2% Environmental Liabilities $70B - 4% Medicare-Eligible Retiree Health Care Fund $538B - 28% Military Retirement Health Care $299B - 15% Other Liabilities $44B - 2%
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Key Success Factor Plan is supported and monitored by DoD senior leaders. Deputy Secretary of Defense designated the Plan a DoD-wide high priority, approves each update/version, and monitors progress Military Department Secretaries and Defense Agency Directors approve their Component’s portion of the Plan Under Secretary of Defense (Comptroller)/CFO and Deputy CFO review monthly progress Functional senior leaders (e.g., DUSD(I&E), monitor portions of the Plan FM Leadership Council decides Plan priorities and monitors progress
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Incremental Approach Focus Areas Fund Balance with Treasury
Accounts Receivable Inventory OM&S Real Property Military Equipment Medicare-Eligible Retiree Health Care Fund Accounts Payable Environmental Liabilities 2006 Assets 2010 Assets Liabilities Liabilities
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FIAR Plan Composition FIAR Plan consists of:
Key milestone plans organized by Balance Sheet line items 5 Phase process A-123 requirements Component Financial Improvement Plans with tasks to accomplish FIAR key milestones Enterprise Transformation Plan (ETP) solution key milestones
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Phased Methodology Discovery & Correction Validation Assertion Assessment Audit Discovery & Correction: Deficiencies identified and corrected (includes policies, processes, internal controls, and systems) Validation: Confirmation of completed corrections, ability to sustain, and audit readiness Assertion: Management asserts audit readiness to OIG Assessment: OIG performs limited review Audit: OIG audits the organization’s financial information
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Accomplishments Corps of Engineers FY 2006 financial statements being audited Audit readiness being evaluated by IG, DoD: Defense Logistics Agency Contingent Legal Liability Ready for audit readiness evaluation: Navy Nuclear Ships and Submarines Environmental Liabilities Completed baseline for Military Equipment and revised acquisition and financial policies Significant progress made in identifying and valuing Environmental Liabilities
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March Plan Highlights Business capabilities framework for integrating the ETP with the FIAR Plan Spotlight on Other Financial Improvement Efforts Other Defense Organizations U.S. Special Operations Command Defense Advanced Research Projects Agency Defense Information Systems Agency Missile Defense Agency Defense Security Service Meeting Federal Requirements The Chief Financial Officers Act The National Defense Authorization Act OMB Circular A-123, Appendix A The GAO High Risk Series
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March Plan Highlights Business Enterprise Priorities CAPABILITIES
Personnel Visibility Manage Personnel & Pay Manage Travel Manage Retirement & Separation Manage Military Health Services Administer Position Management Manage Candidate Accession Manage Assignment, Placement & Transfer Manage Quality of Life & Morale, Welfare & Recreation Manage Benefits Manage Request Sourcing Manage Receive and Acceptance Payment Common Supplier Engagement Forecast, Plan, Program, Budget & Funds Distrib. & Control Manage General Ledger Manage Financial Assets & Liabilities Collect & Disburse Managerial Accounting Financial Reporting Financial Real Property Inventory Real Property Acceptance Hazardous Materials Process Controls & Infor. Mgmt Environmental Liabilities Identification & Valuation Real Property Accountability Acquisition Conduct Program Management Monitor Commercial Technology Export Requests Manage Acquisition Oversight Integration Materiel Deliver Property & Forces Dispose or Return Property & Materiel Perform Asset Accountability Perform Build & Make & Maintain & Sustain CAPABILITIES
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Next Steps Standup DoD Audit Committee Complete DoD audit strategy
Expand identification of dependencies on BTA solutions and critical financial and business systems
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