1. Financial Improvement and Audit Readiness (FIAR) Office of the Under Secretary of Defense (Comptroller) Inventory and OM&S Audit Readiness Status October 25, 2012

2. 2 Agenda Background Accomplishments to date Plans for audit readiness –Near term milestones –Full audit readiness

3. 3 Inventory and OM&S Background 1990 –The Chief Financial Officers (CFO) Act of 1990 Required all Federal Agencies to produce auditable Financial Statements. DoD is the only Federal Agency without an audit. August 11, 2009 –USD(C) Robert Hale prioritizes SBR & E&C DoD will place the highest priority on improving its budgetary information and processes. DoD Components were directed to adjust their plans in August 2009 for improving financial information and processes and achieving successful audits to focus first on their SBR, and focus on existence and completeness of mission critical assets. November 2, 2009 –USD AT&L Ashton Carter endorses and supports USD(C) priority to validate the existence and completeness of mission-critical assets Existence – All accountable property (military and general equipment, real property, inventory, and operating materials and supplies) in DoD systems of record exists and their records match actual physical assets. Completeness – All accountable property is identified and accurately recorded in a DoD system of record. October 13, 2011 –Secretary of Defense Leon Panetta – Move up date Achieve audit readiness for SBR by end of 2014. Increase emphasis on accountability for assets.

4. 4 Inventory and OM&S Accomplishments Army –Asserted OM&S – 3 missile types – Q2 FY 2012 Air Force –Validated OM&S – Cruise missiles – Q3 FY 2011 –Validated OM&S – Aerial Targets/Drones – Q3 FY 2011 –Asserted OM&S – Spare engines – Q2 FY 2012 –Asserted OM&S – Missile Motors – Q2 FY 2012 Navy –Asserted OM&S – Ordnance – Q4 FY 2010 (additional corrective actions needed)

5. 5 Inventory and OM&S Overall Audit Readiness

6. 6 Inventory and OM&S Full Audit Readiness

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8. Questions? 8

9. Inventory and OM&S Supporting Documents Secretary’s Memorandum Improving Financial Information and Achieving Audit Readiness –http://comptroller.defense.gov/FIAR/documents/SD_Audit_Memo_12_Oct.pdfhttp://comptroller.defense.gov/FIAR/documents/SD_Audit_Memo_12_Oct.pdf USD(C) Memorandum Priorities for Improving Financial Information and Processes and Achieving Audit Readiness –http://comptroller.defense.gov/FIAR/documents/USC005517- 09_USDC_SIGNED_MEMO_9A_4.pdfhttp://comptroller.defense.gov/FIAR/documents/USC005517- 09_USDC_SIGNED_MEMO_9A_4.pdf USD(AT&L) Memorandum Priorities for Improving Financial Information and Achieving Audit Readiness –http://comptroller.defense.gov/FIAR/documents/Signed_Memo_Priorities_for_ Improving.pdfhttp://comptroller.defense.gov/FIAR/documents/Signed_Memo_Priorities_for_ Improving.pdf 9