1. RDML K. Taylor | DHS CFO Brief | 25 JAN 2010 Margo Sheridan, CDFM, Comptroller, U S Coast Guard Presented to: American Society of Military Comptrollers Washington, DC Chapter July 2012 The Big Challenge for Audit Readiness: Property, Plant and Equipment at the United States Coast Guard

2. Assistant Commandant For Resources 1 Agenda Why PP&E audit readiness is important Life cycle of property Business lines impacted by property Types of property and associated challenges Relationships with liabilities, costs, and budgets Where we are, where we are going

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4. 3 PERCV Audit Assertions: management representations embodied in the financial statements: – Presence and disclosure – Existence – Rights and Obligations – Completeness – Valuation Most audit work is done to prove these assertions Obtain and evaluate evidence Reference: FAM section 235.02

5. Assistant Commandant For Resources 4 Life Cycle of Property Identify need Conduct research & development Program and budget for acquisition Acquire/build Place in use Repair/maintain/upgrade Dispose

6. Assistant Commandant For Resources 5 Baseline Business Processes Scope System Budget formulation to execution Request to procure Procure to pay Reimbursable management Bill to collect Grants management Acquire to dispose Record to report

7. Assistant Commandant For Resources 6 Why is PP&E important to you? 6 Assistant Commandant For Resources You can’t know what you need if you don’t know what you have Major equipment and construction projects are itemized in legislation and must be discretely tracked in execution Both accountants and budgeteers must report expenditures for equipment and other property Age, location, and condition of PP&E matter to operational units and commanders—mission effectiveness It is not about the audit—it is about stewardship and public trust that we will preserve resources

8. Assistant Commandant For Resources 7 Why is Capitalized PP&E a problem? 7 Assistant Commandant For Resources In the beginning … a purchase request was issued, a requisition launched, a MIPR created – Object class – 25**? 26**? 31**/32**? – LOA – who validates? Certifier? Fund manager? Procurement official? Accounting technician? Property manager? Critical paperwork is misplaced: purchase order/ contract, evidence of ownership, receiving report, invoice Direct and indirect costs incurred to place PP&E in use are difficult to identify and document

9. Assistant Commandant For Resources 8 Why is Capitalized PP&E a problem? (cont.) 8 Assistant Commandant For Resources Internal Controls Other challenges: – easements, software, items installed on leased equipment, property transfers, surveys, deployments, upgrades – Environmental liabilities—while in use, during repair/upgrade, at disposal

10. Assistant Commandant For Resources What information is needed to book a property asset? Acquisition/construction cost Date acquired or placed in service/BOD Useful life Dimensions/configuration Location Composition Unique identifier code/VIN /HIN/bumper number Disposal value (if any) 9

11. Assistant Commandant For Resources What if key data points are missing? Refer to SFFAS 3, 6, 10, 35, and AAPC Technical Release 13 Options: – Date in service (DIS): VIN/HIN, mid-month or mid- year convention – Valuation: PRV indexed to DIS (deflation of current replacement), appraisal, expenditure information, budget/appropriation data Don’t forget property in contractors’ possession 10

12. Assistant Commandant For Resources 11 Environmental Liabilities SFFAS 5 & 6, AAPC Technical Releases 2 & 10 Most property has associated environmental liabilities that is probable and measurable – Buildings – lead paint, asbestos, stored materials – Vehicles, vessels, mission equipment – CARC paint, mercury, phosphorescent paints, zinc oxide, lead, fiberglass – Land and ranges – lead, unspent munitions, petroleum products, chemicals, underground water contamination

13. Assistant Commandant For Resources 12 Questions?? 12 Assistant Commandant For Resources