1. Equipment Management Process Updates Edlouie S. Ortega, MSM, CDFM Equipment and Technology Management Medical Equipment and Logistics Solutions Naval Medical Logistics Command 1

2. 2 Federal Managers’ Financial Integrity Act (FMFIA) The Department of Defense has identified real and personal property accounting as a high-risk area. The Annual Statement of Assurance continues to report on the open status and progress in financial accounting for real and personal property as one of the five high-risk areas within the Department. GAO-03-168, MILITARY TREATMENT FACILITIES, Internal Control Activities Need Improvement Above 10 percent inventory and valuation error is considered ineffective internal control.

3. 3 DODI 5000.64 - Accountability and Management of DoD Equipment and Other Accountable, May 2011  Ensure electronic interfaces are used between the APSR and mandated enterprise systems (e.g., Wide Area Workflow).  Establish and maintain records and accountability for property (of any value) furnished to contractors as Government furnished property (GFP). This requirement also includes property that is loaned to outside entities such as Federal agencies, State and local governments, and foreign governments.  Account for Information technology property such as desktops, laptops, and mobile computing devices, including, but not limited to, mobile information storage devices and auxiliary hard drives, regardless of cost, containing personally identifiable information.  Add data element: Unique item identifier (UII) or DoD recognized IUID equivalent, if available and necessary for unique identification.

4. 4 DODI 5000.64 - Accountability and Management of DoD Equipment and Other Accountable, May 2011  Ensuring readiness, testing for existence and completeness, maintaining internal controls, or meeting other mission objectives.  Physical inventories may take different forms, including wall-to-wall, cyclic, sampling, and “by exception” methodologies.  A minimum 98 percent physical inventory accuracy rate (100 percent for classified or sensitive property) shall be achieved and maintained.  Inventory by exception may be authorized by the DoD Component APO. This type of inventory uses actions or transactions, (e.g., move orders, maintenance actions, calibration checks, usage logs (or flight logs)) where the items are “touched” by disinterested parties (i.e.,persons without stewardship responsibilities), with supporting documentation directly associated with an accountable asset.

5. 5 ASN-FMO Memo dated Oct 5, 2011  Effective immediately until further notice, the Department of the Navy (DON) must retain all document in support of a financial statement audit.  Evaluate the source documents supporting the existence, completeness, accuracy/valuation, and rights and obligations of documentation to support the amount reported on DON financial statements.

6. 6 Financial Improvement and Audit Readiness (FIAR) The Department of Defense (DoD) is committed to having fully auditable financial statements by 2017, the deadline established by Congress in the National Defense Authorization Act of 2010. In addition, Secretary Panetta outlined an accelerated goal of achieving an auditable Statement of Budgetary Resources (SBR) for General Funds in 2014.

7. Personal Property Land PP&E Inventory/OM&S Real Property Repairables Facilities Internal Use Software Consumables Equipment Military Equipment General Purpose Equipment Structures Buildings Linear Assets (Financial World) 2017: DoD audit readiness goal! 2017 Concerns

8. Output: Clinical review Acquisition Devices Network Switches Network Gateway Network Switches Repair Parts/ Special Tooling Cost of an Image Maintenance Monitoring System

9. –Lack of cross-cutting/integrated thought; i.e., logisticians not required to know acquisition rules; acquisition specialists not required to know property accountability –Poor communication between acquisition (Contracting Officers) and logistics (accountable property officers) –Property accountability simply not in the top 3 –Ad hoc interrelationships between domains (acquisition, property, financial) –Lack of inter-operative business rules DOD Opinion

10. The “Solution”  Everyone wants: –Property lists. Why? Lists make us happy Any information (even bad) will quell our fear –A 100% wall-to-wall physical inventory. Why? Helps us sleep at night Auditors love them Lets us “catch up”  The Truth: –Property lists are a poor proxy for good records –Physical inventories are usually not necessary and a waste of time if not done effectively Always conduct a compliant inventory process

11. The Latest GFP Memo…  OSD memorandum issued on January 7, 2012  Goals –Promote the current clause requirements –Demonstrate the relationship between the clauses, the DoD policy, and the system capabilities (IUID Registry) –Get a starting point for equipment already used by contractors –Increase visibility and awareness of the “mystery” surrounding GFE –Highlight the criticality to auditability

12. Major Command PPE Responsibilities  Establish a personal property management organization within Headquarters that provides personal property management oversight for the claimancy.  Disseminate current personal property guidance and information throughout the claimancy including the latest policies, procedures, standards and mandates established by DoD, DON, Federal regulation, and/or the laws that pertain to personal property accountability and financial requirements. 12 Per SECNAVINST 7320.10A

13. Major Command PPE Responsibilities  Verify that activities within the claimancy are performing physical inventories as required. Activities are required to submit letters to their major claimants substantiating physical inventory completion.  Collect/review claimancy personal property financial information on a quarterly basis for reasonableness and accuracy.  Compile and report all personal property financial information to ASN Financial Management Office (FMO) on a quarterly basis. 13

14. Major Command PPE Responsibilities  Establish procedures to monitor usage of the claimancy personal property database (may include implementation of additional internal controls) to ensure: activities are using the mandated system, data is complete and accurate, and financial information is being reported properly.  Reconcile personal property financial information from the personal property system with the general ledger account balance. Retain a copy of the summary/detailed personal property information to support the reconciliation performed for 3 years. 14

15. M4 M42 Logistics Policy Chief, MedLog M46 Logistics Execution -Lead Contracting Executive -Fleet Hospital Program Office (PML-500) -Property Management Office -Medical Logistics Business Systems/Metrics -FOA Vaccine Management CO, NAVMEDLOGCOM Execute Current Mission NEMSCOM NOSTRA Echelon 2 Echelon 3 Echelon 4 Navy Medicine Support Command Support Functions MOU Dual Hatted Position

16. BUMED-PMO Organization Structure 16 BUMED M46 NMLC/PMO BUMED M4 Installation and Logistics BUMED M42 Logistics Provides Execution Guidance BUMED M8 Comptroller Supports Policy Development Provides Financial Reporting Guidance Accounting and Accountability

17. M46 Responsibilities - Execution  Provide day-to-day personal property management oversight.  Conduct BSO-18 wide monthly Property, Plant & Equipment (PP&E) telcon brief to disseminate updates to property accounting and financial reporting requirements.  Monitor inventory process to make sure physical inventories are conducted as required.  Monitor Defense Medical Logistics Standard Support- Equipment Module (DMLSS-EM) usage. 17

18. M46 Responsibilities - Execution  Monitor and compile DMLSS-EM System Authorization Access Request-Navy (SAAR-N) forms.  Run and analyze BSO-18 wide Monthly Quality Assurance (QA) reports.  Verify receipt of Centrally Funded Equipment (CFE), especially Capital Equipment.  Monitor equipment reutilization. 18

19. M46 Responsibilities – Policy Development  Draft the PPE Annual Inventory Letter to include timeline, requirements, and business rules.  Compile and validate inventory results.  Collaborate discrepancies with the Regions and recommend re-inventory as needed.  Mitigate and address conflicting guidance ensuring that higher Echelon guidance is met.  Issue FY Logistics Guidance bi-annually to include property management updates (to be posted on NMLC “Home (MIL/GOVT)” website. 19

20. M46 Responsibilities – Policy Development  Provide training on property accountability to the Regions.  Manage training requirements.  Compile copies of training certificates.  Provide SME input to the accessible units that are distributed.  Conduct LAVs to provide logisticians with total asset visibility and ensure best business practices are being implemented for Equipment and Technology Management processes. 20

21. M46 Responsibilities – Financial Reporting  Collect/review BSO-18 wide personal property financial information on a quarterly basis for reasonableness and accuracy.  Compile and report all personal property financial information to Assistant Secretary of the Navy Financial Management Office (FMO) on a quarterly basis via the Defense Departmental Reporting System (DDRS) Data Collection Module (DCM).  Retain a copy of the summary personal property information to support the reconciliation performed for 3 years. 21

22. QUESTIONS? edlouie.ortega@med.navy.mil (301) 619-3065 22

23. 23 Related Sessions  LO-W-3-E Annual Inventory Process and Requirements