Army Audit Readiness - ASMC

1 army Audit Readiness 7 April 2011 John J. ArgodaleDeputy Assistant Secretary of the army (Financial Operations)2 army AuditReadinessDirectorateOverall Audit Message DoD is committed to meeting Congressional deadline of 2017 for fully auditable statements We have a streamlined and cost-effective approach that focuses on improving information we most use to manage the Department s resources We are seeking cost-effective ways to achieve full auditability We have a long way to go and will need significant Service support23 army AuditReadinessDirectorateWhy Is This Important? Comply with Laws:Laws require financial statement audits Verify Correct Allocation of Funds: Verify that all resources are allocated to approved mission priorities in a legal manner Make Better Use of Resources:Identify dollars before they expire Increase Public Trust: Reassure the public and Congress that DoD is a good steward34 army AuditReadinessDirectorateArmy Audit Readiness Timeline5 army AuditReadinessDirectorateExamination Scope & Expectations Exam 1 2011: Scope: Validate the army s Audit Readiness approach ensure we are doing what an Audit requires Continue to educate army personnel on Audit requirements Processes include: Funds Receipt and distribution below ABO level (Command HQ to installation).

2 TDY-DTS travel; PCS travel; Contracts-SPS; Reimbursable-Inbound/Outbound Expectations: Validation of Audit Readiness strategy and work Limited testing success Exam 2 2012: Scope: Expanded to include Civilian Pay; Misc. Payments; Supply Requisitions; Non-SPS Contracts; DFAS Financial Reporting; this brings us up to all SBR processes at wave 1 and wave 2 sites Dependent upon Exam 1 results, as well as discovery and evaluation at GFEBS wave 2 sites Initial systems Audit of GFEBS application security (access controls), business process controls (automated and manual), data integrity controls, and information technology general controls; GFEBS system Audit scope dependent upon results from current GRC work to be complete by 12/31/11 Expectations: Improved & effective internal control environment Successful Audit of several processes/assessable units, likely Funds Receipt, Distribution, & Monitoring; TDY-DTS.

3 Civilian Pay Clean opinion on GFEBS access controls6 army AuditReadinessDirectorateExamination Scope & Expectations (cont.) Exam 3 2013: Scope: Full Audit of all SBR business processes at all GFEBS locations Expectations: Sustain successes from Exam 2 and expand to include remaining material business processes (if any) Expand successful Audit results to additional business processes (Misc. Payments; Contracts-SPS; etc.) Successful FISCAM Audit of GFEBS, including interfaces, but excluding feeder systems Identification of final gaps to address prior to assertion in 2015 Exam 4 2014: Scope: Full Audit of all SBR business processes at all GFEBS locations Expectations: Sustain successes from Exam 2 and expand to include remaining material business processes (if any) Expand successful Audit results to additional business processes (Misc.)

4 Payments; Contracts-SPS; etc.) Successful FISCAM Audit of GFEBS, including interfaces, but excluding feeder systems Identification of final gaps to address prior to assertion in 2015 Complete, successful Audit of all SBR processes within GFEBS environment at all GFEBS locations Ability to assert Audit ready for GF SBR7 army AuditReadinessDirectorateControls SummaryControl NumberDefinitionFunds Receipt and Budget Analyst runs an SoFreport daily to monitor for new allotments and execution of the funds within each sub-activity group (SAG). The SoFreport indicates whether, at the SAG level, the Command has over or under executed funds in comparison to the budget and spend plan. The analystreviews the execution issues and researches the amounts being executed by the divisions.

5 This review is evidenced by an e-mail to the Supervisor or by signing off on the Branch Analyst updates the monthly assessment report on a monthly basis which details the execution for all funds (includes detail on actual Base Operating Support Services (BOSS) execution, Overseas Contingency Operations (OCO) execution). It also details the year to date executions forcommitments and obligations by program directorate and the remaining requirements and expected shortfalls through year-end. The report is manually completed by the analyst with data that is pulled from GFEBS and evidenced by the Budget Analyst within the Purchase Requester s organization verifies the Purchase Request (PR) against the Spend Plan andperforms Level 1 approval in Supervisory Budget Analyst reviews the approved Purchase Request (PR) and certifies funds availability (Level 4 approval) in Directorate of Contracting (DOC Contract Specialist) reviews the Purchase Request (PR) data in SPS/PD2 and creates the contract based on information listed on the Contract Officer reviews the approved Purchase Request (PR) within SPS/PD2 through GFEBS interface to the created contract.

6 The Contract Officer signs and awards the Budget Analyst (or designated individual) reviews the vendor submitted approved invoices and receiving reports in order to determine if the invoice data (quantity, unit price, total amount, service rates, etc.) are in accordance with the contract terms. Also, the Budget Analyst (or designated individual) verifies the billed amounts match what has been received by the Requestor and (RM as Performer): The analyst with the appropriate user role reviews the MIPR to verify all required fields including quantity, price, signatures, WBS Element and LoA are completed by referring to the information provided by the Performer via ISSA, MOA, MOU or e-mail regarding the Reimbursable (RM as Performer): The RM office analyst with the appropriate GFEBS user roles refers to the MIPR (DD Form 448) to create the Sales Order to verify all required fields are completed and that the Sales Order matches the components detailed in the (RM as Requestor).

7 Once the budget analyst generates the MIPR and creates the PR in GFEBS, a secondary budget analyst must do the Level 1 (L1) Release on the PR within GFEBS. The L1 Release is the initial approval of the (RM as Requestor): Once the secondary budget analyst does the L1 Release, another analyst with the appropriate user rights must do the Level 4 (L4) Release on the PR within GFEBS. The L4 Release commits the funds within GFEBS. The Funds Commitment Document in a specific PR will reference when funds are committed in the AuditReadinessDirectorateControls SummaryControl NumberDefinitionTemporary Duty (TDY) system is configured to ensure roles and responsibilities are segregated by the following functions: Receiving Funds (Traveler) Approver (Approving Official) Processing and Recording.

8 (Traveler or Defense Travel Administrator (DTA) with Approving Official's (AO) electronic approval) orders are reviewed and quality checked by the Defense Travel Administrator (DTA)/ Approving Official (AO) and the Directorate Reviewers to verify that the correct line of accounting (LoA) is used and that travel orders meet regulations and approval Approving Official (AO) approves/certifies the voucher in Defense Travel System (DTS) by applying a digital stamp. The certifying AO has a delegation of authority ( memo or DD Form 577) on file. Prior to applying the digital signature stamp, the AO will review the travel vouchers to verify they comply with travel Change of Station (PCS) HR specialist must have proper training to verify that transactions and events comply with the Joint Federal Travel Regulations (JFTR) and Joint Travel Regulations (JTR) ( valid transactions).

9 HR specialist and Budget Analyst examine the details of the PCS order. This includes verifying fund availability and theli ne of accounting (LoA). Signatures of both are required for the PCS to be considered each DD Form 1351-2 and DD Form 1614 received, an Approving Official (AO) reviews the form for completeness, accuracy, and conformity with all DoD travel regulations, and then signs the form signifying that all of the data has been reviewed and the expenses are authorized. EachAOshould have a delegation of authority or DD Form 577 on file as evidence of appropriate approval proper segregation of duties the following duties and responsibilities are divided or segregated among different people: Receiving Funds (Traveler) Approver (Approving Official) Processing and Recording: (GFEBS user/Budget Analyst) Making Payments (DFAS)9 army AuditReadinessDirectorateAccomplishments Since September 2010 SBR.

10 Asserted GF Appropriations Received on 28 September 2010 Asserted to selected SBR processes at GFEBS Wave 1 sites SECARMY memorandum of 18 Feb 2011 requires army senior leaders to actively engage in Audit Readiness activities and include Audit Readiness goals in annual performance plans Completed initial testing at GFEBS wave 1 locations Implemented several corrective actions in Q1 FY 2011 to correct initial knowledge & process deficiencies Mixed results: Enormous improvement in support & awareness since April 2010, but many control failures still exist Began discovery at GFEBS wave 2 locations in March 2011; testing planned for Q3 FY 2011 Existence & Completeness (E&C) of Mission Critical Assets: Asserted E&C of 97% of the army s aviation assets Expanded E&C work to all mission critical assets (general and military equipment) Began discovery, evaluation, and testing of 3 missile programs (Hellfire; TOW; Javelin); E&C assertion planned for 30 Jun 2012 GFEBS: Began systems control assessment against FISCAM and FISMA standards Expect to complete GFEBS IT general & application controls assessment by 31 Dec 2011 Sustainment: Established training program to provide in-person training to all RM, contracting, and logistics personnel at installations & HQs army -wide.