Accountability from Flightline to Bottomline

Report
Headquarters U.S. Air Force
Accountability from Flightline to Bottomline
FM on FIAR!
Gulf Coast Professional Development Seminar
8 March 2012
Ms. Becky Allen
Director, Audit Readiness
SAF/FMPA
1
SECDEF on Audit Readiness

“One key to making a budget
work in any fiscal environment,
but especially now will be
streamlining overhead,
eliminating waste, and improving
our business practices—ensuring
that we are operating in a
common sense, accountable, and
modern business environment”

“All hands” effort across DoD

Accelerate SBR audit readiness
from 2017 to 2014

Plan in 60 days

2-Letter tiger team
Accountability from Flightline to Bottomline
2
It’s Real FIAR! VCSAF says…

“This is a an enterprise-wide
effort that demands the
determined commitment of
leadership”

“…improve our audit readiness
plans, identifying opportunities
to accelerate work and transition
from headquarters to base-level
activities”

“…we are counting on you to
assist in process reviews,
respond to audit requests, and
lead these critical efforts”
“Air Force leadership is committed to achieving audit readiness and we are
counting on you to assist in process reviews, respond to audit requests
and lead these critical efforts.” General Breedlove and Ms Conaton
Accountability from Flightline to Bottomline
3
Input CORONA slide
Accountability from Flightline to Bottomline
4
What’s on FIAR?

What is FIAR?
What does FIAR mean to you?
What is the AF strategy for FIAR?
What is the status AF FIAR efforts?
What are the FIAR challenges?
“Your FIAR’d” examples
How you can help put out the FIAR?

“FIAR” Truck Example (time permitting)






Accountability from Flightline to Bottomline
5
What is FIAR?
FIAR
Today:
- “I spent all of
my budget”
- “I got more
money to fund
additional
requirements”
- “My systems
track spending
(obligations)
but lack an
audit trail”
Standard Processes:
efficient…consistent approach…shorter learning
curve….customer is happy…the auditor is happy
Internal Controls:
separation of duties…mitigate fraud, waste and
abuse…safeguard funds
Audit Trail:
know where the money is…decision
support….efficient use of funds….CC happy
Compliant Systems:
Necessary to achieve standard processes,
internal controls and an audit trail
Tomorrow:
- “I spent my
budget on these
things and
could also fund
these
requirements”
- Documentation
to support my
obligations is
available and
the audit trail
exists
Auditable Financial Statements will:
1)
2)
Increase credibility with Congress, auditors, and taxpayers by proving the AF spends the
money in the manner that was intended
Give CC confidence funds were used in the most effective manner to support the warfighter
Accountability from Flightline to Bottomline
6
Four Wave Strategy for FIAR
Wave 1:

Wave 3:
Focus on the flow of money from receipt
by SAF to distribution down to the
MAJCOMs

Includes all appropriations for the current
fiscal year

Asserted as audit ready Sep 2010

Accountability for the assets and supplies

Air Force can account for all of the
assets/supplies that are reported in the system
of record for a particular end-item (e.g. aircraft in
REMIS) and that the entire universe of those
items reside in the system of record

Conduct inventories on a regular basis
Wave 4:
Wave 2:

Life-cycle of funds (commit, obligate, spend)

Audit trail for all funds

Performed testing of the internal controls to
ensure minimal risk to misstatement

Tested and reconcile d starting and ending
balances

Air Force has an audit trail to prove
the valuations of assets, no matter
when they were purchased

Successful completion will allow
the Air Force to successfully
undergo full‐scope financial
statement audits
Accountability from Flightline to Bottomline
7
What Does FIAR Mean To…
SAF/HAF Level
• Articulate policies and processes properly
• Provide opportunities to enhance audit readiness understanding (e.g. training)
• Ensure systems are CFO Compliant and provide clear audit trail
• Implement and monitor FIAR strategy and progress
• Liaise with DoD
• Communicate with MAJCOMs
MAJCOM Level
• Enforce data standardization
• MAJCOM unique policies are clearly defined and CFO Compliant
• Provide training to maintain the FIAR vigilance
• Serve as the MAJCOM liaison to SAF and base-level
• Support process improvement, pre-audit and audit activities
• Communicate with Bases
• Know what you spent, know what you bought….and be able to prove it
Base Level
• Input transactions properly
• Follow up and track documents to support audit trail
• Be on the look out for negative trends
• “Purpose, Time, and Amount” used to certify funds
• Work closely with DFAS
• Promote the message of audit readiness to individuals
• Understand “How you fit into the big picture”
Every job, at every level, in FM impacts the Financial Statements….YOU Matter!!!
Accountability from Flightline to Bottomline
8
Resource Advisors (RAs)
Ignite the FIAR!


The whole process starts with RAs

Initiate purchases and are most knowledgeable about them

Accurate and timely recording of commitments
RAs must ensure


Financial transactions are recorded in the current period and the
related economic events occurred in the same period
Critical for RAs to follow through

Obligations of funds is important; but proper liquidation when
transactions are completed is just as important

Properly recording the transaction in the system is
important…and worth saying twice! 
RAs are link between commanders and financial statements…the FIAR starts with them!
Accountability from Flightline to Bottomline
9
RA’s Must…
Ensure proper controls exist and are enforced that illustrate:

Recorded obligations represent valid orders, contracts, or other events
that will require future payment

Obligations are recorded in bulk amounts and supported by binding
agreements

Obligations are properly liquidated when transactions are completed

Transactions are recorded in the current period and the related
economic events occurred in the same period

All obligations incurred are properly recorded

Obligations are recorded at the proper amounts

Lifecycle management of funds execution

Work Open Document Listing/Tri-annual Review
Accountability from Flightline to Bottomline
10
Functional Impact to
FIAR Approach
FM
X
X
X
X
USM
X
X
X
X
AQ
X
X
X
A1
X
A4
X
X
A6
X
X
A7
X
X
MAJCOM
X
X
X
Base Level
X
X
X
X
X
X
Other Svc’s
X
X
DLA
X
X
DFAS
X
X
AUDIT
READY
X
X
X
Air Force Audit Readiness will take an enterprise effort
Accountability from Flightline to Bottomline
11
What does FIAR Mean
Outside FM?
Org
A few examples of how you can support right now
AQ
Ensure data is properly updated in contracting systems and supporting documentation is retained in
accordance with audit standards
Close old contracts and deobligate funds
A4
Support of Equipment/Inventory/OM&S systems and reporting; ensure periodic inventories are performed
and documentation is maintained
A6
Support of IT General and Application controls; identify places where general controls are shared across
various systems to reduce “strain” on PMOs
A7
Recording, tracking, and reporting of Real Property in ACES-RP and NexGen IT; Accurately estimate and
record Environmental Liabilities
MAJCOM (All
Orgs)
Maintain supporting documentation; perform TAR and deobligate excess obligations; standardize base
level processes; fully utilize the Management Internal Control (MIC) Program
Base Level
(All Orgs)
Follow standard processes; Input transactions properly the first time; track down and retain documents to
support the audit trail
Accountability from Flightline to Bottomline
12
Key Tasks
Phases
FIAR Methodology
1.0
Discovery
2.0
Corrective
Action
Statement to
Process Analysis
Design AuditReady
Environment
Prioritize
Develop
Corrective
Actions
Assess & Test
Controls
Resource
Evaluate
Supporting
Documentation
Execute
3.0
Evaluation
4.0
Assertion
5.0
Validation
6.0
Audit
Test
Compile
Process, Control
& System
Documentation
Assertion
Documentation
Review
Engage Auditor
Decide
Compile
Supporting
Documentation
Assertion
Examination
Support Audit
Auditor Issues
Report
Note: The gray boxes are key tasks that must be repeated on a continuous basis as they are key in achieving and
maintaining auditability and reliable financial information .
Red text is changes to May 2010 FIAR Guidance
Accountability from Flightline to Bottomline
13
AF Wave 1 and Wave 2
SBR Assessable Units

Budget Authority

Resources - Appropriations, Allotments,
Apportionments, Nonexpenditure
Transfers, Rescissions
 Status of Resources – Unobligated
Apportioned and Unavailable

Reimbursements


Incorporates spending authority, offsetting
collections and any outlays associated
with the reimbursable process
Obligations

Encompasses the entire budget execution
process
 Impacts anyone that receives, commits
and obligates AF funds

Outlays

Covers the payment process to liquidate
an obligation
 Impacts anyone that obligates AF funds
Accountability from Flightline to Bottomline
14
Existence & Completeness

Two of the four financial assertions that auditors will test in Wave 3



Other two are Rights and Presentation & Disclosure
Focus is on Mission Critical Assets (MCA)

Military Equipment

Real Property

Inventory (WCF)

Operating Materials and Supplies (OM&S)

General Equipment
Direct impact to the Balance Sheet
Accountability from Flightline to Bottomline
15
Existence & Completeness

Connects to SBR processes from acceptance of the item (i.e. WAWF)

Add item into accountable property system of record (ASPR)
Conduct annual physical inventories (except Real Property every 5
years)


Ensure inventories are conducted and documented



Inventory sheets must be signed and dated
Reconcile physical inventories to ASPR at local and enterprise level
Proper Use of key data fields

Item identifier, asset type, item description, operational status,
condition code, date placed-in-service or transfer, inventory date
Accountability from Flightline to Bottomline
16
Audit Readiness Status
Description
Due
Accomplishments
USD(C) Priority
Current Status
Budget Authority – Fund Receipt/Distribution
30-Sep-10
SBR
Fund Balance with Treasury Reconciliation
31-Dec-10
SBR
Military Equipment, Cruise Missiles, Drones, Aerial Targets 31-Dec-10
Existence & Completeness
Fiscal Year 2012 Goals
Uninstalled Missile Motors
30-Mar-12
Existence & Completeness
Opinion - Sustainment
Opinion - Sustainment
Under DoDIG Examination (6/30/12)
Spare Engines
Funds Distribution to Base
MDAP (SBIRS)
29-Feb-12
Existence & Completeness
31-Mar-12
SBR
30-Sep-12
SBR
Fiscal Year 2013 Goals
31-Dec-12
SBR
Preparing assertion documentation
Preparing assertion documentation (CAPs)
In Discovery Stage
Hire to Retire (Civilian Pay)
Hire to Retire (Military Pay)
Real Property
MILSTRIPS
Vendor Pay
31-Dec-12
SBR
31-Mar-13
SBR
30-Jun-13
Existence & Completeness
31-Jul-13
SBR
31-Aug-13 SBR
Fiscal Year 2014 Goals
In Discovery Stage
In Discovery Stage
In Discovery Stage
Not Started
Not Started
Reimbursable Work Order (RWO)
31-Dec-13
SBR
In Discovery Stage (CAP)
Contracts (MOCAS)
Net Outlays
Financial Statement & Compilation
Spare Parts - AF Managed/AF Possessed
Munitions
31-Dec-13
31-Dec-13
31-Dec-13
30-Jun-14
30-Jun-14
In Discovery Stage
In Discovery Stage
In Discovery Stage
Not Started
In Discovery Stage
Spare Parts - Ctr Managed/Ctr Possessed
30-Sep-15
SBR
SBR
SBR
Existence & Completeness
Existence & Completeness
Future Goals
Existence & Completeness
Spare Parts - Ctr Managed/AF Possessed
Inventory (WCF)
General Equipment
Government Furnished Equipment
30-Sep-15
31-Dec-15
30-Sep-15
31-Mar-16
Existence & Completeness
Existence & Completeness
Existence & Completeness
Existence & Completeness
Not Started
In Discovery Stage
Not Started
In Discovery Stage
Reimbursable Budget Authority (RBA)
a/o 2/24/12
Preparing assertion documentation
In Discovery Stage (CAP)
Not Started
Accountability from Flightline to Bottomline
17
SBR Assessable Units and
Milestones to Audit Readiness
Air Force
FY10
2
3
FY 11
4
1
2
3
FY 12
4
1
2
3
FY13
4
1
2
3
FY 14
4
1
2
3
FY15
4
1
2
3
FY 16
4
1
2
Wave 1 - Appropriations Received
Appropriations Received
Wave 2 - Statement of Budgetary Resources
Rescissions (not audited)
Non-expenditure Transfers (not audited)
Funds Distribution to Base
Reimbursable Budget Authority
Reimbursable Work Orders
Civilian Pay
Military Pay
Contracts (MOCAS)
Examination of One Acquisition Program (SBIRS)
Contracts Pay (Vendor Pay)
MILSTRIPS
Net Outlays (incl. FBWT )
Financial Statement Compilation and Reporting
Examination of DEAMS at TRANSCOM/Scott AFB
Complete SBR
3
FY 17
4
1
2
3
4
Legend
FIP Development
Underway
Discovery 1
Corrective Action 2
Audit Readiness
Assertion
Validation
Under Audit or
Sustainment
FBWT Recon
Capability
Indicates Change
from Original
Milestone
DEAMS
Examination
Acceleration of a
Milestone
a/o 2/24/12
Notes:
1 Discovery Phase include the activities of Process Documentation, Development of Test Plans, Conducting Testing, and Analyzing the Test Results
2 Corrective Action Phase includes the implementation, monitoring and validation of corrective actions
Accountability from Flightline to Bottomline
18
E&C Assessable Units and
Milestones to Audit Readiness
Air Force
FY10
Wave 3 - Existence & Completeness
Military Equipment
Military Equipment
Real Property
Real Property
Operating Materials and Supplies (OM&S)
OM&S - Missile Motors
OM&S - Spare Engines
OM&S - Cruise Missiles & Drones
OM&S - Munitions
OM&S - Spares (AF Managed)
OM&S - Spares (Contractor Managed, Contractor Possessed)
OM&S - Spares (Contractor Managed, AF Possessed)
Inventory
WCF Inventory
General Equipment
Medical Equipment
Government Furnished Equipment
Other
2
3
FY11
4
1
2
3
FY12
4
1
2
3
FY13
4
1
2
3
FY14
4
1
2
3
FY15
4
1
2
3
FY16
4
1
2
3
FY17
4
1
2
3
Legend
4
FIP Development
Underway
Discovery
Corrective Action
Audit Readiness
Assertion
Validation
Under Audit or
Sustainment
Indicates Change
from Original
Acceleration of a
Milestone
a/o 2/24/12
Notes:
1 Discovery Phase include the activities of Process Documentation, Development of Test Plans, Conducting Testing, and Analyzing the Test Results
2 Corrective Action Phase includes the implementation, monitoring and validation of corrective actions
Accountability from Flightline to Bottomline
19
Challenges to Meet Our Goal

Effective communication within FM and other functional
communities on how they can help

Illustrating how everyone fits into the “big picture”

Translating this “foreign language” into action and results

2014 is just around the corner and FY 2017 is not that far beyond
that…Time is of the essence

Educating Key Stakeholders….Why this matters

Efficient use of funds and resources

Credibility will help support need for additional funding

Enhanced decision support to fund operational needs
Systems limitations
This Is Not Just An FM Initiative – It Will Take the Entire AF Enterprise

Accountability from Flightline to Bottomline
20
How You Can Help…
Right Now

Lead FIAR efforts within your unit and spread the word at every
opportunity….be a “FIARMAN”

Follow the document retention policy (e.g. pay related documents
stored for 6 yrs and 3 months); as well as within other Comptroller
offices and functional communities on base

Take the MIC Program seriously….effective internal controls are
critical success factors to audit readiness

Work with your functional counterparts and show them how they fit
into the “big picture”

Participate on Assessable Unit Teams

Functional knowledge resides outside “the Beltway” (e.g. MilPay,
GAFS-BL, local purchases, etc.)
Business events create financial transactions and impact audit readiness
Accountability from Flightline to Bottomline
21
Examples of Where You Can
Assist AF Audit Readiness
Area
Functional
Community
Where You Can Assist Now
Requisitions and
Other Initiating
Documents
FM, RA’s
Controls are in place to ensure:
• The item requested is consistent with statutory intent of the appropriation and is not
otherwise prohibited
• The item requested is a necessary expense
• The LOA on each requisition is in line with the purpose of the business event
• The cost estimate is reasonably accurate
• Commitment is recorded accurately and timely
Invoices
FM, DFAS
Controls are in place to ensure:
• Quantity billed and unit price of items are accurate
• Goods or services have been received prior to certifying invoice for payment
• Invoices are processed promptly
• Documentation is retained and available for audit
Fund Control
FM, RA’s
Controls are in place to ensure:
• LOA for all activity is valid and supports the purpose of the business event
•
Funding is available to process the transaction
• Only valid codes are available to be cited
Funds
Distribution
DFAS, FM, RA’s
• Adhere
to the new document number construct for funds distribution through AFM to
GAFS-BL; this is the first step in auditability of our budget
•
Reconcile funds received and funds available, at a minimum, quarterly
Accountability from Flightline to Bottomline
22
Examples of Where You Can
Assist AF Audit Readiness
Area
Functional
Community
Where You Can Assist Now
Procurements
AQ
Controls are in place to ensure:
• Item purchased is to satisfy a bona fide need
• LOA cited for each transaction is consistent with purpose for the purchase of the
item
• FY funding used is appropriate for the transaction
• Obligation is recorded accurately and timely
• Applicable commitment is liquidated or adjusted
• All procurement actions are recorded
• Documentation is retained and available for audit
Receipt of Goods
and Services
All who certify
receipt of goods or
services
Quantity received is accurate
• Goods or services have been received by designated end user
• Receiving report is completed and recorded timely
• The appropriate accountable property system is updated to reflect the receipt of the
item, if applicable
• Receipt is recorded accurately and timely
• Documentation is retained and available for audit
Reimbursable
Orders
Any organization
performing
reimbursable work
Controls are in place to ensure:
• Statutory authority for performing work for others is valid
• Orders are supported by documented evidence of a formal offer and acceptance
• All billable costs are charged to the applicable customer order
• Documentation is retained and available for audit
Accountability from Flightline to Bottomline
23
Examples of Where You Can
Assist AF Audit Readiness
Area
Functional
Community
Where You Can Assist Now
MORDs
FM, DFAS
Controls are in place to ensure:
•
MORDs are only prepared when documents to support valid obligation/reimbursable
transactions are not immediately available
•
Documentation to support cost estimate is retained and available for audit
•
LOA for all activity is valid and supports the purpose of the business event
•
MORDs are reversed when the actual obligating document is recorded
Travel
All
Controls are in place to ensure:
• The LOA on each travel order is in line with the purpose of the travel
• The cost estimate is reasonably accurate
• Documentation is retained and available for audit
• Validate and Account for Government Orders Outstanding (GOO); if necessary, deobligate funds
Payments
DFAS, FM
•
If partial payment, LOA is valid for the specific items that are being paid
•
Disbursement is recorded accurately and timely
• Applicable
•
obligation is liquidated or adjusted
Documentation is retained and available for audit
Accountability from Flightline to Bottomline
24
Examples of Where You Can
Assist AF Audit Readiness
Area
Functional
Community
Where You Can Assist Now
Real Property
(RP)
Accountability
A7
•
•
Conduct physical inventories once every 5 years (20% each year), update the asset
record in ACES-RP and ensure documentation is filed
•
Accountability of
Property (other
than RP)
Timely processing of DD Forms 1354 to place facilities into service
A4/7
•
Maintain source documentation for the life of the asset
Ensure Receiving Report is accurate and signed
•
Ensure asset is recorded in the Accountable Property System of Record (APSR)
when Air Force takes ownership of the asset
•
Conduct physical inventories each year and ensure asset record in the APSR
reflects the “date of last inventory”
•
Maintain source documentation for the life of the asset (including proof of last
physical inventory)
•
Payroll
All
Potential Logistic Compliance Team review items
Controls are in place to ensure:
•
Codes used to record each payment are accurate
•
Reimbursable work is reported and identified separately
•
Timecards are recorded accurately and timely
•
Documentation is retained and available for audit
Accountability from Flightline to Bottomline
25
Examples of Where You Can
Assist AF Audit Readiness
Area
Functional
Community
Where You Can Assist Now
Systems
All FM and Feeder
System PMO’s
Documentation to support CFO compliance is current and readily available:
• System accreditation
• Security plan
• System controls
• User listing
• Test plans
• Recent audits
• Risk assessments
• Interfaces
• Transaction flows
• System and user documentation
Quality
Assurance
All
•
Ensure all controls are in place and are followed
•
Ensure all transactions are recorded
•
Ensure all transactions are processed timely
•
Ensure all errors are identified and corrected promptly
•
Validate data elements using FM DQS for ALL address requests
•
Don't knowingly use invalid data element values (even when you intend to go back
and correct them)
•
Correct known errors as soon as possible - the longer you wait, the worse it gets
•
Understand SFIS (structure - not a system) and how Legacy will translate
Accountability from Flightline to Bottomline
26
References

Hyperlinks
 FIAR/FIP CoP
 December 2011 OUSD(C) FIAR Guidance
 November 2011 FIAR Plan Status Report
 AF Business Rules on the FIP/FIAR CoP (Under Revision)

Documents Mention/Discussed
 Joint USM and Vice Chief Memo
 Mandatory Document Number Construct Memo
 USD(C) Priority Memo
 USD(AT&L) Memo
 FIAR Info to MAJCOM FM’s
Accountability from Flightline to Bottomline
27
Backup
Accountability from Flightline to Bottomline
28
You’re
FIAR’D!!!
Here are
some
examples.
Accountability from Flightline to Bottomline
29
FIAR Truck Example
Accountability from Flightline to Bottomline
30
Purchase of an FIAR Truck –
Impact to Audit Readiness

Example follows the purchase of a “FIAR” truck at base-level

Understand, fire trucks are not procured at base-level; however:

Everyone can relate to a fire truck
 They are found on every base
 Meet capitalization threshold
 Accountability takes place at base-level

Interchange fire truck with any capital asset (over $20K) purchased
(i.e. generator, utility truck, etc.) for applicability

Financial impacts are the same
 Accountable Property System of Record could be different

Process steps are similar for the purchase of goods and services,
but these costs are not capitalized on the balance sheet
Accountability from Flightline to Bottomline
31
Planning and Requirement
Development Phase

Step 1: Business Case Analysis – Base needs a Fire
Truck (Asset)
 AIR FORCE INSTRUCTION 63-101: ACQUISITION
AND SUSTAINMENT LIFE CYCLE MANAGEMENT
No Impact to
AF Financial
Statements….Yet

Step 2: Justification and Report Generation

Information is input into Financial Information Resource
System (FIRST)

Budget is prepared in Automated Budget Interactive
Data Environment System (ABIDES)

Budget is approved by Congress

Budget is signed by President

Air Force Receives Current Budget in ABIDES
Accountability from Flightline to Bottomline
32
Budget Execution –
Funds Receipt


Step 3: Funding is received

Treasury issues funding warrants to Air Force

SAF/FMB transfers information from ABIDES
into the Automated Funds Management (AFM)
system for distribution to the MAJCOMs

AFM information is transferred to the Air Force
accounting system General Accounting &
Finance System – Re-host (GAFS-R)
3. Budget Authority
A. Appropriation
Financial Statement Impact

Air Force must satisfy the Key Control Objective
(KCO) in order to become audit ready:

Appropriation transactions (or other forms
of budget authority): Recorded
appropriation (or other forms of budget
authority) is the same as the appropriation
or other legislation, was made available for
obligation (including restrictions on amount,
purpose & timing) and pertains to the entity
(Dept of the Air Force)
Accountability from Flightline to Bottomline
33
Budget Execution –
Funds Distribution


Step 4: Distribution to MAJCOM

Funding Authorization Document (FAD) is
transferred to MAJCOM through AFM and is
converted into Excel or loaded into FMSuite
for allotment to bases

The standardized AFM document ID is one of
key requirements for an audit trail, this allows
the Air Force to reconcile the fund distribution
balance

Funding is recorded with the proper
appropriation symbol (ex. 3080 - Other
Procurement, Air Force)
9. Unobligated Balance
A. Apportioned
Financial Statement Impact

Air Force must satisfy the KCO in order to
become audit ready:

Recorded apportionments agree with the
OMB apportionments and the total amount
apportioned does not exceed the total
amount appropriated
Accountability from Flightline to Bottomline
34
Procure to Pay –
Requisitioning and Sourcing


Step 5: Request for Procurement

The Base prepares a purchase request in the Automated Business Services System
(ABSS)

Common forms are Form 36 (Purchase Request), AF Form 9 (Purchase Request),
and AF Form 185 (Project Order)

Financial Services Office (FSO) ensures a Program Summary Record (PSR)
matches the Long Line of Accounting (LOA) on the purchase order and it exists in
General Accounting and Finance System - Base Level (GAFS-BL) system

FSO checks the availability of funding to support request, this is done by entering
the purchase request amount into the GAFS-BL utilizing the PSR as a commitment
(C) of funds Detailed contract information is interfaced from MOCAS into GAFS-BL
to record the Commitment (C)
No Direct Financial Statement Impact

However there is a risk within this step – if the FSO does not validate the availability
of funding it could create an Anti-Deficiency Act (ADA) violation
Accountability from Flightline to Bottomline
35
Procure to Pay –
Contracting and Purchasing

Step 6A: Contract for Procurement

The accounting record update allows the funds certifier to certify and release the
purchase request to the contracting officer for procurement action, the funds
certification data is sent via ABSS to contracting

The contracting officer (CO) receives the request, completes the acquisition
process and prepares a contract incorporating all the data entered by the requestor


CO prepares the contract in Standard Procurement System (SPS)

In the course of finalizing the details of the contract, it is reviewed by legal,
Defense Contract Management Agency (DCMA), and the vendor

Once the contract is awarded copies are distributed - Electronic image (PDF) is
sent to the vendor, DCMA and the originating financial specialist via e-mail
Detailed contract information is interfaced from SPS into Mechanization Of Contract
Administration Services (MOCAS)
NOTE: For this example, MOCAS used; however most base level folks are familiar with IAPS
and probably use this system for most purchases
Accountability from Flightline to Bottomline
36
Procure to Pay –
Contracting and Purchasing

Step 6B: Purchasing of Asset


The associated GAFS-BL Document
Summary Record (DSR) is used to match
the incoming obligation transactions
against the purchase request document
number (Step 5) – Commitment to
Obligation (C to O) this is simultaneous
with contracting (Step 6A), once the
contract is awarded
Financial Statement Impact

8. Obligations Incurred
A. Direct
Air Force must satisfy the KCO in order
to become audit ready:

Obligations represent valid orders
that will require future payment

Obligations are for the same purpose
for which the appropriation was
made
Accountability from Flightline to Bottomline
37
Procure to Pay –
Receipt and Acceptance

Step 7: Receipt of Asset

The Base receives the Fire Truck from the vendor, examines the asset, accepts the
asset received and creates a receiving document

On-line Vehicle Integrated Management System (OLVIMS) reportable vehicles
include fire fighting and base maintenance vehicles/ equipment of commercial or
military design

The Base’s Vehicle Fleet Manager (VFM) or Vehicle Management Superintendent
(VMS) takes delivery of the asset on behalf of the Air Force

The VFM completes a receipt/acceptance report (DD250) which is forwarded to
Defense Finance and Accounting Service (DFAS) through Wide Area Work Flow
(WAWF)

DFAS vendor pay receipt/acceptance data is interfaced from WAWF or input
manually into MOCAS

Receipt/Acceptance data flows electronically from MOCAS into GAFS-BL booking
the Accounts Payable
Accountability from Flightline to Bottomline
38
Procure to Pay –
Receipt and Acceptance

Step 7: Receipt of Asset

Financial Statement Impact

Statement of Budgetary Resources (SBR)

Air Force must satisfy the KCO in order
to become audit ready:


18. Obligated Balance, net, end of period
A. Unpaid Obligations
Obligations are recorded in the
proper period
Balance Sheet (BS)

Air Force must satisfy the KCO in order
to become audit ready:

Obligations are recorded in the
proper period
4. Accounts Payable
Accountability from Flightline to Bottomline
39
Procure to Pay –
Invoice and Distribution

Step 8A: Process Invoice & Matching and Distribution


DFAS conducts a three-way matching of the documentations provided (contract,
receiving report and invoice)

DFAS Vendor Pay personnel verify that the invoice meets proper invoice
requirements and that the vendor is actively registered in Central Contractor
Registration (CCR) and Corporate Electronic Funds Transfer (CEFT)

The invoice is also verified against the contract to determine if the charges are
correct
If all of the necessary documentation exists, DFAS processes the disbursement in
Centralized Disbursing System (CDS)


The payment process begins when DFAS receives a demand for payment
however payment is not made until the receipt of a DD250 or any other approved
receipt & acceptance document is in DFAS possession either electronically via
WAWF or manually submitted (mailed or faxed)
CDS generates check issue and Electronic Fund Transfer (EFT) files and interfaces
the associated accountability data to GAFS-R
Accountability from Flightline to Bottomline
40
Procure to Pay –
Invoice and Distribution

Step 8A: Process Invoice & Matching and Distribution

Financial Statement Impact

Statement of Budgetary Resources (SBR)

Air Force must satisfy the KCO in order to
become audit ready:


Outlay, collection and receipt transactions
represent valid, authorized transactions
and pertain to the entity
19. Outlays
Balance Sheet (BS)

Air Force must satisfy the KCO in order to
become audit ready:

Outlays are for the purposes for which the
appropriation was provided and in an
amount not exceeded the obligation, as
adjusted, authorizing the outlay (supports
ADA)
1. Assets
A. Intragovernmental
1. Fund Balance w/Treasury
Accountability from Flightline to Bottomline
41
Acquire to Retire –
Place into Service

Step 8B: Place into Service

The receiving activity is required to produce a receiving report upon receipt and
acceptance of the Fire Truck

Upon receipt the base level personnel, VFM, forwards a copy of the DD 250 to DFAS
for processing

The VFM enters all applicable data to include UIUD, serial number, and placed into
service date into OLVIMS


Asset information is ultimately passed to AFEMS, the Accountable Property
System of Record (APSR)

Bases set and implement local guidance in the form of Operating Instruction (OIs) in
accordance with (IAW) AFI 33-360, Publications and Forms Management for
reporting on inventory reconciliation

Upon notification that the reconciliation is complete, the VMS begins the process of
collecting cost and entering value for newly procured assets as well as any “child”
assets into OLVIMS
Financial Triggers:

(+) Receipt of Newly Procured Equipment
Accountability from Flightline to Bottomline
42
Acquire to Retire –
Place into Service

Step 8B: Place into Service

Financial Statement Impact

Statement of Budgetary Resources (SBR)


No Impact
Balance Sheet (BS)

Air Force must satisfy the KCO in order
to become audit ready:

Ensure recorded assets exist at a
given date

Ensure recorded assets at a given
date, are supported by
appropriate detailed records that
are accurately summarized and
reconciled to the account balance
Ensure recorded assets are
owned by the entity. The entity
has rights to the recorded asset at
a given date

1. Assets
E. Property Plant and Equipment
Accountability from Flightline to Bottomline
43
Acquire to Retire –
Monitor Assets

Step 9: Asset Accountability Reconciliation






Base level personnel are required to perform periodic inventory of on hand PP&E,
and perform a reconciliation of the inventory results against the information
recorded in OLVIMS
Any discrepancies that are noted between the asset inventory and the records in
OLVIMS are reported to the base level VFM
A discrepancy report is prepared detailing the differences between the results of the
inventory and the records in OLVIMS
Base level VMS updates the records in OLVIMS to reflect the results of the inventory
Maintaining the results of the current and last inventory is critical for Existence and
Completeness assertions
Step 10: Asset Maintenance/Modification

Maintenance and modification requirements for assets are established by VFM and
VMS using the AIR FORCE INSTRUCTION 23-302 Material Management VEHICLE
MANAGEMENT

Asset modifications that meet the capitalization threshold ($20K) are identified and
added to OLVIMS

VMS enter “child” assets and applicable value in OLVIMS (capitalized modifications
applied dependant upon total asset valuation after modifications are complete)

Proper recording of modifications (cost, date of modification, etc.) is important to
full financial statement audit readiness
Accountability from Flightline to Bottomline
44
Acquire to Retire –
Monitor Assets


Step 12: Asset Depreciation

Asset depreciation calculations are programmed to occur automatically in AFEMS

At the end of each month current total PP&E asset value (which represents the net
updates for new receipts and adjustments from inventory reconciliations)
accumulated depreciation and summarized transactional data is forwarded from
OLVIMS to GAFS-R for use in the financial reporting process

Critical to ensure placed in service date, acquisition cost, useful life fields are
accurate and match the information on the supporting documentation (DD250 and
invoice)
Financial Triggers:

(+)Asset Found During Inventory

(-) Asset Lost During Inventory
 (-) Depreciation

(+/-) Modifications
Accountability from Flightline to Bottomline
45
Acquire to Retire –
Disposition of Assets


Step 13: Asset Disposition

(1) Disposition Authority (USCENTAF AOR Only). Deployed sites do not have local
authority to salvage vehicles disposition decisions will be made by the MAJCOM. To
request salvage instructions units need to submit an AFTO Form 91, Limited
Technical Inspection-Motor Vehicle, to CENTAF-AUAB

(2) Defense Reutilization and Marketing Service (DRMS) Procedures. Contact
Regional or Zone DRMS Manager for processing guidance after a vehicle has been
approved for DRMS. If DRMS representation is not able to assist with disposal, the
MAJCOM or NAF Vehicle Management Staffs will direct disposal IAW DOD 4160.21M, Defense Materiel Disposition Manual, Chapter 8, Abandonment or Destruction
(A/D)

Disposal summarized transactional data is forwarded from OLVIMS to SBSS-ILS to
AFEMS to GAFS-R for use in the financial reporting process

Critical to maintain supporting documentation of the asset disposal (sale of asset,
destruction, etc.) for Existence and Completeness

Asset records in OLVIMS must be updated within 30 days of disposal of the vehicle
Financial Triggers:

(-) Disposal
Accountability from Flightline to Bottomline
46
Air Force Strategy

47
Incorporates an “enterprise-wide” approach

SAF/FM and SAF/USM responsible for audit readiness

Governance structure in place to enforce accountability

Includes redefined Assessable & Sub-assessable units for the SBR

Establishes “firm” milestone dates for E&C assertions with the functional
communities

Spends least amount of time in Discovery in order to move to corrective
action sooner, given the tight timeline

Assesses financial and mixed feeder systems to ensure IT General and
Application controls are tested and effective

Incorporates MAJCOM and base-level personnel – this is where the audit
will go when we are under audit

Assumes higher level of risk to meet audit readiness by FY14
Accountability from Flightline to Bottomline
47
Audit Readiness Risks

48
Table below contains overarching risks the Air Force identified
that may impede the ability to achieve the accelerated plan
Risk to Achieving the AF Plan
Actions to Mitigate Risk
Corrective actions not fully implemented prior to
assertion of the SBR
- Governing bodies will prioritize CAPs
- Develop a robust communication strategy
Critical Enterprise Resource Planning System
(ERPs) not fully deployed prior to September 2014
-Work with system PMO’s to ensure audit readiness requirements are
addressed in the ERP
- Conduct a QDD for all financial and financial feeder systems
Acquisition of contractor expertise is a timely
process
-Proactively work with GSA to ensure procurement is awarded timely
- Ensure knowledge transfer is achieved from one contractor to the next
Interim examinations delayed by DoDIG’s right of
first refusal
- Establish a process with OUSD(C) to procure an IPA when DoDIG is
unable to perform examination timely (e.g. Military Equipment)
OUSD(C) timeline for assertion review is too long
- Provide OUSD(C) interim products for review
Increased employee turnover due to added stress
and pace of plan
-Proactively manage the plan and limit the amount of reactive exercises
- Provide adequate resources to accomplish the plan
Lack of audit infrastructure to prepare for and
respond to financial statement audits conducted in
accordance with Generally Accepted Auditing
Standards (GAAS)
-Develop audit response capabilities (based on lessons learned by
USMC) – ex. SharePoint site
- Provide training to AF personnel on the preparing for, going through
and sustaining a financial statement audit
Accountability from Flightline to Bottomline
48
Required Assertion Work
Products
Accountability from Flightline to Bottomline
49
Key Control Objectives

Objectives that capture the outcomes needed to achieve proper
financial reporting and serve as a point against which the
effectiveness of financial controls can be evaluated

Effective internal controls mitigate risks and provide assurance
that financial information is properly and accurately recorded and
reported

Critical to successful financial statement audits. KCOs do the
following:
 Ensures key risks are mitigated during audit readiness efforts
 Ensures internal controls are aligned with financial statement
assertions
 During Evaluation & Discovery activities, assessing internal
controls is a prerequisite
Accountability from Flightline to Bottomline
50
Key Supporting Documentation

Documentation retained to demonstrate control activities are
properly designed and operate to satisfy KCOs, as well support
individual financial transactions and accounting events

Some examples:
 Obligating document and related modifications such as
contract purchase order, MIPR, etc.
 Unpaid Obligations (Undelivered Orders) brought forward and
at end of period are supported by valid obligating documents
such as contracts, reimbursable agreements, MIPRs,
purchase orders, etc.
 Receiving report, and billing document such as vendor
invoice (or equivalent), or accrual estimate support (if invoice
has not been received)
Accountability from Flightline to Bottomline
51
E&C Key Supporting
Documentation

Documentation retained to demonstrate control activities are
properly designed and operate to satisfy KCOs, as well support
individual financial transactions and accounting events

For example
 Tier 1 – physical inventory count documentation (book to
floor, floor to book), detailed asset listing, summary schedule
reporting amounts/quantities by class of asset, reconciliation
to general ledger, policies & procedures demonstrating
consistency of treatment
 Tier 2 – asset logs (maintenance or usage), missionmanagement/logistics data, track maps, physical indicators of
ownership of rights.
Accountability from Flightline to Bottomline
52
E&C Evaluation Objective
Objective: Provide the Air Force with a level of assurance that their mission-critical
assets in the related Accountable Property System of Record (APSR) exist, the records
are complete, and that their internal controls are designed and operating effectively.
Existence
test work
Completeness
test work
Internal
controls
Supporting
documentation
Purpose
Purpose
Purpose
Purpose
Validate assets
recorded in APSR
exist
Validate assets on the
flight line exist in
APSR
Document and review
internal controls for
inventory management
and accountability
Ensure data in APSR
is supported with
documentation; verify
Rights and Obligations
Test
Test
Test
Test
Randomly selected
“X” Assets from APSR
data for each
base/location
Select at least ”X”
assets to physically
observe that were not
in the Existence
population
Validate process;
Administer
questionnaire
regarding processes
and perform interview
Validate supporting
documentation exists
and is maintained for
assets being tested
Accountability from Flightline to Bottomline
53

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