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ASMC National Capital Region PDI 3 March 2015

Sustaining Audit Readiness. ASMC National Capital Region PDI 3 March 2015. Agenda. USCG CFO Audit History ICOFR Audit Remediation Lessons Learned Internal Control Program Internal Control Reporting & Statement of Assurance Discussion. Financial Statement Audit.

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ASMC National Capital Region PDI 3 March 2015

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  1. Sustaining Audit Readiness ASMC National Capital Region PDI 3 March 2015

  2. Agenda • USCG CFO Audit History • ICOFR Audit • Remediation Lessons Learned • Internal Control Program • Internal Control Reporting & Statement of Assurance • Discussion

  3. Financial Statement Audit • FY03: Coast Guard joined DHS. DHS receives Qualified audit opinion on its balance sheet • FY11: Received first Qualified audit opinion on its balance sheet and statement of custodial activity • FY13: Received first unmodified (unqualified) audit opinion on its financial statements since DHS was formed in 2003 • FY14: Received unmodified audit opinion on its financial statements At DOT - Thru 2002 At DHS 2003 - Onward

  4. FY14 Audit - ICOFR • DHS is only Federal agency required to also obtain audit opinion on Internal Control over Financial Reporting (ICOFR) • FY14 - Adverse Opinion

  5. Audit/Internal Control Benefits • Improved stewardship of resources • Increased transparency • Improved financial/business processes • Reduced waste/duplication of efforts • Minimizing errors • Providing leadership with better information to make decisions

  6. Remediation Lessons Learned • Commitment Highest Level – DHS & USCG Executive Focus • Establish Framework for Success • USCG Financial Management Transformation Task Force (FMTTF) • USCG Financial Strategy for Transformation & Audit Readiness (FSTAR) • Multi-year, Disaggregation, Materiality • Mission Action Plans (MAPs) • DHS/USCG – Balance Sheet First Approach • Compensating Controls for System Limitations • Assertion Packages – Assisting Auditor (Audit Execution) • Accounting for Remediation in Current Year Activity • Roll Forwards/Isolate Remediation/Current Year • Prior Period Adjustments • Mature: NFRs/Remediation to Internal TOD/TOE Results • Financial Statement Success – ICOFR Success • Sustaining = Continually Improving/Risk Based

  7. Executive Focus The unmodified Financial Statement Audit Opinion was earned through hard work and significant manpower….But it requires continued executive focus to sustain the opinion.

  8. Audit Execution Need Effective Audit Engagement

  9. Audit Execution Independent Auditor, USCG Audit Coordination Team (ACT), and USCG POCs use SharePoint and Shared folders for PBC/NFR requests

  10. Internal Control Cycle September October/ November Q4 DHS Reporting Requirements & V&V Q1 Q2 & 3

  11. Internal Control Reporting 11

  12. Internal Control Reporting 12

  13. 15-10 Financial Reporting MAP Milestones for 9 FEB – 20 FEB 2015 20 Feb 9/30/2014 12/31/2014 3/31/2015 9/30/2015 6/30/2015 Update Q3 root cause dashboard 8.2.1.2 Update Q1 root cause dashboard V&V FY15 Beginning Balance Rollforward Update Q4 root cause dashboard Update Q2 root cause dashboard 8.2.1.4 Provide fluctuation analysis tool results 7.6.6 5.1.3 5.1.2 8.2.1.3 8.2.1.1 FY15 Q2 CRO analysis Analysis & Analytics FY15 Q1 CRO analysis 4 5.1.1 5.1.4 FY15 Q3 CRO analysis FY14 Q4 CRO analysis 7.6.3 17 9 7.6.9 10.4 Perform TIER V&V Fed/Non-Fed/Industry TPIN analysis 7.6.12 5.2.1 Provide fluctuation analysis tool results Provide fluctuation analysis tool results Perform OTA analysis Provide fluctuation analysis tool results 8.1.3 Conduct COA analysis Identify gaps in policies/procedures Develop data mining process for JVs posted in system 11.1.3.1 V&V of Q4 manual footnotes Perform V&V of CG-842 Q4 probe testing 8.1.2 19.1 V&V of Q2 manual footnotes Compile master list of JVs/OTAs JV/OTA Support 11.1.2 8.1.6.6 19.3 19.2 Finalize category listings for approval 13.1 Determine corrective action to resolve timing issues 11.1.4 Document internal controls for Global Pay Determine initial high risk/low risk classification V&V of Q3 manual footnotes 18.2.1 Document financial reporting processes 3.1.3 3.6.4 6 Develop ICP transaction code analysis SOP COA Analysis SOP Documentation & Procedures Fixed Asset Rollforward SOP 3.5.3 20 3.4.3 3.2.3 12.2.12 CRO Analysis SOP Beginning Balance Rollforward SOP Finalize Document Repository GAO Checklist due Financial Reporting Re-engineering Provide JV support package for posting payroll to GL Global Pay Go-Live 18.3.7 9.4.2 18.3.2 Integrate consolidated GL into FR deliverables Financial Reporting Systems 9.1 13.1.1 Develop analytic/ script to support timing differences in OTAs 8.2.3 10.2 18.1.1.1 Document findings and develop corrective action on Closing Package Global Pay testing of October data Complete adding TIER fields to consolidated GL in ACL Analyze posting logic related to RTP1 differences

  14. 15-09 Policy,Process ProcedureMAPMilestoneDashboard for 26 JAN 2015 –6FEB 2015 Key Tasks Planned for Next Reporting Period Key Accomplishmentsthis ReportingPeriod PROPERTY RP: Green (3): Completed updates to Environmental Liability (EL) Queries and Assumptions (RP step 19.1), EL Estimate Process (RP step 22.2), and EL desk guide (RP step 22.2.10). Drafted Out-Grant FRMM-P (RP step 4) and Condition Assessment Schedule procedures (RP step 7.1.1). PROPERTY RP - Complete Desktop Guide for SAM/OFA reconciliation PP - Finalize personal property FRMM-Ps Red (1):ThePP&PforidentifyingnewLHI projectsisdelayed.Draftisundergoingmanagementreview(RPstep 14.4). PP: Green (1):Updated Heritage asset policy, FRMM-Pfor1995, HLA, and finalized draftforPPLease FRMM-Ps (PPStep 2). CIP - Finalize the tech refresh definitions and CIP CAP package desk guide CIP: Green (2):Updated CIPprojectestablishment and periodicreviewdeskguides. Red (1):Policyforinsurance and other spares (CIPstep 15)and thetech refreshdefinitions (CIPstep 16)are overdue. FR: Finalize COA and CRO SOPs Start work on BBRF SOP and desk guide IRP: Green (4) - Completed supply fund governance board charter (IRP step 11.2) and ATON/NESSS business policy (IRP step 3.9.1). Reviewed policies over OM&S valuation (IRP step 6) and Kodiak improvements (IRP step 9.1). PM: 1. Finalize AP accrual management review issue paper 2. Identify next steps for auxiliary patrol order procedure FINANCIAL REPORTING Red (2): COA and CRO Analysis SOPs are overdue - they are at 90% completion and undergoing management review. The delay is as a result of resources being diverted to Global Pay efforts (FR steps 3.1.3, 3.4.3). PAYMENT MANAGEMENT Green (3): Completed documenting the AP accrual methodology process (PM step 4.5), gap analysis over AUX patrol order process (PM step 9.1), and updated the AP quarterly reconciliation procedures (PM step 3.2). RRM: Make updates to TPML and NPFC AFDA PP&Ps Develop PCS process flow from DCMS-831 procedures REVENUE AND RECEIVABLES MANAGEMENT Green (4): Completed review over AR reporting process for PCS advances and the Third Party Medical Liabilities (TPML) business process (RRM steps 8.2, 5.3). Updated the AR quarterly reconciliation procedure (RRM step 3.2), and met with CG-843 to discuss prioritization of PP&P efforts (RRM step 14.1). BRM: Finalize drafts of BRM related PP&P updates Promulgate CG-831 policy over monitoring cash balance in revolving funds BUDGETARYRESOURCEMANAGEMENT Green (3):Promulgated unilateral contractclose outPP&P(BRM step 3.6.2);created UCOrollforward and Ammo receipting PP&Ps (BRM steps5.1.1, 9.2.3). * Corrective action plans for MAP tasks that are in jeopardy of missing the due date and/or overdue are not included in this dashboard. They can be found in the appropriate process area Quad. Yellow(1):Promulgation of CG-83reviewover obligation managementisdelayed.Theinitial draft hasbeen created (BRM step 3.8). Red (5): PP&Ps over deobligation management and validation; monitoring of revolving funds, unit approved plan, gift fund, and funding document attributes including period of performance are overdue. The initial drafts have been created (BRM steps 3.5, 3.6, 7.2, 9.2.1, 9.2.4).

  15. Statement Of Assurance Coast Guard Commandant’s Assurance Statement Assessable Organizational Elements (AOE) Assurance Statements CIO CFO Government Performance and Results Act Reporting (Operations) Information Technology General Controls (CIO) Internal Controls Over Operations (AOE) Internal Controls Over Financial Reporting (CFO) Effective and Efficient Operations Compliance with Laws and Regulations Reliable Reports

  16. Discussion/Questions Contact info: Mark Rose Director of Financial Operations/ Comptroller, USCG 202-372-3541 Mark.A.Rose@uscg.mil

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