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Air Force Financial Improvement and Audit Readiness

Air Force Financial Improvement and Audit Readiness. Curtis Lord/Isidro Silva FMF/DFAS 26 April 12. OVERVIEW. General overview of FIP/FIAR DFAS Role More FIAR specifics. SBR and Our Assessable Units. Budget Authority

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Air Force Financial Improvement and Audit Readiness

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  1. Air Force Financial Improvement and Audit Readiness Curtis Lord/Isidro Silva FMF/DFAS 26 April 12

  2. OVERVIEW • General overview of FIP/FIAR • DFAS Role • More FIAR specifics

  3. SBR and Our 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 3 3

  4. What is FIAR? 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 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 4

  5. FIAR – What is it? • The Department of Defense must have financial statements that are auditable by 2014 • The FIAR Plan is a Department of Defense wide effort to accomplish this

  6. FIAR – Why Now? • Mandated by law and regulatory requirements • Chief Financial Officer Act (CFO) 1990 • Government Performance and Results Act (GPRA) 1993 • Federal Financial Management Improvement Act (FFMIA) 1996 • National Defense Authorization Acts (NDAA) 2006 and 2010 • FY12 Defense Appropriation Bill • Use money for its intended purpose • Good stewards of entrusted taxpayer resources • Ability to provide Accurate, reliable and timely financial information to support decision makers

  7. Statement of Budgetary Resources & Mission Critical Asset Existence and Completeness Areas of Concentration USD(C) Memorandum Requiring DoD Components to: Improve information and processes supporting auditable financial statements Primarily focus on improving budgetary information and processes Secondary goal to verify existence and completeness of mission critical assets AUG 2011

  8. A Four Wave Strategy for FIAR Wave 3: (Target Q4 FY16) • 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 1: • Focus on the flow of money from receipt by HAF to distribution down to the MAJCOMs • Includes all appropriations for the current fiscal year • Asserted as audit ready Sep 2010 AUDIT READY Wave 2: (Target Q1 FY14) • 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 reconciled starting and ending balances Wave 4: (Target Q1 FY17) • Full financial statement audit, except for the values of legacy assets (e.g. B-52 purchased in 1955) • Requires that the Air Force has the capability to value new asset acquisitions 8

  9. FIAR – Wave 2 Timeline • DoD Audit Readiness by 2017 • SECDEF accelerated to 2014 • Clarification to SECDEF comments - Statement of Budgetary Resource auditable by 2014 • OSD(C) & SAF/FM accelerating all audit readiness work • Working Wave 2 & 3 Countermeasure Objective: Achieve Clean Audit Opinion by 2017 Measure: Controls within each Assessable Unit Data Source: SAF/FMP 24 FEB 12 AFRC/FMFC

  10. FIAR Methodology • Standard Approach to address any Wave of the FIAR Strategy 10 10 10

  11. What Does FIAR Mean To… • 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 SAF/HAF 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 MAJCOM 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” Base Level This Is Not Just An FM Initiative – It Will Take the Entire AF Enterprise 11

  12. DFAS Critical service provider with major impact to AF Financials Audit Readiness Office Support overall AF audit readiness assertion priorities “Repurposing” Command Client Exec/ Mission Support Accountants Augmenting Readiness Office 42 MSAs Puts DFAS on the Front Line of FIAR Supporting the Completion of SBR General Fund Working Capital Fund DFAS Is Fully Engaged

  13. Questions ?

  14. You’re FIAR’D!!!

  15. FIAR – Air Force • Key Events - • SECDEF Accelerated Plan • SAF/FM briefed Fall CORONA • SAF/FM & MAJCOM meeting 15

  16. FIAR – Wave 2 • Statement of Budgetary Resources (SBR) • 14 Assessable Units • Life-cycle of funds • Audit trail for all funds • Perform testing of the internal controls to ensure minimal risk to misstatement • Test and reconcile starting and ending balances

  17. FIAR – Wave 2 • 14 Assessable Units • Funds Distributed to Base • Reimbursable Budget Authority • Civilian Pay • Military Pay • Contracts (MOCAS) • Contracts (Vendor Pay) • Reimbursable Work Orders • MILSTRIPS • Examination of One Acquisition Program (SBIRS) • Rescissions • Non-expenditure Transfer • Net Outlays • Examination of DEAMS • Financial Statement Compilation and Reporting 17

  18. Wave 2 – Funds Distributed to Base • Status: • Assertion – 2nd Qtr FY12 • Revised Assertion – 4th Qtr FY12 • Findings: • Not following Air Force Guidance on Mandatory Funding Document Number Construct • SAF/FMBM memo, dated 21 April 11 • All AFM & DoD PBAS documents (1 Jun 11) • REVISED – as of 01 Jan 12 • No Supporting Documentation for Funding Realignments 18

  19. Wave 2 – Funds Distributed to Base • Findings: • Not using AF Form 1269 (or equivalent) for loading Targets • Total of AF Form 1269 doesn’t equal AFM/PBAS document • AF Form 1269 doesn’t have an Approval signature • No Delegation of Authority Memo for AF 1269 Approver • More Base Level Testing in Aug 2012 19

  20. Wave 2 – Reimbursable Budget Authority • In Discovery Phase, Results Pending • 5 GLACs (55 samples from each) • 4221 – Unfilled, Uncollected Reimbursable Order • 4222 – Unfilled, Collected (Advanced) Reimbursable Order • 4972 – Refunds • 4251 – Filled, Uncollected Reimbursable Order • 4252 – Filled, Collected Reimbursable Order • Issuing Reimbursable Budget Authority (RBA) – FY13 • Assertion – 1st Qtr FY13 20

  21. Wave 2 – Civilian Pay • Discovery/Testing Phase • Phase 1 – Completed, Under Review • Phase 2 – Pending • Automated Time, Attendance, and Production System (ATAAPS) • Assertion – 2 Qtr FY2013 21

  22. Wave 2 – Military Pay • Discovery • 30 Oct 2011 – 15 Jun 2012 • Identified during Discovery • Reconcile mismatched data between Military Personnel Data System (MILPDS) and Defense Joint Military Pay System (DJMS) • Assertion – 2nd Qtr FY2013 22

  23. Wave 2 – Contracts (MOCAS) • Initial Discovery Phase • Air Force Audit Agency (AFAA) Supporting • 235 Transactions • 230 Contain Complete Documentation • Issues: • 26 Obligation Documents not Signed • 18 Commitment Documents did not have appropriate Delegation of Authority Memo • Assertion – 2nd Qtr FY2013 23

  24. Wave 2 – Take-Aways • Auditable Financial Statement is Mandatory • Success is Dependent on Everyone in the Air Force • Compliant • Documentation • Authorization • Validation 24

  25. References • Hyperlinks • FIAR/FIP CoP • May 2010 OUSD(C) FIAR Guidance on the FIP/FIAR CoP • May 2011 FIAR Plan Status Report • AF Business Rules on the FIP/FIAR CoP • 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 25

  26. Questions ?

  27. Backup

  28. Wave 2 – Funds Distributed to Base

  29. Wave 2 – Funds Distributed to Base

  30. Wave 2 – Funds Distributed to Base

  31. Wave 2 – Funds Distributed to Base

  32. Wave 2 – Funds Distributed to Base

  33. Wave 2 – Funds Distributed to Base

  34. Wave 2 – Funds Distributed to Base

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