Department of the Navy

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Department of the Navy Strategic Plan for
Achieving an Unqualified Opinion Office of the
Assistant Secretary of the Navy (Financial
Management and Comptroller)
Department of the Navy Financial Improvement
Initiative San Diego Conference


1 Feb 2005
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(No Transcript)
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The Road to Auditable Financial Statements
Clean Audit Opinion ??? Miles
16 Sept 2004- DON assert GF Investments
26 May 2004- DON Audit/Steering Committee
Established
21 Dec 2004- OMB Circular A-123
Jan 2004- DON FIP established
28 Oct 2004- NDAA 2005, Section 352
31 Oct 2003- MR FIP submission to OSD
23 June 2004- OSD Business Rules
8 August 2003- OSD memo tasking Mid-Range
Financial Improvement Plans
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Roles and Responsibilities

• FMO
• Provide guidance for execution
• Align corrective actions to systems transition
• Manage funding
• Oversee FIP Validation Effort
• Consolidate Validations

• DFAS Cleveland
• Provide systems documentation for DFAS-owned
  systems, including posting logic.
• Document AFS reporting processes
• Manage field sites effort

• COMMANDS
• Document business processes, systems, and
  internal controls
• Gather evidentiary matter to demonstrate
  effectiveness of controls
• Take ownership of financial information and
  processes
• Implement corrective actions that address
  material deficiencies

• NAVAUDSVC
• Validation
• Assisting Commands in preparing for audit

• DFAS Field Site
• Document business processes

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Understanding the Command Role
OSD/DoDIG
DON
Commands
Audit
Discovery and Correction
Validation
Assertion
Assessment

• Develop and implement approved corrective action
  plans
• Document business processes
• Assess internal controls
• Identify deficiencies
• Status effort

• Support validation effort by working with
  NAVAUDSVC or independent auditor
• Address findings from validation process

• Provided FMO materials required for assertion in
  Discovery and Correction Phase.
• No additional action required.

• Support assessment effort by working with DoDIG
  or independent auditor

• Support audit effort by working with DoDIG or
  independent auditor

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GF - Validation Matrix

• Horizontal versus Vertical Approach
• The obtainment of the DON clean opinion can be
  viewed as the summation of its clean parts.

RFA Ready for Audit
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Funding Profile FY 2005 - FY 2009

• DON FIP funding profile

Implementation
Sustainment
FY 05 FY 09 accounted for in OSD Budget
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Distribution of DON FIP Funds
Command identifies Requirement
Command develops FR
Command submits FR to FMO
Command executes requirement
Command Submits Fund status report
Rejected requests
FMO reviews/ approves FR
FMO establishes Funding Request (FR) Template
FMO monitors performance
Approved Requests
IF WCF FMO forwards RWO request to FMA
FMA issues RWO to WCF Command
IF GF FMO forwards OB change request to
FMA/FMB/ AAUSN
FMB Issues OB change to Command
IF GF (ES/FTE) FMO forwards RWO request to FMA
FMA issues RWO to GF Command
IF IDIQ FMO notifies Command
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Minimum Funding Justification

• Funding Derivation
• Contract FTE 8.0 X 85 X 2,000 hrs. 1,360,000
  
• 85 Contract hourly rate 2,000 hrs. per year
• Other Non-Labor 5,000 (NMCI seat cost) X 8
  40,000
• Travel 20,000
• Supplies 2,500
• Activities performed with the funding, i.e.
• Analyze and document the "as is" and the "to be"
  financial processes to validate effectiveness of
  corrective actions using methodology consistent
  with external audit standards that will be used
  during the assessment and audit phases of
  Financial Improvement Initiative process.
• Identify and correct the root cause of problem
  disbursements. Eliminate aged (over 30 day old)
  problem disbursements. Significantly reduce
  problem disbursement inflow. 
• Validate obligations to support Triannual Review
  efforts. 
• Develop Standard Operating Procedures to support
  reengineered processes. Develop procedures and
  documentation to facilitate review and audit of
  processes.  
• Develop procedures and documentation to
  facilitate review and audit of processes.
• Determination of success, i.e.
• Deliverable-based Completed requirements set
  forth in Validation guidance for line item
  Accounts Receivable and provided documentation to
  FMO
• Metric-based Problem disbursements Average
  monthly balance and inflow have reduced for 3
  consecutive months.

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IDIQ Delivery Order process
Command establishes mgmt team and identifies
Technical advisor
Command identifies Requirement
Command develops PWS
Command submits PWS to FMO
Command oversees contract effort
FMO forwards PWS and IGE to FISC
FMO reviews PWS
FMO notifies Command of award
FMO monitors progress
FMO establishes Performance Work Statement
Template
FMO provides technical assistance
FISC evaluates quote and awards PWS to selected
Contractor
FISC provides PWS guidance
FISC sends out request for quote
FISC notifies FMO of award
Contractors submit quote
Contractor establishes Supt Team
Contractor reports to command
Contractor performs PWS requirements
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IDIQ Validation Delivery Order process
Command establishes mgmt team and identifies
Technical advisor
Command Attends Validation Training
Command identifies Requirement
Command develops PWS
Command submits PWS to FMO
Command oversees contract effort
FMO forwards PWS and IGE to FISC
FMO establishes Performance Work Statement
Template
FMO reviews PWS
FMO notifies Command of award
FMO monitors progress
FMO provides technical assistance
FISC evaluates quote and awards PWS to selected
Contractor
FISC sends out request for quote
FISC provides PWS guidance
FMO prioritize schedule
FISC notifies FMO of award
Contractor Attends Validation Training
Contractor establishes Supt Team
Contractor reports to command
Contractor performs PWS requirements
Contractors submit quote
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GF Validation Matrix
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IDIQ Bill Paying Process
Command oversees contract effort
Command reviews/accepts WAWF invoice
FMO monitors progress
FMO reviews/accepts WAWF invoice
FMA certifies WAWF invoice
DFAS pays WAWF invoice
Contractor performs PWS requirements
Contractor prepares Invoice
Contractor submits invoice via WAWF
Contractor receives payment
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Challenges

• Foster reliable and timely guidance from OUSD(C)
• Integrate timely approval of SCRs into new BMMP
  structure
• Accommodate and leverage C-ERP wherever possible
• Apply budgeted resources efficiently and
  effectively
• Engage and garner the support of DON leadership
• Communicate progress and status to all impacted
  organizations
• Accommodate Section 352 restrictions
• Hire experienced and knowledgeable command teams
• Accomplish systems audits in line with validation
  efforts

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Sec 352 of DoD FY 2005 Authorization Act

• PL 108-375 of October 28, 2004 sec 352 states
• SEC. 352 LIMITATION ON PREPARATION OR
  IMPLEMENTATION OF MID-RANGE FINANCIAL IMPROVEMENT
  PLAN PENDING REPORT.
• Amounts authorized to be appropriated to the
  Department of Defense for fiscal year 2005 for
  operation and maintenance may not be obligated
  for the purpose of preparing or implementing the
  Mid-Range Financial Improvement Plan until the
  Secretary of Defense submits to the
  congressional defense committees a report
  containing the following
• (1) A determination that the enterprise
  architecture for defense business systems and the
  transition plan for implementing the enterprise
  architecture have been developed, as required by
  subsection (c) of section 2222 of title 10,
  United States Code, as added by section 332(a).
• (2) An explanation of the manner in which the
  operation and maintenance funds will be used for
  each of the military departments and the Defense
  Agencies to prepare or implement the Mid-Range
  Financial Improvement Plan during that fiscal
  year.
• (3) An estimate of the costs for future fiscal
  years for each of the military departments and
  the Defense Agencies to prepare and implement the
  Mid-Range Financial Improvement Plan.

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Sec 352 of DoD FY 2005 Authorization Act

• Whats OK
• Discovery
• As Is Process mapping
• Systems definition
• OMB A-123 requirements
• Validation
• Obligation reviews
• Converged ERP efforts
• DTS Implementation
• WAWF Deployment
• Command level statements
• Data Cleansing
• Fixing problem disbursements
• Day-to-day accounting operations
• Efforts with completion dates beyond FY 2007
• Management of overaged A/R
• Posting of A/P transactions

• Whats Not OK
• Manual Heroic efforts
• Mid-Range Deficiency correction
• Mid-Range Plan development
• Unapproved Legacy System Changes
• Efforts solely for a clean opinion in FY 2007

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FMO Near-Term (FY 05) Actions
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Command Near-Term (FY 05) Actions
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Communication Channels

• DON FIP FMO Team
• Gilbert Gardner- DON FIP Team Lead
• gilbert.gardner_at_navy.mil, 202-685-6727
• William.mccleary_at_navy.mil, 202-685-6739, IBM
  Support
• Michael.sullivan_at_navy.mil, 202-685-0786, IBM
  Support
• Vicki Beck- Deputy DON FIP Team Lead, Marine
  Corps Statements, other GF issues
• vicki.beck_at_navy.mil, 202-685-6721
• Damon.sturniolo_at_navy.mil, 202-685-6726, IBM
  Support
• Phillip Graham- DON FIP Navy Working Capital Fund
  Accounts Payable (GF)
• phillip.graham_at_navy.mil, 202-685-6729
• Nina.blassengale_at_navy.mil, 202-685-6743, IBM
  Support
• Wanda Creech DFAS Liaison for FBWT, A/R GF
  Command Level Statements GF validation matrix,
  PD
• Wanda.creech_at_navy.mil , 202-685-6728
• Shandell.taylor_at_navy.mil, 202-685-6758, IBM
  Support
• Matthew.Bembenick_at_navy.mil, 202-685-6753, IBM
  Support
• Warren Pfeiffer- Environmental Liabilities, Real
  Property, Personal Property
• warren.pfeiffer_at_navy.mil 202-685-6730
• Mark.s.rockwell_at_navy.mil, 202-685-0772, IBM
  Support
• Beverly Veit- Inventory, OMS, and Military
  Equipment

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FY 2005 Take-aways

• Command Level Financial Improvement Programs are
  essential for the successful execution of the DON
  FIP.
• Commands should
• Review the DON FIP to identify those existing
  deficiencies that apply to your Command
• Document additional known deficiencies
  pre-meeting worksheet to be distributed
• Provide FMO potential areas for Validation (no
  known deficiencies, materiality, etc.)
  pre-meeting worksheet to be distributed
• Prepare to meet with FMO point of contact to
  discuss Command level actions that can support
  the DON FIP (Command-Level action plans and
  validation)
• Commands should expect validation efforts
  beginning in March/April
• Begin to establish command level team to oversee
  this effort