ASMC PDI

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ASMC PDI
Army Managers Internal Control Program (MICP)

• ASMC PDI
• San Antonio, Texas
• May 26-29, 2009

Presented by Mr. Jorge F. Roca Director,
Management Services Office of the Deputy
Assistant Secretary of the Army (Financial
Operations)
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Army Managers Internal Control Program (MICP)

• Agenda
• Army MICP Policy
• What are Internal Controls
• Key Controls
• Risk Assessment
• Background
• Actions Taken
• Value Added
• Current Initiatives, Big Payoff
• Proven Benefit to the Army
• Lessons Learned
• Way Ahead

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Army Managers Internal Control Program (MICP)

• Army Policy
• Leaderships inherent responsibility
• Full disclosure
• Chain of command / communication / guidance /
  training
• Performance agreements
• AR 11-2 and DA Form 11-2 (Formerly 11-2-R)
• Internal Controls Over Financial Reporting
  (ICOFR)

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(No Transcript)
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FY 08 Strategic Priorities for Army Financial
Management Comptroller
Loyalty Duty Respect Selfless Service
Honor Integrity Personal Courage
Strategic Priority 4. Enhance work place and
work force support to enable accomplishment of
the FMC mission.
Objectives 4.1. Develop cost and financial
management and decision support competencies
through enhanced education, training and
professional development opportunities. 4.2.
Develop future FM leaders. 4.3. Enhance
information systems environment, performance, and
capabilities.
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Internal Controls Not just a financial
requirement

• Internal controls over business processes help
  ensure planned outcomes are achieved based on
  adherence to specific guidelines established by
  the organization, laws and/or regulations.
• Senior Leaders risk assessment and establishment
  of internal controls for high risk areas are key
  to mitigating and reducing potential violations
  resulting from weaknesses in internal controls
• Continuous review and testing of internal
  controls are vital to identifying areas of risk
  and weaknesses.
• Results of these reviews should inform management
  decisions on managing risk and eliminating
  weaknesses.

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Army Managers Internal Control Program (MICP)

• What are Internal Controls?
• The rules, procedures, techniques and devices
  employed by managers to ensure that what should
  occur in their daily operations does occur on a
  continuing basis
• Internal controls include such things as
• the organization structure itself (designating
  specific responsibilities and accountability)
• formally designed procedures (e.g. required
  certifications and reconciliations)
• checks and balances (e.g. separation of duties),
  
• recurring reports and internal reviews,
  supervisory monitoring
• physical devices (e.g. locks and fences)
• a broad array of measures used by managers to
  provide reasonable assurance that their
  subordinates are performing as intended

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Army Managers Internal Control Program (MICP)

• Risk Assessment
• What is Risk?
• The probable or potential adverse effects from
  inadequate internal controls that may result in
  the loss of Government resources through fraud,
  error, waste or mismanagement

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Army Managers Internal Control Program (MICP)
Risk Assessment

• A process -- not necessarily a stand-alone
  product
• Subjective assessment made by management
• Identify mission objectives
• Identify risks (qualitative and quantitative)

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Armys MICP in Brief

• Background
• 25 Years of Internal Controls Reporting
• 236 Material Weaknesses Reported to DOD
• 6 Open Material Weaknesses at the end of FY-08
• Improved timeliness of reporting from 45 days
  late in FY-05 to 16 days early in FY-08
• Most improved DOD Agency in FY-06
• First DOD Agency to file report in FY-08 SOA tied
  for second place in scorecard with benchmark SOA
• Over 9,122 Internal Control Administrators
  Trained Army-Wide in FY-08

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Army Reporting Organizations
Principal Staff
Secretariat
Commands

• 3 Army Commands
• 9 Army Service Component Commands
• 11 Direct Reporting Units

• CIO/G-6
• IG
• Chief, Army Reserves
• Chief of Chaplains
• Corps of Engineers
• Director of Army Staff
• G-1/DCS
• G-2/DCSINT
• G-3/5/7 DCSOPS
• G-4/DCSLOG
• G-8/DCSPRO
• DCS Installation Mgt
• JAG
• MEDCOM/OTSG
• Chief NGB
• Provost Marshall
• Chief Legislative Liaison
• General Counsel
• Public Affairs

• Administrative Assistant to the Secretary of the
  Army
• Financial Management Comptroller
• Acquisition Logistics Technology
• Manpower and Reserve Affairs
• Civil Works
• Installations Environment

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Roles and Responsibilities
Internal Control Organization
AAA Annual Review of Program
ASA(FMC)
Guidance
Statements
Headquarters Principal Army Command Army Service
Component Command Direct Reporting Unit
Reporting Organization
ICA
Audits
SRO
SRO
ICA
SRO
AUM
AUM
AUM
AUM
AUM
AUM
AUM
AUM
ICA
AUM
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Army Managers Internal Control Program (MICP)

• Actions Taken
• Program Turn Around Based on Change in Philosophy
• Reward candor
• Embrace MICP as an opportunity to transform
  business processes and improve financial
  reporting
• Emphasize timely implementation of audit
  recommendations and proactive corrective action
  to resolve weaknesses
• Early surfacing of internal control issues to
  HQDA through command channels
• A more proactive approach to reporting and full
  disclosure
•  
• Reporting has improved qualitatively and
  quantitatively
• Between FY01 and FY07 the Army reported only 21
  material weaknesses -- all but three are now
  closed
• In FY08 alone, the Army reported 24 new
  material weaknesses -- indicative of the Armys
  eagerness to employ the MICP as a mechanism for
  real change

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Army Managers Internal Control Program (MICP)

• Value Added
• Current Initiatives, Big Payoff
• ASA(FMC)
• Lean6 Sigma pilot plan developed to streamline
  Army Fraud Recovery Process. Universal tracking
  numbers and Accounts Receivable established to
  reduce delays in research time by DFAS.
  Initiative aims to greatly reduce time required
  to return recovered funds to Army from 900 days
  to 30 days (97 improvement), thus enabling the
  Army to retain use of 80 more Procurement funds
  before appropriation cancels.
• Another ASA(FMC) project is underway to fully
  reconcile Army and DoD accounts. Initiative
  seeks to ensure that Army receives 100 of
  proceeds from sales and leases that are deposited
  by Army installations (in FY06 the Army received
  only 50 of these proceeds).

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Army Managers Internal Control Program (MICP)

• Value Added
• Current Initiatives, Big Payoff
• US ARMY FORCES COMMAND
• Safety Office conducted on-site surveys and
  analyses to determine accident causal failures.
  Subsequent mitigation plan has decreased accident
  fatality rates by 26.
• 101st Airborne Division developed a comprehensive
  suicide prevention program through creation of
  a Buddy System training and empowering junior
  leaders to detect warning signs in their
  soldiers and reducing the stigma associated with
  obtaining counseling.

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Army Managers Internal Control Program (MICP)

• Value Added
• Current Initiatives, Big Payoff
• US ARMY MATERIEL COMMAND
• Tobyhanna Army Depot improved availability of
  critical spares for Firefinder radars.
  Comprehensive parts prioritization and
  acceleration blitz has increased production and
  reduced backorder quantities for critical spares
  by 76, resulting in decreased down times for
  units undergoing Reset.
• The Army Research, Development and Engineering
  Center developed the Rapid Entry Vehicle to
  increase survivability for military police inside
  Theater Internment Facilities and provide
  enhanced non-lethal capabilities for insertion of
  security personnel into detainee compounds during
  riots.

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Army Managers Internal Control Program (MICP)

• Value Added
• Current Initiatives, Big Payoff
• US ARMY INSTALLATION MANAGEMENT COMMAND
• In conjunction with ACSIM, OGC and USACE, IMCOM
  has developed enhanced work classification
  guidelines and submittal requirements for
  relocatable buildings. Garrisons must now define
  project costs by specific category and provide
  exit strategies for transition out of the
  temporary buildings in an acceptable timeframe.
  Improved training and guidance is reducing the
  Armys vulnerability to Antideficiency Act
  violations.
• CG, IMCOM issued an Executive Order to ensure
  that the quality of life and standard of living
  for redeploying soldiers is a command priority
  and that barracks management and readiness
  throughout the Army is not compromised. A Senior
  NCO facility oversight body answerable to the CG,
  IMCOM has now been created to provide continuous
  monitoring of barracks conditions and avoid
  repeat of embarrassing failures that occurred at
  the height of GWOT mobilizations.

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Army Managers Internal Control Program (MICP)

• Value Added
• Proven Benefit to the Army
• Financial Reporting of Equipment In-Transit
  (Closed FY08)
• Systems interfaces and logistics processes have
  been improved, thus improving the validity of the
  in-transit records displayed by the Continuing
  Balance System-Expanded (CBS-X)
• Reduced error rate for in-transit asset financial
  data has led to more reliable data on the
  valuation of equipment in the Armys financial
  statements
• Improved accuracy for inventory data in the
  Logistics Integrated Data Base has enhanced asset
  reporting and document closure procedures

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Army Managers Internal Control Program (MICP)

• Value Added
• Proven Benefit to the Army
• Manpower Requirements Determination System
  (Closed FY06)
• More effective programs for managing and
  controlling Tables of Distribution and Allowances
  (TDA) workload, organizations and and manpower
  staffing have resulted in the Army being better
  able to rationally predict future manpower
  requirements
• Improved ability to link workload, manpower
  requirements and dollars has resulted in staffing
  levels of Army organizations based on validated,
  prioritized missions
• The dollars required to support the requested
  level of manpower in Army budget submissions must
  now be cross walked to specific workload
  requirements that are directly attributed to
  validated missions

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Army Managers Internal Control Program (MICP)

• Value Added
• Proven Benefit to the Army
• Financial Reporting of General Equipment (Closed
  FY06)
• Defense Property Accountability System (DPAS)
  implementation has improved management oversight
  and visibility of PPE improved management
  access to PPE information and operating results
  and standardized property book accounting
  throughout the Army
• Fielding of a Chief Financial Officers Act
  compliant property system has substantially
  improved the ability of the Army to obtain an
  unqualified audit opinion on its annual financial
  statements

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Army Managers Internal Control Program (MICP)

• Value Added
• Proven Benefit to the Army
• Line-of-Duty (LOD) and Incapacitation (Incap) Pay
  (Closed FY06)
• Army has established policy guidance, including
  effective internal controls, for the processing
  of LOD and Incapacitation pay
• Army has published AR 600-8-4 (Line of Duty
  Policy, Procedures and Investigations) to clarify
  ARNG eligibility for medical treatment and VA
  benefits after separation when injuries were
  service-related
• AR 135-381 and DA Pam 135-381 have both been
  issued to alleviate problems in the processing of
  Incapacitation pay, resulting in fewer Soldiers
  dunned by medical care providers

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Army Managers Internal Control Program (MICP)

• Value Added
• Proven Benefit to the Army
• Reserve Component Mobilization Accountability
  (Closed FY07)
• Better-integrated internal controls for tracking
  RC personnel in the mobilization pipeline
• Improved synchronization and integration in
  automated data bases for tracking of RC personnel
  
• Data feeds and interfaces between National Guard
  Bureau and USARC individual order systems with
  Active Component systems have been established
  and enhanced

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Army Managers Internal Control Program (MICP)

• Lessons Learned
• Team effort not only financial program
• Maintain Senior leader engagement Senior Level
  Steering Group
• Backwards planning
• Improve reporting Material Weakness Reporting
  Process Working Group
• Maintain flexibility
• Develop achievable milestones and actively follow
  up
• Communications and guidance
• Leverage training

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Army Managers Internal Control Program (MICP)

• Way Ahead
• Clarity and simplicity of guidance
• Maintain senior leader focus
• Improve communications
• Embrace reporting as mechanism for improvement
• Leverage training
• Benchmark with industry best practices