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									Senior Level Steering Group/
  Senior Assessment Team
         (SLSG/SAT)




FY 2012, 3rd Quarter Meeting
      Thursday, April 19, 2012
            1300-1400
   Pentagon Conference Center B1
                   Agenda


• FY 2012 Schedule of Events
• AR 11-2 (Managers’ Internal Control Program)
• FY 2012 Status of Material Weaknesses
   • Internal Controls Over Nonfinancial Operations
     (ICONO)
   • Internal Controls Over Financial Reporting (ICOFR)
   • Internal Controls Over Financial Systems (ICOFS)
• Way Ahead


                                                          2
                             FY 2012 Schedule of Events
Complete           Date                                               Event                                        OPR
                                st
           Oct 12, 2011        1 Qtr Managers’ Internal Control Program (MICP) VTC with reporting organizations   SAFM-FO
   √
           Oct 27, 2011        1st Qtr Senior Level Steering Group/Senior Assessment Team (SLSG/SAT)               SLSG
   √
           Jan 10-11, 2012     OSD FY 2012 Business and Financial Improvement Leadership Conference (Navy Yard)
   √
           Jan 19, 2012        2nd Qtr MICP VTC with reporting organizations                                      SAFM-FO
   √
           Jan 26, 2012        2nd Qtr SLSG/SAT                                                                    SLSG
   √
           Apr 4, 2012         3rd Qtr MICP VTC with reporting organizations                                      SAFM-FO
  √
           Apr 19, 2012        3rd Qtr SLSG/SAT                                                                    SLSG
  √




                                                                                                                          3
                          FY 2012 Schedule of Events
Complete           Date                                            Event                                         OPR

           May 16, 2012     Annual statements from Army commands (ACOMs), Army service component               Commands
                            commands (ASCCs) and direct reporting units (DRUs) due to OASA(FM&C)
           May 31, 2012     Annual statements from HQDA Principal Officials due to OASA(FM&C)                   HQDA
                                                                                                               Principal
                                                                                                               Officials
           Jun 20, 2012     Draft Army statement of assurance delivered to SLSG/SAT members for coordination   SAFM-FO

           Jun 27, 2012     4th Qtr MICP VTC with reporting organizations                                      SAFM-FO

           Jun 28, 2012     SLSG/SAT member comments on draft Army statement due to OASA(FM&C)                  HQDA
                                                                                                               Principal
                                                                                                               Officials
           Jul 12, 2012     4th Qtr SLSG/SAT                                                                     SLSG

           Jul 16, 2012     Release final draft Army statement thru DASA(FO) to SecArmy for signature          SAFM-FO

           Jul 31, 2012     Internal Control Over Financial Reporting Statement of Assurance due to OSD        SAFM-FO

           Aug 16, 2012     Final signed Army statement delivered to the Secretary of Defense                  SAFM-FO
                            (Due: Sep 1, 2012)




                                                                                                                        4
 AR 11-2 (Managers’ Internal Control Program)



• Revised AR 11-2 available in Army Publishing
  Directorate Website: http://www.apd.army.mil

• Effective Date: 26 April 2012




                                                 5
   FY 2012 Status of Material Weaknesses - Internal
    Controls Over Nonfinancial Operations (ICONO)


• Expeditionary Contracting – ASA(ALT)
    (Briefer: Mr. Art Rivera)
• Oversight of Service Contracts – ASA(ALT)
    (Briefer: Mr. Steve Jaren)
• Reporting of New Equipment in Transit – G-4
    (Briefer: Ms. Carol Kornhoff)
• Reporting Accurate Obligations for the Permanent
  Change of Station (PCS) Program – ASA(FM&C)
    (Briefer: Mr. Art Hagler)



                                                      6
                                      Expeditionary Contracting
      Description: The Army’s acquisition workforce is not adequately staffed, trained, structured, or empowered to meet the Army
      needs. The contracting process is not treated as a core competency. Audit reports conclude that internal controls to mitigate risks in
      the contracting process are ineffective or nonexistent.
Date                          Task Description                                                 OPR        Status
 rd
3 Qtr FY 09                   AFAR Appendix BB (Contingency) Internal Control Evaluation       ASA(ALT)   Complete. AFARS rewritten.
                              Checklist

3rd Qtr FY 10                 Establish subtasks to grow and mature Expeditionary              ASA(ALT)   Complete. Subtasks identified and metrics
                              Contracting workforce                                                       defined to mature the 51C Force Design
                                                                                                          Update and the ACC ECMC

4th Qtr FY 11                 Policy memorandum for Corrective Action and Subtask              DASA(P)    Completed. DASA(P) Memo signed 6 June 2011
                              Completion Quarterly Review

4th Qtr FY 11                 Expeditionary Contracting Command (ECC) and US Army Corps        DASA(P)    Done. Subtask completion will be a continuous
                              of Engineers (USACE) review and assess internal control                     effort. AFARS provide internal controls and
                              implementation and subtask completion                                       evaluate operations. Self Inspection and
                                                                                                          Independent Review (IR) ongoing.

1st Qtr FY 12                 51C directed growth by 315 active duty Soldiers through 2013,    VCSA       Ongoing. Will increase active duty 51C
                              to ECC and USACE                                                            structure to 1006 Soldiers by 2013

3rd Qtr FY 12                 Expeditionary Contracting Force quarterly review of corrective   DASA(P)    Completed 51- C Certification is RED. More
                              action progress and subtask completion                                      relevant Accreditation Standards will be added
                                                                                                          in future assessment. Please see next slide.

3rd Qtr FY13                  Request USAAA audit                                              DASA(P)    Request to be made 6 to 9 months prior to
                                                                                                          USAAA audit

2nd Qtr FY 14                 USAAA validation audit commences                                 USAAA      No action required at this time

3rd Qtr FY 14                 USAAA provides audit results                                     USAAA      No action required at this time

3rd Qtr FY 14                 Material weakness is closed                                      ASA(ALT)   Not applicable
                                                               rd
                             Targeted Correction Date: 3 Qtr FY 14                                                                                    7
                 Army Expeditionary Contracting– Material Weakness


G
       Provide Regulatory Guidance and Internal Instructions for Expeditionary Workforce
         –    Completed Army Federal Acquisition Regulation Supplement (AFARS) Appendix BB (Contingency) Internal Control
              Evaluation Checklist, 3rd Qtr FY09.
         –    Jan 2012 DACM memo emphasizing leadership role in certification education, training and career development.
         –    Developed a draft Expeditionary Contracting Acquisition Instruction (AI) and 51C Proficiency Guide.
                         2006      2007         2008         2009          2010          2011            2012          2013            2014            2015         2016

G Authorized             240       240          256          333            422          485             583            949            1179            1414         1642

                         240       240          256          333            422          485          536 (92%)
G On Board
                                                                                                        FY12            FY13            FY14
                                                                                                      Goal is 61%      Goal is         Goal is
                                                                                                                        70%             95%

Y                                    Expeditionary Contracting Command FY12 Certifications
                            Military – 51C NCOs                                                                 Military – 51C Officers
                                                                    Total Certified w/                                                           Total Certified w/in 24
                        Assigned    Certified      Percent             24 Months           Assigned        Certified          Percent                   Months

                           #              #            %             #            %              #              #                %                 #               %

             Total        321             70           22%          77         24%              235            177               75%              232         100.00%

        Red – Accessing 51C NCOs who lack BA degree to expand acquisition workforce.         Contingency contracting accreditation
         less stringent. Education, training and experience combined with field assignments expected to show certified and
         accredited 51C population growth.

                                                              UNCLASSIFIED
                                                Army Contracting: Procuring Army Strength                                                                              8
                      Oversight of Service Contracts
Description: Inadequate oversight. Corrective Measures focus on training, appointment of Contracting Officers
Representatives, preparation of plans and conduct of surveillance.
 Date                  Task Description                                             OPR        Status
  nd
 2 Qtr FY 10           Leadership Focus Message                                     ASA(ALT)   Action complete. Chief of Staff Army memo
                                                                                               issued 5 Mar 2010
  th
 4 Qtr FY 10           Publish AR 70-13 (Management and Oversight of Service        ASA(ALT)   Action complete. Army Publishing
                       Contracts)                                                              Directorate published document 31 July 2010
  th
 4 Qtr FY 10           Develop revised corrective action taskers and milestones     ASA(ALT)   Action complete 22 Apr 2010
                       Issue QASP policy guidance and training resources
  rd
 3     Qtr FY 11       Finalize centralized COR database guidance and               ASA(ALT)   Guidance issued 27 Oct 2010
                       management tools
  rd
 3     Qtr FY 11       Assess COR/QASP compliance. Continue to monitor.             ASA(ALT)   Decision made to delay AAA audit due to data
                                                                                               inconsistencies in quarterly data submissions.

 3rd Qtr FY 12         DASA(P) memo to HCAs/PARCs directing use of COR tool,        ASA(ALT)   Memo to be issued no later than 20 Apr
                       provide status of deployment, and date full deployment and              2012
                       implementation no later than 01 June12 (with monthly
                       status reporting)
 3rd Qtr FY 12         Establish AFARS policy that contracting officers will not    ASA(ALT)   Language developed and currently under
                       release any solicitation for services unless the requiring              review by DASA(P)
                       activity has provided an acceptable QASP and nominated
                       the requisite number of CORs
 3rd Qtr FY 12         Begin compliance assessment using data drawn from the        ASA(ALT)
                       COR tool; compliance threshold is not less than 90% across
                       the Army contracting community
 4th Qtr FY12          Army contracting community attains compliance threshold      ASA(ALT)
                       as indicated by data pulled from the COR tool
 4th Qtr FY12          Request AAA conduct audit                                    ASA(ALT)
 2nd Qtr FY13          AAA conducts audit                                           ASA(ALT)
                                                        rd
                       Targeted Correction Date: 3 Qtr FY 13

                                                                                                                                                9
                Reporting of New Equipment In-Transit

Description: The U.S. Army lacks internal controls to adequately monitor the shipment and receipt of
equipment through the Supply System resulting in unreliable data on the value reported on the U.S. Army's
financial statements. This error makes it difficult to gain visibility over the total number of major items,
determine maintenance requirements, and redistribute equipment. AAA and G4 restructured the weakness in
2008 to address just Total Package Fielding (TPF) transactions to track equipment in-transit from the Program
Management office to the unit.
Date              Task Description                                                                  OPR   Status
January 2008      USAAA closed the Financial Reporting of Equipment In-Transit, Audit Report AA           Background
                  96-156, Material Weakness and DA-G4 re-scoped a New Material Weakness to
                  focus on Total Package Fielding In-Transits.
 th
4 Qtr FY 08                                                                                               Background
                  Developed flowchart detailing Equipment In-Transit Process; revised AR 710-2 to
                  include metrics for closeout of in-transit records; modified Command Supply
                  Discipline Program Checklist to Include the metrics.
 nd
2 Qtr FY 09       Process retesting (Tollgate Control – Transition Brief: 19 October 09)            G-4   Complete
                  Apr 09 submitted ECP for PBUSE to pull D6S (Receipt Documents);
                  converted to DRA and inputted into DAS to Feed CCSS to close open
                  transactions; actions being Input into LMP to ensure closure of in-transit
                  transactions. Initial pilot test results show an improvement from 16%
                  Closure rates to 90% closure rates.
 nd
2 Qtr FY 10       Request USAAA validation and closure following Tollgate Review.                   G-4   Complete
 rd
3 Qtr FY 10       AAA conducted entrance brief with key players for audit validation.               AAA   Completed w/o
                  AAA could not close the weakness based on their findings: lateral                       resolution
                  transfer process not demonstrated in LMP; lateral transfer process barely
                  demonstrated in CCSS; financial statement process not addressed.
                                                     rd              th
                  Targeted Correction Date: 3 Qtr FY 12 4 Qtr FY 16

                                                                                                                          10
                   Reporting of New Equipment In-Transit (Con’t)
Date               Task Description                                                                             OPR             Status
 rd
3 Qtr, FY 10       Revised milestones with target date 3rd Qtr, FY 10 changed to 3rd Qtr, FY 12.                AMC/Army G-4    Completed
 st
1 Qtr, FY 11       LMP TPF document creation/generation developed and fielded to the LCMCs.                     AMC/Army G-4    Completed
 nd
2     Qtr, FY 11   Develop internal control process for validation of manual closure of LMP TPF documents.      AMC/Army G-4    Completed
                   Investigate design for an automated fix.
 th
4 Qtr FY 12        Map and compare the TPF and Non-TPF process flow between LMP, DSS, SARRS and                 ASA-FMC/AMC     Ongoing
                   PBUSE/GCSS-Army. Research closure of aged in-transits in LMP.                                Army G-4
 st
1 Qtr FY 13        Analysis expanded to include new equipment in-transits for non TPF shipments. Analysis
                   underway to understand and correct non-compliant transactions that occurred during the       AMC /Army G-4   Ongoing
                   transition to LMP. Analyzing current data pull; assessing sustainment needs based on
                   recent discovery.
 th
4 Qtr FY 14        Monitor closures based on newly identified gaps in process and introduction of new retail    AMC/Army G-4    Open
                   Property Accountability System (GCSS-Army).
 th
4 Qtr FY 15        Monitor the implementation of IUID in the tactical and national Property Accountability      AMC/.Army G-4   Open
                   systems (Required to demonstrate and sustain existence and completeness).
                                                                                                                ASA-FMC/AMC     Open
 rd
3 Qtr FY 15        Complete re-mapping the financial process for in transits from LMP and PBUSE/GCSS-Army       Army G-4
                   to GFEBS.
 nd
2 Qtr, FY 11                                                                                                    ASA-FMC/AMC     Open
 th
1 Qtr FY 16        Test the financial reporting of equipment from LMP/DSS and PBUSE/GCSS-Army to GFEBS.         Army G-4
 nd
2 Qtr FY 16        Request AAA Audit.                                                                           Army G-4        Open
 rd
3 Qtr FY 12        USAAA validates closure of weakness for the financial reporting of equipment in transit of   AAA
 th
4 Qtr FY 16        major end item new equipment fielding.

                   Targeted Correction Date: 3rd Qtr FY 12 4th Qtr FY 16


                                                                                                                                            11
                                 Reporting Accurate Obligations for the
                              Permanent Change of Station (PCS) Program

Problem. The Army's military PCS program is at risk of failing to meet audit readiness timelines and of incurring future Anti-Deficiency Act
violations due to inability to 1) obligate PCS orders when issued 2) apply reliable cost estimates to obligations and 3) reconcile
disbursements with obligations.
 Date:                        Task Description                                        OPR                  Status
 2nd - 4th Qtr FY 12          Phase 2 (Concept Development)
 Milestone 1: Support Team    ID and Validate Support Requirements                    ASA(FM&C)            Complete
 Standup – In progress, 3rd   Hire Support Team                                                            Ongoing
 Qtr FY 2012
                              Finalize As-Is Process                                  ASA(FM&C),           Ongoing
 Milestone 2: End-to-End      Issue Analysis                                          IMCOM, HHG,          Ongoing
 Process Mapping              Finalize To-Be Process Map                              DFAS, MEPS           Ongoing
 3rd Qtr - 2012               Obtain Stakeholder’s Sign-Off                                                TBD

                              *Create Stakeholder Memorandum of Understanding (MOU)   ASA(FM&C),           Ongoing
 Milestone 3: Memorandum      Coordinate and Obtain Sign-Off                          IMCOM, HHG,          TBD
 of Understanding (MOU)                                                               DFAS, MEPS

 Milestone 4: Pilot Study     Create Pilot Study Plan                                 ASA(FM&C)            TBD
 Plan - 4th Qtr 2012

 Milestone 5: Concept and     COA Cost-Benefit Analysis                               ASA(FM&C)            TBD
 COA Approval – 4th Qtr       *USAAA Update Meeting (Process Controls)                                     TBD
 2012                         *GOSC Decision Brief (Process Controls)                                      TBD


                              *Note: BOLD = Process Controls




                                                                                                                                          12
                                   Reporting Accurate Obligations for the
                                Permanent Change of Station (PCS) Program

Problem. The Army's military PCS program is at risk of failing to meet audit readiness timelines and of incurring future Anti-Deficiency Act
violations due to inability to 1) obligate PCS orders when issued 2) apply reliable cost estimates to obligations and 3) reconcile
disbursements with obligations.
 Date:                          Task Description                                         OPR               Status
 1st - 4th Qtr FY 13            Phase 3 (Build-Test-Assert-Rollout)
 Milestone 6: Build – 1st Qtr   *Create Stakeholder Memorandum of Instruction (MOI)      ASA(FM&C),        Phase 3 Milestone
 FY 2013                        Coordinate and Obtain Sign-Off                           IMCOM, HHG,
                                Pilot Study Preparation                                  DFAS, MEPS

 Milestone 7: Test 2nd Qtr FY   Pilot Study Implementation                               ASA(FM&C),        Phase 3 Milestone
 2013                           Pilot Study Outcome Report                               IMCOM, HHG,
                                *GOSC Rollout Decision Brief: Go/No Go                   DFAS, MEPS

 Milestone 8: Assert 3rd/4th    Final Gap & Issues Resolution / Risk Mitigation          ASA(FM&C)         Phase 3 Milestone
 Qtr FY 2013                    *Training and SOPs Change Management plan / Strategic
                                Communications
                                Rollout plan
                                Assertion Review Brief
                                Execute Assertion

 Milestone 9: Rollout –         Execute Rollout                                          ASA(FM&C)         Phase 3 Milestone
 3rd/4th Qtr FY 2013


                                *Note: BOLD = Process Controls



                                                        Targeted Correction Date: 4th Qtr FY13
                                                                                           st
                                                  Targeted USAAA Exam Attestation Date: 1 Qtr FY14
                                                                                   nd
                                                        Targeted SBR Audit Ready: 2 Qtr FY14

                                                                                                                                          13
         Internal Control Over Financial Reporting (ICOFR)
                       Material Weaknesses


• Army currently reports 22 auditor-identified ICOFR material
  weaknesses for both General Fund (GF) and Working Capital
  Fund (AWCF).

• These weaknesses transcend nearly every business process in
  the Army and manifest themselves in the financial statements.

• The Army’s financial improvement plan (FIP) guides the actions
  necessary to correct these weaknesses.

• Functional proponents execute activities included in the Army
  FIP.

                                                                  14
               FY 2011 Auditor Identified Weaknesses


•   Fund Balance with Treasury (GF)
•   Inventory and Related Property (GF & AWCF)
•   General Property, Plant, and Equipment (GF & AWCF)
•   Environmental Liabilities (GF)
•   Intragovernmental Eliminations (GF & AWCF)
•   Accounting Adjustments/Accounting Entries (GF & AWCF)
•   Accounts Receivable (GF)
•   Accounts Payable (GF & AWCF)
•   Statement of Net Cost (GF & AWCF)
•   Abnormal Account Balances (GF & AWCF)
•   Statement of Budgetary Resources (GF & AWCF)
•   Reconciliation of Net Cost of Operations to Budget (GF & AWCF)
•   Contingency Payment Audit Trails (GF)

                                                                     15
           Summary of Changes to Audit Readiness Timeline

    Old and New               Related Material Weaknesses                 Reason for Change in Dates
     Assertion
    Target Dates
Old date: 1st Qtr FY 2015   Environmental Liabilities (GF)                Secretary of Defense Leon E.
New date: 3rd Qtr FY 2014   Intragovernmental Eliminations (GF)           Panetta’s “Improving Financial
                            Accounting Adjustments (GF)                   Information and Achieving Audit
                            Accounts Receivable (GF)                      Readiness” memorandum dated 13
                            Accounts Payable (GF)                         October 2011 directed the
                            Statement of Net Cost (GF)                    Department to revise its financial
                            Abnormal Account Balances (GF)                improvement and audit readiness
                            Statement of Budgetary Resources (GF)         (FIAR) plan to achieve audit
                            Reconciliation of Net Cost of Operations to   readiness for the Statement of
                            Budget (GF)                                   Budgetary Resources
                                                                          by the end of FY 2014. In response
                                                                          to the memorandum, the Army
                                                                          accelerated its audit readiness
                                                                          timeline.




                                                                                                               16
                               ICOFR-related Accomplishments

                 Accomplishments                                       Related Material Weaknesses
Received an unqualified audit opinion for GF                    Statement of Budgetary Resources (SBR) (GF)
appropriations received
Received a qualified audit opinion for five GF SBR              Statement of Budgetary Resources (GF)
processes at the General Fund Enterprise Business
System (GFEBS) Wave 1 locations (Forts Jackson,
Stewart, and Benning)
Completed discovery, evaluation, and testing at the             Statement of Budgetary Resources (GF)
SBR GFEBS Wave 2 locations and delivered corrective
action training to over 10 installation sites
Asserted Existence & Completeness (E&C) of 97% of               General Property, Plant, and Equipment (GF)
the Army’s aviation assets
Expanded E&C effort to entire Army Military                     General Property, Plant, and Equipment (GF)
Equipment (ME) and General Equipment (GE) universe
to perform discovery, evaluation, and testing
Performed discovery, evaluation, and testing of “Quick          Inventory and Related Property (GF)
Wins” mission critical assets (Hellfire, Javelin, and
TOW missile programs) and on track to assert audit
readiness of “Quick Wins” assets by 30 June 2012


Note: TOW is Tube Launched Optically Tracked Wire Guided Missile.
                                                                                                              17
                ICOFR-related Accomplishments (continued)

           Accomplishments                                Related Material Weaknesses
Drafted memo to U.S. Army Audit Agency to      Contingency Payment Audit Trails (GF)
request a follow up audit on recommendations
in three audit reports
Began identifying the requirements for an      Fund Balance with Treasury (GF)
automated reconciliation tool
Completed in March 2012 an information         Inventory and Related Property (GF)
technology (IT) general and application        General Property, Plant, and Equipment (GF)
controls assessment of GFEBS against Federal   Intragovernmental Eliminations (GF & AWCF)
Information System Controls Audit Manual       Accounting Adjustments (GF)
(FISCAM) and Federal Information Security      Accounts Receivable (GF)
Management Act (FISMA) requirements            Statement of Net Cost (GF)
                                               Abnormal Account Balances (GF)
                                               Statement of Budgetary Resources (GF)
                                               Reconciliation of Net Cost of Operations to Budget (GF)
Began an IT general and application controls   Inventory and Related Property (GF)
assessment of Global Combat Support System-    General Property, Plant, and Equipment (GF)
Army (GCSS-A) against FISCAM and FISMA         Intragovernmental Eliminations (GF & AWCF)
requirements and on track to finalize          Accounting Adjustments (GF)
assessment by end of September 2012            Accounts Receivable (GF)
                                               Statement of Net Cost (GF)
                                               Abnormal Account Balances (GF)
                                               Statement of Budgetary Resources (GF)
                                               Reconciliation of Net Cost of Operations to Budget (GF)   18
         Internal Control Over Financial Systems (ICOFS)
                      Material Weaknesses



• Army currently reports two auditor-identified material
  weaknesses for both GF and WCF in Financial
  Management Systems.

• The Army FIP guides the actions necessary to correct
  these weaknesses.

• Functional proponents execute activities included in the
  Army FIP.




                                                             19
       FY 2012 Status of Material Weaknesses - Internal
           Controls Over Financial Systems (ICOFS)



• Internal Controls Over Financial Systems (ICOFS) – GF
  ASA(FM&C) (Briefer: Ms. Kristyn Jones)

• Internal Controls Over Financial Systems (ICOFS) – WCF
  ASA(FM&C) (Briefer: Mr. Jorge Roca)




                                                           20
                           ICOFS-related Accomplishments

            Accomplishments                               Related Material Weaknesses
Completed in March 2012 an IT general and      Inventory and Related Property (GF)
application controls assessment of GFEBS       General Property, Plant, and Equipment (GF)
against FISCAM and FISMA requirements          Intragovernmental Eliminations (GF & AWCF)
                                               Accounting Adjustments (GF)
                                               Accounts Receivable (GF)
                                               Statement of Net Cost (GF)
                                               Abnormal Account Balances (GF)
                                               Statement of Budgetary Resources (GF)
                                               Reconciliation of Net Cost of Operations to Budget (GF)

Began an IT general and application controls   Inventory and Related Property (GF)
assessment of GCSS-A against FISCAM and        General Property, Plant, and Equipment (GF)
FISMA requirements and on track to finalize    Intragovernmental Eliminations (GF & AWCF)
assessment by end of September 2012            Accounting Adjustments (GF)
                                               Accounts Receivable (GF)
                                               Statement of Net Cost (GF)
                                               Abnormal Account Balances (GF)
                                               Statement of Budgetary Resources (GF)
                                               Reconciliation of Net Cost of Operations to Budget (GF)




                                                                                                         21
                    ICOFS-related Accomplishments (GFEBS)

            Accomplishments                                 Related Material Weaknesses
Deployed Wave 8A on 1 April 2012 (approx.        Inventory and Related Property (GF), General Property, Plant
6800 users)                                      and Equipment (GF), Intergovernmental Eliminations (GF &
                                                 AWCF), Accounting Adjustments (GF), Accounts Receivable
                                                 (GF), Statement of Net Cost (GF), Abnormal Account Balances
                                                 (GF), Statement of Budgetary Resources (GF), Reconciliation
                                                 of Net Cost of Operations to Budget (GF)
In FY2012, GFEBS has processed (as of            Inventory and Related Property (GF), General Property, Plant
3/21/2012):                                      and Equipment (GF), Intergovernmental Eliminations (GF &
• $34.5 billion in allotment, $21.8 billion in   AWCF), Accounting Adjustments (GF), Accounts Receivable
  obligations and $18.1 billion in               (GF), Statement of Net Cost (GF), Abnormal Account Balances
  disbursements.                                 (GF), Statement of Budgetary Resources (GF), Reconciliation
• 615,000 DTS travel authorizations and          of Net Cost of Operations to Budget (GF)
  566,000 DTS travel vouchers with a 99%
  success rate,
• payroll bi-weekly for 168,218 civilians
• 147,200 Standard Procurement System (SPS)
  transactions
Final fielding to Wave 8B on target for 1 July   Inventory and Related Property (GF), General Property, Plant
2012 (approx. 8,350 users) to the Army           and Equipment (GF), Intergovernmental Eliminations (GF &
Material Command, Program Executive Office       AWCF), Accounting Adjustments (GF), Accounts Receivable
and Army Central Command                         (GF), Statement of Net Cost (GF), Abnormal Account Balances
                                                 (GF), Statement of Budgetary Resources (GF), Reconciliation
                                                 of Net Cost of Operations to Budget (GF)                     22
               ICOFS-related Accomplishments (GFEBS cont.)

            Accomplishments                                Related Material Weaknesses
20 legacy systems retired post Wave 8A. Will    Inventory and Related Property (GF), General Property, Plant
replace about 1 million transactions daily in   and Equipment (GF), Intergovernmental Eliminations (GF &
over 100 legacy systems when fully deployed     AWCF), Accounting Adjustments (GF), Accounts Receivable
                                                (GF), Statement of Net Cost (GF), Abnormal Account Balances
                                                (GF), Statement of Budgetary Resources (GF), Reconciliation
                                                of Net Cost of Operations to Budget (GF)
Compliance with 94.7% of in-scope FFMIA         Inventory and Related Property (GF), General Property, Plant
requirements, many of which were not            and Equipment (GF), Intergovernmental Eliminations (GF &
enforced in legacy systems. AAA FFMIA testing   AWCF), Accounting Adjustments (GF), Accounts Receivable
of 65-84 requirements was completed at the      (GF), Statement of Net Cost (GF), Abnormal Account Balances
end of March                                    (GF), Statement of Budgetary Resources (GF), Reconciliation
                                                of Net Cost of Operations to Budget (GF)
Identified 117 actions from IBM, PWC and SFIS   Inventory and Related Property (GF), General Property, Plant
compliance audits (48 High Risk). To date, 48   and Equipment (GF), Intergovernmental Eliminations (GF &
actions have been completed (26 High Risk).     AWCF), Accounting Adjustments (GF), Accounts Receivable
Expected to complete an additional 16 High      (GF), Statement of Net Cost (GF), Abnormal Account Balances
Risk actions by 31 May 2012.                    (GF), Statement of Budgetary Resources (GF), Reconciliation
                                                of Net Cost of Operations to Budget (GF)




                                                                                                               23
               ICOFS-related Accomplishments (GCSS-Army)

           Accomplishments                               Related Material Weaknesses
Expecting Full Deployment Decision (FDD)      Inventory and Related Property (GF), General Property, Plant
August 2012                                   and Equipment (GF), Intergovernmental Eliminations (GF &
                                              AWCF), Accounting Adjustments (GF), Accounts Receivable
                                              (GF), Statement of Net Cost (GF), Abnormal Account Balances
                                              (GF), Statement of Budgetary Resources (GF), Reconciliation
                                              of Net Cost of Operations to Budget (GF)
Wave 1 deployments scheduled to begin         Inventory and Related Property (GF), General Property, Plant
following FDD                                 and Equipment (GF), Intergovernmental Eliminations (GF &
                                              AWCF), Accounting Adjustments (GF), Accounts Receivable
                                              (GF), Statement of Net Cost (GF), Abnormal Account Balances
                                              (GF), Statement of Budgetary Resources (GF), Reconciliation
                                              of Net Cost of Operations to Budget (GF)
GCSS-A subsumes stand-alone logistics and     Inventory and Related Property (GF), General Property, Plant
financial STAMIS systems to include: SARRS,   and Equipment (GF), Intergovernmental Eliminations (GF &
SAMS, ULLS, PBUSE, STANFINS, SOMARDS, FCM     AWCF), Accounting Adjustments (GF), Accounts Receivable
and MILSTRIP orders from GFEBS                (GF), Statement of Net Cost (GF), Abnormal Account Balances
                                              (GF), Statement of Budgetary Resources (GF), Reconciliation
                                              of Net Cost of Operations to Budget (GF)




                                                                                                             24
          ICOFS-related Accomplishments (GCSS-Army cont.)

           Accomplishments                               Related Material Weaknesses
Currently engaged with AAA for FFMIA          Inventory and Related Property (GF), General Property, Plant
attestation                                   and Equipment (GF), Intergovernmental Eliminations (GF &
                                              AWCF), Accounting Adjustments (GF), Accounts Receivable
                                              (GF), Statement of Net Cost (GF), Abnormal Account Balances
                                              (GF), Statement of Budgetary Resources (GF), Reconciliation
                                              of Net Cost of Operations to Budget (GF)
SFIS Audit conducted in October 2012          Inventory and Related Property (GF), General Property, Plant
                                              and Equipment (GF), Intergovernmental Eliminations (GF &
                                              AWCF), Accounting Adjustments (GF), Accounts Receivable
                                              (GF), Statement of Net Cost (GF), Abnormal Account Balances
                                              (GF), Statement of Budgetary Resources (GF), Reconciliation
                                              of Net Cost of Operations to Budget (GF)
Engaged with the Army Audit Readiness Team    Inventory and Related Property (GF), General Property, Plant
in preparation for a Systems Control          and Equipment (GF), Intergovernmental Eliminations (GF &
Assessment scheduled to begin in March 2012   AWCF), Accounting Adjustments (GF), Accounts Receivable
and run through December 2012                 (GF), Statement of Net Cost (GF), Abnormal Account Balances
                                              (GF), Statement of Budgetary Resources (GF), Reconciliation
                                              of Net Cost of Operations to Budget (GF)




                                                                                                             25
                   ICOFS Material Weaknesses & Accomplishments

GFEBS Accomplishments:                                          GCSS-A Accomplishments:
•Deployed Wave 8A on 1 April 2012 (approx. 6,800 users)         •Expecting Full Deployment Decision August 2012
•In FY2012, GFEBS has processed (as of 3/21/2012):              •Wave 1 deployments scheduled to begin following FDD
        • $34.5 billion in allotment, $21.8 billion in          •GCSS-A subsumes stand alone logistics and financial
             obligations and $18.1 billion in disbursements.    STAMIS systems to include: SARRS, SAMS, ULLS, PBUSE,
        • 615,000 DTS travel authorizations and 566,000         STANFINS, SOMARDS, FCM and MILSTRIP orders from
             DTS travel vouchers with a 99% success rate,       GFEBS
        • payroll bi-weekly for 168,218 civilians               •Currently engaged with AAA for FFMIA attestation .
        • 147,200 Standard Procurement System (SPS)             •SFIS Audit conducted in October 2012
             transactions                                       •Engaged with the Army Audit Readiness Team in
•Final fielding to Wave 8B on target for 1 July 2012 (approx.   preparation for a Systems Controls Assessment scheduled
8,350 users) to the Army Materiel Command, Program              to begin in March 2012 and run through December 2012.
Executive Office and Army Central Command.
•20 legacy systems retired post Wave 8A. Will replace
about 1 million transactions daily in over 100 legacy
systems when fully deployed.
•Compliance with 94.7% of in-scope FFMIA requirements,
many of which were not enforced in legacy systems. AAA
FFMIA testing of 65-84 requirements was completed at the
end of March.
•Identified 117 actions from IBM, PWC and SFIS compliance
audits (48 High Risk). To date, 48 actions have been
completed (26 High Risk). Expected to complete an
additional 16 High Risk actions by 31 May 2012.


                                                                                                                          26
Senior Level Steering Group/Senior Assessment Team




                Backup




                                                     27
                                                                  PCS Obligation Reporting
                    Briefing Type:        Decision        Sec. Army Priorities:         1    2      8                                                Project Status:
                      Problem: The Army's military PCS program is at risk of failing to meet audit readiness timelines and of incurring future Anti-Deficiency Act
                      violations due to inability to 1) obligate PCS orders when issued 2) apply reliable cost estimates to obligations and 3) reconcile
                      disbursements with obligations.

                      Champion(s): Co-Champions: Mr. Roy Wallace (Deputy G-1) and Mr. Art Hagler (Director, Military Personnel & Facilities)

                      ACHIEVEMENTS SINCE LAST GOVERNANCE:
                      • Developed “PCS Orders Log” and Step Owner Process Maps as part of the “To Be” process
                      • Developed draft MoA with stakeholders
UNCLASSIFIED/FOUO




                      • Courtesy Review by USAAA
                      • Collaborate Reviews with other Services (Navy & Marines)

                       Benefits:                                                                        Risks:
                       • Audit Readiness: PCS SBR audit ready by 2014                                   • Not resourced adequately jeopardizes ability to meet
                       • Financial: Financial information which obligates PCS orders                        timeline for the USAAA Attestation Examination – Trigger for
                          when issued – DoD FMR and fiscal law requirement                                  Audit Ready verification
                       • Operational: Funding levels within 3-5% variance (planned                      • Delays impact on SBR Audit Readiness
                          to actual), improved managerial controls                                      • Roadblocks delay PCS financial progress
                                                                                                                            PCS Audit Ready
                    Timeline/Upcoming Milestones:                    = Governance       = We Are Here                     Financial Statements
                                                     Begin non-                          FM&C       USAAA                      2017
                                                                                                                                          GOAL:
                                                       system                Solution   Assertion Examination
                                                                                                                  SBR Audit               Improve PCS financial
                                                      solution              Complete     Review   Attestation
                                                                                                                    Ready                 information, improve
                       30 Mar
                                                                                                                                          managerial controls and
                                3Q/FY12    4Q/FY12     1Q/FY13    2Q/FY13   3Q/FY13     4Q/FY13         1Q/FY14     2Q/FY14
                                                                                                                                          achieve PCS SBR audit
                                                                                                                                          readiness by 2014.
                    Concept Development
                    Recommendations:
                                                                                                                                                              Decision
                    • Decision to resolve material weakness in support of Timeline & Milestones or adjust timeline.
                    • Continue to support the FY 2011 PCS Material Weakness as a top ASA(FM&C) priority.                                                                   28
                                                                       PCS Project Phases
                    Project Phase
                                                  1                         2                              3                          4                       5
                    Timetable
                                             3rd Qtr FY 11           2nd Qtr FY 12                  1st Qtr FY 13                1st Qtr FY 14          2nd Qtr FY 14
                                            to 1st Qtr FY 12        to 4th Qtr FY 12               to 4th Qtr FY 13
UNCLASSIFIED/FOUO




                    Tasks
                                               Mapping          Concept Development            Build – Test – Assert –         AAA Attestation        SBR Audit Ready
                                                                                                       Rollout                      FOC




                                        Problem Statement      ID and validate support
                    Deliverables        Scope                  requirements
                                                                                               __Create Stakeholder
                                                                                               Memorandum of
                                                                                                                              __Prepare Walk-Thru
                                                                                                                              for Exam Attestation
                                                                                                                                                     __Prepare SBR Audit
                                                                                                                                                     Ready Report
                                        Goal                   __Hire support team            Instruction (MOI)              Review with USAAA      __Closeout Audit
                                        Benefits Analysis      __Finalize As-Is Process Map   __Coordinate and Obtain        __Execute Exam         Ready
                                        Stakeholder Analysis   __Issue Analysis               Sign-Off                       Attestation with       __Post-Process
                                        Kickoff Meeting        __Finalize To-Be Process       __Pilot Study Preparation      USAAA                  Controls Validation
                                        Core Team Standup      Map                            __Pilot Study                  __Closeout Paperwork   __Material Weakness
                                        As-Is Mapping          __Obtain Stakeholders’         Implementation                 for Exam Attestation   Resolved
                                        Initial Gap Analysis   Sign-Off                       __Pilot Study Outcome          Review with USAAA      __ENDEX PCS Project
                                        Audit Team Kickoff     __Create Stakeholder MOU       Report                         and FM&C               __On order, Transition
                                        Initial Document       Coordinate and Obtain Sign-    __GOSC Rollout Decision        Leadership/Army        Lessons Learned to ERP
                                        Capability (Draft)      Off                            Brief: Go/No Go                __Document Exam
                                                                __Create Pilot Study Plan      __Final Gap & Issues           Attestation
                                                                __COA Cost-Benefit Analysis    Resolution / Risk Mitigation   Completion,
                                                                __USAAA Update Meeting         __Final Gap & Issues           Procedures, and
                                                                __GOSC Decision Brief          Resolution / Risk Mitigation   Lessons Learned
                                                                                               __Training and SOPs            __Announce FOC
                                                                                               Change Management Plan/
                                                                                               Strategic Communications
                      Legend:                                                                  __Rollout Plan
                       = Completed                                                            __Assertion Review Brief
                      __= To Be Completed                                                      __Execute Assertion
                                                                                               __Execute Rollout                                                              29
                                                  PCS Milestones, Deliverables & Controls
                      Phase 2 ( 2nd – 4th Q FY12) Concept Development                      Deliverables and Process Controls              Lead*        Support*      Location**
                     Milestone 1: Support Team Standup                      ID and validate support requirements                           PM       PI IT HR FI&A    Pentagon
                                                                            Hire support team                                               PM       PI IT HR FI&A    Pentagon
                     Milestone 2: End-to-End PCS Process Mapping            Finalize As-Is Process Map                                       PI       IT HR FI&A         All
                                                                            Issue Analysis                                              PI FI&A IT         HR         Pentagon
                                                                            Finalize To-Be Process Map                                       PI       IT HR FI&A         All
                                                                            Obtain Stakeholders’ Sign-Off                                   PM       PI IT HR FI&A       All
                     Milestone 3: Memorandum of Understanding (MOU)         Create Stakeholder MOU                                          HR         PI IT FI&A     Pentagon
                                                                            Coordinate and Obtain Sign-Off                                  PM       PI IT HR FI&A       All
UNCLASSIFIED/FOUO




                     Milestone 4: Pilot Study Plan                          Create Pilot Study Plan                                        PI IT        HR FI&A       Pentagon
                     Milestone 5: Concept and COA Approval                  COA Cost-Benefit Analysis                                      FI&A         PI IT HR      Pentagon
                                                                            USAAA Update Meeting                                            PM       PI IT HR FI&A       All
                                                                            GOSC Decision Brief                                             PM       PI IT HR FI&A    Pentagon
                     Phase 3 (1st – 4th Q FY13) Build-Test-Assert-Rollout                  Deliverables and Process Controls              Lead*        Support*      Location**
                     Milestone 6: Build                                     Create Stakeholder Memorandum of Instruction (MOI)              HR         PI IT FI&A     Pentagon
                                                                            Coordinate and Obtain Sign-Off                                  PM       PI IT HR FI&A       All
                                                                            Pilot Study Preparation                                        PI IT        HR FI&A       Pentagon
                     Milestone 7: Test                                      Pilot Study Implementation                                     PI IT        HR FI&A          All
                                                                            Pilot Study Outcome Report                                     PI IT        HR FI&A       Pentagon
                                                                            GOSC Rollout Decision Brief: Go/No Go                          PM        PI IT HR FI&A   Pentagon
                     Milestone 8: Assert                                    Final Gap & Issues Resolution / Risk Mitigation             PI FI&A IT         HR        Pentagon
                                                                            Training and SOPs                                           HR IT FI&A          PI       Pentagon
                                                                            Change Management Plan / Strategic Communications               PM       PI IT HR FI&A      All
                                                                            Rollout Plan                                                    HR         PI IT FI&A       All
                                                                            Assertion Review Brief                                          PM       PI IT HR FI&A   Pentagon
                                                                            Execute Assertion                                               PM       PI IT HR FI&A   Pentagon
                     Milestone 9: Rollout                                   Execute Rollout                                                 PM       PI IT HR FI&A      All
                    Legend
                     *PM = Project Manager / PI = Performance Improvement / IT = Information Technology / HR = Human Resources / FI&A = Finance and Accounting
                     **All = Pentagon, Installations, Household Goods, and DFAS
                     Bold / Italics = Process Controls                                                                                                                          30
    AS OF: 9/29/2012 1:33 AM
 Senior Level Steering Group/Senior Assessment Team




   ICOFR Material Weaknesses
Summary of Corrective Action Plans




                                                      31
                                    ICOFR Material Weaknesses
                                 Summary of Corrective Action Plans
                                               Fund Balance with Treasury (GF)

Current Target Date: 2nd Qtr FY 2013 (Lead – DFAS, Support – OASA(FM&C))
Senior Official in Charge: Mr. John Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Inability to reconcile collections and disbursements at the detailed transaction level with the records
of the Department of the Treasury.
Corrective Action: Army will develop an auditable Fund Balance with Treasury reconciliation process.
Impediments: Legacy systems and processes create multiple reconciliation points.
                                             Operating Materials & Supplies (GF)

Current Target Date: 2nd Qtr FY 2013 (Lead – AMC, Support – OASA(FM&C))
Senior Official in Charge: Mr. Mark Averill, DCS/Army G-4
Description of Weakness: Systems do not maintain historical cost data necessary to comply with Statement of Federal Financial
Accounting Standards No. 3, “Accounting for Inventory and Related Property.” Also, systems cannot produce financial
transactions using the U.S. Government Standard General Ledger.
Corrective Action: GFEBS and GCSS-A will provide the required general ledger processing capability. Additional corrective
actions are also needed to ensure that required physical inventories are conducted and properly documented.
Impediments: Slippage in the GCSS-A deployment schedule may impact ability to resolve the weakness.
                                                       Inventory (AWCF)

Current Target Date: 3rd Qtr FY 2013 (Lead – AMC, Support – OASA(FM&C))
Senior Official in Charge: Mr. Mark Averill, DCS/Army G-4
Description of Weakness: Systems do not maintain historical cost data necessary to comply with accounting standards.
Corrective Action: LMP provides the general ledger processing capability. Corrective actions are needed to ensure LMP
processes are stable.
Impediments: Ability to correct abnormal balances resulting from legacy system data conversions. Unit of issue and Unit of
measure problems.                                                                                                              32
                                 ICOFR Material Weaknesses
                              Summary of Corrective Action Plans

                                                    General PP&E (GF)

Current Target Dates: 3rd Qtr FY 2013 (Leads – AMC, OACSIM, Army G-4, Support – OASA(FM&C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: General PP&E is not recorded at acquisition or historical cost and does not include all costs
needed to bring these assets to a form and location suitable for their intended use.
Corrective Action: Army will evaluate and implement internal controls to ensure that General PP&E assets are accurately
recorded and managed in the accountable property systems of record; and will ensure that financial accountability systems
for all Military Table of Equipment unit property books comply with the Federal Financial Management Improvement Act
(FFMIA) of 1996.
Impediments: Army may not have sufficient documentation to support recorded values, and may need to employ alternate
valuation methods.

                                                  General PP&E (AWCF)

Current Target Date: 2nd Qtr FY 2015 (Leads – AMC, OACSIM, Army G-4, Support – OASA(FM&C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: GPP&E is not recorded at acquisition or historical cost.
Corrective Action: Evaluate and implement internal controls to ensure GPP&E assets are accurately recorded and managed
in the property systems of record; and ensuring financial accountability systems for all Military Table of Equipment unit
property books comply with FFMIA.
Impediments: May not have documentation to support recorded values, and may need to employ alternate valuation
methods.



                                                                                                                            33
                                     ICOFR Material Weaknesses
                                  Summary of Corrective Action Plans

                                                  Environmental Liabilities (GF)

 Current Target Date: 3rd Qtr FY 2014 (Lead – OACSIM, Support – OASA(FM&C))
 Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
 Description of Weakness: Improper estimation and reporting of environmental liabilities.
 Corrective Action: Army will implement systems, processes, and controls to ensure the accuracy of site level environmental
 liability data.
 Impediments: None at this time.

                                                Intragovernmental Eliminations (GF)

Current Target Date: 2nd Qtr FY 2014 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Inability to collect, exchange, and reconcile buyer and seller transactions.
Corrective Action: Army will fully deploy GFEBS, ensuring compliance with the Department of Defense’s standard financial
information structure (SFIS). as a means to identify and reconcile intragovernmental balances.
Impediments: GFEBS alone may not be sufficient to resolve this weakness.

                                             Intragovernmental Eliminations (AWCF)

Current Target Date: 1st Qtr FY 2015 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Unable to collect, exchange and reconcile buyer and seller transactions.
Corrective Action: Deploy LMP, including SFIS compliance, to help identify and reconcile trading partner transactions.
Impediments: LMP alone may not be sufficient to resolve this weakness.


                                                                                                                              34
                                     ICOFR Material Weaknesses
                                  Summary of Corrective Action Plans

                                                  Accounting Adjustments (GF)

Current Target Date: 2nd Qtr FY 2013 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: DFAS processed $14.6 billion in unsupported journal voucher adjustments in preparing the FY 2011
Army General Fund financial statements.
Corrective Action: Full deployment of an SFIS-compliant GFEBS will enable the Army to submit a GF trial balance directly to DFAS.
This will reduce the need for DFAS to process unsupported accounting adjustments.
Impediments: GFEBS alone may not be sufficient to resolve this weakness.
                                                    Accounting Entries (AWCF)

Current Target Date: 1st Qtr FY 2013 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: DFAS processed $219.1 million in unsupported journal voucher adjustments.
Corrective Action: Ensure LMP will be compliant with SFIS to reduce the need for unsupported adjustments
Impediments: Anticipate journal voucher processing in the LMP environment.
                                                    Accounts Receivable (GF)

Current Target Date: 2nd Qtr FY 2013 (Lead – DFAS, Support – OASA(FM&C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Inability to document accounts receivable at the detailed transaction level, mismatches between
entitlement systems and accounting systems, noncompliance with policies and procedures regarding referrals to the Debt
Management Office of the Department of Treasury, and inability to age debts and assess interest.
Corrective Action: GFEBS enables the audit of receivables from source transaction posting to the general ledger, and also provides
the ability to age receivables and assess interest.
Impediments: Feeder systems may not provide data necessary to account for all receivables.
                                                                                                                              35
                                    ICOFR Material Weaknesses
                                 Summary of Corrective Action Plans

                                                     Accounts Payable (GF)

Current Target Date: 2nd Qtr FY 2013 (Lead – DFAS, Support – OASA(FM&C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Lack of integration between contracting, entitlement, payment, and accounting systems prevents the
Army from properly recording and reporting accounts payable.
Corrective Action: GFEBS provides the ability to record payables upon receipt of goods and services, and integrates many of the
contracting, entitlement, payment, and accounting functions.
Impediments: Relying on systems outside of GFEBS in the procurement process may not provide required information to record
and report accounts payable.




                                                    Accounts Payable (AWCF)

Current Target Date: 1st Qtr FY 2015 (Lead – DFAS, Support – OASA(FM&C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Reliance on unsupported adjustments processed by DFAS to report accounts payable balances.
Corrective Action: Implementing an upgrade for constructive receipts in LMP, scheduled for December 2011.
Impediments: Continued reliance on non-integrated contracting and entitlement processes and systems.




                                                                                                                             36
                                    ICOFR Material Weaknesses
                                 Summary of Corrective Action Plans

                                                  Statement of Net Cost (GF)

Current Target Date: 3rd Qtr FY 2014 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Statement of Net Cost is not presented by programs that align with major goals and outputs described
in the Department of Defense (DoD) strategic and performance plans required by the Government Performance and Results Act.
Corrective Action: Army will report the Statement of Net Cost in accordance with programs described in the DoD strategic and
performance plans. Army will also fully deploy GFEBS and ensure that the system’s capabilities are functioning properly.
Impediments: None at this time.




                                                Statement of Net Cost (AWCF)

Current Target Date: 1st Qtr FY 2015 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Financial management systems did not accurately capture costs for programs or properly account for
intragovernmental transactions and related eliminations.
Corrective Action: Identified a need for an interim solution to perform tie point analysis between budgetary and proprietary
accounts.
Impediments: Implementing tie point analysis in LMP is an unfunded requirement for FY 2012.




                                                                                                                          37
                                    ICOFR Material Weaknesses
                                 Summary of Corrective Action Plans


                                                Abnormal Account Balances (GF)

Current Target Date: 2nd Qtr FY 2013 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: DFAS did not detect, report, or take action to eliminate the abnormal balances.
Corrective Action: Full deployment of GFEBS will enable the Army to detect and correct abnormal balances through general
ledger tie point reconciliations and other processes.
Impediments: Abnormal balances may continue with interface partners.




                                              Abnormal Account Balances (AWCF)

Current Target Date: 1st Qtr FY 2013 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Abnormal balances in LMP are caused by incorrect general ledger attributes.
Corrective Action: LMP SFIS compliance will correct abnormal balances caused by incorrect general ledger attributes.
Impediments: Ability to document manual corrections. Changing the business culture and/or processes.




                                                                                                                           38
                                    ICOFR Material Weaknesses
                                 Summary of Corrective Action Plans

                                            Statement of Budgetary Resources (GF)

Current Target Date: 3rd Qtr FY 2014 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Accounting systems do not provide or capture data needed for obligations incurred or prior year
obligations recovered pursuant to Office of Management and Budget Circular No. A-11, “Preparation, Submission and Execution of
the Budget.”
Corrective Action: Army is conducting audit readiness work at Army installations and DFAS to implement effective internal
controls over the budget distribution, execution, and reporting processes. Army will fully deploy GFEBS and ensure that the
system’s capabilities are functioning properly.
Impediments: None at this time.



                                          Statement of Budgetary Resources (AWCF)

Current Target Date: 2nd Qtr FY 2015 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: DFAS relies on un-auditable crosswalks and other processes to prepare the SBR.
Corrective Action: LMP SFIS compliance will eliminate the reliance on un-auditable processes when preparing the SBR.
Impediments: LMP environment continues to rely on legacy business processes and systems.




                                                                                                                          39
                                  ICOFR Material Weaknesses
                               Summary of Corrective Action Plans
                                Reconciliation of Net Cost of Operations to Budget (GF)

Current Target Date: 3rd Qtr FY 2014 (Lead – OASA(FM&C), Support – OUSD(C)) check w/ Rick
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Army cannot accurately represent the relationship between budgetary obligations incurred
and the Statement of Net Cost.
Corrective Action: Integrated capabilities of GFEBS will enable the Army to represent relationships between budgetary
obligations incurred and the Statement of Net Cost.
Impediments: None at this time.

                               Reconciliation of Net Cost of Operations to Budget (AWCF)

Current Target Date: 1st Qtr FY 2015 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Mr. John J. Argodale, DASA(FO), OASA(FM&C)
Description of Weakness: Could not reconcile information reported in Note 21 with AWCF Statement of Net Cost
without forcing costs to match obligation information.
Corrective Action: Identified a need for an interim solution to perform tie point analysis between the budgetary and
proprietary accounts.
Impediments: Implementing tie point analysis in LMP is an unfunded requirement for FY 2012.

                                          Contingency Payment Audit Trails (GF)

Current Target Date: 3rd Qtr FY 2012 (Lead – OASA(FM&C), Support – AAA)
Senior Official in Charge: Thomas Mullins, OASA(ALT)
Description of Weakness: Challenges in tracing audit trails for support of financial statements.
Corrective Action: Army implemented recommendations from Army Audit Agency (AAA) reports, and will follow up with
AAA to validate that recommendations have been implemented.
Impediments: No known impediments to implementing the corrective action plan.                                           40
Senior Level Steering Group/Senior Assessment Team




   ICOFS Material Weaknesses

    Summary of Corrective Action Plans




                                                     41
                                    ICOFS Material Weaknesses

                                        Financial Management Systems (GF)

Current Target Date: 4th Qtr FY 2015 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Ms. Kristyn Jones, Director, Financial Information Management, OASA(FM&C)
Description of Weakness: Army accounting systems lacked a single, standard transaction-driven general ledger.
Army also needed to upgrade or replace many of its non-financial feeder systems so that financial statement
reporting requirements could be met. The lack of a single, standard transaction-driven general ledger will continue
to prevent the Army from preparing auditable financial statements.
Corrective Action: Implementation and fielding of GFEBS and GCSS-A.
Impediments: Feeder systems performing non-financial transactions may not be able to provide data necessary to
properly report all financial transactions.


                                      Financial Management Systems (AWCF)

Current Target Date: 4th Qtr FY 2015 (Lead – OASA(FM&C), Support – OUSD(C))
Senior Official in Charge: Ms. Kristyn Jones, Director, Financial Information Management, OASA(FM&C)
Description of Weakness: Army Working Capital Fund systems do not collect and record financial information as
required by U.S. General Accounting and Auditing Principles (GAAP). The financial and nonfinancial feeder systems
do not contain the required system integration to provide a transaction-level audit trail for the amounts reported in
the proprietary and budgetary general ledger accounts.
Corrective Action: Fully implement and deploy the LMP. Ensure required physical inventories are conducted and
properly documented, and LMP processes are stable.
Impediments: Ability to reconcile and document actions necessary to correct abnormal balances resulting from
legacy system data conversions.
                                                                                                                        42

								
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