Accountability from Flightline to Bottomline Headquarters U.S. Air Force 1 FM on FIAR! Gulf Coast...

Accountability from Flightline to Bottomline

Headquarters U.S. Air Force

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FM on FIAR!

Gulf Coast Professional Development Seminar

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8 March 2012Ms. Becky Allen

Director, Audit ReadinessSAF/FMPA


SECDEF on Audit Readiness

“One key to making a budget work in any fiscal environment, but especially now will be streamlining overhead, eliminating waste, and improving our business practices—ensuring that we are operating in a common sense, accountable, and modern business environment”

“All hands” effort across DoD

Accelerate SBR audit readiness from 2017 to 2014

Plan in 60 days

2-Letter tiger team

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Accountability from Flightline to Bottomline 33

It’s Real FIAR! VCSAF says…

“This is a an enterprise-wide effort that demands the determined commitment of leadership”

“…improve our audit readiness plans, identifying opportunities to accelerate work and transition from headquarters to base-level activities”

“…we are counting on you to assist in process reviews, respond to audit requests, and lead these critical efforts”

“Air Force leadership is committed to achieving audit readiness and we are counting on you to assist in process reviews, respond to audit requests

and lead these critical efforts.” General Breedlove and Ms Conaton


Input CORONA slide


What’s on FIAR?

What is FIAR? What does FIAR mean to you? What is the AF strategy for FIAR? What is the status AF FIAR efforts? What are the FIAR challenges? “Your FIAR’d” examples How you can help put out the FIAR?

“FIAR” Truck Example (time permitting)


What is FIAR?

Today:

- “I spent all of my budget”

- “I got more money to fund additional requirements”

- “My systems track spending (obligations) but lack an audit trail”

FIAR Tomorrow:

- “I spent my budget on these things and could also fund these requirements”

- Documentation to support my obligations is available and the audit trail exists

Standard Processes: efficient…consistent approach…shorter learning curve….customer is happy…the auditor is happy

Internal Controls:separation of duties…mitigate fraud, waste and

abuse…safeguard funds

Audit Trail:know where the money is…decision

support….efficient use of funds….CC happy

Compliant Systems:Necessary to achieve standard processes,

internal controls and an audit trail

Auditable Financial Statements will: 1) Increase credibility with Congress, auditors, and taxpayers by proving the AF spends the

money in the manner that was intended2) Give CC confidence funds were used in the most effective manner to support the warfighter


Four Wave Strategy for FIAR

Wave 1: Focus on the flow of money from receipt

by SAF to distribution down to the MAJCOMs

Includes all appropriations for the current fiscal year

Asserted as audit ready Sep 2010

Wave 2: Life-cycle of funds (commit, obligate, spend) Audit trail for all funds Performed testing of the internal controls to

ensure minimal risk to misstatement Tested and reconcile d starting and ending

balances

Wave 3: Accountability for the assets and supplies Air Force can account for all of the

assets/supplies that are reported in the system of record for a particular end-item (e.g. aircraft in REMIS) and that the entire universe of those items reside in the system of record

Conduct inventories on a regular basis

Wave 4: Air Force has an audit trail to prove

the valuations of assets, no matter when they were purchased

Successful completion will allow the Air Force to successfully undergo full‐scope financial statement audits


SAF/HAF Level

MAJCOM Level

Base Level

• Articulate policies and processes properly • Provide opportunities to enhance audit readiness understanding (e.g. training)• Ensure systems are CFO Compliant and provide clear audit trail• Implement and monitor FIAR strategy and progress• Liaise with DoD• Communicate with MAJCOMs

• Enforce data standardization • MAJCOM unique policies are clearly defined and CFO Compliant • Provide training to maintain the FIAR vigilance• Serve as the MAJCOM liaison to SAF and base-level • Support process improvement, pre-audit and audit activities • Communicate with Bases• Know what you spent, know what you bought….and be able to prove it

What Does FIAR Mean To…

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• Input transactions properly • Follow up and track documents to support audit trail• Be on the look out for negative trends• “Purpose, Time, and Amount” used to certify funds• Work closely with DFAS• Promote the message of audit readiness to individuals• Understand “How you fit into the big picture”

Every job, at every level, in FM impacts the Financial Statements….YOU Matter!!!


Resource Advisors (RAs) Ignite the FIAR!

The whole process starts with RAs

Initiate purchases and are most knowledgeable about them

Accurate and timely recording of commitments

RAs must ensure

Financial transactions are recorded in the current period and the related economic events occurred in the same period

Critical for RAs to follow through

Obligations of funds is important; but proper liquidation when transactions are completed is just as important

Properly recording the transaction in the system is important…and worth saying twice!

RAs are link between commanders and financial statements…the FIAR starts with them!


RA’s Must…

Recorded obligations represent valid orders, contracts, or other events that will require future payment

Obligations are recorded in bulk amounts and supported by binding agreements

Obligations are properly liquidated when transactions are completed

Transactions are recorded in the current period and the related economic events occurred in the same period

All obligations incurred are properly recorded

Obligations are recorded at the proper amounts

Lifecycle management of funds execution

Work Open Document Listing/Tri-annual Review

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Ensure proper controls exist and are enforced that illustrate:


Functional Impact to FIAR Approach

AUDITREADY

FM X X X X

USM X X X X

AQ X X X

A1 X X

A4 X X X

A6 X X X

A7 X X X

MAJCOM X X X

Base Level X X X

DFAS X X X X

Other Svc’s X X

DLA X X

Air Force Audit Readiness will take an enterprise effort


What does FIAR Mean Outside FM?

Org A few examples of how you can support right nowAQ Ensure data is properly updated in contracting systems and supporting documentation is retained in

accordance with audit standards

Close old contracts and deobligate funds

A4 Support of Equipment/Inventory/OM&S systems and reporting; ensure periodic inventories are performed and documentation is maintained

A6 Support of IT General and Application controls; identify places where general controls are shared across various systems to reduce “strain” on PMOs

A7 Recording, tracking, and reporting of Real Property in ACES-RP and NexGen IT; Accurately estimate and record Environmental Liabilities

MAJCOM (All Orgs)

Maintain supporting documentation; perform TAR and deobligate excess obligations; standardize base level processes; fully utilize the Management Internal Control (MIC) Program

Base Level (All Orgs)

Follow standard processes; Input transactions properly the first time; track down and retain documents to support the audit trail

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FIAR Methodology

Red text is changes to May 2010 FIAR Guidance

3.0 Evaluation

4.0 Assertion

5.0 Validation

6.0Audit

1.0 Discovery

Statement to Process Analysis

Prioritize

Assess & Test Controls

Evaluate Supporting

Documentation

2.0 Corrective

Action

Develop Corrective

Actions

Compile Supporting

Documentation

Assertion Examination

Test

Ph

ases

Key

Tas

ks

Note: The gray boxes are key tasks that must be repeated on a continuous basis as they are key in achieving and maintaining auditability and reliable financial information .

Resource

Execute

Compile Process, Control

& System Documentation

Assertion Documentation

Review

Design Audit-Ready

Environment

Decide

Engage Auditor

Support Audit

Auditor Issues Report


AF Wave 1 and Wave 2 SBR Assessable Units

Budget Authority Resources - Appropriations, Allotments,

Apportionments, Nonexpenditure Transfers, Rescissions

Status of Resources – Unobligated Apportioned and Unavailable

Reimbursements Incorporates spending authority, offsetting

collections and any outlays associated with the reimbursable process

Obligations Encompasses the entire budget execution

process Impacts anyone that receives, commits

and obligates AF funds Outlays

Covers the payment process to liquidate an obligation

Impacts anyone that obligates AF funds


Existence & Completeness

Two of the four financial assertions that auditors will test in Wave 3

Other two are Rights and Presentation & Disclosure

Focus is on Mission Critical Assets (MCA)

Military Equipment

Real Property

Inventory (WCF)

Operating Materials and Supplies (OM&S)

General Equipment

Direct impact to the Balance Sheet


Existence & Completeness

Connects to SBR processes from acceptance of the item (i.e. WAWF)

Add item into accountable property system of record (ASPR)

Conduct annual physical inventories (except Real Property every 5 years)

Ensure inventories are conducted and documented

Inventory sheets must be signed and dated

Reconcile physical inventories to ASPR at local and enterprise level

Proper Use of key data fields

Item identifier, asset type, item description, operational status, condition code, date placed-in-service or transfer, inventory date


Audit Readiness Status Accomplishments

Description Due USD(C) Priority Current Status

Budget Authority – Fund Receipt/Distribution 30-Sep-10 SBR Opinion - Sustainment

Fund Balance with Treasury Reconciliation 31-Dec-10 SBR Opinion - Sustainment

Military Equipment, Cruise Missiles, Drones, Aerial Targets 31-Dec-10 Existence & Completeness Under DoDIG Examination (6/30/12)

Fiscal Year 2012 Goals

Uninstalled Missile Motors 30-Mar-12 Existence & Completeness Preparing assertion documentation

Spare Engines 29-Feb-12 Existence & Completeness Preparing assertion documentation

Funds Distribution to Base 31-Mar-12 SBR Preparing assertion documentation (CAPs)

MDAP (SBIRS) 30-Sep-12 SBR In Discovery Stage


Reimbursable Budget Authority (RBA) 31-Dec-12 SBR In Discovery Stage (CAP)

Hire to Retire (Civilian Pay) 31-Dec-12 SBR In Discovery Stage

Hire to Retire (Military Pay) 31-Mar-13 SBR In Discovery Stage

Real Property 30-Jun-13 Existence & Completeness In Discovery Stage

MILSTRIPS 31-Jul-13 SBR Not Started

Vendor Pay 31-Aug-13 SBR Not Started


Reimbursable Work Order (RWO) 31-Dec-13 SBR In Discovery Stage (CAP)

Contracts (MOCAS) 31-Dec-13 SBR In Discovery Stage

Net Outlays 31-Dec-13 SBR In Discovery Stage

Financial Statement & Compilation 31-Dec-13 SBR In Discovery Stage

Spare Parts - AF Managed/AF Possessed 30-Jun-14 Existence & Completeness Not Started

Munitions 30-Jun-14 Existence & Completeness In Discovery Stage

Future Goals

Spare Parts - Ctr Managed/Ctr Possessed 30-Sep-15 Existence & Completeness Not Started

Spare Parts - Ctr Managed/AF Possessed 30-Sep-15 Existence & Completeness Not Started

Inventory (WCF) 31-Dec-15 Existence & Completeness In Discovery Stage

General Equipment 30-Sep-15 Existence & Completeness Not Started

Government Furnished Equipment 31-Mar-16 Existence & Completeness In Discovery Stage

a/o 2/24/12


SBR Assessable Units and Milestones to Audit Readiness

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2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4Wave 1 - Appropriations ReceivedAppropriations ReceivedWave 2 - Statement of Budgetary ResourcesRescissions (not audited)Non-expenditure Transfers (not audited)Funds Distribution to BaseReimbursable Budget AuthorityReimbursable Work Orders Civilian PayMilitary PayContracts (MOCAS) Examination of One Acquisition Program (SBIRS)Contracts Pay (Vendor Pay)MILSTRIPS Net Outlays (incl. FBWT )Financial Statement Compilation and ReportingExamination of DEAMS at TRANSCOM/Scott AFBComplete SBR

a/o 2/24/12Notes:1 Discovery Phase include the activities of Process Documentation, Development of Test Plans, Conducting Testing, and Analyzing the Test Results2 Corrective Action Phase includes the implementation, monitoring and validation of corrective actions

LegendAir ForceFY10 FY 11 FY 12 FY13 FY 14 FY15 FY 16 FY 17

FIP Development UnderwayDiscovery 1

Corrective Action 2

Audit Readiness AssertionValidationUnder Audit or SustainmentFBWT Recon CapabilityIndicates Change from Original MilestoneDEAMS ExaminationAcceleration of a Milestone


E&C Assessable Units and Milestones to Audit Readiness

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Legend2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Military EquipmentMilitary Equipment Real PropertyReal Property Operating Materials and Supplies (OM&S)OM&S - Missile Motors OM&S - Spare Engines OM&S - Cruise Missiles & Drones OM&S - MunitionsOM&S - Spares (AF Managed)OM&S - Spares (Contractor Managed, Contractor Possessed)OM&S - Spares (Contractor Managed, AF Possessed)Inventory

General EquipmentMedical Equipment Government Furnished Equipment

a/o 2/24/12Notes:1 Discovery Phase include the activities of Process Documentation, Development of Test Plans, Conducting Testing, and Analyzing the Test Results2 Corrective Action Phase includes the implementation, monitoring and validation of corrective actions

Other

FY15 FY16 FY17

Wave 3 - Existence & Completeness

WCF Inventory

Air Force FY10 FY11 FY12 FY13 FY14

FIP Development Underway

Discovery

Corrective Action

Audit Readiness Assertion

Validation

Under Audit or Sustainment

Indicates Change from Original

Acceleration of a Milestone


Challenges to Meet Our Goal

Effective communication within FM and other functional communities on how they can help

Illustrating how everyone fits into the “big picture”

Translating this “foreign language” into action and results

2014 is just around the corner and FY 2017 is not that far beyond that…Time is of the essence

Educating Key Stakeholders….Why this matters

Efficient use of funds and resources

Credibility will help support need for additional funding

Enhanced decision support to fund operational needs

Systems limitations

This Is Not Just An FM Initiative – It Will Take the Entire AF Enterprise


How You Can Help…Right Now

Lead FIAR efforts within your unit and spread the word at every opportunity….be a “FIARMAN”

Follow the document retention policy (e.g. pay related documents stored for 6 yrs and 3 months); as well as within other Comptroller offices and functional communities on base

Take the MIC Program seriously….effective internal controls are critical success factors to audit readiness

Work with your functional counterparts and show them how they fit into the “big picture”

Participate on Assessable Unit Teams Functional knowledge resides outside “the Beltway” (e.g. MilPay,

GAFS-BL, local purchases, etc.)

Business events create financial transactions and impact audit readiness


Examples of Where You Can Assist AF Audit Readiness

Area Functional Community

Where You Can Assist Now

Requisitions and Other Initiating Documents

FM, RA’s Controls are in place to ensure:• The item requested is consistent with statutory intent of the appropriation and is not otherwise prohibited• The item requested is a necessary expense• The LOA on each requisition is in line with the purpose of the business event • The cost estimate is reasonably accurate• Commitment is recorded accurately and timely

Invoices FM, DFAS Controls are in place to ensure:• Quantity billed and unit price of items are accurate• Goods or services have been received prior to certifying invoice for payment• Invoices are processed promptly• Documentation is retained and available for audit

Fund Control FM, RA’s Controls are in place to ensure:• LOA for all activity is valid and supports the purpose of the business event• Funding is available to process the transaction• Only valid codes are available to be cited

Funds Distribution

DFAS, FM, RA’s • Adhere to the new document number construct for funds distribution through AFM to GAFS-BL; this is the first step in auditability of our budget• Reconcile funds received and funds available, at a minimum, quarterly

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Procurements AQ Controls are in place to ensure:• Item purchased is to satisfy a bona fide need• LOA cited for each transaction is consistent with purpose for the purchase of the item • FY funding used is appropriate for the transaction• Obligation is recorded accurately and timely• Applicable commitment is liquidated or adjusted• All procurement actions are recorded• Documentation is retained and available for audit

Receipt of Goods and Services

All who certify receipt of goods or services

Quantity received is accurate• Goods or services have been received by designated end user• Receiving report is completed and recorded timely• The appropriate accountable property system is updated to reflect the receipt of the item, if applicable• Receipt is recorded accurately and timely• Documentation is retained and available for audit

Reimbursable Orders

Any organization performing reimbursable work

Controls are in place to ensure:• Statutory authority for performing work for others is valid• Orders are supported by documented evidence of a formal offer and acceptance• All billable costs are charged to the applicable customer order• Documentation is retained and available for audit

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MORDs FM, DFAS Controls are in place to ensure:• MORDs are only prepared when documents to support valid obligation/reimbursable transactions are not immediately available• Documentation to support cost estimate is retained and available for audit• LOA for all activity is valid and supports the purpose of the business event• MORDs are reversed when the actual obligating document is recorded

Travel All Controls are in place to ensure:• The LOA on each travel order is in line with the purpose of the travel• The cost estimate is reasonably accurate• Documentation is retained and available for audit• Validate and Account for Government Orders Outstanding (GOO); if necessary, de-obligate funds

Payments DFAS, FM • If partial payment, LOA is valid for the specific items that are being paid• Disbursement is recorded accurately and timely• Applicable obligation is liquidated or adjusted• Documentation is retained and available for audit

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Real Property (RP) Accountability

A7 • Timely processing of DD Forms 1354 to place facilities into service

• Conduct physical inventories once every 5 years (20% each year), update the asset record in ACES-RP and ensure documentation is filed

• Maintain source documentation for the life of the asset

Accountability of Property (other than RP)

A4/7 • Ensure Receiving Report is accurate and signed

• Ensure asset is recorded in the Accountable Property System of Record (APSR) when Air Force takes ownership of the asset

• Conduct physical inventories each year and ensure asset record in the APSR reflects the “date of last inventory”

• Maintain source documentation for the life of the asset (including proof of last physical inventory)

• Potential Logistic Compliance Team review items

Payroll All Controls are in place to ensure:• Codes used to record each payment are accurate• Reimbursable work is reported and identified separately• Timecards are recorded accurately and timely• Documentation is retained and available for audit

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Systems All FM and Feeder System PMO’s

Documentation to support CFO compliance is current and readily available:• System accreditation• Security plan• System controls• User listing• Test plans• Recent audits• Risk assessments• Interfaces• Transaction flows• System and user documentation

Quality Assurance

All • Ensure all controls are in place and are followed• Ensure all transactions are recorded• Ensure all transactions are processed timely• Ensure all errors are identified and corrected promptly• Validate data elements using FM DQS for ALL address requests• Don't knowingly use invalid data element values (even when you intend to go back and correct them)• Correct known errors as soon as possible - the longer you wait, the worse it gets• Understand SFIS (structure - not a system) and how Legacy will translate

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References

Hyperlinks FIAR/FIP CoP December 2011 OUSD(C) FIAR Guidance November 2011 FIAR Plan Status Report AF Business Rules on the FIP/FIAR CoP (Under Revision)

Documents Mention/Discussed Joint USM and Vice Chief Memo Mandatory Document Number Construct Memo USD(C) Priority Memo USD(AT&L) Memo FIAR Info to MAJCOM FM’s

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Joint USM and CV FIAR Memo

Mandatory BA Document Number Construct

USD(AT&L) Priority Memo

MAJCOM Opportunities to Support FIAR

USD(C) FIAR Priorities Memo

https://afkm.wpafb.af.mil/community/views/home.aspx?Filter=AF-FM-FF-07

https://afkm.wpafb.af.mil/community/views/home.aspx?Filter=AF-FM-FF-07

http://comptroller.defense.gov/fiar/documents/FIAR_Guidance_2011.pdf

http://comptroller.defense.gov/FIAR/documents/FIAR_Plan_November_2011.pdf

https://www.my.af.mil/afknprod/ASPs/DocMan/Process/ProcessDOCFunctions.asp?DocID=8850021&Function=ViewDocument&FolderID=AF-FM-FF-07-13-6&Filter=AF-FM-FF-07

https://www.my.af.mil/afknprod/ASPs/DocMan/Process/ProcessDOCFunctions.asp?DocID=8850021&Function=ViewDocument&FolderID=AF-FM-FF-07-13-6&Filter=AF-FM-FF-07


Backup

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You’re FIAR’D!!!Here are

some examples.


FIAR Truck Example

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Purchase of an FIAR Truck –Impact to Audit Readiness

Example follows the purchase of a “FIAR” truck at base-level Understand, fire trucks are not procured at base-level; however:

Everyone can relate to a fire truck They are found on every base Meet capitalization threshold Accountability takes place at base-level

Interchange fire truck with any capital asset (over $20K) purchased (i.e. generator, utility truck, etc.) for applicability Financial impacts are the same Accountable Property System of Record could be different

Process steps are similar for the purchase of goods and services, but these costs are not capitalized on the balance sheet


Planning and Requirement Development Phase

Step 1: Business Case Analysis – Base needs a Fire Truck (Asset)

AIR FORCE INSTRUCTION 63-101: ACQUISITION AND SUSTAINMENT LIFE CYCLE MANAGEMENT

Step 2: Justification and Report Generation Information is input into Financial Information Resource

System (FIRST)

Budget is prepared in Automated Budget Interactive Data Environment System (ABIDES)

Budget is approved by Congress

Budget is signed by President

Air Force Receives Current Budget in ABIDES

No Impact to AF Financial

Statements….Yet


Budget Execution – Funds Receipt

Step 3: Funding is received Treasury issues funding warrants to Air Force

SAF/FMB transfers information from ABIDES into the Automated Funds Management (AFM) system for distribution to the MAJCOMs

AFM information is transferred to the Air Force accounting system General Accounting & Finance System – Re-host (GAFS-R)

Financial Statement Impact Air Force must satisfy the Key Control

Objective (KCO) in order to become audit ready:

Appropriation transactions (or other forms of budget authority): Recorded appropriation (or other forms of budget authority) is the same as the appropriation or other legislation, was made available for obligation (including restrictions on amount, purpose & timing) and pertains to the entity (Dept of the Air Force)

3. Budget AuthorityA. Appropriation


Budget Execution – Funds Distribution

Step 4: Distribution to MAJCOM Funding Authorization Document (FAD) is

transferred to MAJCOM through AFM and is converted into Excel or loaded into FMSuite for allotment to bases

The standardized AFM document ID is one of key requirements for an audit trail, this allows the Air Force to reconcile the fund distribution balance

Funding is recorded with the proper appropriation symbol (ex. 3080 - Other Procurement, Air Force)

Financial Statement Impact Air Force must satisfy the KCO in order to

become audit ready:

Recorded apportionments agree with the OMB apportionments and the total amount apportioned does not exceed the total amount appropriated

9. Unobligated BalanceA. Apportioned


Procure to Pay – Requisitioning and Sourcing

Step 5: Request for Procurement The Base prepares a purchase request in the Automated Business Services System

(ABSS)

Common forms are Form 36 (Purchase Request), AF Form 9 (Purchase Request), and AF Form 185 (Project Order)

Financial Services Office (FSO) ensures a Program Summary Record (PSR) matches the Long Line of Accounting (LOA) on the purchase order and it exists in General Accounting and Finance System - Base Level (GAFS-BL) system

FSO checks the availability of funding to support request, this is done by entering the purchase request amount into the GAFS-BL utilizing the PSR as a commitment (C) of funds Detailed contract information is interfaced from MOCAS into GAFS-BL to record the Commitment (C)

No Direct Financial Statement Impact However there is a risk within this step – if the FSO does not validate the

availability of funding it could create an Anti-Deficiency Act (ADA) violation


Procure to Pay – Contracting and Purchasing

Step 6A: Contract for Procurement The accounting record update allows the funds certifier to certify and release the

purchase request to the contracting officer for procurement action, the funds certification data is sent via ABSS to contracting

The contracting officer (CO) receives the request, completes the acquisition process and prepares a contract incorporating all the data entered by the requestor

CO prepares the contract in Standard Procurement System (SPS)

In the course of finalizing the details of the contract, it is reviewed by legal, Defense Contract Management Agency (DCMA), and the vendor

Once the contract is awarded copies are distributed - Electronic image (PDF) is sent to the vendor, DCMA and the originating financial specialist via e-mail

Detailed contract information is interfaced from SPS into Mechanization Of Contract Administration Services (MOCAS)

NOTE: For this example, MOCAS used; however most base level folks are familiar with IAPS and probably use this system for most purchases


Procure to Pay – Contracting and Purchasing

Step 6B: Purchasing of Asset The associated GAFS-BL Document

Summary Record (DSR) is used to match the incoming obligation transactions against the purchase request document number (Step 5) – Commitment to Obligation (C to O) this is simultaneous with contracting (Step 6A), once the contract is awarded

Financial Statement Impact Air Force must satisfy the KCO in order

to become audit ready:

Obligations represent valid orders that will require future payment

Obligations are for the same purpose for which the appropriation was made

8. Obligations IncurredA. Direct


Procure to Pay – Receipt and Acceptance

Step 7: Receipt of Asset The Base receives the Fire Truck from the vendor, examines the asset, accepts the

asset received and creates a receiving document

On-line Vehicle Integrated Management System (OLVIMS) reportable vehicles include fire fighting and base maintenance vehicles/ equipment of commercial or military design

The Base’s Vehicle Fleet Manager (VFM) or Vehicle Management Superintendent (VMS) takes delivery of the asset on behalf of the Air Force

The VFM completes a receipt/acceptance report (DD250) which is forwarded to Defense Finance and Accounting Service (DFAS) through Wide Area Work Flow (WAWF)

DFAS vendor pay receipt/acceptance data is interfaced from WAWF or input manually into MOCAS

Receipt/Acceptance data flows electronically from MOCAS into GAFS-BL booking the Accounts Payable


Procure to Pay – Receipt and Acceptance

Step 7: Receipt of Asset Financial Statement Impact

Statement of Budgetary Resources (SBR)

Air Force must satisfy the KCO in order to become audit ready:

Obligations are recorded in the proper period

Balance Sheet (BS)


Obligations are recorded in the proper period

18. Obligated Balance, net, end of periodA. Unpaid Obligations

4. Accounts Payable


Procure to Pay – Invoice and Distribution

Step 8A: Process Invoice & Matching and Distribution DFAS conducts a three-way matching of the documentations provided (contract,

receiving report and invoice)

DFAS Vendor Pay personnel verify that the invoice meets proper invoice requirements and that the vendor is actively registered in Central Contractor Registration (CCR) and Corporate Electronic Funds Transfer (CEFT)

The invoice is also verified against the contract to determine if the charges are correct

If all of the necessary documentation exists, DFAS processes the disbursement in Centralized Disbursing System (CDS)

The payment process begins when DFAS receives a demand for payment however payment is not made until the receipt of a DD250 or any other approved receipt & acceptance document is in DFAS possession either electronically via WAWF or manually submitted (mailed or faxed)

CDS generates check issue and Electronic Fund Transfer (EFT) files and interfaces the associated accountability data to GAFS-R


Procure to Pay – Invoice and Distribution

Step 8A: Process Invoice & Matching and Distribution Financial Statement Impact

Statement of Budgetary Resources (SBR) Air Force must satisfy the KCO in order to

become audit ready: Outlay, collection and receipt transactions

represent valid, authorized transactions and pertain to the entity

Balance Sheet (BS) Air Force must satisfy the KCO in order to

become audit ready: Outlays are for the purposes for which the

appropriation was provided and in an amount not exceeded the obligation, as adjusted, authorizing the outlay (supports ADA)

19. Outlays

1. AssetsA. Intragovernmental

1. Fund Balance w/Treasury


Acquire to Retire – Place into Service

Step 8B: Place into Service The receiving activity is required to produce a receiving report upon receipt and

acceptance of the Fire Truck Upon receipt the base level personnel, VFM, forwards a copy of the DD 250 to DFAS

for processing

The VFM enters all applicable data to include UIUD, serial number, and placed into service date into OLVIMS

Asset information is ultimately passed to AFEMS, the Accountable Property System of Record (APSR)

Bases set and implement local guidance in the form of Operating Instruction (OIs) in accordance with (IAW) AFI 33-360, Publications and Forms Management for reporting on inventory reconciliation

Upon notification that the reconciliation is complete, the VMS begins the process of collecting cost and entering value for newly procured assets as well as any “child” assets into OLVIMS

Financial Triggers:

(+) Receipt of Newly Procured Equipment


Acquire to Retire – Place into Service

Step 8B: Place into Service Financial Statement Impact

Statement of Budgetary Resources (SBR)

No Impact

Balance Sheet (BS)


Ensure recorded assets exist at a given date

Ensure recorded assets at a given date, are supported by appropriate detailed records that are accurately summarized and reconciled to the account balance

Ensure recorded assets are owned by the entity. The entity has rights to the recorded asset at a given date

1. AssetsE. Property Plant and Equipment


Acquire to Retire – Monitor Assets

Step 9: Asset Accountability Reconciliation Base level personnel are required to perform periodic inventory of on hand PP&E,

and perform a reconciliation of the inventory results against the information recorded in OLVIMS

Any discrepancies that are noted between the asset inventory and the records in OLVIMS are reported to the base level VFM

A discrepancy report is prepared detailing the differences between the results of the inventory and the records in OLVIMS

Base level VMS updates the records in OLVIMS to reflect the results of the inventory Maintaining the results of the current and last inventory is critical for Existence and

Completeness assertions Step 10: Asset Maintenance/Modification

Maintenance and modification requirements for assets are established by VFM and VMS using the AIR FORCE INSTRUCTION 23-302 Material Management VEHICLE MANAGEMENT

Asset modifications that meet the capitalization threshold ($20K) are identified and added to OLVIMS

VMS enter “child” assets and applicable value in OLVIMS (capitalized modifications applied dependant upon total asset valuation after modifications are complete)

Proper recording of modifications (cost, date of modification, etc.) is important to full financial statement audit readiness


Acquire to Retire – Monitor Assets

Step 12: Asset Depreciation Asset depreciation calculations are programmed to occur automatically in AFEMS

At the end of each month current total PP&E asset value (which represents the net updates for new receipts and adjustments from inventory reconciliations) accumulated depreciation and summarized transactional data is forwarded from OLVIMS to GAFS-R for use in the financial reporting process

Critical to ensure placed in service date, acquisition cost, useful life fields are accurate and match the information on the supporting documentation (DD250 and invoice)

Financial Triggers: (+)Asset Found During Inventory (-) Asset Lost During Inventory (-) Depreciation (+/-) Modifications


Acquire to Retire – Disposition of Assets

Step 13: Asset Disposition (1) Disposition Authority (USCENTAF AOR Only). Deployed sites do not have local

authority to salvage vehicles disposition decisions will be made by the MAJCOM. To request salvage instructions units need to submit an AFTO Form 91, Limited Technical Inspection-Motor Vehicle, to CENTAF-AUAB

(2) Defense Reutilization and Marketing Service (DRMS) Procedures. Contact Regional or Zone DRMS Manager for processing guidance after a vehicle has been approved for DRMS. If DRMS representation is not able to assist with disposal, the MAJCOM or NAF Vehicle Management Staffs will direct disposal IAW DOD 4160.21-M, Defense Materiel Disposition Manual, Chapter 8, Abandonment or Destruction (A/D)

Disposal summarized transactional data is forwarded from OLVIMS to SBSS-ILS to AFEMS to GAFS-R for use in the financial reporting process

Critical to maintain supporting documentation of the asset disposal (sale of asset, destruction, etc.) for Existence and Completeness

Asset records in OLVIMS must be updated within 30 days of disposal of the vehicle

Financial Triggers: (-) Disposal


Incorporates an “enterprise-wide” approach SAF/FM and SAF/USM responsible for audit readiness Governance structure in place to enforce accountability

Includes redefined Assessable & Sub-assessable units for the SBR

Establishes “firm” milestone dates for E&C assertions with the functional communities

Spends least amount of time in Discovery in order to move to corrective action sooner, given the tight timeline

Assesses financial and mixed feeder systems to ensure IT General and Application controls are tested and effective

Incorporates MAJCOM and base-level personnel – this is where the audit will go when we are under audit

Assumes higher level of risk to meet audit readiness by FY14

Air Force Strategy

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Table below contains overarching risks the Air Force identified that may impede the ability to achieve the accelerated plan

Audit Readiness Risks

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Risk to Achieving the AF Plan Actions to Mitigate Risk

Corrective actions not fully implemented prior to assertion of the SBR

- Governing bodies will prioritize CAPs- Develop a robust communication strategy

Critical Enterprise Resource Planning System (ERPs) not fully deployed prior to September 2014

-Work with system PMO’s to ensure audit readiness requirements are addressed in the ERP- Conduct a QDD for all financial and financial feeder systems

Acquisition of contractor expertise is a timely process

-Proactively work with GSA to ensure procurement is awarded timely- Ensure knowledge transfer is achieved from one contractor to the next

Interim examinations delayed by DoDIG’s right of first refusal

- Establish a process with OUSD(C) to procure an IPA when DoDIG is unable to perform examination timely (e.g. Military Equipment)

OUSD(C) timeline for assertion review is too long - Provide OUSD(C) interim products for review

Increased employee turnover due to added stress and pace of plan

-Proactively manage the plan and limit the amount of reactive exercises- Provide adequate resources to accomplish the plan

Lack of audit infrastructure to prepare for and respond to financial statement audits conducted in accordance with Generally Accepted Auditing Standards (GAAS)

-Develop audit response capabilities (based on lessons learned by USMC) – ex. SharePoint site- Provide training to AF personnel on the preparing for, going through and sustaining a financial statement audit

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Required Assertion Work Products

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Key Control Objectives

Objectives that capture the outcomes needed to achieve proper financial reporting and serve as a point against which the effectiveness of financial controls can be evaluated

Effective internal controls mitigate risks and provide assurance that financial information is properly and accurately recorded and reported

Critical to successful financial statement audits. KCOs do the following: Ensures key risks are mitigated during audit readiness efforts Ensures internal controls are aligned with financial statement

assertions During Evaluation & Discovery activities, assessing internal

controls is a prerequisite

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Key Supporting Documentation

Documentation retained to demonstrate control activities are properly designed and operate to satisfy KCOs, as well support individual financial transactions and accounting events

Some examples: Obligating document and related modifications such as

contract purchase order, MIPR, etc. Unpaid Obligations (Undelivered Orders) brought forward and

at end of period are supported by valid obligating documents such as contracts, reimbursable agreements, MIPRs, purchase orders, etc.

Receiving report, and billing document such as vendor invoice (or equivalent), or accrual estimate support (if invoice has not been received)

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E&C Key Supporting Documentation

Documentation retained to demonstrate control activities are properly designed and operate to satisfy KCOs, as well support individual financial transactions and accounting events

For example Tier 1 – physical inventory count documentation (book to

floor, floor to book), detailed asset listing, summary schedule reporting amounts/quantities by class of asset, reconciliation to general ledger, policies & procedures demonstrating consistency of treatment

Tier 2 – asset logs (maintenance or usage), mission-management/logistics data, track maps, physical indicators of ownership of rights.

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E&C Evaluation Objective

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Objective: Provide the Air Force with a level of assurance that their mission-critical assets in the related Accountable Property System of Record (APSR) exist, the records are

complete, and that their internal controls are designed and operating effectively.

Existence test work

Purpose Validate assets

recorded in APSR exist

TestRandomly selected “X” Assets from APSR data for each base/location

Completeness test work

PurposeValidate assets on the

flight line exist in APSR

TestSelect at least ”X”

assets to physically observe that were not

in the Existence population

Internal controls

Purpose Document and review

internal controls for inventory management

and accountability

TestValidate process;

Administer questionnaire regarding processes and perform

interview

Supporting documentation

PurposeEnsure data in APSR is

supported with documentation; verify Rights and Obligations

TestValidate supporting

documentation exists and is maintained for assets being tested

Accountability from Flightline to Bottomline Headquarters U.S. Air Force 1 FM on FIAR! Gulf Coast...

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