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Coast Guard Financial Management

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Presentation on theme: "Coast Guard Financial Management"— Presentation transcript:

0 FSTAR 101: Assistant Commandant For Resources
The Coast Guard’s Audit Readiness Plan Assistant Commandant For Resources RDML K. Taylor | DHS CFO Brief | 25 JAN 2010 Financial Management Modernization | RDML Taylor | 29 APR 10

1 Coast Guard Financial Management
Principle Issues CG accounting operations policies, procedures and processes which are not in accordance with Generally Accepted Accounting Principals (GAAP) standards Multiple General Ledgers General Ledgers non-US Standard General Ledger (USSGL) Compliant Lack of a standard line of accounting Unable to address the following major functional gaps in a cost-effective manner in the current environment: Centralized funds control Three-way matching of good receipt Payment management Automated processing of Intergovernmental Payments and Collections (IPACs)

2 Size (Materiality) Matters
Our results to date and projections for FY11 FY07 – Disclaimer on all line items FY08 – Supported the accuracy of the balance for 6% of CG Balance Sheet: Investments & Contingent Legal Liabilities (CLL) FY09 – Supported the accuracy of the balance for 55% of CG Balance Sheet: Investments, CLL & Actuarial Pension Liability (APL) FY10 – Supported the accuracy of the balance for >70% of CG Balance Sheet: Investments, Contingent Legal Liabilities, Actuarial Pension Liability, Actuarial Medical Liability, PP&E (Personal Property & OM&S), FBwT (Military & Civilian Payroll – 3 out of 6 Agency Location Codes (ALCs) FY11 – will be able to support additional balances for Construction in Progress (CIP) an Real Property for PP&E Line Item, Internal Controls for Military & Civilian Payroll, and be able to prove accuracy & non-material misstatement of AP, AR, FBWT, BRM and SBR to support almost 100% of balance sheet Will get DHS a “Qualified Opinion “ for FY11 Total Balance sheet assets plus liabilities is $66.9B CG in DOT CG in DHS in 2010 CG is 18% of DHS Assets CG is 41% of DHS Liabilities Assistant Commandant For Resources 2

3 Coast Guard Audit Readiness Approach
Financial Management Modernization is the backbone of the Coast Guard Modernization Efforts are inextricably linked Marks a turning point for the USCG to achieve timely, accurate, reliable, visible and transparent financial information Critical to decision makers Must actively transform our financial management processes and systems using a deliberate phased approach. We must: Consolidate financial management activities to create centers of expertise and reduce potential internal control issues Establish a preeminent culture of internal controls Institutionalize a governance architecture to: Enhance advocacy Provide optimal resource allocation Enable an enduring audit readiness posture Assistant Commandant For Resources

4 FSTAR 1.0 Development Initial Financial Strategy for Transformation and Audit Readiness (FSTAR) 1.0 published in March 2007 High-level strategy and schedule to address material weaknesses Contained FY07 financial corrective actions published in DHS ICOFR Playbook DHS OIG Performance Audit (OIG-08-73) concluded plan did not contain detailed milestones articulating path from current to desired state. Many Mission Action plans (MAPs) with thousands of milestones – “like trying to boil the ocean” Assistant Commandant For Resources

5 Audit Readiness Planning Team (ARPT)
Cross-functional team of senior CG & DHS financial experts chartered in APR 08 Charged with addressing root cause conditions of material weaknesses & developing action plans Disaggregated financial statement line items into a set of assessable units (AU) for purposes of conducting risk assessments Resulting assertion matrix indicates whether the ability to provide an assertion for each AU is significantly constrained by current system deficiencies CG estimated only 13 – 15% of the 139 AUs can be asserted to without successfully addressing systems deficiencies Incorporated a risk based approach w/realistic timelines for remediation Developed FSTAR 2.0 Assistant Commandant For Resources

6 Coast Guard Audit Readiness Strategy
Scope Divide the world of work into “Assessable Units” Size Focus on those items most material to the DHS Balance Sheet ‘Fix it once’ Remediate the root causes of the issue, not just a ‘quick fix’. To get through a current year audit Sustainability Improved the “Tone at the Top.” The Coast Guard CFO and Deputy CFO met weekly with each of the MAP teams to assess progress, mitigate risks, and identify potential roadblocks. As a result, timely responses to risks associated with MAP remediation efforts and completion were addressed.  A successful example of this is when the Fund Balance with Treasury MAP was in danger of missing critical milestones, the CFO sent a senior member of his staff to the Coast Guard Pay and Personnel Center in Topeka, Kansas to get the project back on track. Established the Financial Management Accounting Oversight Board (FMAOB).  It is comprised of the Coast Guard’s senior Certified Public Accountants and includes the DHS Director of Financial Management.  The purpose of the Board is to provide recommendations to the CFO, Senior Assessment Team (SAT) and EMC-ICARB on the proper accounting treatment for complex transactions and provide recommendations around aligning Coast Guard accounting policy and guidance to federal best practices and standards.  Most notably, in FY 2009, the Board provided recommendations for and approved the calculation of the Actuarial Pension Liability Materiality Threshold, which was a critical step in asserting to the balance at the end of FY 2009.  CFO Technical Authority. Providing the CFO with this authority allows for the consistent and timely application of federal financial management standards across the enterprise.  This has improved the standardization of common processes throughout the Coast Guard, bringing them in compliance with generally accepted accounting principles. Comptroller The Comptroller will ensure the reliability of financial reporting and validate that timely corrective actions are taken providing greater effectiveness and efficiency of operations by strengthening accountability. Attack the items that can be remediated outside of current financial system limitations System 6

7 MAP Focus Areas 2003-2011: Consolidated (DHS) Balance Sheet Audit
Get the ‘balance’ Work toward internal controls Includes Statement of Custodial Activity (SCA) 2012 Forward: Full Scope Audit Statement of Budgetary Resources (SBR) Statement of Net Costs (SNC) Statement of Change in Net Position (SCNP) Internal Controls Over Financial Reporting (ICOFR) Assistant Commandant For Resources

8 Coast Guard Balance Sheet
FY07 – Disclaimer on all line items FY08 – Supported the accuracy of the balance for 6% of CG Balance Sheet: Investments & Contingent Legal Liabilities (CLL) FY09 – Supported the accuracy of the balance for 55% of CG Balance Sheet: Investments, CLL & Actuarial Pension Liability (APL) FY10 – Supported the accuracy of the balance for >80% ($53B) of CG Balance Sheet: Investments, Contingent Legal Liabilities, Actuarial Pension Liability, Actuarial Medical Liability, PP&E (Personal Property & Construction in Progress), FBwT (Military & Civilian Payroll – 3 out of 6 Agency Location Codes (ALCs) FY11 – Supported the accuracy of the balance for 91% of CG Balance Sheet: FBwT (Non-Payroll), Accounts Payable, Accounts Receivable). FY12 – Goal is to support 100% of the Balance Sheet adding Real Property, Internal Use Software and Environmental Liabilities. Assistant Commandant For Resources

9 Coast Guard Audit Readiness Progress
High Risk, High Materiality FBwT (Cash) Support $5.6B Non-Pay Balance & Support $200M Payroll Balance Personal Property Support the $5.1B Existence, Completeness & Valuation Actuarial & Other Liabilities Support the $35B Pension Balance Support the $8.6B Medical Balance Support the $1.3B CLL Balance Internal Controls Removed Material Weaknesses for Actuarial Liabilities & MilPay Our results to date and projections for FY11 FY07 – Disclaimer on all line items FY08 – Supported the accuracy of the balance for 6% of CG Balance Sheet: Investments & Contingent Legal Liabilities (CLL) FY09 – Supported the accuracy of the balance for 55% of CG Balance Sheet: Investments, CLL & Actuarial Pension Liability (APL) FY10 – Supported the accuracy of the balance for >70% of CG Balance Sheet: Investments, Contingent Legal Liabilities, Actuarial Pension Liability, Actuarial Medical Liability, PP&E (Personal Property & OM&S), FBwT (Military & Civilian Payroll – 3 out of 6 Agency Location Codes (ALCs) FY11 – will be able to support additional balances for Construction in Progress (CIP) an Real Property for PP&E Line Item, Internal Controls for Military & Civilian Payroll, and be able to prove accuracy & non-material misstatement of AP, AR, FBWT, BRM and SBR to support almost 100% of balance sheet Will get DHS a “Qualified Opinion “ for FY11 Total Balance sheet assets plus liabilities is $66.9B Assistant Commandant For Resources 9

10 MAP Focus Areas FY11 Focus Areas FY12 Focus Area
Military HR Internal Controls Civilian HR Internal Controls Actuarial Medical Liabilities Environmental Liabilities Accounts Payable Accounts Receivable Fund Balance with Treasury (Non Payroll) IT General Controls Capitalized Property CIP Real Property Major Electronic Systems Operating Materials & Supplies Military HR Internal Controls Civilian HR Internal Controls Actuarial Medical Liabilities Environmental Liabilities Statement of Budgetary Resources Statement of Net Costs Accounts Payable Accounts Receivable Fund Balance with Treasury (Non Payroll) IT General Controls Capitalized Property Personal Property CIP Real Property Major Electronic Systems Operating Materials & Supplies Assistant Commandant For Resources

11 CG-85: Office of Financial Management Transformation & Compliance
Office Chief: Dale Amidon Deputy (CG-85D): CDR Jim Passarelli Office Manager: CWO2 Dave Casteel Policy & Communications LT Tom Baker (CG-85) CG-851: Internal Controls Division Chief: Susan Seyfried Deputy: CDR Tony Alarid CG-852: Audit Remediation Division Chief: CDR Jason Collins Accounts & Payroll Team LCDR Tuan Luong Civilian Payroll Wes Johnson Military HR/Payroll Accounts Payable & Receivable LCDR Colin Campbell Femi Esoimeme Statement of Net Cost Laila Grassley Accounts & Payroll AP & AR John Bower Civilian Payroll LCDR Jeff Ferlauto Military Payroll Actuarial Medical Liabilities FBwT CLL & Investments CDR Tony Alarid General Ledger / Financial Reporting General Ledger/Financial Reporting Statement of Net Cost Rena Wear Change in Net Position Statement of Budgetary Resources Akram Maruf PP&E Personal Property Akram Maruf Environmental Liabilities CDR Tony Alarid Real Property Construction In Progress Rena Wear OM&S/Repairable Spares PP&E Team LCDR Bobby Hart Personal Property LT Josh Zike Construction In Progress LT Ron Millspaugh Real Property Veronica Christen Electronics LT Christian Hernaez Internal Use Software OM&S/Repairable Spares Environmental Liability LTJG Riley Matsco ITGC/Application Controls LCDR Ferlauto GL & Financial Reporting Team LCDR Amy Florentino FBwT & General Ledger LT Melissa Cooper Phil Faries (CG-8C) Actuarial Medical Liabilities DCMS-831/CG-852 Change in Net Position LCDR Colin Campbell Statement of Budgetary Resources LCDR David Hatchett (CG-83) Karen Maye Other Government Charge Cards TBD IPERA Monitoring Rena Wear SAS 70 Reviews GS-9 Statement of Assurance Susan Seyfried

12 Why Do I Care? It’s not about Passing the Audit, it’s about doing our jobs IAW Federal Standards. The audit is merely a trigger It’s not extra work, it’s work we’ve been required to do, but failed to do You can’t know what you need if you don’t know what you have From the OMB Reviewer: the CG is not a candidate for budget growth until they can pass the audit (paraphrasing) Auditors heading your way….. Assistant Commandant For Resources

13 Questions? CDR Jim Passarelli CG-85D (202) Learn more about Auditing, Internal Controls and Financial Statements at: https://collab.uscg.mil/lotus/mypoc?uri=dm:0d f0ed30b0e9baea &verb=view Assistant Commandant For Resources


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