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Auditability Update ASMC National Capital PDI Navy Break-Out Session Ms. Karen Fenstermacher Deputy Assistant Secretary of the Navy (Financial Operations)

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Presentation on theme: "Auditability Update ASMC National Capital PDI Navy Break-Out Session Ms. Karen Fenstermacher Deputy Assistant Secretary of the Navy (Financial Operations)"— Presentation transcript:

1 Auditability Update ASMC National Capital PDI Navy Break-Out Session Ms. Karen Fenstermacher Deputy Assistant Secretary of the Navy (Financial Operations) 3 March 2015

2 - 2 - Agenda  FY2015 Navy SBA Audit Status  Game Plan for Full Financial Auditability by FY2017  What’s Left to Do – the Big Rocks  Accomplishments to Date  Discussion

3 - 3 - Milestone: Navy’s initial SBA Audit began in December 2014 Report Phase October 1 – November 13* Test Phase July 1 – November 11* Planning Phase December 17 – May 20* Control Phase April 16 – August 31*  Auditors gain understanding of business operations  Audit plan is developed  Auditors perform walk-thrus of business processes and internal controls  Orgs support with explanations, documentation  Auditors develop samples and initiate testing of financial transactions  Commands provide key supporting documentation  Auditors evaluate test results to determine compliance with financial audit regulations  A report of findings is provided to DON MediumLowHighMedium Major Activities Command Involvement Assertion Schedule of Budgetary Activity Existence & Completeness Assertions Assertion Full Financial Statements Report to Congress on Full Financial Statement Audit Audit Full Financial Statements Audit Schedule of Budgetary Activity *All dates are Cotton & Company estimates Auditor Requests for Information (as of 24 Feb)FinancialITTotal Delivered to Auditors (Completed) Still Outstanding Total Requests

4 - 4 - Command Roles – During Audit and Beyond Example: NFRs on Navy/USMC Reimbursable Work Order processes spurred move toward a DON-wide automated solution -- Invoice Processing Platform (IPP) Audit Notice of Findings and Recommendations (NFRs) will drive Corrective Action Plans (CAPs) Audit findings will identify necessary changes to business processes and systems During the audit, respond promptly to auditors’ requests for documentation – Know your business and document it! NFRs can have a wide impact on the DON Enterprise. CAP implementation will require: Navy action on NFRs: promptly implementing CAPs. Progress on CAPs will be noted during successive audits. Priorities Commands provide information and documentation during an audit. However, active audit participation does not end with the Audit Report. Weaknesses must be corrected., and corrective actions must be sustained. Notice of Findings and Recommendations (NFRs) – Why do they matter?  NFRs outline weaknesses and concerns that need to be addressed by the DON  Addressing NFRs will require collaborative discussions that will shape solutions and probably require resources  Corrective actions must be implemented by relevant commands – or the entire Enterprise

5 - 5 - On to FY2017: Validated SBA entries will support lines on the three other statements Schedule of Budgetary Activity Balance Sheet Statement of Net Cost Statement of Changes in Net Position Single Statement Auditability Full Financial Statement Auditability Work performed to prepare the SBA for audit can be leveraged for the other three financial statements – providing momentum toward the FY 2017 goal of full financial statement auditability ~49% ~39% ~72% - % Applicability to Additional Statements - Crosswalks Posting Logic Analysis Functional Assessment (Processes/ Controls) ~78%

6 - 6 - Navy’s game plan to reach full auditability by FY2017 Checkpoints FIAR Dates Navy Dates NDAA Mandate

7 - 7 - What the Chart Says -- Game Plan Highlights 30 September 2015 Assert General Fund Statement of Budgetary Resources (SBR) Build on Schedule of Budgetary Activity (SBA) work so far 30 September 2017 Assert the other seven General Fund/Working Capital Fund statements: WCF SBR GF/WCF Balance Sheet GF/WCF Statement of Net Cost GF/WCF Statement of Changes in Net Position Now thru FY2017 Periodically conduct confidence checkpoints Assess auditability progress to date Re-evaluate timelines/milestones if necessary Get auditor read-outs if necessary on progress Agreed Upon Procedures to dig further if required Audit of all statements begins early in FY2018 Flexible approach to maximize audit readiness by the end of FY2017

8 - 8 - On The To-Do List -- Challenges To Meet Business ProcessesContinue remediation and sustainment Search for Enterprise, impactful solutions – e.g., IPP Asset ManagementComplete Existence and Completeness on General Equipment, OM&S, Real Property Implement valuation strategy Sustain gains Data ManagementRemediate control deficiencies Continue building out data warehouse/analytics Emphasize Navy ERP capabilities Defense Agency Service Providers Forge ever-closer collaboration – many controls are performed outside Navy! From BSOs’ PerspectiveResources and Policy are concerns Many hands on the wheel will be required!

9 - 9 - Solid Achievements To Date FIAR Accomplishments Strengthened Controls Over Business Processes As demonstrated by positive results on segment exams Overhaul of Business Systems has begun Controls assessments on major business/financial systems; CAPs must be expedited Navy ERP change backlog tackled Progress in Asset Accountability Existence and Completeness validated for major military equipment, ordnance; progress continues Valuation strategy evolving First Congressional mandate met SBA audit began December 2014 Sense of urgency must continue to meet FY2017 goal


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