1. ASMC Discussion Joe Marshall
May 2016
Joe Marshall
Principal Deputy Assistant Secretary of the Navy
(Financial Management & Comptroller) 1

2. Road to Auditability
All DON Financial Statements
Audit Ready by
1 OCT 2017
Navy has defined the critical path to comply with NDAA & report the results of full audits by 2019
Completed FY15 SBA Audit Feb 2016
FY16 SBA Audit underway--preparing for FY17 Balance Sheet Audit
Balance Sheet, Beginning Balances
Audit Ready by
1 OCT 2016
Schedule of Budgetary Activity (SBA)
Audit Ready by
1 OCT 2014

3. DON Audit Results To Date
NOV ‘14 - Produced automated Transaction Universe
DEC ‘14 - Public Accounting Firm Begins FY15 SBA Audit
SEP ‘15 - Commands produced documentation samples
FEB ‘16 - Received disclaimer of opinion on the audited SBA
Opinion not possible: control environment weaknesses
Material weaknesses in disclaimer:
Ineffective Business IT Systems Controls – 181 system-related deficiencies on 30 business systems; security & access controls uniformly non-compliant
Ineffective Business Process Controls – multiple process control failures; documentation shortcomings.
Ineffective Controls over Financial Reporting – data does not reliably flow through compilation process, resulting in unexplained adjustments.
Will the functional / technical “split” ownership of IT withstand audit? 3

4. DON Audit Results To Date
Tactical:
Major commands met audit response timelines…across-the-board.
Operational:
Commands are invested and committed. Flag /SES champion appointed to correct each deficiency.
Strategic:
Senior leaders are recognizing what audit will require and moving to the challenge.
But: audit needs more direct, plain-language discussion & explanation. 4

5. Congress watching…HASC hearing on Audit 8 Jun 2016
Audit the Pentagon 2015
Consequences if DOD fails to obtain an audit with an unqualified opinion:
Transfers DFAS from DOD to Treasury.
Provides higher reprogramming thresholds for Services that are auditable as a "carrot."
Sticks:
Severe restrictions on reprogramming
No obligating funds for major defense acquisition programs beyond Milestone B
Cancellation of any ERP business computer system if procurement takes longer than three years from initial obligation of funds to full deployment and sustainment.
Congress watching…HASC hearing on Audit 8 Jun 2016 5

6. Reimbursable Work Order Process
SOW
Period of Performance
Appropriate Line of Accounting
RECEIPT & ACCEPTANCE
No formal process to document receipt and acceptance
INVOICE / DISBURSEMENT
Automated process with no validation
CLOSE-OUT / RECON
Agreement regarding amount to be returned
“AS IS” PROCESS
AGREEMENT
DD 1144 or MOA for DoD-Other Federal or Intra-DoD
RWO for internal DON
AGREEMENT
General Terms & Conditions (GT&C)
Single format for all levels of trade
Prerequisite to all orders
REIMBURSABLE WORK ORDER
Order(s) consistent with GT&C (work & amount)
SOW
Period of Performance
Appropriate Line of Accounting
RECEIPT & ACCEPTANCE
Quarterly review (receipt & acceptance, reconciliation w/ disbursements) for all orders until complete.
INVOICE / DISBURSEMENT
Automated process
Reconciliation with disbursements part of receipt & acceptance
CLOSE-OUT / RECON
Final receipt & acceptance acknowledging work as complete
Agreement regarding amount to be returned
“TO BE” PROCESS
~FY18 G-Invoicing: links GT&C, order(s), receipt & acceptance, & recon w/disbursements.
Red Font = Change/Deletion to “as is” process
Green Font = Change/Deletion to “to be process

7. Shifting from startup into sustainment.
DoD FM Certification
Goal: implement standardized financial management competencies that describe the knowledge, skills & abilities needed to perform & achieve desired results.
FM Cert requirements are competency based; prior FM training courses are mapped to the cert competency requirements.
Course shortfalls exist in the FM Systems and Leadership areas
DON has provided “off the shelf” classroom leadership training courses, but lacks a long term solution.
DON has narrowed the FM Systems gap by mapping new SABRS training.
Many online training courses meet FM Cert requirements but lack DoD classroom / virtual training.
Shifting from startup into sustainment.

8. Questions Joe Marshall
Principal Deputy Assistant Secretary of the Navy
(Financial Management & Comptroller) 8