1. Army Financial Management HON Mary Sally Matiella
Assistant Secretary of the Army, Financial Management & Comptroller
23 February 2012
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2. Agenda The Defense Budget Cost Culture/Management
Challenges to Improving Financial Management
Pathway to Auditability
Funding Lifecycle
DoD Certification Program Framework
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3. The Defense Budget
Discretionary spending is ~35% of total federal budget – Defense budget is ~50% of discretionary spending
Increasing emphasis on reducing spending/deficit – Congress and the Administration
Historically, funding levels have decreased as military demand decreases
Height of
Vietnam
War (1968)
Height of
Cold War
(1985)
9/11
(2001)
Korean War
Armistice (1953)
OCO?
Gulf War
Ends (1991)
Vietnam War
Ends (1973)
BCA
BCA impact?
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FOR OFFICIAL USE ONLY
BCA – Budget Control Act of 2011

4. Cost Culture/Management
Planning
Controlling
Analysis
Accounting
Management
Process
Full Cost Measurement
Accurate, timely and relevant data
Connecting operational output/performance data to financial data
Allocate Overhead, Unfunded Costs, Indirect Support
Cost Analysis
Variances
Trends and forecasting
Product, service or activity cost by expense (labor, material, contracts, etc…)
Understanding full costs of organizations, operations, products and services
Comparison Analysis & Benchmarking
Cost Planning
Operational managers set cost targets and efficiency goals
Plan cost based on outputs produced
Resource Informed
Decisions
Take action based on analysis and external demands
Change targets
Change resources
Change quantity / quality
** Cost Management Requires:
Engaged Leaders
Strong Staff (Cost Warriors)
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5. Challenges to Improving
Financial Management
Leadership
Internal Control
Workforce
Accountability
Architecture
ERP
1. Committed and sustained
leadership
2. Effective plan to correct internal
control weaknesses
3. Competent financial management
workforce
4. Accountability and effective
oversight
5. Well-defined enterprise architecture
6. Successful implementation of the
enterprise resource planning systems.
Risks
According to GAO Testimony before the Panel on DOD Financial Management House Armed Services Committee, 28 July 2011
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6. Pathway to Auditability
System
General Ledger Accounts
Transaction-level accounting
Automated Internal Controls
Automated Interfaces
Financial Reporting
Transaction-level processing
Follow the 5 stages of accounting (funding, commitment, obligations, receipt/accrual, and disbursing)
Standard business practices
Inter-governmental processing
Provide supporting documentation (old & new)
Practices & Policies
Leadership
Instill a “Will Do” Culture
Ensures compliance with system, practices, and policy
Track & Resolve problems
Train the workforce
Change Management
“Who”; “What”; “When”
AUDIT OPINION
Statement of Budgetary Resources by 2014
Full Financial Statements by 2017
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7. Funding Cycle
The purpose of financial reports is to inform managers how much of their funding falls into each phase of the lifecycle. The example below uses terminology geared toward contracts and supply orders, but the same lifecycle applies to other major uses of our funds, such as civilian and military labor.
1. Funding Available
2. Under Contract/Order
3. Goods/Services Received
4. Invoice Approved
5. Payment made (Outlays)
6. Contract/Order Adjusted/Closed
1. Funding Available – Receive and distribute funding to operational organizations
2. Under Contract/Order – Use funding on goods and activities to meet mission goals
3. Goods/Services Received – Document orders are received
4. Invoice Approved – Pay only for goods and services received
5. Payment Made – Ensure payments are processed and recorded
6. Contract/Order Adjusted/Closed – Adjust orders for subsequent changes
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8. DoD Certification Program Framework
Level 1
40 CEU/CPE hrs
Course Hours to Meet FM Competencies
Content and Course Hours for FM 101 Course & Other Required Courses
Course Hours for Leadership Competencies
Time and Experience in DoD
Developmental Assignments
CEU/CPE
Level 2
60 CEU/CPE hrs
Level 3
80 CEU/CPE hrs
In March 2011, USD(C) convened a Senior Working Group (SWG) to develop the framework and structure for a Department of Defense Financial Management Professional Certification Program for the DoD financial management workforce.
Workforce Competencies: proprietary and budgetary accounting, information systems, internal control, audit readiness
Section 1053 of the National Defense Authorization Act for Fiscal Year 2012 requires that the DOD strategic workforce plan include a chapter to specifically address the shaping and improvement of the financial management workforce of the Department of Defense, including military and civilian personnel.
Pentagon leaders have given the thumbs up to a financial management certification program that would focus on audit readiness and provide a framework for the department's 58,000 civilians and military personnel working in the field.
Employees have two years to achieve certification following implementation, which is expected to begin in phases by January Full implementation is planned by March 2014
The goal of the program is to improve the financial management workforce by providing them a recognized body of knowledge, while encouraging college degrees and test-based certifications.
The program would divide the financial management community into three experience-based levels, which would face separate mandatory requirements.
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9. WIN Summary LEARN FOCUS ADAPT Efficient Effective Workforce FM Systems
Audit Readiness
Resource Informed Decisions
WIN
Efficient
Effective
FOCUS
Cost Culture
GFEBS
Audit Readiness
Workforce
ADAPT
GFEBS
Workforce
Cost Culture
Financial Environment

10. Questions?
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