0. Managers’ Internal Control Program FY 2015 1st Quarter Teleconference
21 October 2014
Office of the Assistant Secretary of the Army (Financial Management & Comptroller) (OASA(FM&C))

1. Agenda Roll Call Opening Remarks FY 2015 Schedule of Events
FY 2015 Open Material Weaknesses
FY 2015 ASOA Preparation/AAA Audit
Enterprise Governance, Risk and Compliance (GRC) Update
Future Significant Events
Questions/Comments

2. Opening Remarks

3. HQDA Principal Officials
FY Schedule of Events
Completed
Date
Event
OPR √
9 Oct 2014
1st Qtr Senior Level Steering Group/Senior Assessment Team (SLSG/SAT)
SLSG
21 Oct 2014
1st Qtr Teleconference with Reporting Organizations
SAFM-FO
8 Jan 2015
2nd Qtr Teleconference with Reporting Organizations
15 Jan 2015
2nd Qtr SLSG/SAT
2 Apr 2015
3rd Qtr Teleconference with Reporting Organizations
9 Apr 2015
3rd Qtr SLSG/SAT
15 May 2015
Annual statements from Army commands (ACOMs), Army service component
commands (ASCCs) and direct reporting units (DRUs) due to OASA(FM&C)
Commands
29 May 2015
Annual statements from HQDA Principal Officials due to OASA(FM&C)
HQDA Principal Officials

4. HQDA Principal Officials
FY 2015 Schedule of Events
Completed
Date
Event
OPR
18 Jun 2015
Draft Army statement of assurance delivered to SLSG/SAT members for coordination
SAFM-FO
26 Jun 2015
SLSG/SAT member comments on draft Army statement due to OASA(FM&C)
HQDA Principal Officials
1 Jul 2015
4th Qtr Teleconference with Reporting Organizations
9 Jul 2015
4th Qtr SLSG/SAT
SLSG
21 Jul 2015
Release final draft Army statement thru DASA(FO) to SecArmy for signature
24 Aug 2015
Final signed Army statement delivered to the Secretary of Defense

5. FY 2015 Open Material Weakness (Carried over from FY 2014)
Status of Open Material weaknesses:
6 Open Internal Control over Operations
Expeditionary Contracting
Oversight of Service Contracts
Reporting of New Equipment in Transit
Second Destination Transportation (SDT)
Reporting Accurate Obligations for the Permanent Change of Station (PCS) Program
Basic Allowance for Subsistence (BAS)
23 Open Internal Control over Financial Reporting (ICOFR)
General Fund – 13
Army Working Capital Fund – 10
3 Open Internal Control over Financial Systems (ICOFS)
GFEBS – Super User Privileged Management (SPM) access to application layer
GFEBS – Configuration Management
LMP – Army Working Capital Fund systems do not collect and record financial information as required by U.S. Generally Accepted Accounting Principles (GAAP)

6. FY 2015 ASOA Preparation

7. FY 2015 ASOA Preparation/AAA Audit
No significant changes from FY 2014 ASOA guidance.
FY15 guidance is routing for signature and will be issued soon.
FY15 Army Audit Agency (AAA) Audit
Planning meeting held with DASA (FO) on 10 October 2014
Objectives of audit:
MICP – verify the program provides effective oversight of operational and financial internal controls.
Audit Readiness – verify Army activities have sufficient processes and procedures support and sustain financial audit readiness.
Priority and Order of Review:
2 – 3 commands with SBR/SBA priority in first quarter
4 – 8 commands for GE and OM&S in 2nd and 3rd quarter

8. Enterprise Governance, Risk and Compliance (GRC) Update

9. Background Review
Principal Mission Requirements for Directorate of Accountability and Audit Readiness:
Ensure compliance with Congressionally-mandated milestones to produce auditable financial statements by 2017
Ensure compliance with provisions of OMB Circular A-123 governing the Managers’ Internal Control Program (MICP)
Both missions require an effective strategy of integrating overall risks and controls with existing ERP and other systems and key processes to achieve and sustain an effective audit ready posture
Government Accountability Office report (GAO ) cited DoD as a whole with not following many risk management principles necessary for effective risk management
Integrity of our processes and controls and the audit readiness of our financial statements are driving the need for a sound and comprehensive GRC strategy!

10. Benefits of Enterprise GRC Environment
Applies an integrated internal controls approach.
Leverages IT tools for efficiency of documentation, testing and remediation.
Greatly reduces manual controls and increases automated controls.
Documents evidence supporting the Annual Statement of Assurance and reduces dependence on manual data calls.
Provides Senior Level Management performance indicators/metrics in a “Dashboard Environment” to improve decision capabilities.

11. Army Enterprise GRC Initiative
Enterprise GRC Working Group established in early 2013 to integrate perspectives of Audit Readiness, ERP development and sustainment teams , AESIP Data Hub and OBT.
Problem Statement defining the Financial Management needs of the Army Enterprise for an automated risk management solution approved in December 2013.
Performance of Work Statement developed and provided to APG contracting office for solicitation of vendor proposals.
Contract awarded to Kearney & Company on 06 May 14
Contract end date is 29 December 2014
Kick-off meeting held with Kearney & Company team on 09 May 14.

12. Kearney GRC Contract: Task 1
Evaluate the Army strategy for Financial Risk Management and approach for key financial systems
Identification of key risks within the General Fund Enterprise Business Systems (GFEBS), Global Combat Support System – Army (GCSS-A) and Logistics Management Program (LMP) ERP systems
Projection of potential risks encountered within the Integrated Pay and Personnel System – Army (IPPS-A) ERP system
Application of controls to address identified risks
Analysis of factors that impact sound risk management such as command and control structure, maturity of current systems, personnel and resource constraints and existing policies
Non-financial reporting and system risks identified through the MICP within Army subordinate commands

13. Top 3 Recommendations
Strategy
Function / Management
Resources
Execution
Focus on building Army wide risk management capabilities prior to focusing on the technology to support GRC, they can be implemented “slightly” in parallel with the technology lagging by a minimum of 6 – 9 months
Establish a program to drive accountability and transparency and simplify / integrate existing risk management activities and committees into a coordinated program with a clear vision, objectives and executive support
Utmost focus should be placed on the people and the process, technology will not succeed without well trained people and standardized process to support an enterprise wide program with varying mission goals, objectives and outputs
Develop a plan to converge GRC technology implementation in the ERPs with the enterprise wide GRC technology consideration/implementation
Maturity of the application and general controls within the ERPs is a major driver of GRC technology success at the enterprise level
Develop GRC technology requirements for all levels of the organization and for all stakeholders, utilize a top-down/bottoms-up approach to requirements documentation and development, identify all dependencies as early as possible
Select key Commands/reporting organization and or HUB to pilot risk management implementation and roll-out

14. Kearney GRC Contract: Task 2
Assess Army Enterprise GRC Informational Needs
Identification of key data management requirements
Identification of key metrics measurements requirements
Identification of continuous monitoring requirements
Identification of financial management and other ad hoc reporting requirements

15. Requirements for Army’s GRC Informational Needs

16. Kearney GRC Contract – Task 3
Evaluate potential Enterprise GRC solutions
Review and assess Enterprise GRC business requirements
Assess alternative Enterprise GRC solutions to meet Army’s business requirements
Implement pilot for validation

17. Receive final deliverable products from Kearney
Next Steps
Complete Task 3 vendor assessments and analysis of GRC solution capabilities
Receive final deliverable products from Kearney
GRC Contract ends on December 29, 2014
Present Kearney assessment and recommendations to Army senior leadership in January 2015 for decision regarding way ahead

18. Future Significant Events
FY 2015 Audit Committee:
14 Nov 2014, (EST)
FY nd QTR Teleconference:
8 Jan 2015, (EST)
FY nd QTR SLSG/SAT:
15 Jan 2015, (EST)
(Pentagon Library Conference Center, Room B1)

19. Questions/Comments