Transcript Slide 1

Fourth Estate
Financial Management
Update
Washington-ASMC National Capital Region PDI
March 3, 2015
Panel Composition
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Mr. Mark Easton (Moderator), Deputy Chief Financial Officer, OUSD(C)
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DFAS Service Provider Perspectives
Mr. David McDermott, Deputy Director for Operations, DFAS
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Working Capital Fund Perspectives
Ms. Gretchen Anderson, Director, Revolving Funds, OUSD(C)
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TI-97 Appropriations Perspectives
Mr. Tom McClutchy, Associate Director, Defense-Wide Programs, OUSD(C)
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Financial Management Workforce Initiatives
Ms. Glenda Scheiner, Director, Human Capital and Resource Management, OUSD(C)
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Fourth Estate Audit Strategy
Ms. Alaleh Jenkins, Director, Financial Improvement and Audit Readiness, OUSD(C)
The Changing Business Environment Within the Fourth Estate – an FM Perspective 2
Welcome
Mr. Mark Easton
Deputy Chief Financial Officer, OUSD(C)
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Fourth Estate
Audit Strategy
Ms. Alaleh Jenkins
Director, Financial Improvement and Audit Readiness
OUSD(C)
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DoD Consolidated Audit Strategy Overview
 DoD has developed a strategy to move to full financial statement audit
by FY 2018 in accordance with the NDAA for FY 2010
 The audit strategy builds on audit readiness momentum and
demonstrates interim progress toward the FY 2018 target using a
phased approach
– Propose that audits of select reporting entities’ financial statements be accelerated
– Other reporting entities will undergo progressively more complex examinations
 The phased approach will allow for continual growth and expansion of
DoD’s audit infrastructure to support the increasing number of audits
 Strategy assigns each of DoD’s reporting entities to one of four
categories:
– Tier 1: Large Caps (OMB Designated Entity Audits)
– Tier 2: Mid Caps (DoD Designated Audits)
– Tier 3: Small Caps (DoD Designated Examinations)
– Tier 4: Micro Caps (Remaining Defense Agencies, Organizations, and Funds (Not Material for
Audit))
The Resulting DoD Consolidated Financial Statement Audit Starting in FY 2018
Will Likely Be the Largest Financial Statement Audit Ever Performed
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The DoD Agency-Wide Audit Will Involve
Presenting Our Complete Portfolio
Categories as Percentage of Total Budgetary Resources
Tier 3
Small
Caps
Tier 2
Mid
Caps
Tier 1
Large
Caps
3.6% DoD Designated Examinations
• WHS (Pentagon admin)
• DoDEA (education)
• MDA (missile defense)
• DARPA (R&D)
• DSCA (security cooperation)
• Many others
21.9% DoD Designated Audits
• Defense Logistics Agency • DHA (healthcare)
• USTRANSCOM (transport) • USSOCOM (special ops)
• DISA (IT / communication) • Others already under audit
0.9 % Not Material for Audit
Tier 4
Micro
Caps
Selected Activities
in the Fourth Estate
are participating in
mock audits
73.6% OMB Designated Entity Audits
• Department of the Army (GF and WCF)
• Department of the Navy (GF and WCF)
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•
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(includes Marine Corps GF and WCF)
Department of the Air Force (GF and WCF)
Military Retirement Fund (MRF) Trust Fund
U.S. Army Corps of Engineers (USACE)–
Civil Works
Entities in red are under audit
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Critical Success Factors
Tone from the Top
– Stress importance
– Emphasize deadlines
Strong Audit Infrastructure
– Well organized audit support team
– Continual and effective communication
Access to Supporting Documentation
– Correct, clear, and timely
– Auditor must be able to follow (plain English)
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Setting Expectations
 Be Prepared
– Auditor will interview personnel and observe operations
– Auditor will test account balances and trace to source
– All organizations, locations, processes, and systems may be subject to
audit
– Assign point personnel for supporting documentation
– Expect large sample sizes for testing
 Own Your Information
– Provide correct audit evidence in a timely manner
– Be able to respond to an auditor’s questions
 Communicate
– Continually communicate with audit liaisons and your organizations
– Don’t assume auditors know your business…clear communication is
key
– Embrace feedback
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DFAS Service Provider
Perspectives
Mr. David McDermott
Director for Operations, DFAS
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DFAS Business
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In FY 2014, DFAS:
 Military Members – 2.2M
 Civilians – 1.2M
– Pay Services
 Retirees/Annuitants – 2.8M
o Paid ~6.3 million customers
 Processed 150.2 million pay transactions
o Made 5.8 million travel payments
o Paid 11.5 million commercial invoices
o Disbursed $572 billion
– Accounting/Account Management Services
o Accounted for 1,270 active DoD appropriations
o Maintained 228.6 million General Ledger accounts
o Managed $772 billion in Military Retirement and Health Benefits
Funds
o Managed $18.3 billion in accounts receivables
o Managed Foreign Military Sales cases valued at $424 billion
(Reimbursed by foreign governments)
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The DFAS Role in Audit Readiness – Service Provider
Department of Defense
COMMUNICATION
DoD
Component
Transactions
COLLABORATION
DFAS Audit Support
People
EXPECTATIONS
DoD Auditable
Financial
Statements
• Army
Military Pay
Processes
• Navy
• Air Force
• Marine
Civilian Pay
Systems
Contractor/
Vendor Pay
Corps
• Defense
Agencies
Independent
Public
Accountant
• Conducts
independent
review
• Issues audit
opinion
As of FY14,
DFAS helped
its Customers
achieve 34
Favorable
Audit Opinions
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Working Capital Fund
Perspectives
Ms. Gretchen Anderson
Director, Revolving Funds, OUSD(C)
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Cash Management
• SASC FY 2015 NDAA Report Language - “…prepare a
report…on: (1) DOD’s status made on the proposed change to daily
cash balances; (2) A specific definition of sufficient cash balances that
DOD and each military service will follow; (3) The methodology used to
calculate such definition; (4) Recommendations on how to mitigate the
need to carry excess cash to avoid Anti-deficiency Act violations; and (5)
A mitigation plan to address the projected ARA shortfall, including any
initiatives that could result in savings.”
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Plan –
– Workshop
o Define sufficient cash and develop methodology
o Make recommendations to mitigate need for high cash balances
 What can we do?
 What can Congress and other stakeholders do?
– Propose policy improvements
– Closeout
– Prepare policy draft and circulate for comment
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TI-97 Appropriations
Perspectives
Mr. Tom McClutchy
Associate Director, Defense-Wide Programs, OUSD(C)
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Where We Are Now
• Current Priorities (Along with and in addition to PPBE)
– Audit Readiness for General Fund Budgetary Resources (September 30, 2014)
– Audit Readiness for Existence & Completeness (E&C) of Mission Critical
Property (June 30, 2016)
• Examples
– Sub allocations
– Moving funds by Military Interdepartmental Purchase Request (MIPR)
New requirements (or old requirements re-discovered)
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Financial Management
Workforce Initiatives
Ms. Glenda Scheiner
Director, Human Capital and Resource Management
OUSD(C)
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DoD FM Certification
and Audit Readiness
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Establish a framework to guide DoD FM professional development
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Applicable to DoD Civilians and Military in the DoD FM Workforce
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Intent is to make a good FM workforce even better!
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Establish a mechanism to encourage key training in:
− Audit Readiness
− Decision Support/Analysis
Encourage career broadening and leadership
Transition to a more analytic orientation
Ensure financial management workforce has knowledge, skills, and abilities
necessary to achieve auditable financial statements
•
Develop a course-based rather than test-based certification to encourage
continuous learning
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Reminder: 2-year CET clock starts the day a member earns their FM
Certification
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Workforce Demographics
As of 30 Sep 2014
Key Civilian Demographics:
Total DoD Financial Management Workforce
Education Levels
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Less than a Bachelor’s Degree – 45%
Bachelor’s Degree – 38%
Master’s Degree – 17%
Doctorate Degree – 0.12%
Career Levels
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GS 01- 08/Equivalent – 21%
GS 09 -12/Equivalent – 46%
GS 13-15/Equivalent – 33%
Age Distribution
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29 and Under – 9%
30 - 39 – 19%
40 - 49 – 26%
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50-59 – 34%
60-64 – 9%
Over 65 – 3%
Retirement Eligibility
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Currently Eligible to Retire – 14%
Eligible to Retire Next Year – 4%
Eligible to Retire in Two to Five Years –15%
DoD Workforce
Total - 53,300
Army (26%)
Civ – 8,100
Mil – 5,700
Air Force (22%)
Civ – 7,600
Mil – 4,400
DoN (19%)
Civ – 8,300
Mil – 1,800
th
4 Estate (33%)
DFAS – 8,800
Other – 8,600
Total DoD Military Workforce
11,900, 22%
Mil DoN
3%
Mil AF
8%
Civ DoN15%
Mil Army
11%
Civ 4th Estate 33%
Civ Air Force
14%
Civ Army 15%
Total DoD Civilian Workforce
41,400, 78%
Total DoD Civilian Workforce
41,400, 78%
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DoD FM Certification
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99% of Active Components
Implemented in FY14
FY 14 Implementation Results
50000
2,384 FM members have
completed certification
45000
40000
DoN
20000
Army
15000
Air Force
10000
Total
5000
Sep
Aug
July
Jun
May
Apr
Mar
0
Feb
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DCAA
Jan '14
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Will provide capability to achieve all
FM competency-based
requirements via training on-line
OUSD(C) and DoD SMEs have
developed 48 web-based courses
21 more new courses are planned
for development in FY15
25000
Dec
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DFAS
Nov
Course Development
30000
Oct
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Other
Sept
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31 March 2015 target completion
date
4,999 RC launched out of 6,404 RC
total (78%)
Aug
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35000
Jul
Guard/Reserve Implementation
Jun
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DoD FM Certification
By 4th Estate as of 25 February
10000
800
5%
9000
0%
6%
700
8000
600
7000
500
6000
0%
5000
4000
400
18%
300
3000
200
2000
6%
15%
0%
100
1000
1%
18%
DCMA
DTRA
0
0
DFAS
DCAA
DeCA
DLA
DISA
MDA
DHA
Other
DoD Orgs
Not Certified
Certified
The 2-year window for achieving FM Certification ends 30 Jun 2016, or two
years from date of launch whichever is later
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On-going Strategic Initiatives
• Competencies
− DoD FM Enterprise-wide Competencies
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Competency refresh slated for FY16
CFO Council is propagating DoD’s FM competencies across federal government
− Round 1: Workforce Competency Assessment - Results
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Highest response rate in DoD
No significant gaps in mission critical occupations 501, 510, and 560
Small gaps in 511 series (Audit Reporting, Decision Support-Audit, Execution, Audit Planning and Management)
̶ Round 2: Workforce Competency Assessments – to begin in April
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Focus on non-mission critical occupational series
May receive system email – please participate promptly, feedback anonymous
• Defense Civilian Emerging Leadership Program
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Residential leadership course – 5 modules focused on leadership development
FY15 Cohort includes 28 Participants
• FM Occupational Series
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Released civilian FM career roadmaps for 13 occupational series; available via FM Online
Aligned Civilian and military occupational series/specialties to FM competencies;
available on FM myLearn
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Open Q & As
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ASMC National Capital Region: Professional Development Institute
Speed Mentoring
Polaris Room 16:30
EDUCATION
TRAINING
PROFESSIONAL DEVELOPMENT23