FIAR Status Update 17 July 2014

AFLCMC… Providing the Warfighter’s Edge

FIAR Status Update17 July 2014

Randal BowenAFLCMC/FM-FZDSN: [email protected]

AF Life Cycle Management Center


Provide a High Level Overview of FIAR and LCMC Impacts/Status

BLUF

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Overview

• Background• Guidance/Strategy• AFMC Approach• Current Status/Examples• Challenge(s)• How You Can Help

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What is FIAR?

FIAR IS: An enterprise-wide effort to:

- Document and standardize business processes- Implement/enhance internal controls- Standardize data- Provide reasonable assurance that financial statements are presented

fairly An initiative that involves all Functional Communities and

MAJCOMs

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FIAR IS NOT: An initiative of the current administration Just a legal requirement The sole responsibility of the FM Community


1990 1993 1994 1995 1996… 2000… 2005… 2009 2010 2011…

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The CFO/FIAR Evolution

Federal Financial Management Improvement Act (FFMIA) of 1996

Government Management Reform Act (GMRA) of 1994

Chief Financial Officer (CFO) Act of 1990

Government Performance and Results Act (GPRA) of 1993

Air Force produced first financial statements for FY95

Financial Improvement and Audit Readiness Focus on Balance Sheet Line Items (2005-2009)

FIAR Priorities Focused on Statement of Budgetary Resources and Existence and Completeness of Mission Critical Assets

NDAA 2010 audit ready by Sep 2017Incentives for components that have financial statements validated as ready for audit on or before September 30, 2017

SECDEF Memo GF SBR by 2014, Increased Emphasis on MCA’s

VCSAF and Under SECAF letter on FIAR

Unqualified Opinion All Stmts

2017

Previous audit readiness target dates

2014

Unqual. Opinion GF SBR

2009 - USD(C) Refocused Efforts on Information Most Used for Decision MakingDoD Only Federal Agency Without a Positive Audit Opinion


Tone from the Top

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“As we continue to assess our readiness and design, implement, and test corrective actions, we believe a concerted effort and laser focus will be required in order for us to meet the 2014 deadline.“

"Strengthening our financial systems, and the associated controls around those systems, remains our most critical challenge. Despite this challenge, the Air Force believes we will benefit greatly from an audit of our [Schedule of Budgetary Activity] in 2015, and further delays would place our goal of being ready for a full financial statement audit in 2017 at risk.“Source: May 14 OSD FIAR Plan Status Report to Congress

Deborah Lee James, SECAF

Eric Fanning, USECAF

“Transforming financial management and achieving audit readiness is the law. General Welsh and I are committed to meeting these requirements, which are critical to maintaining the trust and confidence of Congress and the American people, and which will ultimately strengthen our Air Force.”

“In support of this essential effort, I directed SAF/FMP to provide monthly updates on IT system Corrective Action Plans. These IT remediation efforts are critical in establishing the trust and confidence of our stakeholders and ultimately in strengthening our Air Force.”Source: SECAF 12 May 14 Memos: FIAR Update & Improving IT Controls


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Why is Financial Improvement & Audit Readiness Important?

• Comply with Laws – Requires financial statement audits– National Defense Authorization Act (NDAA) 2013 requires Statement of

Budgetary Resources auditability by 30 Sep 2014– NDAA 2010 requires full financial statement auditability by 30 Sep 2017

• Verify Correct Allocation of Funds– Verify that all resources are allocated to approved mission priorities in a legal

manner• Make Better Use of Resources

– Provide better information for timely, informed decision-making and identify funds for other purposes

• Understanding the value proposition– extends beyond auditable financials – accountability, cost control, operational

improvement • Increase Public Trust

– Reassure the public and Congress that the Air Force is a good steward

Good audit results improve an organization’s creditability


DoD Four Wave Strategy

Wave 3: (CYE 2015) Asset Accountability

Book-to-Floor/Floor-to-Book Inventory Proof of Ownership of Assets

Wave 4: (FYE 2017) Full financial statement audit Incl. AF Working Capital Funds

Wave 1: (Done!) Focus on the flow of money from receipt by

Treasury to distribution to the Services

Wave 2: (FYE 2014) Life-cycle of funds (commit, obligate, spend) Audit trail for all funds

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Current Position


• Organized to focus on goals/objectives• HQ AFMC Strategic Plan• AFMC FIAR Governance Structure• AFMC Learning/

Training Model• Commander’s

Report Card• Wins/

Accomplishments

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How Did We Adapt?

SAF/FMP

HQ AFMC

Center

Base

Vision, Leadership, Oversight, Accountability, Assertion

Leadership, Implementation Direction, Readiness

Guidance Development, Issue Resolution, Consolidation

Plan Development, Issue Identification, Quality Control

Plan, Test Execution, Provide Sample Data

Commander Involvement


HQ AFMC Strategic Plan

AFMC Priority:

Demonstrate Cost Effectiveness Across All Mission Areas

Goals:• Demonstrate Cost Effective

Mission Execution• Achieve and Maintain

Financial Accountability/ Auditability (3.2.1.)

• Stmt. of Budgetary Resources• Mission Critical Asset Accountability• Full Financial Statements• IT Controls

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Chair: AFMC/FM, Senior Financial AdvisorMembers: Center & 2-Ltr FIAR OPRs

Chair: AFMC/CCMembers: AFMC/CV/CA, Center CC/CV/CA & HQ Directors/Deputies

Chair: AFMC/FM, DirectorMembers: HQ Directors/Deputies & Ctr FMs

AFMC Council

Ctr/HQ Staff Council Prep

FIAR Team

FIAR Division (HQ AFMC/FMI)

Execution arm of the FIAR Team; oversees and coordinates audit readiness initiatives across the Command

AFMC FIAR Governance Structure

Enduring Requirement 11


SBR Timeline As of 22 Jul 14

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Assessable Units:Statement of Budgetary Resources: 30 Sep 2014 O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S

Funds Distribution to MAJCOMFunds Distribution to BaseCivilian Pay - Joint GF & WCFTravel Pay - Joint GF & WCFMilitary PaySupply Requisitions (MILSTRIP)Vendor Pay (IAPS) - Joint GF & WCFContract Pay (MOCAS) - Joint GF & WCF Reimbursable Authority and Execution

FIAR Task

FIAR Phase Change Since Last CouncilAudit/SustainmentExamination Sample PeriodAssertion Date Change From Last Council

Discovery: Assertion Testing

FY 2013

Discovery: Readiness Sampling/TestingDiscovery: Policy/Test Criteria

FY 2015FY 2014

FIAR OPRAssertion Team/Lead Commands/MAJCOMs

MAJCOMAir Staff/AFMC

Assertion Team

Assertion Team Readiness Date Change From Last CouncilAssertion Date Reported to CongressAssertion Date Move ProjectionReadiness Date AFMC Goal (95%)

Schedule of Budgetary Activity

(Current Yr Transactions) 1 Examination - 1

Opinion/Yr

Supply Requisitions: Awaiting SAF policy changes and test criteria

June 14: SAF assertions not yet accomplished


Train to a Standard

Compliance Learning/Training Model

PhaseBefore

InstructionBefore and During

InstructionInstruction

Check for Understanding

Think about and use what you

learn to motivate employees on

“Why” and “How” we change the

norm

Reach consensus of “Right” by auditing

standard

Write Curriculum and Decide Objective of

Training

Random Sampling

Analyze Results for any Trends

Grade

Provide Feedback and

Training

Update Training Based on Results

Start An Instructional

Sequence on

Assessable Area

Add to Base/Center Quality Assurance

Programs as a Quality Assurance Review

Add to IG Unit Effectiveness

Inspection as a Focus Area

Recycle

Sustainment Phase

End Instruction Sequence

95% Assurance Achieved

MAJCOM Collaboration with

AFAA

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Commander’s Report Card SBR As of 22 Jul 14

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AFMC AFLCMC AFNWC AFRL AFSC AFTC Comments

Funds Distr. to MAJCOM Opinion N/A ● N/A N/A N/A N/A N/A N/A

Funds Distr. To Base Disclaimer N/A ● ● ● ● ● ● ≥ 95% since Oct 12

Civilian Pay (DMAPS-TAA, JOCAS II*)

Disclaimer ● ● ● ● ● ● ● June 14: 93%

Travel Pay On Track N/A ● ● ● ● ● ● ≥ 95% since Mar 13

Military Pay On Track N/A ● ● ● ● ● ● ≥ 95% since Aug 13

Supply Requisitions (MILSTRIP)

Off Track N/A ● ● ● ● ● ●Awaiting SAF

policy/test criteria

Vendor Pay (ACPS, ConWrite, SCS (FIABS), SPS*)

Off Track ● ● ● ● ● ● ● ≥ 95% since Jan 14

Contract Pay (ACPS, ConWrite, SPS*)

On Track ● ● ● ● ● ● ● ≥ 95% since Dec 13

Reimb. Budget Auth. & Execution (SAMIS, JOCAS II*)

Off Track ● ● ● ● ● ● ● ≥ 95% since Nov 13

SBR Assessable Units (Supporting AFMC Owned/

Operated* IT Systems)

Data Readiness Status (Performance)Overall Readiness

Status (Schedule)

IT Ind. Assessment

(Performance)

Blue: ● Opinion Green: ● On Track/Pass Yellow: ● Outstanding IT Priority 2 Red: ● Off Track/Fail Gray: ● Not Graded


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100.00%

Nov Mar Apr Jun

GOAL 95%

AFLCMC AFRL AFSC AFTC

Civilian Pay Testing Results Nov 13-Apr 14

AFNWCAFMC

Lower scores due primarily to missing documentation & incomplete delegation of authority forms (DD 577s)


Civ Pay Checklist

• 1A. Verify supervisor approved any additional hours worked (comp time earned, overtime, etc.)• 1B. Request for additional hours includes pay pd, justification, name, grade, date, time, & number hrs requested for each

individual.• 1C. Verify line of accounting data is present on AF Form 428• 1D. Verify line of accounting data has been certified• 1E. Verify AF Form 428 is retained in accordance with records retention regulations.

• 2A. Verify accounting data is reviewed by resource manager and signed by a supervisor.• 2B. AF IMT 3821 retained in accordance with retention regulations• 2C. AF IMT 3821 contains effective date, name, office symbol of employee.

• 3A. Verify accounting classification in DCPS agrees with the AF IMT 3821.• 3B. Employee's time and attendance is properly recorded in DCPS.

• 4A. Completed DD 577.• 4B. Name, title, organization of appointing authority.• 4C. Effective date of appointment.• 4D. Name, title, organization, address and phone number of appointee.• 4E. Block 13 appoints appointee to certify time and attendance.• 4F. Must be signed and dated by both the appointing authority and appointee.• 4G. Provided DD 577s match signatures on 428s, leave requests and time cards.

• 5A. Leave taken is properly approved by the employee's supervisor (signed time card).• 5B. Date, time, type and number of hours requested are on the leave request.• 5C. Verify that leave request was retained two weeks after pay period.

• 6A. Supervisor has approved time and attendance action (annual leave, travel comp or comp time).• 6B. Supporting documentation is present for time and attendance other than regular hrs (credit hrs, travel comp, over time, etc.).

• 7A. Time and attendance is annotated on time card.• 7B. Employee signs for any changes to timecard• 7C. Supervisor signs time card (digitally or hand written).• 7D. Verify timecard is retained in accordance with retention regulation.

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DD 577 Example

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EffectiveDate

Approval Date (CAC)

Acknowledgement Date (CAC)

Approval Date(Stated)


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MCA Timeline As of 23 Jun 14

= AFMC Owned

Assessable Units:Mission Critical Assets: AFMC Due 31 Dec 2015 A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J JMilitary Equiment, Cruise Missiles, Aerial Targets & Drones (3AU's)Uninstalled Missile MotorsSpare Engines (Corrective Action Plan)Conventional MunitionsGeneral EquipmentOM&S Contractor Managed/PossessedGovernment Furnished EquipmentInventory / OM&S Base PossessedInventory / OM&S (Depot)OM&S (U2/UAV)Inventory (In-Transit)Real Property - Joint GF & WCFGeneral Equipment (Information Technology)Inventory (MedDent)

FIAR OPR FIAR Task

Discovery: Policy/Test CriteriaDiscovery: Readiness Sampling/TestingDiscovery: Assertion TestingReadiness Date AFMC Goal (95%)Assertion Date Reported to CongressReadiness Date Change From Last CouncilAssertion Date Change From Last CouncilExamination Sample Period

FIAR Phase Change since last Council

Audit/Sustainment

Corrective Action: Qualified Opinion

FY 2016

Assertion Team/Lead Commands/MAJCOMs

Assertion TeamAssertion Team

MAJCOMAir Staff/AFMC

FY 2015FY 2014


Commander’s Report Card MCAOverall Readiness with IT Status

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AFMC AFLCMC AFNWC AFRL AFSC AFTC Comments

Military Equipment (RAMPOD, IMDS), Cruise Missiles (IMDS), Aerial Targets & Drones (IMDS) [3 AUs]

Opinion ● ● ● N/A ● ● ● Unqualifed Opinion FY12

Uninstalled Missile Motors (IMDB) Opinion N/A ● N/A ● N/A ● N/A Unqualifed Opinion FY12

Spare Engines (Corrective Action Plan) (CEMS)

On Track N/A ● N/A N/A N/A ● N/A Qualifed Opinion FY12

Conventional Munitions On Track N/A ● ● ● ● ● ●Initial SAF testing of 5 AFMC accts in

Feb 14; AFMC reviewed all accts twice in Apr/Jun 14

General Equipment (CDAS) On Track N/A ● ● ● ● ● ● Awaiting AF Test Criteria

OM&S Contractor Managed/ Possessed (TBD)

Off Track TBD ● ● ● N/A ● ● AF Mat'l Weakness; SDDP in progress

Government Furnished Equipment -(Establish the baseline)

Off Track N/A ● ● ● ● ● ● AF Mat'l Weakness; Data baselining in progress

Inventory/OM&S Base Possessed (ILS-S*)

On Track ● ● ● ● N/A ● ● Awaiting AF test criteria; Scheduling IT Review

Inventory/OM&S (Depot) (SCS/FIABS, AF-DSS, CAV-AF)

On Track ● ● ● ● N/A ● ●MOU w/DLA signed; SCS/FIABS IT

Review In Progress, Scheduling AF DSS and CAV AF

Inventory/OM&S (U2/UAV) (ALMSS)

On Track ● ● N/A N/A N/A ● N/A In-Progress; Scheduling IT Review

Inventory - (In-transit) (SCS/FIABS, AF DSS, CAV AF)

On Track ● ● ● ● ● ● ●AFMC Mat'l Weakness; SCS/FIABS IT

Review in Progress, Scheduling AF DSS and CAV AF Review

Real Property On Track N/A ● ● ● N/A ● ● ≥ 95% Since Oct 13

General Equipment (IT) On Track N/A ● ● ● ● ● ● Awaiting AF/A6 guidance

Inventory - Med/Dent (DMLSS*) On Track ● ● ● ● N/A ● ● ≥ 95% Since Oct 13; Scheduling IT Review ECD Sep 14

Data Readiness Status (Performance)

Blue: ● Opinion Green: ● On Track/Pass Red: ● Off Track/Fail Gray: ● Not Graded

Overall Readiness

Status (Schedule)

IT Ind. Assessment

(Performance)

MCA Assessable Units (Supporting AFMC Owned/

Operated* IT Systems)


GFE Commander’s Report Card

Overall Commander’s Status

ID contracts with GFE (initial look)

Centers submit spreadsheets to A4, then A4 to HAF (suspense – Feb 14)

Correct/Populate missing data

Task contractors to populate IUID Registry IAW contract requirements/2012 memo

Establish Baseline of GFE Contracts/Assets

ID contracts with GFP that do not include required clauses and attachments

Update contracts to add required clauses and attachments

Task contractors to populate IUID Registry with GFE data with “corrected” contracts

Establish metric(s) for monitoring contractors inputs into IUID Registry

Sustain Baseline of GFE Contracts/Assets

GFE Task/Milestone AFMC AFLCMC AFNWC AFRL AFSC AFTC

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Status/ Summary of GFE Spreadsheets as of 11 Jun 14

Lead Center

Total spreadsheets

A4RM receivedRevision Required

PercentRequiringRevision

Number of lines of data reviewed*

A4RM AFLCMC 25 22 88% 77,298

PK AFNWC 21 21 100% 9,347

PK AFRL 36 21 58.3% 1,413

PK AFSC 41 4 9.8% 8,901

PK AFTC 27 22 81.5% 38,546

150 90 60% 135,505

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*Number of lines of data reviewed* estimated, spreadsheets my have spaces between line items, or contractor formatted data sheets +/- 10 to totals


GFE Contract Issues

• ID of GFE contracts requires matching input from FPDS-NG, Center SOCCER responses, & IUID Registry– Review reveals miscoding / low confidence in automated data —

requires manual verification of 750+ AFMC contracts – Developing path to correct errors & to clarify base support vs GFE

• Numerous contracts will require clause updates– Numerous “GFE” contracts validated to date do not include all six

required clauses• Some awarded prior to current regulation; some contracts don’t include

GFE– CONWRITE revised to pre-select all GFP clauses for Cost, T&M

contracts – and, when applicable, FFP• SPS & ACPS already contained this logic

– Manual review of 1500+ Cost-Type contracts required

• PK/AQC/AQX to set burn-down plan, metrics for contract updates – Top USAF Programs? Complexity? Period of performance? Dollar

value? GFE value? Contract Type? 22


Challenges to Meeting Our Goals

• Time– 2014 is here for AF General Fund Statement of

Budgetary Resources, 2017 is not that far away for the rest…Time is of the essence

• Automated Systems Environment– Need to implement process and IT mitigating controls

to offset legacy system weaknesses– Need to ensure Systems Controls (FISCAM) and

Business Enterprise Architecture (BEA) compliance

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How can you help?

• Your Involvement– Look at what you are doing

• Ensure the documents are correct before you sign them• Will an person outside the organization understand the

description of what you are buying• Is the LOA complete and correct. Modifications changing

Line of Accounting muddies the audit trail and causes rework.

– Perform Quality Reviews as required in your functional guidelines

– Answer data calls quickly with all required documentation, Auditors only give us 3-5 days to reply

WE WILL WIN!24


Call to Action

“Being able to audit this Department’s finances is a high priority for me and for the Department’s senior leadership. It should also be a high priority for each

of us.”Chuck Hagel

“If we can but prevent the government from wasting the labours of the people, under the pretence of taking care

of them, they must become happy.”Thomas Jefferson


Product Deliver Cost Effective Acquisition

Solutions

Deliver Affordable and Effective Product Support

Process Launch High

Confidence Sustainable Programs

Standardize andContinuously Improve Center Processes

People Develop and

Place Right Person at Right Time

Assure a Safe, Secure, andQuality WorkEnvironment

26DELIVER TO COMMITMENTS

Acquire and Support War-Winning Capabilities


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FIAR Status Update 17 July 2014

Documents

Transcript of FIAR Status Update 17 July 2014