United States Air Force Reserve
Integrity - Service - Excellence
Air Force Financial
Improvement and Audit
Readiness
Curtis Lord/Isidro Silva
FMF/DFAS
26 April 12
Fly, Fight and Win…
1
OVERVIEW
• General overview of FIP/FIAR
•
DFAS Role
• More FIAR specifics
Fly, Fight and Win…
2
SBR and
Our Assessable Units

Budget Authority

Resources - Appropriations, Allotments,
Apportionments, Nonexpenditure
Transfers, Rescissions
 Status of Resources – Unobligated
Apportioned and Unavailable

Reimbursements


Incorporates spending authority, offsetting
collections and any outlays associated
with the reimbursable process
Obligations

Encompasses the entire budget execution
process
 Impacts anyone that receives, commits
and obligates AF funds

Outlays

Covers the payment process to liquidate
an obligation
 Impacts anyone that obligates AF funds
Fly, Fight and Win…
3
What is FIAR?
Today:
- “I spent all of
my budget”
- “I got more
money to fund
additional
requirements”
- “My systems
track
spending
(obligations)
but lack an
audit trail”
Standard Processes:
efficient…consistent
approach…shorter learning
curve….customer is happy…the
auditor is happy
Internal Controls:
separation of duties…mitigate fraud,
waste and abuse…safeguard funds
Audit Trail:
know where the money is…decision
support….efficient use of funds….CC
happy
Tomorrow:
- “I spent my
budget on these
things and
could also fund
these
requirements”
- Documentation
to support my
obligations is
available and
the audit trail
exists
Compliant Systems:
Necessary to achieve standard
processes, internal controls and an
audit trail
Fly, Fight and Win…
4
FIAR – What is it?
• The Department of Defense must have financial
statements that are auditable by 2014
• The FIAR Plan is a Department of Defense wide effort
to accomplish this
Fly, Fight and Win…
5
FIAR – Why Now?
• Mandated by law and regulatory requirements
• Chief Financial Officer Act (CFO) 1990
• Government Performance and Results Act (GPRA) 1993
• Federal Financial Management Improvement Act (FFMIA) 1996
• National Defense Authorization Acts (NDAA) 2006 and 2010
• FY12 Defense Appropriation Bill
• Use money for its intended purpose
• Good stewards of entrusted taxpayer resources
• Ability to provide Accurate, reliable and timely financial
information to support decision makers
Fly, Fight and Win…
6
Statement of Budgetary Resources & Mission
Critical Asset Existence and Completeness
AUG 2011
 Areas
of Concentration
 USD(C)
Memorandum Requiring DoD
Components to:
 Improve
information and processes
supporting auditable financial statements
 Primarily focus on improving budgetary
information and processes
 Secondary goal to verify existence and
completeness of mission critical assets
Fly, Fight and Win…
A Four Wave Strategy for FIAR
Wave 3: (Target Q4 FY16)
Wave 1:
Focus on the flow of money from receipt
by HAF to distribution down to the
MAJCOMs


Includes all appropriations for the current
fiscal year

Asserted as audit ready Sep 2010

Accountability for the assets and
supplies

Air Force can account for all of the
assets/supplies that are reported in the
system of record for a particular enditem (e.g. aircraft in REMIS) and that the
entire universe of those items reside in
the system of record

Conduct inventories on a regular basis
AUDIT
READY
Wave 2: (Target Q1 FY14)

Life-cycle of funds (commit, obligate, spend)

Audit trail for all funds

Performed testing of the internal controls to
ensure minimal risk to misstatement

Tested and reconciled starting and ending
balances
Wave 4: (Target Q1 FY17)

Full financial statement audit, except for the
values of legacy assets (e.g. B-52 purchased in
1955)

Requires that the Air Force has the capability to
value new asset acquisitions
Fly, Fight and Win…
8
FIAR –
Wave 2 Timeline
FY10
FY 11
FY 12
FY13
FY 14
FY15
FY 16
FY 17
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Wave 1 - Appropriations Received
Appropriations Received
Wave 2 - Statement of Budgetary Resources
Rescissions
Non-expenditure Transfers
Funds Distribution to Base
Reimbursable Budget Authority
Reimbursable Work Orders
Civilian Pay
Military Pay
Contracts (MOCAS)
Examination of One Acquisition Program (SBIRS)
Contracts Pay (Vendor Pay)
MILSTRIPS
Net Outlays (incl. FBWT )
Financial Statement Compilation and Reporting
Examination of DEAMS at TRANSCOM/Scott AFB
Complete SBR
Analysis
Legend
FIP Development
Underway
Discovery 1
Corrective Action 2
Audit Readiness
Assertion
Validation
Under Audit or
Sustainment
FBWT Recon
Capability
Indicates Change
from Original
Milestone
DEAMS
Examination
Acceleration of a
Milestone
• DoD
ASSESSMENT
Air Force
Audit Readiness
by 2017
• SECDEF accelerated
to 2014
• Clarification to
SECDEF comments Statement of
Budgetary Resource
auditable by 2014
a/o 11/30/11
Notes:
Countermeasure
1 Discovery Phase include the activities of Process Documentation, Development of Test Plans, Conducting Testing, and Analyzing the Test Results
2 Corrective Action Phase includes the implementation, monitoring and validation of corrective actions
• OSD(C)
Details
Objective: Achieve Clean Audit Opinion by 2017
Measure: Controls within each Assessable Unit
Data Source: SAF/FMP
Current as of 24 FEB 12
Fly, Fight and Win…
& SAF/FM
accelerating all audit
readiness work
• Working Wave 2 & 3
OPR: AFRC/FMFC
9
FIAR Methodology
Key Tasks
Phases
Standard Approach to address any Wave of the FIAR Strategy
Evaluation &
Discovery
Corrective
Action
Evaluation
Assertion
Sustainment
Validation
Audit
Statement to
Process Analysis
Design AuditReady
Environment
Testing
Compile Process
Documentation
Ongoing
Testing
Assertion
Documentation
Review
Engage
Auditor
Prioritization
Develop
Corrective Action
Plan
Decision
Compile
Supporting
Documentation
Ongoing
Implementation
Testing or
Examination
Support Audit
Assess & Test
Controls
Resourcing
Evaluate
Supporting
Documentation
Execute
Report Issuance
Define AuditReady
Environment
Legend

Audit readiness
tasks
Audit readiness tasks
that are utilized for
ICOFR requirements
Fly, Fight10and Win…
10
What Does FIAR Mean To…
SAF/HAF Level
• Articulate policies and processes properly
• Provide opportunities to enhance audit readiness understanding (e.g. training)
• Ensure systems are CFO Compliant and provide clear audit trail
• Implement and monitor FIAR strategy and progress
• Liaise with DoD
• Communicate with MAJCOMs
MAJCOM Level
• Enforce data standardization
• MAJCOM unique policies are clearly defined and CFO Compliant
• Provide training to maintain the FIAR vigilance
• Serve as the MAJCOM liaison to SAF and base-level
• Support process improvement, pre-audit and audit activities
• Communicate with Bases
• Know what you spent, know what you bought….and be able to prove it
Base Level
•Input transactions properly
• Follow up and track documents to support audit trail
• Be on the look out for negative trends
• “Purpose, Time, and Amount” used to certify funds
• Work closely with DFAS
• Promote the message of audit readiness to individuals
• Understand “How you fit into the big picture”
This Is Not Just An FM Initiative – It Will Take the Entire AF Enterprise
Fly, Fight and Win…
11
DFAS Is Fully Engaged

DFAS
 Critical service provider with major impact to AF Financials

Audit Readiness Office
 Support overall AF audit readiness assertion priorities

“Repurposing”
 Command Client Exec/ Mission Support Accountants
 Augmenting Readiness Office
 42 MSAs
 Puts DFAS on the Front Line of FIAR

Supporting the Completion of SBR
 General Fund
 Working Capital Fund
Fly, Fight and Win…
Questions ?
Fly, Fight and Win…
13
You’re
FIAR’D
!!!
Fly, Fight and Win…
14
FIAR – Air Force
•
Key Events •
SECDEF Accelerated Plan
•
SAF/FM briefed Fall CORONA
•
SAF/FM & MAJCOM meeting
Fly, Fight and Win…
15
FIAR –
Wave 2
•
Statement of Budgetary Resources (SBR)
•
14 Assessable Units
•
Life-cycle of funds
•
Audit trail for all funds
•
Perform testing of the internal controls to ensure
minimal risk to misstatement
•
Test and reconcile starting and ending balances
Fly, Fight and Win…
16
FIAR –
Wave 2
•
14 Assessable Units
•
Funds Distributed to Base
•
MILSTRIPS
•
Reimbursable Budget
Authority
•
Examination of One Acquisition
Program (SBIRS)
•
Civilian Pay
•
Rescissions
•
Military Pay
•
Non-expenditure Transfer
•
Contracts (MOCAS)
•
Net Outlays
•
Contracts (Vendor Pay)
•
Examination of DEAMS
•
Reimbursable Work
Orders
•
Financial Statement
Compilation and Reporting
Fly, Fight and Win…
17
Wave 2 –
Funds Distributed to Base
•
•
Status:
•
Assertion – 2nd Qtr FY12
•
Revised Assertion – 4th Qtr FY12
Findings:
•
Not following Air Force Guidance on Mandatory
Funding Document Number Construct
• SAF/FMBM memo, dated 21 April 11
• All AFM & DoD PBAS documents (1 Jun 11)
• REVISED – as of 01 Jan 12
•
No Supporting Documentation for Funding
Realignments
Fly, Fight and Win…
18
Wave 2 –
Funds Distributed to Base
•
•
Findings:
•
Not using AF Form 1269 (or equivalent) for loading
Targets
•
Total of AF Form 1269 doesn’t equal AFM/PBAS
document
•
AF Form 1269 doesn’t have an Approval signature
•
No Delegation of Authority Memo for AF 1269 Approver
More Base Level Testing in Aug 2012
Fly, Fight and Win…
19
Wave 2 –
Reimbursable Budget Authority
•
In Discovery Phase, Results Pending
•
5 GLACs (55 samples from each)
•
4221 – Unfilled, Uncollected Reimbursable Order
•
4222 – Unfilled, Collected (Advanced) Reimbursable
Order
•
4972 – Refunds
•
4251 – Filled, Uncollected Reimbursable Order
•
4252 – Filled, Collected Reimbursable Order
•
Issuing Reimbursable Budget Authority (RBA) – FY13
•
Assertion – 1st Qtr FY13
Fly, Fight and Win…
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Wave 2 –
Civilian Pay
•
•
Discovery/Testing Phase
•
Phase 1 – Completed, Under Review
•
Phase 2 – Pending
Automated Time, Attendance, and Production System
(ATAAPS)
Wave
1
2
3
4
5
6
7
•
MAJCOM
Implementation
31-Dec-12
AFGSC, PACAF, USAFE, AFSOC
AMC
31-Dec-12
ACC
31-Dec-12
AETC
31-Dec-12
AFMC
31-Dec-12
AFRC
31-Dec-12
AFSPC, USAFA, AFDW, ANG
30-Sep-13
Assertion – 2 Qtr FY2013
Fly, Fight and Win…
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Wave 2 –
Military Pay
•
Discovery
•
•
Identified during Discovery
•
•
30 Oct 2011 – 15 Jun 2012
Reconcile mismatched data between Military Personnel
Data System (MILPDS) and Defense Joint Military Pay
System (DJMS)
Assertion – 2nd Qtr FY2013
Fly, Fight and Win…
22
Wave 2 –
Contracts (MOCAS)
•
Initial Discovery Phase
•
Air Force Audit Agency (AFAA) Supporting
•
235 Transactions
•
•
•
230 Contain Complete Documentation
Issues:
•
26 Obligation Documents not Signed
•
18 Commitment Documents did not have
appropriate Delegation of Authority Memo
Assertion – 2nd Qtr FY2013
Fly, Fight and Win…
23
Wave 2 –
Take-Aways
•
Auditable Financial Statement is Mandatory
•
Success is Dependent on Everyone in the Air Force
•
Compliant
•
Documentation
•
Authorization
•
Validation
Fly, Fight and Win…
24
References

Hyperlinks
 FIAR/FIP CoP
 May 2010 OUSD(C) FIAR Guidance on the FIP/FIAR CoP
 May 2011 FIAR Plan Status Report
 AF Business Rules on the FIP/FIAR CoP

Documents Mention/Discussed
 Joint USM and Vice Chief Memo
 Mandatory Document Number Construct Memo
 USD(C) Priority Memo
 USD(AT&L) Memo
 FIAR Info to MAJCOM FM’s
Fly, Fight and Win…
25
Questions ?
Fly, Fight and Win…
26
Backup
Fly, Fight and Win…
27
Wave 2 –
Funds Distributed to Base
Fly, Fight and Win…
28
Wave 2 –
Funds Distributed to Base
Fly, Fight and Win…
29
Wave 2 –
Funds Distributed to Base
Fly, Fight and Win…
30
Wave 2 –
Funds Distributed to Base
Fly, Fight and Win…
31
Wave 2 –
Funds Distributed to Base
Fly, Fight and Win…
32
Wave 2 –
Funds Distributed to Base
Fly, Fight and Win…
33
Wave 2 –
Funds Distributed to Base
Fly, Fight and Win…
34