United States Coast Guard
Real Property Completeness & Existence
ASMC DC Chapter Luncheon
16 March 2011
Agenda
• General CG Audit Strategy
– Balance Sheet
– Accountability vs. Accounting (Why You Need Both)
• Quick Overview of Management Assertions
• How does CG get there for Real Property?
– Cumulative Cost-based Asset Enrollment Trips based on co-located units
– Use best practices learned from Personal Property Remediation: Let the
Inventory cleans the account, behavior, and make program healthy.
• Mythbusters
3/21/2016
2
Size (Materiality) Matters
CG in DOT
CG in DHS
CG is 18% of DHS Assets
CG is 41% of DHS Liabilities
3
Coast Guard Audit Readiness Strategy
Scope
Divide the world of work into “Assessable Units”
Size
Focus on those items most material to the DHS Balance Sheet
Sustainability
‘Fix it once’ Remediate the root causes of the issue, not just a
‘quick fix’. To get through a current year audit
System
Attack the items that can be remediated outside of current
financial system limitations
4
USCG Balance Sheet
CG Balance Sheet
Year End
Intra-governmental Assets
2008
Consolidated
2009
Consolidated
2010
Consolidated
Fund Balance With Treasury
Investments, Net
Accounts Receivable
Due from Treasury
Total Other Intragovernmental Assets
$5,229,134,757.00
$3,100,795,038.27
$232,767,853.89
$0.00
$12,279,603.84
$5,519,352,180.31
$3,416,763,004.82
$247,229,469.87
$0.00
$17,081,187.23
Total Intragovernmental Assets
$8,574,977,253.00
$9,200,425,842.23 $10,202,778,693.01
Cash and Other Monetary Assets
Investments
Accounts Receivable, Net
Direct Loans, Net
Inventory and Related Property, Net
General Property, Plant and Equipment, Net
Land and Land Rights
Total Improvements to Land
Construction-in- Progress
Total Buildings, Improvements and
Renovations
Total Other Structures and Facilities
Total Equipment
Total Assets Under Capital Lease
Total Leasehold Improvements
Total Internal Use Software
Internal Use Software in Development
Total Other Natural Resources
Total Other GPP&E
General Property, Plant and Equipment, Net
Other Non-governmental Assets
Advances and Prepayments
Other Assets
Total Other Non-governmental Assets
Total Assets
Total Liabilities
Total Net Position
Total Liabilities and Net Position
$6,502,107,962.33
$3,480,932,732.29
$209,128,878.59
$0.00
$10,609,119.80
$8,758,012.35
$72,399.54
$28,108,999.17
$0.00
$335,899,976.97
$5,944,818.27
$63,037.22
$34,682,821.58
$0.00
$375,101,005.75
$7,065,240.27
$87,043.14
$55,116,261.35
$0.00
$278,762,343.58
$39,157,254.12
$3,715,614,649.29
$39,137,651.65
$0.00
$4,101,953,503.62
$39,143,355.99
$0.00
$3,102,317,078.39
$789,390,792.37
$192,949,962.33
$3,730,199,386.52
$759,654.97
$0.00
$55,540.09
$767,187.22
$0.00
$0.00
$8,468,894,426.91
$755,497,111.42
$174,696,880.28
$4,097,422,925.19
$739,215.83
$0.00
$0.00
($0.00)
$0.00
$0.00
$9,169,447,287.99
$810,797,278.19
$170,380,326.01
$5,643,486,124.10
$718,776.69
$0.00
$0.00
($0.00)
$0.00
($0.00)
$9,766,842,939.37
$9,206,570.21
$8,435,765.26
$0.00
$8,435,765.26
($0.00)
($0.00)
($0.00)
$9,206,570.21
$17,425,917,637.15 $18,794,100,578.30 $20,310,652,520.72
$33,530,527,402.63 $39,440,419,969.98 $46,378,056,859.75
($16,081,097,490.45 ($20,637,432,930.16 ($26,055,822,227.61
)
)
)
$17,449,429,912.18 $18,802,987,039.82 $20,322,234,632.14
MAP Focus Areas
• Segregated Mission Action Plan (MAP) focus areas into two
tracks
– Track One – those with largest impact on DHS balance sheet, can be
fully remediated in current system state & sustained into the future
– Track Two – less material, but needed for full remediation of balance
sheet line items
• Consolidated (DHS) Balance Sheet Audit for now
– Stand-alone audit in the future?
– Performance audits?
– Internal Controls audits?
FY11 Efforts
Continuation of FY10 Efforts
• Military HR Internal
Controls
• Civilian HR Internal Controls
• Actuarial Medical Liabilities
• Capitalized Property
• CIP
• Real Property
• Major Electronic Systems
• Operating Materials &
Supplies
New Efforts
•
•
•
•
•
Environmental Liabilities
Budgetary Resource Management
Accounts Payable
Accounts Receivable
Fund Balance with Treasury
(Non Payroll)
% of Total GPP&E by NBV
100%
90%
80%
70%
Total Equipment
60%
Total Other Structures and Facilities
50%
Total Buildings, Improvements and
Renovations
Construction-in- Progress
40%
Land and Land Rights
30%
20%
10%
0%
2008
2009
2010
70.00%
Land and Land Rights
60.00%
50.00%
Construction-in- Progress
40.00%
% of Total GPP&E NBV
Comparison By Asset Type
Over Time
Total Buildings,
Improvements and
Renovations
30.00%
Total Other Structures and
Facilities
20.00%
10.00%
Total Equipment
0.00%
2008
2009
2010
$6,000,000,000.00
Land and Land Rights
$5,000,000,000.00
Construction-in- Progress
$4,000,000,000.00
Total NBV Comparison By
Asset Type Over Time
Total Buildings,
Improvements and
Renovations
$3,000,000,000.00
$2,000,000,000.00
Total Other Structures and
Facilities
$1,000,000,000.00
Total Equipment
$0.00
2008
2009
2010
Accountability vs.
Accounting
• Accountants are at CGHQ & FINCEN
• Keep them there!
• Accounting is the Byproduct of Operations
• We want to leverage what units already do
• Units know more than any of the accountants about
their “stuff”
Financial Statements &
Management Assertions
•
•
•
•
•
Completeness
Existence and Occurrence
Valuation and Allocation
Rights and Obligations
Presentation and Disclosure
Financial Statements &
Management Assertions
•
•
•
•
•
Completeness
Existence and Occurrence
Valuation
and Allocation
What does
this really
Rights and Obligations
Presentation and Disclosure
mean?
Financial Statements &
Management Assertions
• Completeness – floor-to-record
• Existence and Occurrence – record-to-floor
• Valuation and Allocation – approximates historical
cost
• Rights and Obligations – do we own it or effectively
own it, or does someone else own it? (e.g. Is it leases
or on loan, etc.?)
• Presentation and Disclosure – Has something been
delivered that is still accounted for in CIP
How do we get there for Real
Property?
• Step 1: Target higher cost geographic areas first, and
enroll assets methodically
• Step 2: Use the best practices of Personal Property
remediation: Leverage units through a CG-wide
capitalized property inventory, and use inventory to
cleanse account, behavior, and make program healthy.
Major Unit
District
BSU Kodiak
SECTOR New York
TRACEN Cape May
USCGA
BSU Seattle
CEU Juneau
TRACEN Petaluma
BSU Honolulu
BSU Alameda
SECTOR San Juan
ATC Mobile
BSU Portsmouth
AIRSTA Cape Cod
BSU Elizabeth City
BSU Boston
TRACEN Yorktown
AIRSTA Sitka
AIRSTA Clearwater
BSU San Pedro
SECTOR Long Island Sound
AIRSTA Miami
SECTOR San Diego
CG Yard
SECTOR Columbia River
BSU Ketchikan
CEU Oakland
17
1
5
1
13
17
11
14
11
7
8
5
1
5
1
5
17
7
11
1
7
11
5
13
17
11
Cost
$ 400,756,505.61
$ 113,520,857.45
$
98,841,923.64
$
92,561,705.13
$
80,338,423.53
$
77,814,788.91
$
74,624,790.89
$
72,291,751.38
$
71,413,231.85
$
70,325,390.77
$
62,343,040.42
$
62,011,329.22
$
61,353,202.33
$
59,883,443.71
$
54,221,803.30
$
53,300,006.45
$
39,424,757.45
$
38,894,348.24
$
32,618,121.23
$
30,855,635.97
$
30,846,903.22
$
30,355,465.48
$
29,937,135.21
$
29,441,242.10
$
28,503,598.57
$
23,380,653.84
Cumulative Cost
$
400,756,505.61
$
514,277,363.06
$
613,119,286.70
$
705,680,991.83
$
786,019,415.36
$
863,834,204.27
$
938,458,995.16
$ 1,010,750,746.54
$ 1,082,163,978.39
$ 1,152,489,369.16
$ 1,214,832,409.58
$ 1,276,843,738.80
$ 1,338,196,941.13
$ 1,398,080,384.84
$ 1,452,302,188.14
$ 1,505,602,194.59
$ 1,545,026,952.04
$ 1,583,921,300.28
$ 1,616,539,421.51
$ 1,647,395,057.48
$ 1,678,241,960.70
$ 1,708,597,426.18
$ 1,738,534,561.39
$ 1,767,975,803.49
$ 1,796,479,402.06
$ 1,819,860,055.90
Unit % of Total Cumulative %
13.30%
13.30%
3.77%
17.07%
3.28%
20.35%
3.07%
23.43%
2.67%
26.09%
2.58%
28.68%
2.48%
31.16%
2.40%
33.56%
2.37%
35.93%
2.33%
38.26%
2.07%
40.33%
2.06%
42.39%
2.04%
44.43%
1.99%
46.41%
1.80%
48.21%
1.77%
49.98%
1.31%
51.29%
1.29%
52.58%
1.08%
53.67%
1.02%
54.69%
1.02%
55.72%
1.01%
56.72%
0.99%
57.72%
0.98%
58.69%
0.95%
59.64%
0.78%
60.42%
 BSU Seattle
 SECTOR Columbia River
 TRACEN Petaluma
 BSU Alameda
CEU Oakland
 BSU San Pedro
Major Unit
District
BSU Kodiak
SECTOR New York
TRACEN Cape May
USCGA
BSU Seattle
CEU Juneau
TRACEN Petaluma
BSU Honolulu
BSU Alameda
SECTOR San Juan
ATC Mobile
BSU Portsmouth
AIRSTA Cape Cod
BSU Elizabeth City
BSU Boston
TRACEN Yorktown
AIRSTA Sitka
AIRSTA Clearwater
BSU San Pedro
SECTOR Long Island Sound
AIRSTA Miami
SECTOR San Diego
CG Yard
SECTOR Columbia River
BSU Ketchikan
CEU Oakland
17
1
5
1
13
17
11
14
11
7
8
5
1
5
1
5
17
7
11
1
7
11
5
13
17
11
Cost
$ 400,756,505.61
$ 113,520,857.45
$
98,841,923.64
$
92,561,705.13
$
80,338,423.53
$
77,814,788.91
$
74,624,790.89
$
72,291,751.38
$
71,413,231.85
$
70,325,390.77
$
62,343,040.42
$
62,011,329.22
$
61,353,202.33
$
59,883,443.71
$
54,221,803.30
$
53,300,006.45
$
39,424,757.45
$
38,894,348.24
$
32,618,121.23
$
30,855,635.97
$
30,846,903.22
$
30,355,465.48
$
29,937,135.21
$
29,441,242.10
$
28,503,598.57
$
23,380,653.84
 AIRSTA Cape Cod
BSU Boston
 USCGA
SECTOR Long Island Sound
 SECTOR New York
 TRACEN Cape May
 CG Yard
 TRACEN Yorktown
 BSU Portsmouth
 BSU Elizabeth City
 SECTOR San Diego
 ATC Mobile
 AIRSTA Clearwater
BSU
 AIRSTASitka
BSU Ketchikan
Kodiak
 CEU Juneau
 CEU Honolulu
 AIRSTA Miami
 SECTOR San Juan
How are we going to do it?
Reconcile
+
+
0
Tab Description
Aviation-Related Structures (other than buildings)
Buildings (other than housing, barracks, berthing, &
lodging)
Category Codes (CATCODEs)
Data Consolidation
Education/Training Facilities (other than buildings)
Field-level Sketches
GPS, Imaging, & Marking (latitude/longitude)
Housing, Barracks, Berthing, & Lodging
Identification of Non-land Assets
Not Used
Land
Measurements (units & techniques)
AtoN
Other Structures
Procedures for Facility Enrollment & Validation
Oracle Fixed Asset Procedures
Recreational Facilities (other than buildings)
SAM Database Procedures
Towers & Electronics (non-AtoN)
Utilities
Not Used
Waterfront Facilities
Other Linear Structures
Not Used
Appendix
Tab A
Tab B
Tab C
Tab D
Tab E
Tab F
Tab G
G
Tab H
Tab I
Tab J & K
Tab L
Tab M
Tab N
Tab O
Tab P
Tab Q
Tab R
Tab S
Tab T
Tab U
Tab V
Tab W
Tab X
Tabs Y & Z
Phase I: Pre-site
Preparation
How to Use the Classification Guide
P1
Start
Note
Phase I is the pre-site visit and should be
started two months before visit
Tab L
Yes
Land?
No
Note
P2
Found asset
Phase II is the actual site visit. Follow all procedural directions
closely
Is
the asset a
building or a
structure?
Note
Structure
Phase II: Site Visit Execution
Yes
Is the asset
housing/
barracks?
Is the asset a linear
structure?
No
Building
No
Tab
H
Tab
B
Yes
Utilities, Waterfront,
and Other Linear
Structures (roads and
pavements)
Aviation, Education, AtoN,
Recreational Facilities, Tower/
Electronics, and Other Structures
Utilities
Recreation
Aviation
AtoN
Other Linear Structures
Towers
Education
Tab A
Tab E
Waterfront
Other Structures
Tab N
Tab R
Tab T
Tab O
Tab U
Tab W
Tab X
Tab
M
Note
Phase IV: Closeout and
Record Retention
Phase III: Package Assembly
Refer to Tab F for
field sketch specifics
Tab
F
Note
Phase III post site
visit
documentation
Note
Tab
G
Gather GPS
data for assets
P3
Tab D
Tab
S
Note
Gather all
required data
on templates
Tab
Q
Note
Note
SAM data entry
OFA data entry
P4
Process complete
Figure 5 – How to Use the Classification Guide
Inventory High-level Strategy
• Let inventory expose other problematic life cycle procedures
–
–
–
–
–
Acquisitions
Disposals
Transfers
Improvements
Impairments
• Use Unit Personnel and CO/OIC/Unit level Supervisor to
reconcile financial and subsidiary systems to get accurate
count at each rung of hierarchy
– Use each unit’s inventory as a building block for the entire CG’s
inventory
– Use asset UID’s to track across several systems
– Process flows drive decisions to arrive at standardized/repeatable
result
3/21/2016
21
Grass Roots Effort - Clear & Detailed
Procedures
3/21/2016
22
Grass Roots Effort - “Sailor-Proof”
Procedure Flowchart
3/21/2016
23
Procedure - Physical Inventory Report /
Count Sheet
Once asset has been verified, initial & date each asset on report as shown:
Each capitalized
personal property asset
that is inventoried
needs to be initialed &
dated by the CT.
3/21/2016
CT needs to initial &
date bottom of each
page of report.
24
Procedure - Physical Inventory Report /
Count Sheet
If edits are necessary,
strike through the report,
as shown below:
Line-out & write-in
individual data fields
for corrections of
characteristics listed
on the report.
3/21/2016
25
Procedure - Physical Inventory Report /
Count Sheet
Signatures and dates are required on last page of Physical Inventory Report,
as shown:
The last page of the
Physical Inventory Report
needs to include
signatures and date of
each CT member, APO,
and PA .
As a reminder, the actual sign off is performed once the subsidiary system
reconciliation has been completed.
3/21/2016
26
Procedure - Subsidiary System
Reconciliation
System Reconciliation:
Currently, there is no interface and/or reconciliation between Oracle Fixed Asset
(OFA) databases and Subsidiary Systems (e.g. AOPs, ALMIS, SAM, etc). This
provides a very high probability that the CG has two different sets of property
assets, and potentially unaware of disposal of assets. In turn, this could result in
potential under/overstatement of PP&E account balance.
Reconciliation
Subsidiary
System #1
3/21/2016
Financial
System
27
Subsidiary
System #2
Procedure - Subsidiary System
Reconciliation
Some Subsidiary System Reports to be used during the Physical Inventory
Count:
 Aviation Logistics Management Information System (ALMIS) - used to record
operations & logistics of aircraft (also used for small boats).
 Abstract of Operation System (AOPS) - used to record the operations &
logistics of small boats & vessels.
 Auxiliary Management Information System (AUXMIS/AUXDATA) - used to
record auxiliary activities, including operations & logistics of small boats &
vessels.
 Fleet Logistics System (FLS) - used to record the operational aspects of general
purpose property, electronics, & occasionally real property.
 Shore Asset Management System (SAMS) - used to record the operational
aspects of real property.
3/21/2016
28
Procedure – Subsidiary System Reconciliation
Report Example: AOPS for boats
Once assets have been identified & matched, initial & date each asset on
subsidiary system report, as shown:
Each asset is reconciled to
Physical Inventory Report
needs to be highlighted,
initialed, & dated by CT.
3/21/2016
Any discrepancies found
during the reconciliation
between the subsidiary
system report & OFA
report needs to be noted
on subsidiary system
report.
29
Follow-Through – The Property “War
Room”
Inventory
Sep-08
Sep-09
Mar-10
Sep-10
Mar-11
Units Reporting
~40-60%
100%
100%
100%
100%
Time Required
12 Mos
5 Mos
5 Weeks
10 Days
7 Days
Chain of Command Involvement & Metrics
1100
900
P7- Evolution Complete
P6P- Oracle Partial Verification
700
P6- Oracle Verification
P5R- Additional Documentation Needed
P5- Financial Record Correction
500
P4- Final Review and Approval
P3- Resubmit Required
P2R- Resubmitted Under Review
300
P2- Under Review
P1- Pre-submittal
100
2/28
-100
3/1
3/2
3/3
3/4
3/5
3/6
3/7
3/8
3/9
3/10
High Level Capitalized Property Inventory Timeline
(Aug 09 - Sep 12)
Pilot Dec 10 inventory
Inventory - CANX
District 14
Update
and Draft
FRMM
Procedures
AUG 09 SEP 09
Aug ‘0
JAN 10
Sept '09
September
Inventory
First RP Asset enter into
Capitalized Physical Inventory
March
Inventory
Updated
PMM
March
Inventory
MAR 10 AUG 10 SEP 10 MAR 11 SEP 11 MAR 12 SEP 12
Jan '10
March
Inventory
March '10
September
Inventory
Aug '10
September
Inventory
Spt '10
September
Inventory
Assert to Completeness, Existence,
and Valuation for Vessels, Aircraft,
and Small Boats
Assert to Completeness, Existence,
and Valuation for Real Property
3/21/2016
32
How are we going to do it?
Reconcile
+
+
0
CFO Commitment
• Include Real Property into CG-wide Managed Capitalized
Property Physical Inventory
• Nine (9) New Positions at CEUs/SILC/CG-4 in FY10
• Environmental Specialists
• Realty Specialists
• Real Property Specialists
• USCG Facilities Classification Guide Publication
• Environmental Specialists
• Realty Specialists
• Real Property Specialists
• Real Property Manual, Vehicle Manual & PMM Rewrites
3/21/2016
34
Myth Busters – Things to
Overcome
• “I found everything on my record”
• “This is Extra Work”
• “This is only to pass the CFO Audit”
• “We know where everything is”
• “That’s not my property”
3/21/2016
35
LCDR Robert E. Hart
GPP&E Team Lead, Office of Financial Management
Transformation & Compliance (CG-852)
202-372-3449
Robert.e.hart@uscg.mil
3/21/2016
36
Extra Slides
% of Total GPP&E by Cost
100%
90%
80%
70%
Total Equipment
60%
Total Other Structures and Facilities
50%
Total Buildings, Improvements and
Renovations
40%
Land and Land Rights
30%
20%
10%
0%
2008
2009
2010
% of Total GPP&E Cost Comparison By Asset Type
Over Time
Year End
Land and Land Rights
Total Buildings, Improvements and
Renovations
Total Other Structures and Facilities
Total Equipment
Total
2008
2009
2010
0.37%
0.34%
0.27%
14.92%
10.44%
14.05%
10.04%
11.98%
8.20%
74.28%
100.00%
75.57%
100.00%
79.54%
100.00%
Total Cost Comparison By Asset Type
Over Time
Year End
Land and Land Rights
Total Buildings, Improvements and
Renovations
Total Other Structures and Facilities
Total Equipment
Total
2008
$39,157,254.12
2009
$39,137,651.65
2010
$39,143,355.99
$1,594,481,482.26 $1,602,159,202.54
$1,115,484,050.56 $1,144,577,904.88
$7,939,890,175.63 $8,618,341,186.07
$10,689,012,962.57 $11,404,215,945.14
$1,709,747,823.77
$1,170,776,218.64
$11,352,274,662.09
$14,271,942,060.49
90.00%
80.00%
Land and Land Rights
70.00%
60.00%
Total Buildings,
Improvements and
Renovations
50.00%
40.00%
% of Total GPP&E Cost
Comparison By Asset Type
Over Time
Total Other Structures and
Facilities
30.00%
20.00%
Total Equipment
10.00%
0.00%
2008
2009
2010
$12,000,000,000.00
$10,000,000,000.00
Total Cost Comparison By
Asset Type Over Time
Land and Land Rights
$8,000,000,000.00
Total Buildings,
Improvements and
Renovations
$6,000,000,000.00
Total Other Structures and
Facilities
$4,000,000,000.00
Total Equipment
$2,000,000,000.00
$0.00
2008
2009
2010
Management Assertions
• Completeness – Assertions about
completeness address whether all
transactions and accounts that should be
presented in the financial statements are so
included.
Source: Auditing: 2004 Edition, Becker Conviser CPA Review, p. A2-34
Management Assertions
• Existence and Occurrence – Assertions about
existence concern the actual existence of the
assets and liabilities reported on the balance
sheet as of a particular date.
– Assertions about occurrence address whether recorded
transactions have in fact taken place. This assertion
addresses the validity of the recorded amounts on the
financial statements, specifically with respect to
overstatement of the account balances.
Source: Auditing: 2004 Edition, Becker Conviser CPA Review, p. A2-34
Management Assertions
• Valuation and Allocation – Assertions about
valuation and allocation address whether asset,
liability, equity, revenue, and expense components
have been included in the financial statements
at appropriate amounts.
– This assertion addresses concepts such as historical cost,
consistency, accrual accounting, accounting estimates,
impairment of assets, and allocation of costs.
Source: Auditing: 2004 Edition, Becker Conviser CPA Review, p. A2-34
Management Assertions
• Rights and Obligations – Assertions about
rights and obligations address whether
assets are the rights of the entity (actually
owned by the company) and liabilities are
the obligations of the entity at a given
date.
Source: Auditing: 2004 Edition, Becker Conviser CPA Review, p. A2-34
Management Assertions
• Presentation and Disclosure – Assertions
about presentation and disclosure address
whether particular components of the
financial statements are properly
classified, described, and disclosed.
Source: Auditing: 2004 Edition, Becker Conviser CPA Review, p. A2-34