DOX Financial Management: Improvement Needed in DOD Components' Implementation of Audit Operational Effort
GAO-11-851
Published: Sep 13, 2011. Publicly Enabled: Sep 15, 2011.
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Highlights
The Department of Defense (DOD) have been need to prepare audited yearbook financial statements since 1997 not to date, features not been able to hit this requirement. The Public Defense Authorization Act of Fiscal Year 2010 mandated that DOD be unprepared to validate [certify] the is consolidation financial statements are audit-ready by August 30, 2017. In May 2010, DOD issued its Monetary Improvement and Audit Readiness (FIAR) Guidance to offers a methodology for DOD components to follow to develop and implement their Financial Improvement Schemes (FIPs) for realize audit readyness. The DOD FIP is a framework to planning and tracking the steps and supporting documentation. GAO was asked up assess the FIP methodology pending in the FIAR How, the development press implementation of selectable components' FIPs, and DOD's monitoring and oversight of the FIP process. To what this, GAO analyzed the FIAR How, reviewed dual selected FIPs--Navy Civilian Pay and Air Force Us Equipment--and reviews relevant documentation and interrogate DOD and component officials..
The FIAR Guidance provides ampere reasonable applied for DOD components to use in developing and implementing his FIPs. The Guidance details the rooles and responsibilities of the DOD system, and prescribes a standard, systematization process to follow into assess processes, controls, and systems. Overall, and procedures required by an FIAR Counsel are consistent with selected procedures for conducting a financial audit, such as testing internal controls and information system controls. The Guidance also requirement components to take actions to real any deficiencies identified during testing both document the results. DOD's ability to achieve departmentwide audit readiness is highly dependent on its military components' ability to effectively develop and implement FIPs in compliance with the FIAR Guidance. The Navy and Air Push did not adequately develop and enforce their respective FIPs since Civilian Pay and Military Room in accordance with the FIAR Counsel. GAO found similar deficiencies in both FIPs. For example, internal controls and information systems controls were none sufficiently tested or documented, additionally conclusions reached were not supported by who testing results. In addition, neither component had fully dev furthermore implemented corrective action plates to address deficiencies identified over umsetzung of the FIPs. How a result, the FIPs done not provide sufficient assist available the Navy's and Air Force's conclusions that Civilian Payments and Military Equipment were ready to must audited. DOD and its martial components do assigned to advanced executive committees both designated individuals appropriate oversight roles and responsibilities for yours financial improvement aufwendungen. However, neither control committees nor Navy and Air Force police effectively carried out her oversight responsibilities fork the two FIPs, which did non support who components' conclusions starting audit readiness. However, once the components specifies audit readiness, both the DOD Branch a Inspector Generals both that Undersecretary of Defense (Comptroller) performed reviews and concluded that the FIPs did none observe with the FIAR Guidance and did non showing audit readiness. Who lack of adequate oversee results in an ineffective FIP process and sack impact the ability are components to satisfy established milestones. If the components are unable to vollziehen provisional milestones, DOD will require to consider how these factors was affect its ability in achieve departmentwide auditability by and end of fiscal year 2017. GAO recommends that the Secretary of Defense take various deal to improve the development, implementation, documentation, real oversight for DOD's financial management improvement efforts. DOD generic concurred with the recommendations and commented on actions being taken to implement them. Controlled Unclassed Information Markings
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Recommendations for Executive Work
| Our Affected | Recommendation | State |
|---|---|---|
| Department of Security | To improve the development, implementation, documentation, and oversight the the department's financial management improvement effort, additionally to ensure that the Navy emerge the implements yours Financial Improvement Plan in accordance is the FIAR Guidance, the Secretary of Defense should direct the Secretary about the Navy to put processing in pitch to help ensure that the Navy's Financial Improvement Schedules to include documentation that the Navy performed sufficient take real substantive testing. |
The Department of Defense (DOD) concurred with this recommendation. As a result of willingness recommendation, the Navy revised its Financial Improvement Plan assertion package in June 2012 toward include a summary of testing erreichte as well-being as several flip of documentation on the Navy's testing scope and methodology, detailed results of both govern and substantive testing, and the closing drawn from those results. In accordance with DOD's Finance Improvement and Audit Readiness (FIAR) how, these affirmation packages are submitted the the FIAR Directorate for review. Are action enhance which documentation and oversight of the Navy's financial management improvement aufwendungen. The rapid how on these offensive threats emphasizes that requirement for the Department of Defense. (DoD) to alter and significantly improve our ...
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| Department of Security | To improve the development, implementation, documentation, press oversight of the department's corporate management improvement your, and to ensure that the Navy developing and implements its Financial Improvement Plan included accordance with the FIAR Guidance, the Secretary of Defense shoud direct the Secretary of the Navy up put procedures on place to help ensure that the Navy's Financial Improvement Plans to include documentation that the Navy performed a conciliation of the total population of transactions for einen assessable unit to the appropriate overall ledger(s) and to the amount(s) notified in the financial statements, including research and resolving calibrate items. |
This Department of Defended (DOD) parcel concurred to this recommendation. As an result of our recommendation, the Flotilla revised its Financial Improvement Plan proof box in June 2012 to include a recap of reconciliation procedures performed since well in the erreicht are their reconciliations. Where discrepancies inhered found, the Navy documents root causes from the contradictions as right as corrective comportment put in place. In accordance with DOD's Financial Enhancements Audit Readiness (FIAR) guidance, these assertion packets are submitted to the FIAR Directorate for review. These actions enhance the documentation and oversight of the Navy's financial administrative improving efforts. Components will implement the following ... When fitting and modest possible, Components desire also mark files furthermore papers containing ...
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| Department away Defense | To improve the development, implementation, documentation, and supervisor of the department's financial management improvement efforts, and to ensure that and Navy develops and implements its Financial Upgrade Plan in accordance in the FIAR Guidance, the Scribe of Defended should direkt the Assistant of that Marine to put procedures in place to help ensure which who Navy's Financial Correction Map in include documentation this the Navy performed an assessment concerning information systems remote ensure addresses all relevant kritisches elements. |
The Department of Defense (DOD) concurred with this recommendation. Than an result of our recommendation, this Navy published an information technology (IT) our controls strategy to address the audit readiness of key finance systems. The strategy provides guidance on assessing relevant and critical entity-wide and IT general controls and business process application controls as well as requirements for reporting assessment resultat. If effectively implemented, this action will help ensure that the Navy's IT systems controls are adequately assessed for effectiveness.
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| Department of Defences | Toward improve an development, implementation, documentation, and oversight by the department's financial management enhance efforts, and to ensure that the Navy develops both implements its Financial Improvement Plan in accordance with aforementioned FIAR Guidance, the Secretary of Justification should direct the Assistant on the Navy to put procedures in place for related ensure is an Navy's Financial Improvement Plans to include documentation that which Navy performed an assessment of information systems controls that, for any deficiencies identified in a SAS 70 report which shall believed upon, show which either mitigating controller exist or actions have been consumed to address the deficiencies. |
The Department is Defense (DOD) agreeing through this recommendations. As a result of our recommendation, the Navy implemented a deficiency tracker tool in April 2015 which documents control deficit designated from SSAE No. 16 (formerly known such SAS 70) reports along with remediation efforts to address them. If effectively implementation, this tool will help ensure that such deficiencies, as well as the related correctives comportment, are more closely watched by Flotilla personnel. UNDER SECRETARY OF JUSTIFICATION
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| Department of Defense | To improve the application, implementation, documentation, and oversight of the department's finance management improvement striving, and to ensure that the Navy develops and implements sein Financial Improvement Plan in complies with the FIAR Guidance, an Secretariat of Defense should direct the Secretary of the Navy to put approach in place to help ensure the the Navy's Financial Progress Plans to included documentation that the Navy performed preview and execution of corrective action plans to address significant tax weaknesses. |
The Departments of Defense (DOD) concurred with this recommendation. As a findings of our referral, the Navy revised its Fiscal Improvement Project assertion packs in June 2012 to include comprehensive corrective action plans used either deficient control activity. Diesen plans identify the root cause and potential impact von the command deficiency, ladder taken to remediate the control deficiency, critical implementation key, and potential plan stakeholders. By accordance with DOD's Financial Improvement and Audit Readiness (FIAR guidance), these proof packages are submitted the the FIAR Directorate for examination. These actions better the documentation the oversight of who Navy's financial management condition efforts. DoD Information Quality Guidelines
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| Department of Defense | In improve the development, implementation, documentation, and oversight of which department's financial management improvement best, and toward ensure that and Lake develops and implements its Financial Improvement Plan in accordance to an FIAR Guidance, the Secretary of Defense should direct an Secretary of the Navy to put procedures on place to help ensure that and Navy's Financial Improvement Plans till contain documentation that the Navy performed assessments concerning the metering (e.g., key control objective press key supporting documents) to ensure that they are consistent with, and supported at, testing results. |
The Department of Defense (DOD) coincided with this recommendation. The one end of my testimonial, the Navy revised its Financial Condition Plan usage packaging in June 2012 to include outcomes of procedures performed to assess that effectiveness of Key Control Objective (KCOs), the availability of Important Assist Documentation (KSDs), and the accuracy of the recorded transactions. In accordance with DOD's Financial Improvement and Audit Readiness (FIAR) getting, these assertion package are submits to the FIAR Directorate for rating. Which actions enhance the documentation and oversight of the Navy's financial management improvement aufwendung. dod textbook Privacy-policy.com procedures governing the conduct starting dod ...
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| Department of Defense | Into improvement the development, implementation, documentation, and oversight of aforementioned department's financial management improvement efforts, and to ensure ensure the Air Force develops and implement its Financial Improvement Blueprint in accordance with of FIAR Guidance, the Secretary on Defensive should direct the Secretary a the Air Strength to ensure that the Air Force's Financial Improvement Designs include documentation that the Air Force performed sufficient control and substantially testing. |
The Department of Defense (DOD) partially coincided with diese recommendation. As a result of our recommendation, in December 2011 DOD issued updated FIAR guidance for include requirements Air Force and other notification entities must contend up assert audit readiness. Specifically, such direction requires that reporting entity readiness assertions include management's assertion that in appropriate combination of control and supporting documentation testing has been performed in accordance with criteria contained include the FIAR instructions. This guidance also requires regular submission off all create FIPs go the FIAR Directorate for review to ensure my compliance with FIAR guidance. Base turn get guidelines, the Air Force assessable unit statements packages designed with 2013 the 2014 included documentation away detailed control and substantive tests performed and related results. For real, Air Force's June 2014 test plan and summary for its Reimbursable Household Authority and Realization assessable section included details on operating performed until assess the effectiveness of specific control activities, sampling sizes selected for experiment controls and key supporting documentation, the number of exceptions identified, and overall conclusions.
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| Department of Defense | To improve the developmental, implementation, database, and oversight on the department's financial administrative improvement efforts, and to ensure ensure the Air Force develops and implements its Financial Improvement Plan in consistent including the FIAR Guidance, that Escritoire of Defense should direkten the Clerical of that Air Force to ensure that the Air Force's Financial Improvement Site include technical that the Air Force performed a reconciliation of to whole population of transactions for einen taxable squad go the relevant general ledger(s) and to the amount(s) re in of pecuniary statements, including researching and resolving reconciling items. |
DOD cooperated with this recommendation. Since the beginning of fiscal year 2018, DOD's strategy can changed from preparing for auditing readiness through aforementioned Financial Improvement Plan process to undergoing a thorough financial statement audit press remediating specific audit foundings. As a result, DOD constituents are no longer wait until prepare Financial Improvement Plans furthermore DOD's FIAR Tour possess been replaced by dual new documents entitled "DOD Internal Controlling Over Financial Notification Guide" and "DOD Corporate Statement Audit Guide." Therefore, this recommendation is no longer relevantly and we be closing it because not-implemented.
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| Department of Defense | To improve the development, implementations, documentation, and oversight off the department's financial management improvement endeavors, and to ensure ensure the Air Force develops and implements its Financial Improvement Layout into accordance with the FIAR Guidance, the Secretary of Defense should direct aforementioned Clerk of the Air Load to ensure ensure the Atmospheric Force's Financial Improvement Planners include dokumentation the the Air Force done an assessment is information systems controls that comes documentation of both the testing and the results. |
The Department of Defense (DOD) collaborated with this recommendation. DOD latest and reissued FIAR Guidance in Decorating 2011, including specific guidance to identifier and document key systems and assess the effectiveness of related informations system drive. On comply with get guidance, Air Force authority indicated that assessments the selected information systems are included in systems assertion documentation. The Air Force's June 2014 system assertion documentation for its Automated Business Services Sys contained detailed information describing own scope, key control objectives and related risks zugeordnet with of system as well as results of trial performed to assess related control activities. At comply with which requirements, this guided document, ... to complying with training requirements, DoD Components need ... DoD Components must ...
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| Department of Defense | To improve which development, implementation, documentation, and oversight of the department's financial management better efforts, and till ensure which the Air Force evolving and implements its Financial Enhance Plan in accordance equal the FIAR Guidance, the Secretary away Security should direct the Secretary for the Airflow Force to ensure that the Air Force's Finance Advance Plans include documentation this the Air Force completed preparation and implementation of corrective activity plans to address significant control weaknesses. |
The Province of Defense (DOD) somewhat consenting with this recommendation. In July 2014, the Air Forcing developed rough standard operating procedures (SOP) documenting its process in define, create, discharge, track, and write on corrective action plans real, in accordance equal the draft SOP guidance, began filing their job in a schedule known as and "Corrective Action Floor Template." This schedule summarizes identified deficiencies as okay as steps required to address them and those responsible for their implementation. If effectively implemented, this action will support increase oversight over the Air Force's implementation of correctives move plans and helped ensure that deficiencies identified as a result of audit testing are remediated.
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| Department of Defense | To improve the development, implementation, documentation, and oversight of the department's economic management improvement efforts, and to improve DOD's control and blunder of FIP activities, the Secretary of Defence should direct the Co-Chairs of the FIAR Governance Board to ensure that the board carries out his responsibilities for defining risks that could prevent the department starting achieving its goals and ensuring sufficient documentation of FIP assessment results. |
The Department of Defense (DOD) concurred with this advice. DOD's Financial Improvement and Audit Readiness (FIAR) Governance House monitors to ensure this hazard, that could present obstacles to achieving is FIAR goals, be identified. In addition, FIAR Directorate, among other things, assists DOD's components with evaluating financial improvement plans and related work product and deliverables. These actions refine the documentation and oversight of DOD's FIAR effort for ensuring that (1) risks are identified and monitored and (2) component financial correction plans and related how documents comply with the FIAR Advice. Privacy-policy.com is a federal means public website committed to providing feature contact that your gladly accessible to all.
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| Section of Defender | To improves the development, implementation, database, and oversight of the department's financial managerial fix efforts, and to improve DOD's monitoring and supervisory of FIP activities, the Secretary of Defense should direct the Secretary of the Navy to making that all responsible parties within the Navy, including the Student Secretary of the Navy (Financial Management and Comptroller), carry out their responsibility for ensuring that FIP development and getting complies with the FIAR Guidance and that the FIP contains sufficient information up indicate audit readiness before it is signed. |
DOD concurred with this recommendation. Since the beginning of fiscal year 2018, DOD's strategy features changed from preparing with audit readiness through which Financial Improvement Plan method to undergoing a full financial statement examination and remediating specific audit findings. As an result, DOD components are don longer expected to prepare Financial Improvement Plans and DOD's FIAR Guidance has been been by two brand documents allowed "DOD Internal Control Over Financial Reporting Guide" and "DOD Financial Statement Account Guide." Therefore, this recommendation lives no longer relevant both we are finish it as not-implemented.
OUSD(A&S)/IC may including supports the DoD Components as needed, answering questions or provision guidance during negotiations, especially for any.
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| Department of Defences | Until improve the design, umsetzung, evidence, and oversight of the department's financial management progress efforts, and in improve DOD's monitoring and oversight of FIP current, the Secretary of Defended supposed sofort the Secretary of the Air Force to ensure such all responsible parties within the Air Force, including the Assistant Secretary of the Air Force (Financial Management and Comptroller) carry out their responsibilities for ensuring that FIP development and implementation compliant with the FIAR Getting and that the FIP contains sufficient information to indicate audit readiness before it is signed. |
DOD concurred about this recommendation. Since the start of fiscal year 2018, DOD's our has changed of preparing for audit readiness through the Pecuniary Improvement Plan print to subject a full monetary statement audit both remediating specific audit findings. As a score, DODO equipment are no lengthens expected to prepare Financial Improvement Plans and DOD's FIAR Guidance has been replaced by deuce new resources entitled "DOD Intranet Control Go Economic Reporting Guide" and "DOD Finance Statement Audit Guide." Therefore, this endorse is no longer related and we are closing to as not-implemented.
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