audit remediation success · raw materials work-in-progress finished goods inventory inventory...
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CDR COLIN CAMPBELLDEPUTY, OFFICE OF FINANCIAL POLICY, REPORTING, & PROPERTY
PDI 2016
THE ESSENTIAL ELEMENTS
AUDIT REMEDIATION
SUCCESS
EXISTENCE
COMPLETENESS
VALUATION
RIGHTS & OBLIGATIONS
PRESENTATION &
DISCLOSURE
THE EASY PART
ACCOUNTING GOVERNANCE SUSTAINMENT
CONTROLS
THE HARD PART
PERSPECTIVE FRAMEWORK TOOLS
AGENDA
PERSPECTIVE
GOVERNANCE ACCOUNTABILITY COST··OF··SERVICE
RISK··MANAGEMENT
HIGH PERFORMING ORGANIZATIONS
US Marine Corps
Governance
ERM
Internal Controls
OMB A-123 FUTURE STATE
“MUST HAVE READY ACCESS TO RELIABLE, USEFUL, AND TIMELY FINANCIAL
AND PERFORMANCE INFORMATION. WITHOUT [IT] THE GOVERNMENT
CANNOT ADEQUATELY ENSURE ACCOUNTABILITY OVER SPENDING AND ITS
ASSETS, ACCURATELY MEASURE AND CONTROL COSTS, MANAGE FOR
RESULTS, OR MAKE TIMELY AND FULLY INFORMED DECISIONS ABOUT
ALLOCATING LIMITED RESOURCES.”
UNSUSTAINABLE PATH
GAO-16-541T, April 6, 2016
0
5
10
15
20
25
30
35
% o
f G
DP
Net InterestSpendingTotal Receipts
Other Spending
Defense Spending
Medicare, Medicaid,Social Security
DEBT TO GDP CONTINUOUS RISE AFTER 2025: 74% 2015 223% 2090
“CURRENT POLICY IS NOT SUSTAINABLE. … REQUIRE SOME COMBINATION
OF SPENDING REDUCTIONS AND RECEIPT INCREASES THAT AMOUNT TO 1.2
PERCENT OF GDP ON AVERAGE OVER NEXT 75 YEARS.”
RESOURCE RISK
WHAT THIS IS NOT
US Navy
Imre Solt
WHAT THIS IS
MAINTENANCE AND REPAIRS ARE ACTIVITIES DIRECTED TOWARD KEEPING
FIXED ASSETS IN AN ACCEPTABLE CONDITION. ACTIVITIES INCLUDE
PREVENTIVE MAINTENANCE; REPLACEMENT OF PARTS, SYSTEMS, OR
COMPONENTS; AND OTHER ACTIVITIES NEEDED TO PRESERVE OR MAINTAIN
THE ASSET. – SFFAS 6, Par 78 (SFFAS 40, Par 6)
MAINTENANCE
US Army
CONTROLS THAT HAVE A PERVASIVE EFFECT ON AN ENTITY’S INTERNAL
CONTROL SYSTEM; ENTITY-LEVEL CONTROLS MAY INCLUDE CONTROLS
RELATED TO THE ENTITY’S RISK ASSESSMENT PROCESS, CONTROL
ENVIRONMENT, SERVICE ORGANIZATIONS, MANAGEMENT OVERRIDE, AND
MONITORING. – GAO-14-704G (GREEN BOOK), 10.09
ENTITY-LEVEL CONTROLS
0%
20%
40%
60%
80%
100%
Balance Sheet, % Supported
PROGRESS
0
1
2
3
4
5
6
7
8
Material Weaknesses
FRAMEWORK
PLAN TO WIN, DON’T PLAN TO FAIL
EXPECT GREATNESS, BUT DON’T BURN THEM OUT
DRIVE TO SUCCESS
BUILD A COALITION
PARTNERSHIP
ESTABLISH POPULATION
IDENTIFY ASSESSABLE
UNITS
DEFINE MATERIALITY
BOUND THE RISK
BALANCE VS PROCEDURES
GEOGRAPHY VS TYPE
EVERYTHING VS HIGHEST
RISK
UNITED EFFORT
CARVE UP THE ELEPHANT
US Navy
MAKE SURE THINGS
FLOW
& RECORD CORRECTLY
CHART OF ACCOUNTS
TRANSACTION CODES
POSTING LOGIC
TIE POINTS
PREP THE SYSTEM
KEY PROCESS OWNERS
TOUCH POINTS
ACCOUNTING EVENTS
SUPPORT & ARTIFACTS
POLICIES, PROCEDURES
SOPS, DESK GUIDES
INTERNAL CONTROLS
MANAGEMENT REVIEW
PROCESS FLOWS/NARRATIVES
Raw Materials Work-in-Progress Finished GoodsInventory Inventory Inventory
1) 9,500 2) 5,000 2) 5,000 8) 8,600 8) 8,600 9) 7,9003) 100 6) 1,000
7) 2,000
Acounts Payable Factory Overhead Cost of Goods Sold1) 9,500 3) 100 6) 1,000 9) 7,900
4) 4005) 600
Accum Depreciation Sales Revenue
4) 400 10) 15,000
Cash Accounts Receivable
5) 600 10) 15,000
Wages Payable7) 2,000
CURRENT ACTIVITY
PRIOR PERIOD ACTIVITY
REMEDIATION
BUILD T-ACCOUNTS TO
TRACE ACTIVITY
KNOW THE IMPACTS
THOSE THAT HARM,
THOSE THAT HINDER
COMMON UNDERSTANDING
IDENTIFY, ASSESS,
PRIORITIZE, MANAGE,
MONITOR
AVOID, MITIGATE,
TRANSFER, ACCEPT
RISKS
US Air Force
5 Unacceptable
5 10 15 20 25
4 Critical
4 8 12 16 20
3 Significant
3 6 9 12 15
2 Marginal
2 4 6 8 10
1 Minimal Impact
1 2 3 4 5
Remote Unlikely LikelyHighly
Likely
Near
Certainty
1 2 3 4 5
Liklihood/Probability of Occurrence
Seve
rity
/Co
nse
qu
en
ce o
f O
ccu
rre
nce
RISK REGISTER WITH
HEAT MAP
ESTABLISH RISK
APPETITE
PRIORITIZATION OF
EFFORT
IDENTIFY (KEY)
CONTROLS
REASONABLE
ASSURANCE
RISKS DRIVE
THOUGHTS,
ASSUMPTIONS
PROCESSES, PLANS,
GUIDANCE,
RESULTS
ISSUE PAPERS
OVERSIGHT BOARD
DATA & ANALYSIS
TESTING & MONITORING
DOCUMENT IT
POLICIES PROCEDURES SOPs DESK··GUIDES
BUILD IT OUT
WORK WITH KPOs TO USE EXISTING PROCESSES AND
INFORMATION
BUILD OUT CONTROLS OVER PROCESSES AND DATA
ESTABLISH THRESHOLDS FOR ACTION
DRIVE PERFORMANCE
US Air Force
ESTABLISH MANAGEMENT OVERSIGHT AND
CONTROLS
TRUST BUT VERIFY
AECOM
TOOLS
PDI PRESENTATIONS
GUIDANCE
SAMPLES
WWW.USCG.MIL/HQ/CG8/CG845/TREATS
GOODIE BAG
credit unknown
robertrichman.com
CHANGE MANAGEMENT
High Volume Capacity
General Focus
Low Volume Capacity
Audit Focus
MANAGING BIG DATA
www.gao.gov/greenbook/overview
http://www.coso.org/-erm.htm
http://www.iso.org/iso/home/standards/iso31000.htm
COSO
COSO: INTERNAL CONTROLS
CDR COLIN CAMPBELLDEPUTY, OFFICE OF FINANCIAL POLICY, REPORTING, & PROPERTY
PDI 2016
THE ESSENTIAL ELEMENTS
AUDIT REMEDIATION
SUCCESS
For more information:
CDR Matt ManofskyChief, Audit Remediation Division
(202) 372-3673