ousd (comptroller) business integration office (bio) mary kemp, ousd(c) bio june 10, 2015 update on...
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OUSD (Comptroller) Business Integration Office (BIO)
Mary Kemp, OUSD(C) BIO
June 10, 2015
Update on OUSD(C) Initiatives Overview and Path Forward
10-June-15 | Slide: 2
Enterprise Business Model
Customer Driven Focus
•Vendor Pay
• Contract Pay
• Travel
• IPAC/IGT
• Interfund
• Transportation Pay
•Military Pay
• Civilian Pay
•Reimbursables
D
oD In
itiati
ves
Define Process
Identify Systems
Define Data
Require-ments
Develop Implemen
-tation Plan
Im
prov
ed A
udita
bilit
y
F
eder
al G
over
nmen
t Acc
ount
abili
ty
Mission and VisionCompliance
• Compliance
•Direct to Treasury Disbursing
•DCAS Reconciliation
•Govt. Wide Accountability
• IGT/IPP
• FIAR
FIARAssessable
Units
FM Functional Strategy
Fe
dera
l Ini
tiativ
es
Initiatives Overview
10-June-15 | Slide: 3
Problem Statement
DoD FBWT auditability cannot be sustained with today’s cumbersome
monthly cash reporting & recon processes and disparate systems
10-June-15 | Slide: 4
DoD Challenges and Requirements
Challenge Requirement
Source Document Errors Utilize data validation earlier in end-to-end business processes
Inconsistent edits (ERP, entitlement, DCAS, DDRS, Treasury) Leverage a standard validation service
Non-Standard Recon Processes and Tools Transition to a DoD Centric Model
Point to point interfaces Utilize a data broker in lieu of point-to-point interfacing
Large unsupported JVs and use of suspense accounts to balance cash
Business Process that eliminates out of balances on a daily basis
Compliance with US Treasury GWA/CARS daily reporter mandate
Design DoD-wide process and align systems to ensure compliance
Direct Cite/Cross-Disbursing Business ProcessDrive business process change to IPP or funding realignment, minimizing Cross-Disbursing transaction volume
10-June-15 | Slide: 5
What is the Magnitude - Analyzing the Problem?
Problem Impact
Initiatives
Cash Traceability &Reconciliation
Data Management
Drawdown Plan
Implementation of DSSN Payment & Collections
GTAS Project
IPP Project
Treasury Disbursing Project
In-Transits $26 Billion
Undistributed $3.9 Billion
Unsupported Accounting Entries $164.46 Billion
Intra/Inter governmentalEliminations $93 Billion
Budgetary / Proprietary Differences $7 Billion
FBWT• Treasury Reports
• Statement of Accountability
(SOA)/ Statement of Transactions (SOT)
• Year Closing Statement
10-June-15 | Slide: 6
DCD/DCWCentral data repository
Cash Traceability*Enterprise Daily Cash
Reporting and Traceability (DCAS)
Many Initiatives Affect FBWT:
Sub-Allotments*, **Execution and internal
controls
OversightImplement
enterprise standards
Change Management
Promote organizational
change
CARS Implementation
Interfund Reporting
IGT/IPP*Standard buy/sell
processes
Direct Treasury Disbursing*,**
Centralized post-pay
Auditability
Delinquent DebtManagement of delinquent debt
Results Outcomes
• Daily traceability of all outlays/collections via DCAS/GEX• Daily validation of accuracy of disbursements and collections via GEX• Daily reconciliation of Treasury accounts with Component accounts• Daily reconciliation of Treasury CARS to GL via DCAS/GEX• Reduction in reclassification entries• Reduction in statement of differences, use of clearing accounts, or unsupported JVs
Data Management*,**Standard financial data/central data
broker
CollectionsReceivables
management
Existing Working Group* Initiative directly relates to Audit Readiness, Daily Funds Balance w/Treasury (FBWT)/Cash Balancing Goals** Initiative heavily enables Auditability & Strengthens Financial Controls or Maximize ERPs as Key Enabler
Legacy Systems Drawdown
Transitions and sunsetting
DSSN Drawdown Reporting1219/1220
Funds Distribution*, **Electronic funds
distribution
Contingency Operations
Support
GTASSingle reporting
requirement
Sensitive Activities
Classified data
CATWG
10-June-15 | Slide: 7
Initiative: Cash Accountability Model
System Improvement• Single system – Defense Cash Accountability System
– to perform expenditure reconciliations
• Adapt legacy disbursing systems to perform daily disbursing using Treasury standards
• Reduce the number of systems reporting to Treasury
Standardization• Formation of DoD Cash Accountability Working
Group
• Expand development of data standards around a FBWT Business Enterprise Architecture
• Leverage Treasury Shared Services processes and procedures
Process Improvement• Single DoD solution for Cash Reconciliation and
Reporting
• Leverage ERP capabilities to perform Treasury Direct Disbursing functions
• Partner with Treasury and DoD Disbursing Offices to implement CARS and GTAS reporting
Microsoft PowerPoint Presentation
Cash Notional Target
10-June-15 | Slide: 8
Initiative: Treasury Disbursing
Systems Improvement• Reduction in expenditure “touch points”
• Native ERP functionality leveraged
Standardization• Aligns with Gov’t wide business process, facilitates
big data analytics for improper payments, debt ceiling management etc.
Process Improvement• Supports Treasury/GWA modernization
• Standardization of reconciliation processes
• Improve data quality and consistency across entire E2E processes by reducing errors
10-June-15 | Slide: 9
Initiative: SLOA Validation Service
Systems Improvement• Provide a mechanism that source systems can use to
validate transactions prior to their dispatch on the E2E process
• Improve enterprise analytics through exposure of SFIS/SLOA financial data
Standardization• Improve data quality by enforcing standard data
structures for DOD financial information
• Exploit GEX to transport SLOA-compliant financial transactional data between core E2E financial, feeder, disbursing and reporting systems.
Process Improvement• Supports Treasury/GWA modernization
• Standardization of reconciliation processes
• Improve data quality and consistency across entire E2E processes by reducing errors
Microsoft PowerPoint Presentation
SCS Integration
10-June-15 | Slide: 10
IGT – Introduction
One of DoD’s key material weaknesses is an inability to
reconcile inter/intra-governmental (IGT) activity and
balancesUnbalanced intra/inter governmental (IGT)
buy/sell activities accounted for $33.6 billion net difference in FY13
10-June-15 | Slide: 11
“A major reason for the disclaimer is the government’s inability to adequately account for and reconcile intra-governmental transactions between departments and agencies. This reform activity supports effective financial management through the achievement of a clean audit opinion; the elimination of material weaknesses; and the production of timely, accurate financial information to help guide decision-making.”
Office of Management and Budget, Executive Office of the PresidentSource: Federal Financial Management 2009
“DoD financial management systems cannot produce the transaction-level details and supporting documentation necessary to reconcile buyer and seller data and support IGT eliminations on the applicable DoD financial statements.”
Source: DoD IG Report No. DODIG-2015-056
The IGT Problem – at the Federal & DoD Levels:
10-June-15 | Slide: 12
IGT is also known as…
Military Interdepartmental Purchase Requests
(MIPRs)Reimbursables
Buy/Sell Transactions
Interagency AgreementsIPAC
INTERFUND – Out of Scope
10-June-15 | Slide: 13
Why is IGT a material weakness?
RequestingAgency
ServicingAgency
Goods and/orservices
Out of balance
10-June-15 | Slide: 14
Decentralized IncompatibleSystems
Lack of Standards
High VolumesWorldwide
Why is IGT a material weakness?
10-June-15 | Slide: 15
FY15-Q1 FY15-Q2
Unsupported Adjustments 39.361 54.096
Supported Adjustments 0.204 0.202
$5.00
$15.00
$25.00
$35.00
$45.00
$55.00
IGT Eliminations - Journal Vouchers
in B
illio
ns
FY15 Q2
FY15 Q1
FY15-Q1 FY15-Q2
Supported Adjustments $204.6m $202.3m
Unsupported Adjustments $39.36b $54.10b
Supported & Unsupported Entries – IGT JVs
10-June-15 | Slide: 16
Challenge Requirement IPP
Lacking documentation for auditProvide for a data warehouse of IGT transactions for audit, research and analysis
Buyer and seller transactions and accounting are out of balance, unable to reconcile (in part due to lack of common identifier)
Need common identifier to synchronize buyer and seller accounting transactions (including proper general ledger treatment) using clearinghouse methodology
Proof of receipt and acceptance Require appropriate users to record receipt and acceptance, preserve for audit
Buyer and seller not in full agreement on terms and details transactions
Automate handshake and agreement between buyer and seller before settlement (reduces chargebacks)
Prompt response to audit findingsNeed affordable and rapidly delivered solution to meet DoD audit readiness campaign plan
Lack of visibility of current status of IAA including remaining period of performance, available funding, unfilled orders, filled orders and paid orders
Must preserve association and provide a common identifier for all transaction components throughout life cycle of agreement, and provide a consolidated view of the information
DoD transaction volumes and diverse systems
Must handle DoD volume and interface with DoD systems using DoD Global Exchange solution and SLOA
DoD Challenges and Requirements
10-June-15 | Slide: 17
Backup
10-June-15 | Slide: 18
Review of Audit FindingsFinding FY15
RequirementIPP
RequirementIPP
Existing RWO Audit Findings:
- “(Reporting Entity) has not been able to isolate…RWO transactions from the rest of the (Reporting Entity) financial transactions”
- Transactions were recorded in the improper period (NFR 2014-RWO General-001)
- Improper recording of (Reporting Entity’s) Intra-appropriation (APPN) reimbursable activity (NFR 2014-RWO-002)
- Lack of sufficient audit evidence to substantiate transactions (NFR 2013-RWO-003)
- Improper recording of collections (NFR 2014-RWO-004)
- Lack of routine tie out of feeder systems to the GL accounts. (NFR 2013-RWO-005)
1. Develop a MOU with each trading partner and agree to terms including receipt and acceptance, reconciliations, adjudication of required adjustments, and KSD retention
2. Identify a universe of transaction level detail for each trading partner.
3. With DFAS assistance, perform monthly reconciliations of transaction level detail with the trading partner to identify variances at the MIPR level.
4. Adjudicate the variances and identify adjustments required to align the transaction level detail for each trading partner.
5. Perform and record appropriate receipt and acceptance procedures
6. Maintain KSDs, per the MOU, which support the transaction level detail as well as receipt and acceptance
Provide for a data warehouse of intra-governmental transactions for audit, research and analysis
Need common identifier to synchronize buyer and seller accounting transactions (including proper general ledger treatment) using clearinghouse methodology
Require appropriate users to record receipt and acceptance, preserve for audit
Automate handshake and agreement between buyer and seller before settlement (reduces chargebacks)
Must preserve association and provide a common identifier for all transaction components throughout life cycle of agreement, and provide a consolidated view of the information
DOD IG Findings:
“Inaccurate and unsupported intra-governmental account balances continues to be one of the long-standing material control weaknesses preventing DoD from achieving audit readiness on the DoD Agency-wide basic financial statements.” – Report No. DODIG-2015-056
“DFAS personnel should use supportable transaction-level details (that is, the actual elimination amount) to reconcile and eliminate IGTs.” – Report No. DODIG-2015-056
Must handle DoD volume and interface with DoD systems using DoD Global Exchange solution and Standard Data Sets
10-June-15 | Slide: 19
Invoice Processing Platform
Enabling “controlled” E2E IGT transactions Reengineering the IGT business process Leveraging Treasury’s shared service
Systems & Business Controls = Auditability
10-June-15 | Slide: 20
Change Manageme
nt
Develop Implementation Outreach IPP-IGT Implementation Guides Unified Communications Strategy Online Presence for the IGT Module of
IPP Speaking Engagements and User
Symposiums Distance Learning and Train-the-
Trainer Strategy FM Career Workforce Training
Modules
Standards & Policy
Approval of Buy/Sell IGT Views in DoD Business Enterprise Architecture
Guide revisions to applicable Laws, Regulations, and Policies, and Provide Implementing Instructions from FIAR Guidance
Development and Oversight of Management Internal Controls Programs (OMB A-123)
Metrics
Improve Quality of Information
Principles of TQM and Lean
Create Integrated Project Plan and Schedule
Monitor & Report on Project Status
Establish SMP & Project Metrics & Produce Reports
Data Requireme
nts
Intergovernmental Data Standard
IPP for IGT Business Rules
GEX Data Mapping
IPP for IGT Reporting Capability
System Change Requests
Future State IPP/IPAC
Governance Structure
Data Requireme
nts
Standards & Policy
MetricsChange
Management
It’s all Important!
10-June-15 | Slide: 21
Key Enablers to Success
IAA
GEXSLOA
& PRDS
Creative Abrasio
n
Creative Resolution
Creative
Agility
10-June-15 | Slide: 22
Pre-GEX
10-June-15 | Slide: 23
Post-GEX
GEX
10-June-15 | Slide: 24
IGT Target
10-June-15 | Slide: 25
Key Process Changes
–Support Agreement Role in IGT
–Documented Performance & Receipt
– IPAC Pay & Chase
10-June-15 | Slide: 26
APRIL MAY JUNE JULY AUGUST SEPTEMBER
Kickoff and Conduct
Pilots
25% Reimb. Auth. On IPP
GT&Cs
Development of Enterprise System ECPs
50% Reimb. Auth. On GT&Cs
Release GT&C Memo
Draft Intra-governmental
Data Standard
(IGDS)
Release IGDS for Review
IPP-IGT Implementatio
n Memo
Receive and Analyze IGDS
Feedback
Development of Enterprise
GEX Maps
MILESTONES
Milestone Occurrence
LEVEL OF EFFORT
Less
More
PRIORITY
Lowest
Highest
PHASE
Planning
Develop-
mentPolicy
Six Month Outlook
10-June-15 | Slide: 27
Adoption: IPP Becomes More Valuable with Increased Use
2-Party Buy/Sell Transactions
Wave 1 – Early AdoptersFY15
25% (of DoD reimb auth) in IPP
~$12B
FY 15 Target: 50 % of Reimb Authority reflected in IPP as GT&C
Early adopters critical to informing requirement gaps, defining change management activity
IPP “value” increases with each new connection/adopter
Outcomes from early adopters :
– Develop implementation guide to direct the process for future “connections”
– Document unique trading partner requirements
– Aid OJT desktop guide development
50% (of DoD reimb auth) in IPP ~$24B
500 transactions per month
DoD Reimbursable Authority
DoD
P
olicy
Dir
ecti
ve
Wave 2 – FY16
10-June-15 | Slide: 29
Mary L. Kemp is lead accountant in the Business Integration Office, Office of the Under Secretary of Defense (Comptroller). She has 30+ years of service as an auditor, budget analyst, accountant, and systems analyst with Department of the Army, Defense Finance and Accounting Service and OUSD(C). She is a past president of ASMC’s CNY Leatherstocking Chapter, a Lean 6 Sigma Green Belt, Certified Defense Financial Manager, and DoD Financial Management Level 3 certified. She just completed her Master's Degree coursework and will graduate in June from the National Defense University.
Mary L. Kemp – OSD(C) Business Integration Office