Marine Corps Financial Statement Audit Audit Readiness and Lessons Learned

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Marine Corps Financial Statement AuditAudit
Readiness and Lessons Learned
American Society of Military Comptrollers
(ASMC) National Capital Region (PDI)
11 March 2010
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Achieving Audit Readiness Doing Business the
Right Way

• Objective improve warfighter support through
  improved financial management and accounting
  governance and sustainability across 5 Key
  Strategic Areas.

The Marine Corps is a combat force-not a
business. To be successful, however, we need to
support warfighting excellence with well-managed
business processes that are both effective and
efficient. General Michael W. Hagee 33rd
Commandant of the Marine Corps
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Bringing Value to the WarfighterThrough Audit
Readiness

• Audit Readiness Results
• Decreased Undelivered Orders
• Reduced Abnormal Accounts Payable
• Decreased Unmatched Disbursements
• Decreased Interest Penalty Payments
• Total Investments 9.9M
• Total benefit 27.3M
• Net Present Value 17.4M

For each 1 spent on financial improvement, an
estimated 2.77 in value was created for the
warfighter.
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Audit Readiness via Training and Testing

• Engaged our field commands in several audit-like
  tests.
• Implemented an aggressive Internal Control over
  Financial Reporting (ICOFR) program.
• Demonstrated that Fund Balance w/ Treasury is
  fully reconciled.
• Final Test audit trail assessment by the
  Department of Defense Inspector General (DoDIG)
  and Financial Improvement and Audit Readiness
  Directorate (FIAR).

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Our Current State Beginning Balance Testing

• Audit Phases
• Planning
• Internal Control
• Testing
• Reporting

The Marine Corps is currently engaged in
supporting the planning, internal control and
testing phases.
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In-Audit Lesson No. 1 Implement a Data
Transfer Mechanism

• How will you capture data from the field and
  service providers?
• SharePoint Documentation Collection Portal
• How will you transmit raw accounting data to the
  auditors?
• ConnectDirect Software Suite
• How will you respond to non-mainframe Provided by
  Client (PBC) requests by the auditors?
• SharePoint Auditee Engagement Site and Auditor
  Portal

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In-Audit Lesson No. 2 Mind Your Trial Balances
Does your Unadjusted Trial Balance plus the
Adjustments equal the Adjusted Trial Balance?
Can you produce detailed accounting records so
support your Unadjusted Trial Balance?
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In-Audit Lesson No. 3 Trust but Verify Your
Service Providers

• Establish an audit review team that ensures that
  PBC submissions are accurate and complete.
• Update Service Level Agreements (SLAs) that
  incorporate required audit support.
• DFAS Audit Support
• Service Provider Feeder Systems
• Please remember it takes a teambuild your
  relationships early to avoid pitfalls during the
  audit.

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Questions?
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Why Audit Ready?Defined Better Environment

• Assessed Financial Management Environment and
  identified dependencies, risks, and controls to
  mitigate risks.
• Engaged in transaction-level testing to support
  core accounting system posting logic, controls
  and documentation.
• Linked our systems environment providing
  traceability from requirements generation to
  financial statement representation.
• Detailed transaction accountability from business
  feeder systems to the General Ledger (Budgetary
  and Proprietary)
• Updated feeder system supporting documentation

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Why Audit Ready?Improved Communication and
Training

• Auditor Lens documentation review of all
  business processes.
• Engaged in several audit-like exercises supported
  by an Independent Public Accountant (IPA)
• Enhanced field vocabulary of audit, source
  documentation and internal control assessment
  requirements
• Confirmed Key Controls and the ability to test
  them
• Conducted a series of workshops with field
  personnel in order to promote process and
  internal control understanding.
• Conducted field-level workshop and highlighted
  disconnect between key internal control
  identified in IPA audit-like exercises and OMB
  A-123 evaluations

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