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CHIPS Articles: Everyone Plays A Role In The Navy’s Financial Well-Being

Everyone Plays A Role In The Navy’s Financial Well-Being
By Karen Fenstermacher, Deputy Assistant Secretary of the Navy (Financial Operations) - December 9, 2014
Every day in the Navy, rounds are fired, fuel is burned, and meals are consumed by our men and women who stand the watch. While warfighters do not normally think of these actions in terms of dollars and cents, each constitutes a financial transaction that ultimately works its way back onto the Navy’s financial statements. We all know that our Sailors hold each other to the highest standards of performance and accountability as they provide for the nation’s protection. Another role we play in our mission is to be top-notch stewards of the taxpayers’ dollars, holding ourselves to similarly high levels of accountability for the Department’s finances.

Navy-Marine Corps business managers — logisticians, contracting officers, financial managers — have been working together for several years to improve the Navy’s business processes and systems. Though financial accountability has always been part of our mission, financial statement accuracy is a new standard that has been mandated by Congress. By making the changes necessary to achieve that new standard, DON’s accountability for each dollar spent on goods, services, and payroll will increase.

As a significant milestone, private sector financial audits will begin in December to examine the accuracy of the first of four Navy financial statements, the Schedule of Budgetary Activity (SBA). This audit is a structured exam which comprises four distinct phases (see graphic below). The audit will last over a year, during which auditors will visit numerous Navy organizations to examine various business processes and systems. The auditors will also test a large sample of business transactions throughout Navy to assess if they were properly executed and documented.

How does this audit affect you? While you may not have direct contact with the audit team, you will still be key to the Navy’s audit success if you play a role in spending Navy dollars or receiving goods and services. Whether you buy F-35s or simply use a government travel card, conducting the Navy’s business in a consistent, “by-the-book,” and well-documented way will make you a valuable contributor to the Navy’s financial auditability. The Marine Corps received a favorable audit opinion on its FY2012 SBA by the DoD Inspector General, and it’s now the Navy’s turn to achieve success. It’s an “all-hands” effort.

Looking to the future, financial audits will be conducted on a continuing basis. Navy business managers will have to adopt audit standards as their new operating norm. In doing so, we will all re-assure Congress and the public that we are accountable stewards of the dollars we collectively spend. Below are answers to questions that you may have about the audit process:

Q1. What is auditability?

Auditability is the ability to track each dollar spent from the beginning of a business transaction to final bill payment. It also involves ensuring that required documentation recording each step of the transaction is available for inspection. Finally, major military assets must be precisely accounted for in amounts and by value.

Q2. Who does the audit affect?

The audit affects all Sailors and civilians from the deck plates up to Pentagon leadership. While the effort will continue to involve Sailors within the financial management, logistics, contracting and personnel communities most directly, many more people have a part to play in helping the Navy improve business practices and maintain auditability.

Q3. How will the audit be conducted?

A private sector accounting firm will conduct the audit under the supervision of the Department of Defense Inspector General’s Office. Audited transactions will range from military and civilian pay, to multi-billion dollar contracts for ships and aircraft, to smaller purchases for consumables and repair parts.

Q4. When does the Navy plan to be audit-ready?

The Navy plans to be fully audit-ready — defined as auditable on all four of its financial statements, including the Statement of Budgetary Resources and the Balance Sheet — by September 2017, in keeping with Congressional guidance.

Q5. Why is the Navy working towards becoming audit-ready?

The aim of the audit is to promote good business practices with effective internal controls. Successful completion of annual financial statement audits adds rigor and discipline to our business culture, demonstrating to Congress and the taxpayers that we are accountable for every dollar they invest in our Navy-Marine Corps team.

Karen Fenstermacher is Deputy Assistant Secretary of the Navy (Financial Operations).

From Navy Live Blog, the official blog of the U.S. Navy:

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