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Joint Finance/Supply PRC Ongoing Financial Initiatives By Bob Hammond Chair, Finance Process Review Committee June 20, 2013. Outline. Purpose of Briefing PDC 1035 - Increased Frequency of Interfund Billing (Withdrawn) Intragovernmental (IGT) Financial Eliminations

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slide1

Joint Finance/Supply PRC

Ongoing Financial Initiatives

By Bob Hammond

Chair, Finance Process Review Committee

June 20, 2013

outline
Outline
  • Purpose of Briefing
  • PDC 1035 - Increased Frequency of Interfund Billing (Withdrawn)
  • Intragovernmental(IGT) Financial Eliminations
    • DoD Material Weakness
  • Draft Proposed FMR Change - Receipt and Acceptance
    • FMR Vol. 4, Ch. 9, Para. 090201
  • Treasury Direct Disbursing
  • Invoice Processing Platform/Collaborative Agency WG
purpose
Purpose
  • Provide situational awareness of ongoing initiatives
  • Perspective of the DoD Finance Process Committee (FPRC) Chair
    • Cross functional subject matter expert evaluation needed
  • Potential topics for near-term focused FPRC meetings
pdc 1035 increased frequency of interfund billing
PDC 1035 - Increased Frequency of Interfund Billing
  • Treasury Commissioner Memorandum January 14, 2011 goals:
    • Improve Accuracy of daily Funds Balance with Treasury
    • Eliminate Monthly Reporting
    • Move Toward Daily Reporting
  • PDC 1035
    • Staffed to allow frequent Interfund reporting to Treasury vice monthly
    • Components and Agencies, in coordination with their Supporting Central Accounts Offices determine proposed frequency of reporting
    • Withdrawn at the request of OUSD(C) sponsor pending analysis of an initiative to centralize reporting to Treasury via Defense Cash Accountability System
intragovernmental igt financial eliminations
Intragovernmental (IGT) Financial Eliminations
  • DoDMaterial Weakness - DoD IG Finding (http://www.dodig.mil/Audit/reports/fy10/10-002.pdf)
  • Managerial Cost Accounting Concepts and Standards for the Federal Government
    • Inter-entity expenses or assets and financing sources should be eliminated for any consolidated financial statements covering both entities
  • DOD FMR, Volume 6B, Chapter 13
    • All DOD reporting entities are required to report intragovernmentalaccount balances in their financial statements and eliminate appropriate intra-DOD balances
intragovernmental igt financial eliminations continued
Intragovernmental (IGT) Financial EliminationsContinued
  • DoD IG Findings
    • DOD cannot accurately identify most of its intragovernmentaltransactions by customer because DOD systems do not track the buyer and seller data needed to match related transactions
    • DOD is unable to fully reconcile intragovernmentaltransactions with all Federal partners
    • DOD acknowledged its inability to reconcile most intragovernmentaltransactions results in adjustments that cannot be fully supported
slide7

Intragovernmental (IGT) Financial Eliminations

Federal Government

financial statement

level

Federal

Government

DoD

Fed Agencies

Federal to Federal

agency eliminations

DoD financial

statement level

Army

Navy

AF

Fed Agencies

DoD Agencies

Department financial

statement level

DoD to DoD

agency eliminations

DoD Agencies

Army

Navy

AF

Fed Agencies

Agency financial

statement level

Within agency

eliminations

Transactions between buyers

and sellers of same agency

Transactions between buyers

and sellers of DoD agencies

Transactions between

DoD and other Fed agencies

Transactions between

agencies and private sector

intragovernmental igt financial eliminations continued1
Intragovernmental (IGT) Financial EliminationsContinued
  • Topic deferred from 2011 Finance Process Review Committee (FPRC) and from FPRC Standard Financial Information Structure & Government – Wide Accounting Interfund Working Group
  • Focused FPRC briefing may be beneficial to determine if Interfund billing or logistics processes contribute to this material weakness
    • Determine if process changes are needed
    • What can we do to help?
draft proposed fmr change vol 4 ch 9 para 090201 receipt and acceptance
Draft Proposed FMR ChangeVol. 4, Ch. 9, Para. 090201Receipt and Acceptance
  • OUSD(C) Draft in Coordination
    • Accounts payable must be supported by receipt and acceptance
    • Clarifies receipt and acceptance
    • IPAC bill initiated by buyer vice seller per Treasury guidance
      • Treasury Financial Manual Bulletin No. 2013-04, Attachment 2, Intragovernmental Transaction (IGT) Guide, Section 9.1.2.2, “Roles and Responsibilities.”
treasury direct disbursing
Treasury Direct Disbursing
  • Concept discussed for “Target Environment” - in ADC 435
    • DLMS Revisions for Standard Financial Information Structure (SFIS) (Supply/Finance)
  • OUSD(C) Current Initiative (P2PPAWG #17)
invoice processing platform collaborative agency wg
Invoice Processing Platform/Collaborative Agency WG
  • OUSD(C) Strategic Initiative
  • Targets Financial Eliminations
  • Includes Treasury Direct Reporting via IPAC
  • Relates to Interagency Agreement; former IVAN
  • Collaborative Agency Working Group formed
    • OUSD(C)/Treasury Leading
    • USMC at the Leading Edge
invoice processing platform collaborative agency wg continued
Invoice Processing Platform/Collaborative Agency WGContinued
  • Out of Scope
    • IPP IGT will look to address Intragovernmental transactions within DoD only, level II and III. Once IPP IGT is proven within DoD IPP IGT will be looked for DoD to Non-DoD transaction, or level I. Also, out of scope for the near-term are:
      • Interfund
      • Advance Payments
      • Assisted acquisitions
      • Transportation
      • Purchase Card
      • Fuel
    • NOTE: While the aforementioned are considered reimbursable activities, these reimbursable types are currently not supported within the IPP IGT solution scope due to their specific process and data needs. These transactions will be addressed at a later date yet to be determined.
invoice processing platform collaborative agency wg continued1
Invoice Processing Platform/Collaborative Agency WGContinued
  • Potential Logistics Implementation Challenges:
      • Logistics transactions occur outside of IPP
        • All federal agencies (including DOD) use hundreds of thousands of DLMS/MILSTRIP/FEDSTRIP transactions per month to buy from each other, regardless of the method of payment (e.g. Interfund, IPAC)
        • These transactions (e.g. requisition, auto pass to seller to fill from stock/vendor/lateral redistribution, partial fill, ship/split ship, cancel, receive, acknowledge receipt, report discrepancy, bill, credit adjustment, etc.) all occur outside of IPP and are all needed to support the ultimate bill (500+ MILS/66 DLMS)
        • Transactions are integrated and highly automated; triggered via standard processes and business rulesand are subject to DAAS validation edits
        • Acceptance completed in Wide Area Workflow today
        • Integrating/replicating this data into IPP may be problematic
invoice processing platform collaborative agency wg continued2
Invoice Processing Platform/Collaborative Agency WGContinued
  • Logistics Potential Implementation Challenges (continued)
    • Bill after receipt for stock items vice upon issue
      • Stock items may be billed/revenue recognized upon issue, per FMR 1102.
      • Overall DOD March 2013 Material Receipt Acknowledgement (MRA) was 78.4%,
      • Relying on MRA and shifting responsibility from seller to buyer for billing may result in immediately universal seller insolvency
    • Feasibility, data standards/mapping, business rules, interoperability, systems, roles & responsibilities, governance; potential warfighter impacts, cost will need to be considered going forward
    • Investment Review Board (IRB) model may be useful in assessing existing systems capability, integration, costs and milestone decisions
invoice processing platform collaborative agency wg1

US TREASURY

Invoice Processing Platform/Collaborative Agency WG

Seller

Agreement w/GT&C

Agreement w/GT&C

Requisition

Unfilled Order

Obligation

Filled Order

Receipt/ Acceptance

Receivable

IPAC Charge

IPAC Credit

2. Create & Appr.Agreement

5. SubmitOrder

6. AcceptedOrder

8. SubmitInvoice

IPAC

IPP

4. Approve Order

10. IPAC PMNT

7. AcceptedOrder

IPP & ERP interfaces w/GEX needed

1. Create & Appr.Agreement

3. CreateOrder

9. Approve Invoice

Logistics Buy/Sell transactions by DOD and all federal agencies occur outside of IPP today

Buyer

order submission and fulfillment

Seller CAO

Buyer CAO

Treasury

500+ Integrated

MILS transactions

Order Submission and Fulfillment

*6 (810L)

6 (810L)

DAAS

1

2 (870S)

2 (870S)

1 (511R)

1 (511R)

5 (527R)

5 (527R)

4b (856S)

4a (945A)

3 (940R)

4d (867I)

Retail Base

511R: Requisition (Order)

527R Material Receipt Acknowledge

810L Logistics Bill

856S Shipment Status

867I Issue

870S: Supply Status

4b(856S)

Distribution Depot

4c Item shipped

* Stock – bill on drop from inventory;

DVD - bill on receipt acknowledgement/acceptance

940R: Material Release

945A: Material Release Confirmation

billing and discrepancy report adjustment requests and replies

Reply (812 L)

6

5

Request (812R)

Discrepancy related

Buyer CAO

Seller CAO

Billing and Discrepancy Report Adjustment Requests and Replies

Treasury

6

Reply (812 L)

DAAS

5

Request (812R)

Bill (Credit) (810 L)

3

3

Bill (Credit) (810 L)

SDR Reply 842AR

SDR Reply 842AR

2a

1

2b

Retail Base

SDR Reply 842AR

SDR Discrepancy ReportSubmission (842AW)

2

1

SDR (842 AW)

Distribution Depot

Financial related

4

*Return Wrong Item

(*Sequence for US. for FMS mat’l returned prior to credit)

billing and interfund payment

7 Stm of Trans

9 Stm of Trans

8 Collection

Seller CAO

Buyer CAO

Treasury

Billing and Interfund Payment

6a (810L)

8 Buyer Interfund Report

6c (810L)

6 Seller Interfund Report

6 (810L)

6b (810L)

DAAS

1

Retail Base

  • 810L Logistics Bill

Distribution Depot

Interfund Billing is out of scope near term. DAAS Edits

logistics transactions, including bills; rejects those failing edits

backup
Backup
  • DOD 7000.14-R, VOLUME 11B, CHAPTER 11, § 1102
  • REVENUE RECOGNITION
  • {Intervening text not shown}
  • 110202. Policy
  • {Intervening text not shown}
  • C. Activities in the Supply Management activity group shall recognize revenue, and related costs, when an item is dropped from inventory for sale or other revenue generating disposition.
  • {Intervening text not shown}
  • E. Activities in the Distribution Depots activity group shall recognize revenue, and related costs, based on one of the following events:
  • EventRevenue Recognized Upon
  • Receipt of Items Receipt of an Item
  • Issuance of Items Issuance of an Item
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