ASMC PDI

1. ASMC PDI ASMC PDI San Antonio, Texas May 26-29, 2009

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6. Internal Controls Not just a financial requirement Internal controls over business processes help ensure planned outcomes are achieved based on adherence to specific guidelines established by the organization, laws and/or regulations. Senior Leaders� risk assessment and establishment of internal controls for high risk areas are key to mitigating and reducing potential violations resulting from weaknesses in internal controls Continuous review and testing of internal controls are vital to identifying areas of risk and weaknesses. Results of these reviews should inform management decisions on managing risk and eliminating weaknesses. 6

7. Army Managers� Internal Control Program (MICP) 7 End of FY-04 oldest material weakness uncorrected was first reported in FY-96 (2 ea) Oldest MW closed was reported in FY 88 End of FY-05 oldest material weakness uncorrected was first reported in FY-96 (1 ea) Oldest MW closed was reported in FY-96 End of FY-06 oldest material weakness uncorrected was first reported in FY-96 (1 ea) next oldest was reported in FY-03End of FY-04 oldest material weakness uncorrected was first reported in FY-96 (2 ea) Oldest MW closed was reported in FY 88 End of FY-05 oldest material weakness uncorrected was first reported in FY-96 (1 ea) Oldest MW closed was reported in FY-96 End of FY-06 oldest material weakness uncorrected was first reported in FY-96 (1 ea) next oldest was reported in FY-03

8. Army Managers� Internal Control Program (MICP)  Risk Assessment What is Risk? The probable or potential adverse effects from inadequate internal controls that may result in the loss of Government resources through fraud, error, waste or mismanagement

9. Army Managers� Internal Control Program (MICP)  A process -- not necessarily a stand-alone product Subjective assessment made by management Identify mission objectives Identify risks (qualitative and quantitative)

10. Army�s MICP in Brief Background 25 Years of Internal Controls Reporting 236 Material Weaknesses Reported to DOD 6 Open Material Weaknesses at the end of FY-08 Improved timeliness of reporting from 45 days late in FY-05 to 16 days early in FY-08 Most improved DOD Agency in FY-06 First DOD Agency to file report in FY-08 SOA tied for second place in scorecard with benchmark SOA Over 9,122 Internal Control Administrators Trained Army-Wide in FY-08 10

11. Army Reporting Organizations

12. Roles and Responsibilities

13. Army Managers� Internal Control Program (MICP) Actions Taken Program Turn Around Based on Change in Philosophy Reward candor Embrace MICP as an opportunity to transform business processes and improve financial reporting Emphasize timely implementation of audit recommendations and proactive corrective action to resolve weaknesses Early surfacing of internal control issues to HQDA through command channels A more proactive approach to reporting and full disclosure � Reporting has improved qualitatively and quantitatively Between FY01 and FY07 the Army reported only 21 material weaknesses -- all but three are now closed In FY08 alone, the Army reported 24 new material weaknesses -- indicative of the Army�s eagerness to employ the MICP as a mechanism for real change 13

14. Value Added Current Initiatives, Big Payoff ASA(FM&C) Lean6 Sigma pilot plan developed to streamline Army Fraud Recovery Process. Universal tracking numbers and Accounts Receivable established to reduce delays in research time by DFAS. Initiative aims to greatly reduce time required to return recovered funds to Army from 900 days to 30 days (97% improvement), thus enabling the Army to retain use of 80% more Procurement funds before appropriation cancels. Another ASA(FM&C) project is underway to fully reconcile Army and DoD accounts. Initiative seeks to ensure that Army receives 100% of proceeds from sales and leases that are deposited by Army installations (in FY06 the Army received only 50% of these proceeds). Army Managers� Internal Control Program (MICP) 14

15. Value Added Current Initiatives, Big Payoff US ARMY FORCES COMMAND Safety Office conducted on-site surveys and analyses to determine accident causal failures. Subsequent mitigation plan has decreased accident fatality rates by 26%. 101st Airborne Division developed a comprehensive suicide prevention program through: creation of a �Buddy System�; training and empowering junior leaders to detect warning signs in their soldiers; and reducing the stigma associated with obtaining counseling. Army Managers� Internal Control Program (MICP) 15

16. Value Added Current Initiatives, Big Payoff US ARMY MATERIEL COMMAND Tobyhanna Army Depot improved availability of critical spares for Firefinder radars. Comprehensive parts prioritization and acceleration blitz has increased production and reduced backorder quantities for critical spares by 76%, resulting in decreased down times for units undergoing Reset. The Army Research, Development and Engineering Center developed the Rapid Entry Vehicle to increase survivability for military police inside Theater Internment Facilities and provide enhanced non-lethal capabilities for insertion of security personnel into detainee compounds during riots. Army Managers� Internal Control Program (MICP) 16

17. Value Added Current Initiatives, Big Payoff US ARMY INSTALLATION MANAGEMENT COMMAND In conjunction with ACSIM, OGC and USACE, IMCOM has developed enhanced work classification guidelines and submittal requirements for relocatable buildings. Garrisons must now define project costs by specific category and provide exit strategies for transition out of the temporary buildings in an acceptable timeframe. Improved training and guidance is reducing the Army�s vulnerability to Antideficiency Act violations. CG, IMCOM issued an Executive Order to ensure that the quality of life and standard of living for redeploying soldiers is a command priority and that barracks management and readiness throughout the Army is not compromised. A Senior NCO facility oversight body answerable to the CG, IMCOM has now been created to provide continuous monitoring of barracks conditions and avoid repeat of embarrassing failures that occurred at the height of GWOT mobilizations. Army Managers� Internal Control Program (MICP) 17

18. Value Added Proven Benefit to the Army Financial Reporting of Equipment In-Transit (Closed FY08) Systems interfaces and logistics processes have been improved, thus improving the validity of the in-transit records displayed by the Continuing Balance System-Expanded (CBS-X) Reduced error rate for in-transit asset financial data has led to more reliable data on the valuation of equipment in the Army�s financial statements Improved accuracy for inventory data in the Logistics Integrated Data Base has enhanced asset reporting and document closure procedures Army Managers� Internal Control Program (MICP) 18

19. Value Added Proven Benefit to the Army Manpower Requirements Determination System (Closed FY06) More effective programs for managing and controlling Tables of Distribution and Allowances (TDA) workload, organizations and and manpower staffing have resulted in the Army being better able to rationally predict future manpower requirements Improved ability to link workload, manpower requirements and dollars has resulted in staffing levels of Army organizations based on validated, prioritized missions The dollars required to support the requested level of manpower in Army budget submissions must now be cross walked to specific workload requirements that are directly attributed to validated missions Army Managers� Internal Control Program (MICP) 19

20. 20 Value Added Proven Benefit to the Army Financial Reporting of General Equipment (Closed FY06) Defense Property Accountability System (DPAS) implementation has improved management oversight and visibility of PP&E; improved management access to PP&E information and operating results; and standardized property book accounting throughout the Army Fielding of a Chief Financial Officers� Act compliant property system has substantially improved the ability of the Army to obtain an unqualified audit opinion on its annual financial statements Army Managers� Internal Control Program (MICP)

21. 21 Value Added Proven Benefit to the Army Line-of-Duty (LOD) and Incapacitation (Incap) Pay (Closed FY06) Army has established policy guidance, including effective internal controls, for the processing of LOD and Incapacitation pay Army has published AR 600-8-4 (Line of Duty Policy, Procedures and Investigations) to clarify ARNG eligibility for medical treatment and VA benefits after separation when injuries were service-related AR 135-381 and DA Pam 135-381 have both been issued to alleviate problems in the processing of Incapacitation pay, resulting in fewer Soldiers dunned by medical care providers Army Managers� Internal Control Program (MICP)

22. Value Added Proven Benefit to the Army Reserve Component Mobilization Accountability (Closed FY07) Better-integrated internal controls for tracking RC personnel in the �mobilization pipeline� Improved synchronization and integration in automated data bases for tracking of RC personnel Data feeds and interfaces between National Guard Bureau and USARC individual order systems with Active Component systems have been established and enhanced Army Managers� Internal Control Program (MICP) 22

23. 23 Lessons Learned Team effort � not only financial program Maintain Senior leader engagement � Senior Level Steering Group Backwards planning Improve reporting � Material Weakness Reporting Process Working Group Maintain flexibility Develop achievable milestones and actively follow up Communications and guidance Leverage training Army Managers� Internal Control Program (MICP)

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