ASA-FM&C Audit

The Army began its first full financial statement audit in fiscal year (FY) 2018. Building on the momentum generated by partial audits in FY 2017 and earlier years, the Army was ready to take this major step forward in fiscal responsibility and accountability. As expected, the result of the FY 2018 audit was a disclaimer of opinion but the findings of our auditor have produced a clear benchmark to begin measuring our progress to a clean opinion. This Army Annual Financial Report (AFR) reflects our enduring commitment to achieving audit success in order to fully support the Army’s missions through better management of our financial resources with timely, accurate, and reliable information.

To continue the Army’s progress, we are aggressively developing and maintaining a culture that expects auditable records at every Army level. The Secretary of the Army has directed all Commanders, Directors, Leaders, Soldiers, and Civilians across the force to take an active role in improving transparency and accountability. We are investing in our people and continuing to improve processes, technology, and policies to sustain accountability and to achieve a clean audit opinion on the Army’s financial statements.

To operationalize this vision across the Army, we have assigned functional managers responsibility for audit success in their respective areas with support from the financial management community. These include, for example, Army leaders in logistics, acquisitions information technology, and facilities. To coordinate and support these leaders, the Army implemented the Business Mission Area Champion (BMAC) framework. In FY 2018, the Army focused on creating a Universe of Transactions to enhance the monitoring and reconciling of Fund Balance with Treasury, journal vouchers, and budget execution, as well as ensuring system posting logic and data categorization compliance with the United States Treasury Financial Manual.

Another important element of audit success is the continual improvement of our financial accounting systems. The General Fund Enterprise Business System (GFEBS), Logistics Modernization Program (LMP), and Global Combat Support System (GCSS)–Army are our primary systems of record providing financial visibility to achieve Army’s operating goals at all levels. An important success in FY 2018 was the LMP system passing the audit of its information technology general controls design and effectiveness. This is the first Army system to achieve this milestone and provides an example of how to achieve measurable progress for other systems.

Improving and standardizing processes is another key step for audit success. One example where this is particularly important is in maintaining proper controls and accountability over ammunition. The Army is the Single Manager for Conventional Ammunition (SMCA), which means that the Army procures and maintains conventional ammunition for all of the Department of Defense. In FY17, the Army underwent its first audit of ammunition and its role as SMCA. We received an Adverse Opinion with 53 findings. The biggest challenges included that the Army did not have its controls over access to the ammunition fully documented and that business processes across Army locations were not standardized. Based on these findings, the Army implemented systematic Corrective Action Plans addressing key problems, including documenting control procedures and standardizing business processes. For example, the Army Joint Munitions Command implemented an automated task order system that limits individuals from signing out keys that are not required to complete a task. This reduced the issuance time from 90 minutes to 15 minutes, significantly reduced the risk of loss of ammunition, and allowed leaders to better plan their operations with the resources available. As a result of the actions the Army took, we closed out 30 of the 53 FY17 Notice of Findings and Recommendations (NFR) and improved from an Adverse Opinion to a Modified Opinion in the FY 2018 audit.

Army leaders and financial managers are committed to ensuring compliance with Congressionally mandated auditability requirements to support achievement of Army priorities in readiness, modernization, and reform. The first full audit of the Army’s financial statements is a major milestone for the Army and we are now firmly on our way to ultimately achieving a clean audit opinion.
 

JOHN E. WHITLEY
Assistant Secretary of the Army, Financial Management and Comptroller