J8 Inventory Finance Workshop--An End to End partnership to pass audit

By Jessica Gratkowski, DLA Distribution supply management specialist

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Defense Logistics Agency employees representing DLA Distribution, DLA headquarters J3 and J8, DLA Troop Support, DLA Land and Maritime and DLA Aviation met in New Cumberland, Pennsylvania, Nov. 5-8 to kick off one of many inventory finance workshops. The goal, during this workshop and future sessions, is to map out all of DLA’s complex processes. 

The workshops are a result of the independent public accountant’s notice of findings and recommendations. A key discussion during the first session focused on how DLA Distribution operations impact DLA’s finances. Co-leads Ms. Karen Opie-Toler, DLA headquarters J8 and Ms. Denise Parker-Kanelos, DLA Distribution, guided the team through various operational and financial topics.  

Throughout the kick-off discussions, the DLA partners stressed a unified viewpoint that is critical to the success of audit. During transition into the new inventory system, warehouse management system, DLA must ensure strong information technology general controls are put into place and ‘unauditable’ and antiquated processes are not implemented.  

In addition to the challenges with implementing a new inventory system, DLA’s intricate business includes many different systems, transactions, codes and reports, making it difficult to map end-to-end processes. To help J8 visualize what happens within a distribution center, the group completed a walkthrough of DLA Distribution Susquehanna, Pennsylvania, to get a firsthand look at core receiving, warehousing, inventory and transportation processes—functions which many of the DLA headquarters J8 finance personnel have never seen.  

Distribution lead a deep dive on its extensive end-to-end process mapping, outlining the “hand-offs” when operations, systems and finances collide. The team will work to identify the various key transactions and interfaces from the different systems and the posting logic and General Ledger accounts from DLA’s financial system, Enterprise Business System. In order to ensure end-to-end processes are documented properly, teams will be tracing test transactions through various systems in the upcoming J8 Inventory Finance Workshop sessions.

Throughout the week, DLA headquarters J8 and the Supply Centers briefed several financial reports used to manage DLA’s accounting. J8 outlined the challenges and successes found in reconciling inventory balances in DLA Distribution’s current inventory system, Distribution Standard System and EBS. The inventory reconciliation work has identified many areas needing improvement. One major area identified is in transit materiel—items destined for a distribution center, shipped from a commercial vendor or from another distribution center.  

The teams will be working together over the next year to tackle the audit challenges identified in order to meet the future goal of a good audit result, called an “unmodified” opinion. The next J8 inventory finance workshop is scheduled to take place in Philadelphia, Pennsylvania, at DLA Troop Support, Nov. 18-20.