Audit readiness progress, goals outlined at all-hands meeting

By Sara Moore DLA Public Affairs

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With just five months left until the Defense Logistics Agency’s goal to be fully audit ready by Sept. 30, audit readiness leaders held an all-hands meeting May 5 at the McNamara Headquarters Complex to discuss progress and challenges that lie ahead.

Simone Reba, deputy director of DLA Finance, kicked off the meeting by highlighting the agency’s audit readiness accomplishments since fiscal 2015, which include assertions for areas like funds balance, the hire-to-retire cycle and inventory.

“We have accomplished so much; now it’s full throttle towards the finish line,” Reba said, noting the areas the agency needs to work on this year, like sustaining the inventory assertion, asserting DLA Disposition Services inventory and asserting DLA’s cash assets.

DLA Director Air Force Lt. Gen. Andy Busch is enthusiastic about the audit readiness process and impressed with the agency’s progress so far, Reba said. Busch has already noted that DLA is far ahead of the Air Force in audit readiness, Reba said, but he is focused on sustaining auditability once it’s achieved.

“The director is all in,” she said. “We owe it to him and the agency to make sure we have processes in place to sustain our readiness year after year.”

Reba noted that the Marine Corps, which achieved an unmodified audit opinion in fiscal 2012, had that opinion removed and deemed unreliable in March by the Department of Defense Inspector General based on newly identified transactions from suspense accounts that had crossover with the Navy. Based on that development, the DoD IG will review all Defense Finance and Accounting Service suspense accounts to determine if any other organizations will face similar problems, she said. DLA does have similar accounts, she said, but audit readiness team members were already aware of the potential problems and have been identifying the agency’s transactions.

“The good news is we were aware of these problems and we were already working on it, and we don’t think this is going to be a big impediment for us,” she said.

Bridget Collins, director of financial compliance and audit readiness in DLA Finance, outlined the critical corrective action plans the agency needs to complete before September. The most significant challenge on the list is the agency’s real property, which must be properly identified, marked and valued to be auditable.

“We have a lot of property across a lot of locations, especially Energy,” Collins said. “We have to make sure we’re consistently marking items, so when the auditors go out and look for our property, they can find it.”

Other areas that will require significant work are financial reporting and inventory reconciliation sustainment, Collins said. However, in all these areas, DLA is still well ahead of other DoD organizations, and all indications are that the agency will meet its goal Sept. 30.

“A lot of these areas that are on this chart are areas that we’re finding well ahead of the rest of the department,” Collins said. “So you may say, ‘Why haven’t we fixed them all yet?’ Because process changes are hard and getting them right is not only important for the audit, but also for our mission.  Because we are DoD, our issues are not always typical of things you would see in the corporate world.”

Reba encouraged team members to view the video, “How to Interact with an Auditor, ” and share it agency-wide. The video helps to lay out the audit cycle and has interviews from various DLA leaders on what to expect when auditors arrive at DLA.

The meeting also covered segregation of duties, an effort to reduce errors and fraud by identifying what transactions all employees have access to, and reducing access where appropriate to fit employees’ specific duties. DLA Information Operations also gave an update on systems testing, and a team from DLA Finance provided substantive testing results. A look ahead at fiscal 2016 – when audit readiness will translate to process excellence – and team awards closed out the meeting.