Army Financial Management : Managing the Process HON Mary Sally Matiella Assistant Secretary of the Army, Financial Ma

1. Army Financial Management : Managing the Process HON Mary Sally Matiella Assistant Secretary of the Army, Financial Management & Comptroller 26 October 2011

2. Agenda • Program Budget Cycle • PPBE Committees and Process • Managing Budget Cycles • The Future of Defense Budget? • Army Financial Management Focus Areas • Cost Culture • GFEBS • Audit Readiness • FM Workforce

3. PPBE Committees and Processes Program Budget Assessment Team (PBAT) Program Evaluation Groups (PEG) • Entry point for the decision process • Package proposals & frame issues Equipping (EE) Planning Programming & Budgeting Committee (PPBC) Council of Colonels (CoC) • ASA(AL&T) • G-8 (FD) • Review resource issues and frame issues • Disposes of low-level issues and elevate those requiring higher-level decisions to PPBC Installations (II) • ASA(IE&E) • ACSIM Program Integrators ARNG USAR G-2 CIO/G-6 Planning Programming & Budgeting Committee (PPBC) Manning (MM) • Coordinate, advise and decide planning, programming and budgeting issues for SRG • Review and recommend courses of action • ASA(M&RA) • G-1 Organizing (OO) 3-Star BRP • ASA(M&RA) • SAAA 2-Star BRP • Chaired by ASA FM&C, G-3/5/7, G-8 • Decide/recommend resource issues for 3-Star Programmers Senior Review Group (SRG) • Chaired by DAB, ADG-3/5/7 & PA&E • Recommend POM/BES solutions to 3-Star BRP and SRG COL BRP • Resolve resource allocation issues • Recommend, Prioritize, and resource allocation to SA/CSA Sustaining (SS) • Chaired by ABO, G-3/5/7 CIR & PDD • Package proposals, frame issues and coordinates for 2-Star BRP & PPBC 3-Star Programmers • ASA(AL&T) • G-4 • Led by OSD-CAPE & USD (C) • Decide/recommend resource issues Secretary of the Army Chief of Staff of the Army Training (TT) • Approve prioritization of Army Programs • Selects resource allocation alternatives • Approves TAP, POM/BES Deputy Mgmt Action Grp (DMAG) • ASA(M&RA) • G-3/5/7 • Led by DepSecDef/VCJCS • Decide resource issues

4. Managing the Budget Cycles • Defense Budget Execution • Year-end reprogram • Close-out Closed FY11 Defense Budget Execution Under a Continuing Resolution (CR) thru 18 Nov 11; likely to receive additional CRs until Appropriations Bill is signed • Congress • Committee Marks (302b) • Enact Appropriation FY12 • Defense Budget Review • Reviewing FY13-17 in accordance with OSD guidance • Assessing impacts of potential reductions • Joint Select Committee for Deficit Reduction (Phase II - Budget Control Act) • OMB 5/10% from FY11 levels for FY13 OMB SubmitPB FY13 FY13-17 Deficit Reduction Plan FY14-18 Defense Strategic Planning FEB 2012 DEC 2011 SEP 2011 OCT 2011 FY12 FY21 Fiscal Environment FY12-21

5. The Future of Defense Budget?Defense Spending Will Likely Be Reduced • Discretionary spending is ~35% of total federal budget • Defense budget is ~ 50% of discretionary spending • Increasing emphasis on reducing spending/deficit – Joint Select Committee on Deficit Reduction & OMB Korean War Armistice (1953) Vietnam War Ends (1973) Gulf War Ends (1991) Today Height of Vietnam War (1968) Height of Cold War (1985) 9/11 (2001) Billions 4. Historically, funding levels have decreased as the military commitments decrease

6. Cost Culture • “And yet, as we confront those threats, we have to meet our fiscal responsibilities. That will require setting a very clear set of strategic priorities and making some very tough decisions.” • Secretary of Defense Testimony before the House Armed Services Committee, 13 October 2011 • Demonstrated behavior focused on simultaneous: • Delivery of required capabilities • Divestiture of redundant activities • Divestiture of out-dated activities • Divestiture of low-risk activities • In a dynamic environment of • Changing fiscal conditions • Changing operational demand “…instill a culture of savings and restraint so that we can maintain critical operational capabilities, capabilities, sustain force structure, and invest in needed modernization.” - 2011 Army Strategic Planning Guidance

7. Cost Culture Policy & Guidance Education and Training Functional Operations and Financial Managers Tools Source: https://www.us.army.mil/suite/page/593701 CBA Portal: https://cpp.army.mil Source: https://cpp.army.mil CBA Workflow Tool

8. GFEBS Wave Deployment Metrics • As of 1 Oct 2011: • 38,050 end users • 180 Army major locations worldwide • $30.8 billion obligated in FY11-- an increase of 500% from FY10

9. How We Execute the Financial Improvement Plan (FIP) Current Focus Areas Current Efforts Results Enablers Audit-Compliant Systems Enterprise Resource Planning (ERP) Systems • Training • AKO Audit Readiness Site • FIP Report Newsletter • Annual FIP Workshop • More… System Controls Improvements Statement of Budgetary Resources (SBR) • Site Visits • Document Processes and Controls • Test Controls • Corrective Actions Tasks Standard Processes and Effective Controls Existence and Completeness (E&C)  Total Result: Army is Auditable • Sites are selected by statistical sample. • Audit readiness visits allow sites to correct deficiencies prior to an audit. • Corrective actions are detailed in the FIP. Find site visit schedule and other resources on AKO at: www.us.army.mil/suite/page/auditready(or search Army Audit Readiness Home) 9

10. Statement of Budgetary Resources (SBR) The SBR provides information on how budgetary resources were made available and how they were executed. Completed: • Received unqualified audit opinion on Appropriations Received in August 2011. • Documented processes, conducted testing, and identified corrective actions at GFEBS Wave 1 & 2 Sites. Underway: • Independent auditors are reviewing supporting documentation as part of GFEBS Wave 1 examination. • Conducting end-to-end process documentation with DFAS. • Working with DFAS and CHRA for discovery and internal control testing of civilian payroll. • SBR sections: • Budgetary Resources Received • Status of Obligations Incurred • Outlays • Processes examined: • Funds Receipt, Distribution, and Monitoring • Contracts • TDY Travel • PCS Travel • Reimbursable Transactions (MIPRs) • Civilian Payroll • Military Payroll • Miscellaneous Payments • Purchase Card Transactions • Supply Requisition • Other 10

11. Enterprise Resource Planning (ERP) Systems ERP systems with effective automated controls support audit readiness. Assessments underway for: • General Fund Enterprise Business System (GFEBS). • Global Combat Support System–Army (GCSS-Army). Providing guidance and/or planning assessment for: • Integrated Personnel and Pay System–Army (IPPS-A). • Logistics Modernization Program (LMP). Analyzing materiality and financial statement impact for: • Property Book Unit Supply Enhanced (PBUSE). • Defense Priorities and Allocations System (DPAS). • Defense Joint Military Pay System (DJMS). • Defense Civilian Pay System (DCPS). • Army is implementing Governance, Risk, and Compliance (GRC) practices and automated solutions for ERPs and non-systems processes. • Defense Civilian Personnel Data System (DCPDS). • Wide Area Workflow (WAWF). • Defense Travel System (DTS). • Others. 11

12. Audit Readiness Schedule • Notes: • GFEBS waves correspond to deployment at specific sites. • “Assert” means Army is ready to be audited in that area. • Exams are evaluations by independent public accounting firms. 13 Oct 11: SecDef announced audit readiness of SBR by the end of 2014 12

13. FM Workforce 75% 500 Series 22% 300 Series 2.9% Operations Research (1515) 99.9% Relevant Skills / Education 510 / 511: Accounting degree or 24 hrs of Accounting / Auditing with relevant degree. 1515: Operations Research degree or 24 hours in math, statistics, science, with 3 hours in calculus.

14. Summary • LEARN • Workforce • FM Systems • Audit Readiness • Resource Informed Decisions WIN Efficient Effective • FOCUS • Cost Culture • GFEBS • Audit Readiness • Workforce • ADAPT • GFEBS • Workforce • Cost Culture • Financial Environment

15. Questions?