EXPEDITIONARY AUDITING, ORGANIZING, AND DOING Presentation To: American Society of Military Comptrollers By: Mr. Benny

1. EXPEDITIONARY AUDITING, ORGANIZING, AND DOING Presentation To: American Society of Military Comptrollers By: Mr. Benny Piccolo Principal Deputy Auditor General 3 June 2010

2. TALKING POINTS • Agency Overview • You Know You’re Deployed When • Civilian Deployment • Southwest Asia Operations – Today’s Risk Areas • Ongoing and Future Work

3. AGENCY OVERVIEW

4. Organizational Alignment

5. What do we do for the U.S. Army? • Our mission is not to find problems. We set out to provide Army leaders assurance that: • Policies, programs, organizations, systems and operations are achieving their objectives. • Resources are efficiently used and properly safeguarded. • Laws and regulations are complied with. • Internal controls and oversight are in place and operating to prevent fraud, waste, and abuse.

6. AAA in OCOPast, Present, & Future • Support dates back to Vietnam War era. • Operations Desert Storm. • Bosnia and Kosovo. • OEF/OIF • Iraq Vested and Seized Assets. • GEN Casey/LOGCAP • Auditors deployed (2005 – Permanent Presence) • Expeditionary Support Audits team (2008 – Dedicated Team) • Way Ahead – Working with Army leadership to be part of future contingency plans.

7. Audit Accomplishments • Audit reports covering a wide range of issues in support of contingency operations. • Contracting • ACC • JCC-I/A • USACE • Financial Management • CERP/Quick Reaction Fund • Vendor Payments • Logistics • Containers • Government Property • LOGCAP • Retrograde

8. Deployment You know you’re deployed when…

9. Everyone eats at the same DFAC…

10. All rides are chauffeured…

11. Auditors are taught to fire a weapon…

12. You live with your 20 closest friends… that you just met.

13. A bed and walls are considered “fancy”!

14. The bathroom is:- plastic- protected with barbed wire- cleaned with a water hose

15. Or in special situations…flushable!

16. You learn the proper disposal method for water bottles…

17. The beach comes to you…

18. The client is just a step away…

19. Anybody need a lift?

20. DEPLOYMENTS

21. Civilian Pre-Deployment • Official Passport • Pre-Deployment Health Assessment • CRC • Legal Matters • Gear • First Aid • Weapons Familiarization • IED Training • Final Medical Screening • Audit Coordination (DODIG/CENTCOM/DA)

22. Civilian Deployment • Transportation • Housing • Hygiene • Communications • Office Space • Personal Time • Food & Water • Troop Medical Center

23. Civilian Redeployment • Transportation • CRC • Post Deployment Health Assessment • Re-integrate • Technology

24. SOUTHWEST ASIA OPERATIONS

25. Audit Risk Areas • Responsible Drawdown • Afghan Buildup • Contingency Contracting • Expeditionary Financial Management • Responsible Reset

26. Oversight Activities • Air Force Audit Agency • Commission on Wartime Contracting • Criminal Investigation Command • Defense Contract Audit Agency • Defense Contract Management Agency • Defense Criminal Investigative • Defense Intelligence Agency Service • Department of Justice • Department of State Inspector General • DOD Inspector General • Federal Bureau of Investigation • Government Accountability Office • Special IG for Iraq/Afghanistan Reconstruction • U.S. Agency for International Development • USAAA is one of several audit and investigative agencies that make up the oversight community in Southwest Asia.

27. Audit Coordination • Several mechanisms in place to ensure adequate audit coverage and prevent duplication of effort. • Southwest Asia Joint Planning Group • Special Inspector General for SWA, DOD-IG • Inspector General Offices – • ARCENT • CENTCOM • USF-I • USFOR-A • International Contracting Corruption Task Force

28. Current Audit Work • Vendor Pay • Equipment Disposal • Contracting • Attestations

29. Vendor Pay • Audit of Controls Over Vendor Payments (Iraq, Afghanistan, Kuwait, Qatar) • Hard copy voucher packages didn’t provide sufficient support to validate vendor payments. AAA identified error rate: • 50% (563 of 1,116) statistical sample vouchers. • 27% (105 of 394) judgmental (on-site) sample vouchers. • Automated data didn’t always match hardcopy voucher packages or actual operations. • Dollar value disbursement mismatch to documentation. • Manual exchange rate losses. • Numerous breakdowns with purchasing, accountability, and payments processes. • Limited Depository Accounts (LDAs) not reconciled.

30. Vendor Pay • Working relationship and initiatives between the fiscal triad weren’t synchronized. • Inconsistently applied retrograde initiatives. • Cash on the Battlefield. • Identified CVS training gaps. • Function only performed in theater. • Stove piped systems training. • Insufficient internal control program – checklist mentality. • 15-6 Investigations and CID referrals.

31. Vendor Pay • Actions Taken: • Vendor Pay Summit (April 2010) - members of fiscal triad collaboratively worked through contracting and payment issues. • Finance Management Workshop (May 2010) - addressed training and automation challenges. • Finance Management Command - revising internal control program (incorporating risk assessment). • We recommended: • Re-report material weakness for hard copy audit trail. • Report material weakness for automated audit trail. • Incorporate high risk areas into inspection programs. • Monitor and limit the use of LDAs. • Investigate, correct, and report loss of funds for questionable and invalid payments and exchange rate losses.

32. Equipment Disposal • Audit of Disposal of Army Equipment and Materiel into DRMO (Iraq) • Units supported the drawdown by disposing of unserviceable, non-reparable items into DRMO sites as permitted by guidance. However, we also determined that: • All four DRMO sites in Iraq have the same RIC causing the SSAs SARSS to route DRMO shipments to Balad, not the nearest DRMO. • Unit’s are not always aware of proper disposition procedures for equipment and materials. • Recommended: • Create unique RICs for each DRMO. • Create a portal on USF-I website with disposal and turn-in procedure information.

33. Equipment Disposal • Audit of Disposal of Army Equipment and Materiel into Dump sites (Iraq) • Lack of monitoring and effective controls allow military equipment, hazardous waste and material, and items prohibited by USF-I Environmental SOP to enter Garrison dumpsites and trash disposal operations. • Units are disposing of government property in dumpsters and base dumpsites. • Disposal sites contain hazardous waste and prohibited items. • Unsorted solid waste is shipped to off-site locations. • We recommended: • Close solid waste sites when other disposal avenues are available. • Sort and remove prohibited items from trash before transporting to off FOB/COB dumpsite and send prohibited items to proper disposal facilities.

34. Pictures

35. Pictures

36. Contracting • Audit of Base Life Support Contracts – Basra, Iraq • Collectively the support contracts were not cost effective. • Reviewed 13 contracts representing 16 services awarded in 2009. • Contract costs were $76.8M or 103% higher than IGE ($37.9M). • Contracts were poorly developed. Contracting and unit personnel rushed to award contracts due to British forces leaving and U.S. forces needing base life support. • Made modifications totaling $18.9M within first year of award. • Raised total cost of the contracts to over $95M (in line with LOGCAP contract costs at similar sized FOBs). • Identified out of scope work directed by unit representatives. • We recommended: • Develop new PWS for 10 services to be re-solicited. • Evaluate out of scope work for ratification/recoupment of payment. • Additional COR training for legal and ethical responsibilities.

37. Contracting • Audit of Camp Buehring Fuel Farm Operations (Kuwait) • Lack of controls for proper fuel accountability. • Inventory measurements not standard or estimated. • Inadequate theft detection and prevention. • Insufficient government oversight of contracted security services. • Identified weaknesses at entry control points. • Debarment action not initiated. • We recommended: • Use calibrated gauging sticks. • Establish standard reference. • Issue and record all truck seals. • Reconcile seal log with shipping documents. • Reconcile daily meter readings to fuel transactions.

38. Attestations • We coordinate with and make referrals to investigative agencies. • US Army Criminal Investigation Command • Defense Criminal Investigative Service • Federal Bureau of Investigation • Internal Revenue Service • Receive requests for limited scope reviews. • Contract Terms • Controls for Safeguarding Assets • Data Analysis • Logistics Issues • Vendor Payments

39. Ongoing and Future Work • LOGCAP IV • Retrograde • Equipment transfers • Return of Assets from SWA • Army Prepositioned Stock

40. Contact Information Mr. Benny Piccolo Principal Deputy Auditor General Benjamin.Piccolo@us.army.mil (703) 681-9802 Ms. Monique Ferrell Program Director, Expeditionary Support Audits Monique.Ferrell@us.army.mil DSN (314) 421-2996 Ms. Crystal Beard Senior Auditor Expeditionary Support Audits Crystal.Beard@us.army.mil (210) 221-1758 Ms. Janet Stallings Audit Manager Expeditionary Support Audits Janet.Stallings@us.army.mil (910) 396-1981

41. Closing Comments