Commander, Navy Installations Command Financial Management Process Improvements

1. UNCLASSIFIED Commander, Navy Installations Command Financial Management Process Improvements Presentation to: American Society of Military Comptrollers - Washington Chapter Mr. Ric Voigt, CNIC Comptroller August 17, 2011 UNCLASSIFIED

2. Purpose • Provide an overview of the depth/breadth of Commander, Navy Installations Command (CNIC) • Present CNIC N8’s approach to process improvement and development of standardized, repeatable and auditable financial management processes • Demonstrate ProcessQuik, our online process document repository

3. Commander’s Guidance • Mission: • Deliver effective and efficient readiness from the shore • Vision: • Be the sole provider of shore capability, to sustain the Fleet,enable the Fighter, and support the Family • Guiding Principles • Collaborate through teamwork • Practice transparency • Deliver best value to our customers • Be accountable • Develop our people • Embrace change • Improve continually • Foster innovation

4. Navy Shore Domain Today SWA MERGED WITH CNRE DEC 2008 TO FORM EURAFSWA JOINT REGION MARIANAS 5/9/11 13 Flags / 7 SES Direct Reports POPULATION SERVED 328K Active Duty 65K Active Reserves (SELRES) 425K Family Members 575K Navy Retirees $135B PRV (Structures, Utilities) 31.6K Bldgs, 24.7K Structures, 13.1K Utilities 63.3K pers.: military 24.1K, civilians 34.6K, KTRs 4.6K $12Bresources (appropriations, NAF) - FY10 @ 9/30/10 11 Regions…72 Bases…1.9 Million Acres 125 Runways… 358 Piers/Wharves…$135B Plant Replacement Value $12B Resources: Fortune 200 in Size

5. Shore Facts

6. Shore Readiness Funding Profile Primary drivers of increased requirements: Energy, Joint Basing, Child Care, and Collateral Equipment

7. CNIC N8’s Process Improvement Landscape Controls Continuous Process Improvement MIC (Risk Management Tool) FIP (Auditability Tool) ProcessQuik (Documentation Tool) LSS (Analysis Tool) • Results • Auditability/SBR • Standardization • Operational Efficiency • Statement of Assurance • Testing Results and Command-level FIP progress reports • Driver: OUSD(C), CNIC N8, CNIC IG • Scope: Identify, document, and test Managers’ Internal Control points • Approach: Process owners develop MIC Plans to assess internal controls on an annual basis • Driver: FMO • Scope: Identify, document, and test financial internal control points for key end-to-end CNIC N8 financial management processes • Approach: Process discovery and validation, SBR Segment Control Testing, Business Segment Analysis, and Financial Impact Statement • Driver: CNIC N8 • Scope: High level re-engineering of key end-to-end CNIC financial management processes (current focus is on HQ) • Approach: Conduct As-Is &To-Be focus groups to re-engineer processes, identify risks & control points, post products to ProcessQuik, develop & implement process change plans & internal controls test plans • Driver: ASN, CMO, CNIC N8 • Scope: Targeted improvement for specific portions or steps within key end-to-end CNIC N8 financial management processes • Approach: Value Stream mapping & analysis, develop & execute Improvement plan using scalable DMAIC processes Process Improvements Continuous Process Improvement Board (CPIB) Implement Process Improvements

8. ProcessQuik • ProcessQuik is: • An online central repository that houses CNIC N8’s standardized process information • Accessible to CNIC employees enterprise-wide via CNIC’s Portal • A SharePoint application • ProcessQuik provides: • Interactive process documentation eliminating the need to update paper-based processes or procedure binders • Standard forms and templates in one repository • A standardized method for training staff • A mechanism for continuous process improvement and encourages employee involvement • One location for internal controls information • Desk guides and Standard Operating Procedures that support transactional level activities • Each posted process includes: • A process narrative that contains: a process definition, timeline of key events, SIPOC model, outline of roles and responsibilities of each process performer, and links to applicable systems / desk guides / rules / policies / regulations • An interactive, MS Visio process map diagram that contains: process steps with control points indicated, “clickable” details behind each process step to include descriptions of the control activity, links to test plans, and links to applicable systems/desk guides/rules/policies/regulations

9. CNIC N8’s Reengineering Methodology Scope Document Current State Design Future State Validate Re-Engineered Process Implement the New Process Determine the Scope of the Process Conduct Focus Groups to Capture the As-IsProcess Conduct Focus Groups to Re-engineer the Process Assess To-Be Process, Define Controls, and Validate Manage Implementation • Define the scope of the process (purpose of process, boundaries, process performers, stakeholders) • Collect relevant documentation (instructions, policies, existing process maps, etc.) • Conduct collaborative interviews/focus groups with Subject Matter Experts (SMEs) to: • Define the process (definition, SIPOC model, process measures) • Develop As-Is process map and dictionary (if needed) • Identify process improvement opportunities • Evaluate and select process improvements • Conduct collaborative focus groups with SMEs to: • Develop To-Be process maps, dictionaries, and narratives • Document process change items • Obtain buy-in and approval from leadership on the re-engineered process • Define measurement criteria • Conduct collaborative risk assessment on To-Be Process from an internal controls perspective • Integrate MIC internal controls; add additional controls if needed • Develop process change implementation plan • Develop control test plans • Establish deployment approach and address process impacts • Post to ProcessQuik • Create Educational briefing for Process Owners to educate staff on process changes • Deliver Training • Complete Implementation Items • Rollout new policies/procedures • Test controls & document results • Conduct CPIB meetings to ensure processes are operating effectively, internal controls are being tested, and process documentation is current Leadership, Process Owner, and Subject Matter Expert involvement

10. CNIC N8’s Maturing Process Improvement Effort: 2008-2010 • 2008: • Gathered feedback from Headquarters Program Managers, Regions, and internal N8 staff that revealed a need to standardize our processes and procedures • Committed to process improvement/reengineering of our key financial management processes • Prioritized 19 key financial management processes for reengineering • Developed our initial methodology for process improvement/standardization • 2009: • Reengineered four processes • Began formal collaboration with Regions and Headquarters Program Managers • Developed ProcessQuik, our online process documentation repository tool • 2010: • Reengineered seven additional processes • Fielded ProcessQuik on the CNIC Gateway and implemented 11 processes • Integrated FIP and MIC into process improvement methodology • Identified control points on process maps with links to test plans and test results

11. CNIC N8’s Maturing Process Improvement Effort: 2011 • 2011: • Expanded to the Regions, now doing enterprise-wide process improvement • Employed the integrated approach to reengineer three additional processes • Developed and implemented a holistic strategy to prepare CNIC to attain auditability of Statement of Budgetary Resources (SBR) by the end of CY12 • Matured the MIC Program • Are incorporating FMO FIP controls and MIC controls into our processes • Are developing transactional-level SOPs and Desk Guides • Are developing an Internal Controls and Testing Page on the ProcessQuik site • Began to explore financial control points with CNIC’s supplying partners (NAVFAC, etc.) • Established the CPIB to provide governance of process improvement/standardization efforts and ensure integration of FIP/MIC program requirements • Implemented an improved Civilian Labor budgeting process • Used actual execution data as basis for projecting requirements to derive the budget (pricing, etc.) from actual accounting data at the Installation and Program level • Began aligning ProcessQuik with workforce development initiatives

12. Leadership & Workforce Involvement • CNIC N8 Leadership (Region N8s and HQ Division Directors): • Identifies and prioritizes key end-to-end financial management processes • Acts as process owners accountable for reengineering their processes • Communicates progress with the Enterprise N8 workforce • Ensures that ProcessQuik contains approved process documentation to serve as a training and workforce development tool • Participates on the CPIB to prioritize and integrate CNIC N8 Process Improvement efforts – currently HQ Division Directors • CNIC N8 Enterprise Workforce: • Participates in process reengineering focus group sessions as subject matter experts • Enacts the reengineered processes, provides feedback on their functioning, identifies additional improvement opportunities, and conducts control testing

13. Live Demonstration of ProcessQuik ProcessQuik is accessed from the “Tools Menu” found on the CNIC Portal homepage under “My Workspace” ProcessQuik is found under the “Accounting and Financial” section of the Tools page

14. Reimbursable Management • CNIC N8 reengineered both Incoming and Outgoing Reimbursable Management processes using our integrated approach to address: • Lack of standardization • Poor overall management of reimbursables • Inadequate controls and compliance metrics • History:

15. Overview of Changes Outgoing Reimbursable Management Process (RWO-G) Incoming Reimbursable Management Process (RWO-P) Old New

16. Integration of FIP and MIC Controls Outgoing Reimbursable Process Map Internal Controls Template Process Dictionary Internal Controls and Testing Page on ProcessQuik 16

17. Key Discoveries • Started out as more of a Lean Six Sigma approach to improve processes, but then learned that it is an excellent vehicle to document internal controls for FIP and MIC auditability • Robust vehicle to discover process improvements and to document standardized processes across the enterprise • Bringing all of the SMEs together enhances communications and improves each group member’s understanding of the entire process, not just their piece while building camaraderie amongst the participants • Integrates the FIP and MIC with improved financial management processes • Clarifies and documents the path toward auditability

18. Way Forward • Achieve auditability of Statement of Budgetary Resources • Continue to reengineer and standardize processes enterprise-wide in coordination with Region N8s • Provide our employees with new workforce development tools and resources • Continue to promote the use of ProcessQuik throughout the Command