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Senior Level Steering Group Senior Assessment Team FY 2011, 4th Quarter Meeting Thursday, July 14, 2011 1300-1400

Agenda. Schedule of Completed/Upcoming EventsMaterial Weaknesses not incorporated in Annual Statement of Assurance (ASOA)Army Publishing Directorate (APD) FY 2011 ASOA Review and ApprovalFY 2011 MilestonesASOA Report SummaryApprove ASOAWay Ahead. 2. FY 2011 Schedule of Events.

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Senior Level Steering Group Senior Assessment Team FY 2011, 4th Quarter Meeting Thursday, July 14, 2011 1300-1400

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    2. Agenda Schedule of Completed/Upcoming Events Material Weaknesses not incorporated in Annual Statement of Assurance (ASOA) Army Publishing Directorate (APD) FY 2011 ASOA Review and Approval FY 2011 Milestones ASOA Report Summary Approve ASOA Way Ahead 2

    3. FY 2011 Schedule of Events 3

    4. FY 2011 Schedule Events 4

    5. AMC USAMC-10-001, Contracting Secure Environmental Contracting (SEC)/Special Access Programs (SAP) Oversight (ACTION: ASA(ALT)) [Briefer: Mr. Tom Colangelo] Weakness states: Little or no oversight of SEC and SAP through Program Management Reviews or Contract Management Reviews Forwarded to ASA (ALT) – This is being addressed in the revision of AR 715-30. The updated regulation is with the Army Publications Directorate. The USAAA is also reviewing to determine if it is adequate to eliminate the material weakness. This action item is briefed quarterly at the Management Control Resolution Process meeting chaired by TMO. ARNORTH G-3/G-6 ARNORTH-2010-001, Theater Signal Enabler (Action: Army Cyber Command) [Briefer: Jorge Roca] Weakness states: Lack of signal capability in USNORTHCOM (evaluated in FY 2010, not included) Army Cyber Command Response: To our knowledge there has been nothing rescinding the Army Campaign Plan (ACP) Decision Points 35, 36, or 99 or Army Regulation 10-87, nor anything altering the manner in which ARNORTH obtains signal support. We recommended in FY 2010 that if ARNORTH was seeking additional force structure for their G6 that it be pursued via the Force Design Update and Total Army Analysis processes, and that recommendation still stands. AMC USAMC 08-001, Contract Administration (Action: ASA (ALT)) [Briefer: Steve Jaren] Weakness states: Lack of personnel, not staffed to provide adequate oversight required by Army doctrine ASA(ALT) Response: The material weakness is already addressed in the ASA(ALT) ASOA Tab B material weaknesses for Oversight of Service Contracts. There is no new information or change from what is already being monitored and addressed in the material weakness correction. FY 2011 Material Weaknesses Submitted for Review Not Incorporated in the Army Statement 5

    6. USARC 06-001, Contract Management and Oversight (Action: ASA (ALT)) [Briefer: Mr. Steve Jaren] Weakness states: Systematic problems were first encountered in FY 2002 involving Contract Support at the U. S. Army Reserve Command (USARC) and Office of the Chief, Army Reserve (OCAR) Headquarters. While solutions to resolving these problems have stabilized at the strategic level of the Army Reserve, problems in the subordinate commands were not as apparent. ASA(ALT) Response: The material weakness is already addressed in the ASA(ALT) ASOA Tab B material weaknesses for Oversight of Service Contracts. There is no new information or change from what is already being monitored and addressed in the material weakness correction. USARC 08-002, Defense Joint Military Pay System (Action: Army G-1; Assist: DFAS) [Briefer: Mr. James Riley] Weakness states: The Defense Joint Military Pay System-Reserve Component (DJMS-RC) inability to automate payment of new entitlements and incentives. DJMS-RC does not allow recording of many pay entitlements and incentives on the Soldier’s Master Military Pay Account (MMPA) for automatic payment. G-1 Response: Although the Army G-1 acknowledges the potential weakness identified by the USARC G-8, there are policies in place to mitigate the risk.  Currently, the DFAS Automated Data Systems (ADSM) Manual and DFAS Military Pay messages establish policy and procedures, which clearly outline processes for non-automated transactions to lessen the risk of improper payments, and or duplicate payments. FY 2011 Material Weaknesses Submitted for Review Not Incorporated in the Army Statement 6

    7. 7 FY 2011 Material Weaknesses Submitted for Review Not Incorporated in the Army Statement USARC 03-002, Army Reserve Pay System Inability to Establish Allotments for Mobilized Army Reserve Soldiers (Closed in FY 2006 – reopened FY 2011 with request for evaluation) (Action: Army G-1) [Briefer: Mr. James Riley] Weakness states: Mobilized Army Reserve Soldiers cannot establish allotments, an option available to Active Duty soldiers. Mobilized Army Reserve Soldiers stay on the reserve pay system (DJMS-RC) instead of transferring them to the Active Component pay system. DJMS-RC is not currently capable of managing allotments and, because of its age and plans for replacing it; DJMS-RC has not been updated. G-1 Response: The inability of Mobilized Army Reserve Soldiers to establish allotments is not a significant deficiency, which would result in a reasonable possibility that a material misstatement will not be prevented or detected. Furthermore, it does not represent an internal control weakness given there is no risk of actual or potential loss of resources or property. Albeit, a potential for adverse publicity does exist, the level of scrutiny by no means will diminish the credibility or reputation of management or impair the mission capability of the Army. Recommendation: Close as unjustified, or return to the reporting organization for monitoring and resolution at a lower level. USARC 10-001, Retirement Services Program/Limited Army Reserve Retirement Services Subject Matter Experts (Action: Army G-1) [Briefer: Mr. John Radke] Weakness states: The Army Reserve does not currently have a system to provide accessible Pre/Post retirement services to retiring and retired troop program unit Soldiers and their Families comparable to those provided to Active Component (AC), Active Guard Reserve and National Guard (NG) personnel. G-1 Response: This issue is being worked internal to the Army staff in close coordination with both the USARC and the ARNG leadership. I do not recommend this issue be elevated to DOD; HQDA is not seeking their direct involvement at this time. The USARC leadership and their G-1 team, and Army RSO are fully engaged to resolve this issue.

    8. FY 2011 Material Weaknesses Submitted for Review Not Incorporated in the Army Statement 8  NGB G-4/G-8, Army National Guard (ARNG) Equipment Tracking (ACTION: G-8) [Briefers: Mr. Thomas Henion and COL Jake Wayman] Weakness states: The ARNG cannot readily and accurately determine when and in what quantity new equipment is delivered to ARNG units and what year and appropriation procured the equipment. G-8 response: Consistent with OSD “Transparency Implementation Instructions” Army G-8 provides OSD Reserve Affairs with quarterly “Equipment Delivery Reports” that track the delivery of equipment to the ARNG & USAR by year of appropriation HQDA continues to provide component level funding and quantity data on annual budget exhibits In addition to complying with OSD instructions, two significant process improvements have occurred: Development of the Future Years Defense Program (FYDP) Collaboration Tool. On-line spreadsheet that allows HQDA staff elements and Army PEOs/PMs to provide information required for budget exhibits in a parallel, collaborative environment. Allows ARNG and USAR staffs to monitor changes in component funding levels and quantities Eliminates the sequential staffing previously used and should help reduce the frequency of errors between the P-1 / P-1R and the P-40 and P-21 exhibits Demonstration of how the Unique Item Identifier (UII) in the PBUSE acceptance record is linked to contract information and treasury codes to reveal both unit-receipt and appropriation source. Allows the Chief, National Guard Bureau to see in one authoritative place both the unit-receipts certified by property book officers and the appropriation sources certified by contracting officers. Documented as a program requirement for GCSS-Army, GFEBS and AESIP

    9. 9

    10. FY 2011 ASOA Highlights 10

    11. FY 2011 ASOA Highlights (Cont’d) 11

    12. 12

    13. Material Weakness Status Material weaknesses carried over (FY 2010) 4 Open Internal Control over Nonfinancial Operations (ICONO) Expeditionary Contracting Oversight of Service Contracts Reporting of New Equipment in Transit Reporting Accurate Obligations for the Permanent Change of Station (PCS) Program 1 Closed (ICONO) Logistics Asset Visibility and Accountability 22 Open Internal Control over Financial Reporting (ICOFR) 2 Open Internal Control over Financial Systems (ICOFS) (formerly reported under ICOFR) 13

    14. 14 Expeditionary Contracting

    15. 15

    16. 16 Reporting of New Equipment In-Transit

    17. 17 Reporting of New Equipment In-Transit (Con’t)

    18. 18

    19. 19

    20. Material Weaknesses – Internal Controls Over Financial Reporting (ICOFR)

    21. FY 2010 Auditor Identified Weaknesses Fund Balance with Treasury (GF) Inventory and Related Property (GF & AWCF) General Property, Plant, and Equipment (GF & AWCF) Environmental Liabilities (GF) Intragovernmental Eliminations (GF & AWCF) Accounting Adjustments/Other Accounting Entries (GF & AWCF) Accounts Receivable (GF) Accounts Payable (GF & AWCF) Statement of Net Cost (GF & AWCF) Abnormal Account Balances (GF & AWCF) Statement of Budgetary Resources (GF & AWCF) Reconciliation of Net Cost of Operations to Budget (GF & AWCF) Contingency Payment Audit Trails (GF)

    22. ICOFR Material Weaknesses

    23. ICOFR Material Weaknesses

    24. ICOFR Material Weaknesses

    25. ICOFR Material Weaknesses

    26. ICOFR Material Weaknesses

    27. ICOFR Material Weaknesses

    28. ICOFR Material Weaknesses

    29. ICOFR Material Weaknesses

    30. ICOFR Material Weaknesses

    31. ICOFS Material Weaknesses

    32. ASOA Report Summary

    33. What’s Next? Our next SLSG is: October 27, 2011 1300-1400 Pentagon Conference Center Room M2 Thank you for your continued support. 33

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