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Drew Morgan
Director, Business Integration
Office of the Secretary of Defense - Comptroller
MAY 2015
How the Future Business Systems Environment
Will Help Us Sustain Financial Auditability
v4
OUSD(C) Strategic
Management Plan
FY 2011-2017
Strategic
Management Goals
Championa strong and capable
financial management
workforce
Acquireresources necessary
to meet national
defense objectives
Ensurethe legal, effective,
and efficient use of
DoD resources
DoD Financial Management is Aligned with Higher-Level Strategic Goals
Changes Affecting
Everyone
The Right Skill
Sets and
Career
Framework
Getting More
out of the
Program to
Support
Mission
Confidence in
Public
Stewardship
and Improved
Efficiency
Desired
Outcomes
Emerging FM
Certification
Program
Downward
Pressure on
DoD Top Line
Demands for
Financial
Auditability
Strategy to Budget to Execution –
Knowing DoD Strategic Cascade is the Start of Knowing How You Fit in2
DoD FM Environment
Dramatically Lower FM Business Mission Support
Costs
Improve and Standardize Information
Ensure Auditability
Outcomes
Goals
Maximize Operational
ERPs
DoD Policy Based on
Successful Pilots
Enablers
Strategic Investment Decisions Aligned with FM
Target
Information Driven Standards-Based Reduce Cost
Simplified Affordable Secure Sustainable Auditable
Simplify the Department's FM Environment
Achieve and Sustain an Auditable Environment
Strengthen Interoperability
Achieve Compliance
Improve Decision Making
3
“Burning Platform”
Compelling Need for Rapid Business Integration
Challenges
• Laws, Regulations, Policies
• Culture
• Scarce Expertise
ODO/Component
Department
Federal-wide
Optimum “Enterprise”
Balance
Inherently Government
Federal Shared
Services
Commercial
Outsourcing
Significant Budget Cuts/Mission
GrowthOperational Effectiveness
Visibility, Transparency
Audit Deadlines
Installation/
Command
4
Reduce Total Cost of FM Operations and
Enable Sustained Audit by Reducing FM Systems
IT Budget
Reconciliations, Rework,
Redundant and Manual Processes,
Unsupportable Balances
Auditability, Complexity and
Issues, Point to Point, Data
Calls, Information Uncertainty
Internal Controls,
Material
Weaknesses,
Non-Standards
5
Changing Landscape: Convergence of
Standardization Efforts
Standard Data &
Processes
E2E BPR
Treasury GWA and
IPAC
Transparency /
DATA Act
DoD & Federal IGT
Audit Readiness
FM Strategic Management Plan Goal
SMP Goal
SMP Key Initiatives* Intent of FM Functional Strategy Initiatives’ Goal Challenge Areas
Stre
ngt
he
n D
oD
Fin
anci
al M
anag
em
en
t • Execute the Financial Improvement Audit Readiness strategy and plans to achieve audit readiness by FY 2017
• Implement standards to ensure accurate and timely posting of accounting events and to improve interoperability across core financial management and feeder systems
Improve audit ability to support producing auditable financial statementsAudit Readiness
Eliminate Material weaknesses
Improve Internal Controls over processes that are relied upon for financial reporting Lack of Internal Controls
Data StandardsImprove accurate posting of accounting events to the general ledger utilizingthe standard USSGL and DoD Chart of Accounts
Establish and Enforce Data StandardsAchieve Compliance w/ Treasury RequirementsLink Budget and Execution information through standard reference dataImprove Interoperability among Core/Target FM and Feeder systems Simplify the FM environment by minimizing the number of interface failures Utilizing common standard data elements
Non-Compliance w/ Data Standards
Too Many Interfaces
• Improve, standardize, and reengineer financial management processes to gain efficiency in financial management operations in order to produce better financial information to support decision making.
• Maximize financial management operational capabilities through technology to achieve a positive return on investment and lower cost of financial management operations
Simplify the FM environment by standardizing processes eliminating manual processes
Manual or Non-Standard Processes
Simplify the FM environment by eliminating duplicative processes Duplicative Processes, TooMany Systems
Simplify the FM environment by minimizing the number of systems necessary to conduct business events
Too Many Systems
Lack of quality or timely access to data/information
Simplify the FM environment by eliminating # of legacy systems
Improve quality and integrity of financial information in systems of record
Improve data, processes, technology in order to support timely, accurate and reliable financial information for business decisions
7
Audit Deal-breakers
• Universe of Transactions (UoT)
• Funds Balance with Treasury (FBWT) balanced
• Unsupported Journal Vouchers
• Reconciliations (Feeders/GLs/Financial Statements
• Systems Readiness
• Supporting Documentation
FM Enterprise Initiatives focus on fixing root causes that
prevent us from reaching and sustaining audit
8
Integrated Financial Improvement Grand Strategy
FM Standards
& Compliance
Standard Processes
& Systems
Leverage
Technology
Business
Outcomes*
Direct Treasury
Disbursing
Cost
Management
Funds
Distribution
Daily Cash
Reporting
Standard PPBE
Delinquent Debt
Management
Treasury System
Roll-Out
Sub-Allotment
Execution
Intra/Inter-Govt.
Trans-Invoice
Payment Platform
(IGT / IPP)
Business Results
Maximize and
Leverage ERPs
Shared Services
Standard
Transaction
Broker &
Business Analytics
• Better financial information for
business decisions
• Auditable financial
statements
• Transparency of
financial data
Interoperability among business systems
End-to-end funds traceability and linkage
between budget and expenditures
Stronger Internal Controls impacting
financial reporting and auditability
Compliance with Govt-wide Accounting (GWA) Initiatives
Enterprise Planning, Program Budget &
Exec. (PPBE)
OSD FIAR
Plan
Guidance
SSAE16
FISCAM
USSGL
SFIS/SLOA
* Aligns with the DoD Strategic Management Plan (SMP)
Reducing the Number of Systems and Interfaces Through Standards &
ERPs Offers the Most Potential for &
Achieving Auditability
Annual Campaign
Plans• Applying FM Initiative
& Enablers
• Resulting in Annual
System Retirements
System
System
System
System
System
System
System
System
System
System
System
FM ERP
System
System
System
System
Point-to-Point Interface
Point-to-Point InterfacePoint-to-Point Interface
Point-to-Point Interface
Point-to-Point Interface
System
System
System
System
System
System
System
FM ERP
System
System
Point-to-Point Interface
Point-to-Point Interface
Point-to-Point Interface
Point-to-Point Interface
System
System
FM ERP
SystemSystem
System
System
System
System
System
Point-to-Point Interface
Point-to-Point Interface
Point-to-Point Interface
Point-to-Point Interface
Point-to-Point Interface
System
Point-to-Point Interface
System
FY15
FY19
FY16
FY17
FY18
FM ERPFM ERP
FM ERP
Cross Functional ERP
Cross Functional ERPCross Functional ERP
Cross Functional ERP
Cross Functional ERP
Cross Functional ERPFM ERP
FM ERP
System
STANDARD DoD
FM TARGET
ENVIRONMENT
~ 327 Roadmap
Systems ,
Annual Budget =
$719M*
~ 120Target Systems,
Annual Budget = ~$220M
10
Auditability
TARGET- Reduce Interfaces via Standard
Transaction Broker
- Minimize Reconciliations
- Supported Balances
327 Systems
2,000+ Point-to-Point Interfaces
Numerous Manual Reconciliations
Unsupportable Balances
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
# Systems,
Interfaces,
Manual
Processes
Simplified Environment and
Improved efficiencies
Potential Savings to:
Repurpose to the
Mission
Not
sustainable
at current
budget
levels
Auditability
sustainable at current
& future budget levels
11
~ 327 FM
Systems,
SNaP-IT Budget =
$719M*
Reducing the Number of Systems and Interfaces Through Standards & ERPs
Offers the Most Potential for Simplifying the Environment and
Reporting/Cash(BEIS(DDRS,DCAS)
1099-TRP, CORAS,SORS)
Business Warehouse/Analytics
(BEIS- DCD/DCW, EBI, BI tool)
Target FM Business Systems Environment
Core Acct/ ERPs: (DAI , EBAS, Navy ERP, GFEBS, DEAMS,EBS, GCSS-A, LMP, MSC-FMS, GCSS-MC, SABRS,FAMIS)
Treasury (GTAS, CARS,
USA Spending)
We Can Achieve This by Executing the FM Functional Strategy
Standard Transaction Broker (STB)
(GEX)
Component Capabilities
Functional Areas
FMBudget
InventoryAcquisition
Payroll/PersonnelTravel
Logistics
Vendors
Portal
Enterprise-wide Standard
Data, Processes and
Systems
Disbursing(ADS,DDS, ERPs(Direct
Treas. Disbursing))
NGRMS, DTS, IPPS’, DCPS, EFD
12
DCD/DCWCentral data
repository
Cash
Traceability*Enterprise Daily
Cash Reporting and
Traceability (DCAS)
Initiatives Affecting FBWT
Sub-Allotments*,
**Execution and
internal controls
OversightImplement
enterprise
standards
Change
ManagementPromote
organizational
change
CARS
ImplementationReporting
IGT/IPP*Standard buy/sell
processes
Direct Treasury
Disbursing*,**Centralized post-pay
Auditability
Delinquent
DebtManagement of
delinquent debt
Results Outcomes
• Daily traceability of all outlays/collections via DCAS/GEX
• Daily validation of accuracy of disbursements and collections via GEX
• Daily reconciliation of Treasury accounts with Component accounts
• Daily reconciliation of Treasury CARS to GL via DCAS/GEX
• Reduction in reclassification entries
• Reduction in statement of differences, use of clearing accounts, or
unsupported JVs
Data
Management*,*
*Standard financial
data/central data
broker
CollectionsReceivables
management
Existing Working Group
* Initiative directly relates to Audit Readiness, Daily Funds Balance w/Treasury (FBWT)/Cash Balancing Goals
** Initiative heavily enables Auditability & Strengthens Financial Controls or Maximize ERPs as Key Enabler
Legacy
Systems
DrawdownTransitions and
sunsetting
DSSN
Drawdown
Reporting1219/1220
Funds Distribution*,
**Electronic funds
distribution
Contingency
OperationsSupport
GTASSingle reporting
requirement
Sensitive
ActivitiesClassified data
CATWG
DoD G/L
As-Is Cash TraceabilityEntitlement Disbursement
Treasury (FACTS)1219/1220/224
Funds Balance with Treasury
(FACTS)
EOM Treasury Reporting by Dept End of Month
Reconciliation
and Rework
A
C
B
D
DDRS
E
F
Entitlement=
Disbursement(B)(A)
Disbursement=
EOM Treasury Report (by Dept)
(B) (C)
EOM Treasury Report (by Dept) =
G/L(D)
(C)G/L
=Treasury (Detail)
(E)(D)Treasury (Detail)
=Treasury (GL)
(E) (F)
! !
5 levels of manual recons
x 4 disparate processes (IN, CL, CO, + ODOs)
= 20 points of failure for FBWT traceability
As Is “Tie Points”
Note: Need data from Component, ODO & DFAS to calculate the systems &
manpower costs to manage/sustain these 20 Tie Points
Initiative: Enterprise Cash Accountability
Entitlement
Treasury(CARS)
DCAS
G/L
Route/Validat
e
Reconciliatio
n
A
C
B
DCAS=
Treasury(B) (D)
DCAS=
G/L (DDRS)
(B) (C)
G/L=
Treasury(C) (D)
Real-time Validation
FBwT / GLAC
DDRS
D
3 levels of automated recon
X 1 enterprise process =
FBWT auditability
To Be “Tie Points”
Initiative: Intra-governmental Transactions
System Improvement
• Establish enterprise data warehouse of intra-governmental transactions for audit, research and analysis
• Automate handshake and agreement between buyer and seller before settlement (reduces chargebacks)
• Leverage DoD Global Exchange (GEX) solution and Standard Line of Accounting (SLOA)
Standardization
• Establish common identifier to synchronize buyer
and seller accounting transactions
• Establish proper general ledger treatment for all
events
• Build common Intragov Data standard
Process Improvement
• Documented terms and conditions
• Documented performance and receipt
• Eliminate the pay and chase mentality
GFEBSSTAN-FINS
SOM-ARDS
*PBAS: TI-21 Non-General
Funds
DEAMS GAFS-R
FUN
DS
DIS
TRIB
UTI
ON
AC
CO
UN
TIN
G S
YSTE
MS
OSD Level – EFD Phase 1(Budget structure down to President’s Budget BLI)
• Handles the initial OUSD(C) FAD distribution to the original allotment holder; delivers funding via interface
• EFD includes all DoD Appropriated Funds (General (less BRAC) and Non-General) down to BLI (Includes TI-57, TI-21, TI-17, and TI-97 funds)
• Includes SFIS/SLOA elements BS/POA, BA, BSA, BLI, (or B1-B4) at this level
Component Field Level – EFD Phase 2(Below Pres Bud BLI)
• EFD now handles the sub-allotment of TI-97 funds within the original allotment holder’s organization and the sub-allocation of funds to other Defense Organizations
• EFD carries forward SFIS/SLOA elements identified above and includes the functional area code (BP), sub-allocation Code (Limit), CA1 (Org Code), O3 (FSN)
Component Accounting Systems
• Receives TI-97 FAD interface file from EFD at each level of distribution and begins executing funds when they are distributed to the final allotment holder
• TI-21, TI-57, and TI-17 field level FADs will be arriving from GFEBS, AFM, and PBIS respectively; (TI-21 Non-General Funds will be distributed via PBAS-FD until Army determines future plan)
NAVY-ERP
STARS-FL
TI-97 funds below BLI
PBIS: TI-17 funds below
BLI
AFM: TI-57 Funds below
BLI
EBIZEBS WAAS
DAIEBAS
Manual
Automatic
GFEBS: TI-21 General Funds
below BLI
EFD
CEFMS
SABRS
Why do we need a standard
transaction broker?
TODAY TARGET
Point-to-Point “Spaghetti” – Expensive!!! Extremely difficult to Manage or Standardize
Hub and Spoke – Lower Cost, Standardization, Audit interface controls,
Scalable
* GEX is the De Facto Standard for Integration among 4th Estate
Business Systems, and is being evolved to serve as the Target
Standard Transaction Broker.
20
Disbursing Systems
Accounting Systems
GEX and Contract Pay – An Example-
AF DEAMS
DFAS GAFS-R
Army LMP
Army GFEBS
Army CEFMS
DLA EBS
DLA DAI
JS EBAS
Navy ERP
DFAS SABRS
DFAS STARS
MOCAS Support Systems
Contracting Systems
DFAS EAS
DCMA MOCAS (Feb-17)
DCMA MOCAS (Feb-17)Treas PAM/SPS
NOT GEX
Connected
LegendSLOA Ready Dates Not
Provided
SFIS Configured
SLOA Long-term Plan
SLOA Plan Not Provided
SLOA Ready by GWA
Not SLOA Applicable
DLA WAWF
Support Systems
DFAS SCRT
DFAS EUD
DFAS BAM
DFAS DCAS (Sep-14)
DLA DDRS (N/A)
Treas Reporting (PIR, CARS)
DLA EFD
DLA EDA (May-15)
DLA SPS (May-15) DLA eProc (Feb-14)Army PADDSAF ConWrite
Standard Enterprise Lines of Accounting
Partner
System
Partner
System
Partner
System
Partner
System
Partner
System
Partner
System
Partner
System
Further Leveraging Integrated ERP Capabilities Offers the Most Potential
for Reducing the Number of Systems and Interfaces
US Standard General Ledger
(Budgetary and Proprietary)
Budgetary Resource
Management
Payment Management
Financial Reporting
General Ledger Management
Funds Balance with Treasury Management
Receivables Management
Cost Management
FM Functional Strategy
Core Financial System
Functions/Capabilities
Execution-Level Planning
Programming
Budget Planning and Formulation
Exhibit Generation
Funds Distribution & Control
Prior-Year Actuals Feed
Translation to Capabilities Available
Today in the Core FM ERPs
Matching & Payment Warehousing
Disbursing
Billings & Collections
IPACS
Budget Execution/ Funds Mgmt/ Funds Control
(General & Working Capital Funds)
Commitments, Obligations, Expenditures, Reimbursables
Treasury and OMB Reporting (Standard Feeds)
Cost Accounting (GFEBS,DAI Navy ERP)
Cost Accumulation and Allocation
Timekeeping (N-ERP & DAI use T&L)
Acquisition
Core FM
Inventory
Payroll/ Personnel
Travel
Logistics
ERPs Offer Additional
Capabilities for Other
Functional
Areas
Standard Interfacing / Business Integration
Standard Business Intelligence and Analytics
ERP capabilities maximized today
Initiatives underway to further leverage
Further leveraging needed – Enterprise
PPBE ConOps and Cost Management
Framework / Proof of Concept underway
FM Initiatives are now underway leveraging all of
these ERP capabilities
23
ERPs and Silos
24
Core Accounting:
General Funds
Core Accounting:
WCFs
Budget Formulation
& Exhibit GenerationTimekeeping &
Cost Management AcquisitionInventory &
Logistics
ODO-DAI
ODO-EBAS
Army GFEBS
Army LMP
Army GCSS
Navy ERP
MC-GCSS
AF-DEAMS
Core FM
Other
Functional
Areas…
planned
SLOA Cost Elements Aligned Cost Framework
Work Order
Number
Functional
Area
Cost
Element
ActivityProject
Cost
Center Cost
Center
• SLOA Component defined data elements roll up into the Enterprise Framework
• Ties Component managerial accounting to enterprise managerial accounting
• Allows Components to determine lower level line item breakout of funding documents (e.g. Payroll, Contracts, etc.)
• Enables standardized reporting
26
26
Initiative: JITC SFIS & USSGL Compliance Reviews
27
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Chart of Accounts Posting Logic SFIS Business Rules
Validation
DDRS Trial Balance SLOA Interfaces SFIS 10.0 Interfaces
1.43% 0.65%16.47%
42.11%
100.00% 90.91%
Compliant
Not Compliant
Areas for USSGL/SFIS/SLOA Compliance:
1) System Posting Chart of Accounts to the DoD Chart of Accounts
2) Posting Logic
3) SFIS Attribute Base Configuration
4) DDRS SFIS Trial Balance
5) SLOA Interfaces/Data Exchanges
6) SFIS 10.0 Interfaces/Data Exchanges
*
DATA Act RequirementsFFATA Sec. 3 “Full disclosure of federal funds”
28
To be posted on USASpending. Gov“:
1. Reporting of Appropriation level data by Program Activity and Object Class in FY2016.
2. Linking of Award Information with Obligation and Outlays from Financial Systems
and posted beginning May 9, 2017.
How the Future Business Systems Environment Will Help Us Sustain Financial Auditability?
1. Simplify the Target Environment
2. Simplify key E2E processes
3. Minimize point-to-point interfaces
4. Retire legacy systems & use functionality in ERPs
5. Comply with data, exchange, and process standards
6. Leverage technology to gain efficiencies
29
Why will this enable DoD to Sustain Financial Auditability?
1. Easier to provide a Universe of Transactions (UoT)
2. Reduce the need for unsupported JVs
3. Better enable reconciliation of FBWT
4. Lowers audit-related costs• Systems sustainment
• Interfaces
• FISCAM reviews
• Extra substantive testing/sampling … lowers audit costs
• Fewer recons & re-work … lower labor costs
5. Can rely on Shared Services & related SSAE-16s
30
How Does SLOA Support the FM Strategic Initiatives?FM Strategic Initiative Outcomes How SLOA Enables Each Outcome
Financial Improvement and Audit Readiness (FIAR)
SBR Assertion FY 2014Financial Statement Assertion FY 2017
• Software tracks and records audit trail at each exchange of data, business rule modification, format transformation, etc.
• Enables matching transactions between multiple accounting/feeder systems in 1-to-1 format which can be easily reconciled
• Enables cleaner end-to-end transactional flow and processing
Standard Line of Accounting (SLOA) Improved E2E FM Information Exchange • Enables clean interoperability across the enterprise E2Es
SFIS/USSGL Compliance and Validation
• Proper Posting of Transactions in DoD Financial Systems
• SFIS Compliance Plans as part of Component OEPs
• Workbooks define and reformat subset of SFIS data (SLOA) into standard definitions
• Data compliance with Treasury and OMB standards
Enterprise Funds Distribution/Next Generation Resource Management System (EFD/NGRMS)
Integrated capability to formulate, distribute, track and execute the DoD budget
• Links transactions to the Budget/Funds Distribution data• Transformed, standard data for allocation and distribution of funds
identically across the enterprise
Direct Treasury Disbursing Standard FBWT Daily Recon Process
• Enables automatic matching of disbursement to accounting system (near real-time recon)
• Enables routing ERP data directly to Treasury• Provides necessary data to prepare a Direct Treasury Pay Ready File
Government-wide Accounting (GWA)
Daily Treasury Reporting - GWA compliance by Oct. 14Standard FBWT Daily Recon Process
• Enables translation of TAS/BETC standard data elements to ADS• Consolidates DSSNs into standard repository for daily reporting
Intragovernmental Transactions (IGT)
• Standardize IGT Process DoD-Wide• Eliminate manual processes and multiple forms• Single Repository for IGT Orders for audit readiness• Reduce IGT Eliminations material weakness
• Enables standardized MIPRs necessary data to perform eliminations• Intakes data formats into single central repository from multiple buyer
systems and transforms it into a standard format, and vice versa• Standard buyer and seller data provides data matching and reconciliation
Delinquent Debt ManagementDelinquent debt collections to treasury after 90 days, using re-engineered processes
• Enables matching and analysis of invoice data to obligation data in real-time and analyzes discrepancies between the two
• Provides flags against delinquency business rules and provides error report when rules are violated (document LOAs overpaid, etc.)
Maximize ERP Capabilities• E2E Process Improvement• Eliminate redundant capabilities in the E2Es
• Take advantage of imbedded controls within ERPs• Eliminates inefficiencies and reliance on feeder systems• Reduces need to point-to-point interfaces & downstream errors
Standard Transaction Broker Reduce/Minimize Point-to-Point Interfaces• Already connected to the GEX• Minimizes need to reconfigure legacy systems• Enables translation, validation, and routing between key E2E systems
Business Intelligence ToolsNear real-time, standards-based information and analytics from authoritative sources
• Software provides detailed reports at each exchange of data, business rule modification, format transformation, etc.
Cost ManagementConsistent cost data and management across the Department
• Enables use of cost management codes and OCC for cost reporting• Provides the cost management information on every purchasing
transaction which will facilitate Full Cost Accounting 33
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