Interest from Pentagon, Capitol Hill fuels DLA’s quest for audit readiness

Photo By Sara Moore | A new push from the secretary of defense has increased interest throughout the Defense Department on audit readiness, and DLA now finds itself with more support as it faces a crucial juncture in this process.  

FORT BELVOIR, VA, UNITED STATES

04.12.2012

Story by Sara Moore 

Defense Logistics Agency   

FORT BELVOIR, Va. - The Defense Logistics Agency’s quest to achieve audit readiness is not a new one. Officials have been working for the past five years to improve the agency’s financial practices and make its business processes ready for audit. But a new push from the secretary of defense has increased interest throughout the Defense Department on audit readiness, and DLA now finds itself with more support as it faces a crucial juncture in this process.

An Oct. 13 memo from Secretary of Defense Leon Panetta to senior DoD leaders emphasized the importance of audit readiness and set deadlines for certain areas to be audit-ready by 2014, in advance of the department’s deadline of 2017 to achieve full audit readiness. The secretary’s interest in this topic brought it to the attention of the leaders below him and members of Congress, noted Tony Poleo, director of DLA Finance. This interest has increased pressure on all DoD agencies to get themselves ready for audit, but for DLA, this pressure is really a benefit, Poleo said.

DLA has already made progress toward audit readiness, Poleo said, but having direct interest from leaders in DoD and Congress when it comes to changing policies or coordinating with the military services will help move the process along more quickly.

Audit readiness will help the agency achieve four goals, said Simone Reba, deputy director of DLA Finance and program manager for audit readiness.

“Audit readiness helps us stretch the budget, make more informed decisions, increase confidence and public trust, and it’s just good business,” said Reba, who took charge of the agency’s audit readiness efforts in March.

Being able to look deeper into DLA’s financial data and ensure it is correct is a best practice that is crucial to private firms, she said.

“We want to make sure the numbers we’re reflecting in our financials are accurate,” Reba said. “In the private sector, if you don’t do this, you go out of business, because investors lose confidence in the company. What’s the difference between us and the private sector in that regard? Don’t we owe it to the taxpayers to give them that same level of confidence?”

DLA’s level of auditability goes beyond ensuring the agency’s financial data is correct, she said.

“We must also prove that we have good controls in place to mitigate risk and to ensure our data cannot be easily manipulated,” Reba said. “Financial data can often be used as a key indicator to determine whether something is amiss in our processes.”

Reba used DLA Distribution as an example. If inventory losses there increase sharply in a given month, DLA management will be able to prove why the losses occurred, know whether inventory quantities are accurate, and better understand what can be done to ensure those losses do not recur, she said.

“A lot of people think audit readiness is just a financial exercise, but it’s not,” Reba said. “It’s about understanding the health of the business.”

Audit readiness will also help DLA’s leaders make better decisions as looming budget constraints compel the agency to do more with less, Reba said.

“When agency leaders understand how much the agency’s processes cost, they can make more informed decisions on what costs can be eliminated without sacrificing mission performance,” she said.

Reba pointed out that DLA often provides its customers with similar services using unique business processes. Each process has enduring costs associated with its uniqueness, including training, information technology and auditability.

“As we are able to streamline and standardize our processes, auditability will become more achievable and overall costs will be reduced,” she said.

To meet the 2014 deadline for the selected areas, DLA leaders and employees will put in a lot of work in the near term, Poleo said. While the effort will be new to many employees and may seem intimidating, Poleo stressed that the goal is to ensure business processes are being performed consistently and that DLA’s documentation reflects what the agency is actually doing.

“This is not about trying to catch employees doing the wrong thing,” he said. “It’s really about finding issues, servicing them and fixing them, and putting employees in a position to succeed. And then the agency will succeed.”

Ensuring all these areas are audit-ready by 2014 will be a challenge, especially since the majority of DLA’s work will have to be done in the next year or so to allow for review by auditors and evaluation by DoD senior leaders, Poleo said, but the amount of work the agency has already put in will be a big benefit.

• Date Taken: 04.12.2012
• Date Posted: 04.12.2012 14:47
• Story ID: 86662
• Location: FORT BELVOIR, VA, US