Defense Logistics Agency Land and Maritime associates gathered in the Defense Supply Center Columbus’ Operations Center Auditorium June 10 for the DLA Audit Task Force Road Show Town Hall meeting titled “Building Connections.”
During the presentation associates heard directly from Navy Rear Adm. Deborah Haven, director of the Defense Logistics Agency Audit Task Force, regarding how critical audit efforts are to the DLA mission.
The DLA Audit Task force was created in November 2018 to coordinate, integrate and synchronize audit efforts across the DLA.
“This is all about the readiness cycle time and resources required to support the warfighter,” said Haven. “All eyes are on DLA; this audit process is briefed regularly at the highest levels of our government.”
The agency’s audit-readiness efforts began six years ago, when senior leaders first challenged associates to adopt new procedures and controls to ensure the accuracy of DLA’s financial statements.
The 2010 National Defense Act mandated that the Department of Defense have all of its financial statements audit-ready by the end of fiscal year 2017. DLA was the first government agency of its size and complexity to assert full financial-statement auditability in September 2015, two years ahead of schedule.
“Approximately 75 % of the issue areas were due to lack of internal controls, accounting procedures, oversight and lack of documentation,” Haven said.
In 2017, accounting firm Ernest & Young issued a disclaimer of opinion on the agency’s financial records indicating it was unable to form an opinion on those records. The focus on audit readiness has challenged associates across the agency to view standard operating procedures and business processes through a new lens.
Haven emphasized DLA associates need to incorporate an audit mindset into their day-to-day normal business routines and procedures, while stressing it will require first-line supervisors to incorporate audit practices into daily conversations, staff meetings and weekly team meetings.
“It’s a collaborative process and the power of this cross-functional team is that it brings numerous parts of the agency together to try and resolve discrepancies in the best way possible,” Haven said.
Although DLA has made improvements to ensure standard operating procedures and business processes are compliant with general accounting principles, there’s still room for improvement.
To address a lack of sufficient internal controls noted in the fiscal year 2019 audit review, DLA has implemented an enterprise wide A-123 Program to assess risks and establish internal controls.
During the town hall meeting Haven presented video message from DLA Director Army Lt. Gen. Darrell Williams, where he stated the A-123 Program and Audit Taskforce is critical to DLA’s success towards achieving an unmodified audit opinion.
“The Audit Task Force is tasked with ensuring compliance with the Office of Management and Budgetary Circular A-123,” said Williams. “The A-123 program is designed to foster an open, transparent culture that encourages people to come forward with information about potential risks.”
Haven concluded the town hall presentation by encouraging all associates to be active participants in the process, apply their knowledge with the processes they support and help identify internal controls associated with those processes.
“A key component of the program is the development of internal training to establish skills required for the proper identification and mitigation of risks,” Haven said. “Once implemented, internal controls will help us drive positive audit results, enhance our decision making process and mitigate risk.”
Williams, who personally considers the audit of the highest priority, proclaimed the audit is here to stay and provided the following ways DLA associates can help ensure DLA achieves an unmodified audit opinion:
• Follow standard operating procedures
• Understand the internal controls
• Identify risks in processes
• Remain consistent and accountable for processes
• Provided evidential matter for every transaction
• Submit complete and accurate supporting documentation
• Conduct audit exercises before auditor arrives