Existence and Completeness

The Department of Defense (DoD) is committed to achieving its audit readiness goals while fulfilling its national security mission.  In an effort to establish audit readiness priorities, the Under Secretary of Defense (USD), Comptroller (C), Mr. Hale, directed the Department to focus on improving the tools and information needed to effectively manage their missions by issuing a memorandum in August 2009 that established the audit readiness priorities as the Statement of Budgetary Resources (SBR) and Existence and Completeness (E&C) of mission critical assets.  The November 2, 2009, USD (AT&L) memorandum, “Priorities for Improving Financial Information and Achieving Audit Readiness,” endorses USD(C)’s priority to validate the existence and completeness (E&C) of mission critical assets on the path to audit readiness. In order for Components to assert to the existence and completeness of their mission critical assets, Components must demonstrate, with adequate supporting documentation, their reported assets physically exist at a given date and the accountable property records are complete and reflect all assets owned by the Component.    Mission Critical Asset E&C assertion means:

By asserting to existence and completeness of mission critical assets, DoD expects to:

Through this existence and completeness initiative, Components have reviewed the accuracy and completion of the Military and General Equipment property records maintained in APSRs and logistical systems. In addition, by following the FIAR guidance, Components are evaluating the effectiveness of their business processes and control environments to ensure these systems remain accurate. Having reliable, accurate data enables the Components to know what readiness assets are available, where these assets currently reside and their condition.

USD(C) and USD(AT&L) tasked DoD Components to conduct E&C initiatives that will illustrate that their mission-critical assets are being accounted for properly in their accountable property systems of record (APSRs) or identifying process, control, or system deficiencies impeding success and developing plans to remediate those impediments. In kicking off this effort, USD(C) targeted “quick win” assessable units (i.e., high value/low density items) which the Component would be able to assert to E&C by the end of the 3rd Quarter FY 2011. In December 2013, the Army submitted a Military Equipment and General Equipment E&C assertion package; this package is currently under review by OUSD(C) and P&EP. Currently, the Department estimates approximately 63% of military and general equipment has been asserted to as audit ready. As E&C assertions are made for Military Equipment, Components will face challenges as they begin their assertion processes for general equipment which consists more of low dollar / high density assets.

The remaining equipment that needs to be asserted to as “audit ready” will be difficult. Contributing to this is the disposition of assets in theater and low dollar / high density general equipment that traditionally has not been the focus of audit readiness. A subset of GE is Government Furnished Property (GFP), which has been identified as a systemic weakness in the Agency Financial Report. In FY 2013, the USD(C)/CFO established a completion date of June 30, 2016, for existence and completeness of mission critical asset audit readiness. Resolving existence and completeness issues is an essential first step to valuing assets and reporting them on the Department’s Balance Sheet.

Property & Equipment Policy is currently assisting with the E&C initiative by:

Moving forward, P&EP will work with the Components to complete E&C for assessable equipment units for the GPP&E financial statement.

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