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MISSION
The Army is committed to integrating audit remediation efforts into our daily business operations, culture, and policies. By focusing on the audit, the Army optimizes the purchasing power and maximizes the worth of every dollar entrusted to us by the American taxpayer. When we do this, we are stronger, more informed, and better resourced.
FREQUENTLY ASKED QUESTIONS
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The Army and other DoD agencies are required by law to conduct financial statements audits. This is outlined in laws such as the 1990 Chief Financial Officers Act and the 1994 Government Management Reform Act.
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Financial auditability helps the Army to not only comply with laws, but also helps improve business processes, increase data reliability, make better use of resources, and enhance public trust to drive operational readiness. Financial statement audits aim to reduce risk from waste, fraud, and abuse by identifying improvements to internal controls, by validating that processes are operating as intended.
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The ASA (FM&C) is the principal adviser to Senior Army leadership on all matters related to Financial Management and Comptrollership. In addition to the above, the ASA (FM&C) is responsible for resourcing America's Army through sound financial management and comptrollership, from budget formulation to auditable financial statements. The ASA (FM&C) is responsible for implementing the required policies and procedures within the Army to drive overall auditability.
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Leaders and process owners across the Army are involved in the financial statement audit. Key entities include:
- Auditor: Department of Defense Inspector General (DoDIG) and the Independent Public Accountant (IPA)
- Monitor and Coordinator: The Office of the ASA (FM&C)
- Process Owners: Army commands, components, direct reporting units, Program Executive Offices (PEOs), Army General Staff, Army secretariats, and other organization
- Internal Review: Risk Management and Internal Controls (RMIC) teams, Internal Review (IR) teams, and the US Army Audit Agency (AAA)
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The annual financial statement audit process begins in December of each year. In this process, each phase builds on both the previous years' work and the previous phase of the current cycle. The phases and their general timelines are outlined below:
- Planning and risk assessment (to include walkthroughs): December - March
- Testing (to include site visits): April - September
- Completion and Reporting: October - November
- Audit Report Issuance: November
- Notices of Findings and Recommendations: Continuous and can be issued at any time
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An audit opinion is a statement from the Auditor after the examination of the organization’s financial statements. There are four types of audit opinions, outlined below:
- Unmodified: Financial statements can be relied upon; also referred as a “clean” opinion
- Modified: Financial statements are reliable with certain exceptions
- Adverse: Financial statements are misleading and cannot be relied upon
- Disclaimer: Auditor did not have enough reliable data to complete the work and cannot issue an opinion
During previous financial statement audits, the Army received a disclaimer of opinion.
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- The Auditor works to collect and evaluate evidence from observing the Army’s business processes and internal controls. In doing this, the Auditor forms an opinion on the reliability of the Army’s financial statements, taking into account its findings and observations. The Auditor then summarizes their work and reports notices of findings and recommendations (NFRs), which the Army then uses to improve upon the identified control weaknesses.
- Most of an Auditor’s work in forming an opinion on financial statements consists of obtaining and evaluating sufficient, appropriate evidence concerning the assertions in the financial statements. These assertions include the following:
- Completeness (i.e., “Is anything missing?”)
- Existence or Occurrence (i.e., “Does the organization have the item on hand or did the event actually occur?”)
- Accuracy and Valuation (i.e., “Are the numbers correct?”)
- Rights and Obligations (i.e., “Does the organization own or owe what they think they do?”)
- Presentation and Disclosure (i.e., “Is the action or item recorded in the right place?”)
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The Army depends on sound financial management practices to maintain operational readiness, mitigate risk, and forecast its budget. Remediating financial management challenges enables the Army to provide accurate and timely financial information to support the reported financial statement balances and leadership decision-making.
For the Army, meeting the demands of conducting multi-domain operations for the past two decades is a challenge in and of itself. Unfortunately, without proper controls and systems in place to capture the financial impacts of its operations, the Army has not been consistent with its fiscal transparency and accountability across the force. This, along with having to appropriately adjust to an ever-changing digital environment, challenges the Army's ability to obtain an audit opinion. The IT systems that focus on Army's mission support operations (eg. equipment, munitions and real property IT systems) are also used for financial management, accounting and reporting. Therefore, investments across these system areas will eliminate financial control weaknesses while also improving reliability, security and mission readiness.
Regardless, the Army continues to remediate issues and make progress towards an audit opinion each year and strives to achieve audit opinions for its Working Capital Fund and General Fund financial statement audits in the next five years.
My FM&C Story
The ASA (Financial Management and Comptroller) (FM&C) is the principal adviser to the Senior Army leadership on all matters related to Financial Management and Comptrollership.
In this video, we connect with leaders and resource management team from U.S. Army Training and Doctrine Command to discuss why achieving a clean audit opinion is important to them.
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- Our Audit Our Success:
TRADOC
- Our Audit Our Success:
Pilot
- Finance Corps 246th Birthday
- ASA (FM&C) Covid-19 Response
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