department of defense agency financial report fiscal year 2012

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Department of Defense Agency Financial Report for FY 2012 FINANCIAL OVERVIEW FINANCIAL HIGHLIGHTS AND ANALYSIS The preceding sections provided an overview of DoD operations in FY 2012 and compared performance with goals. Meeting our defense goals requires resources. Our use of these resources in FY 2012 is summarized in the Department’s financial statements, which appear later in this report. The Department cannot yet produce financial statements that are auditable, and management cannot yet provide sufficient assurance of effective internal controls over financial reporting to pass an audit. This situation occurs because the Department currently cannot supply auditable documentation in a timely fashion and cannot demonstrate that its business processes are sufficiently reliable and well-controlled to pass an audit. The Financial Improvement and Audit Readiness initiative, discussed later in this report, is guiding the Department’s effort to improve financial management and achieve audit readiness for key financial statements by 2014 and for all statements by 2017. While the Department’s financial statements are not auditable because of documentation and control problems, the underlying data are used regularly and successfully to pay people and vendors and to keep track of those payments. The data summarized in this section are providing the Department with the financial information necessary to manage its operations, including its wartime operations. The principal financial statements have been prepared to report the financial position and results of operations of the Department, pursuant to the requirements of 31 U.S.C. 3515 (b). The statements have been prepared from the accounting records of the Department in accordance with OMB Circular No. A-136, and to the extent possible, U.S. Generally Accepted Accounting Principles (USGAAP) for Federal entities, and the DoD Financial Management Regulation. The statements, in addition to the financial reports, are used to monitor and control budgetary resources, which are prepared from the same records. The statements should be read with the realization that they are for a component of the U.S. Government, a sovereign entity. The Defense Finance and Accounting Service (DFAS) prepared the consolidated financial statements and explanatory notes, located in the Financial Information section of this report. The financial statements include: • Statement of Budgetary Resources • Balance Sheet 22 Ms. Teresa McKay, Director, Defense Finance and Accounting Service Management’s Discussion and Analysis
Department of Defense Agency Financial Report for FY 2012 • Statement of Net Cost • Statement of Changes in Net Position STATEMENT OF BUDGETARY RESOURCES. One of the most critical financial improvement and audit readiness priorities in the Department involves the processes, controls, and systems that support information most often used to manage the Department, namely, budgetary resources. The Statement of Budgetary Resources (SBR) presents the Department’s total budgetary resources, their status at the end of the year, and the relationship between the budgetary resources and the outlays made against them. In accordance with Federal statutes and implementing regulations, obligations may be incurred and payments made only to the extent that budgetary resources are available to cover such items. As discussed in the Overview section and depicted in Figure 2 of this report, the Department’s FY 2012 enacted appropriations total $645.7 billion. The $42.3 billion decrease from FY 2011 enacted amounts is mostly attributable to a decrease in appropriations for overseas contingency operations (OCO). The amounts needed for OCO in FY 2012 were significantly lower due to completing the military and “advise and assist” missions in Iraq at the end of 2011, and the redeployment of approximately 33,000 troops from Afghanistan by the end of FY 2012. The Department reported $1.2 trillion in FY 2012 total budgetary resources as summarized in Figure 7. Figure 6. Trend in DoD Enacted Appropriations $ in Billions $800 $700 $600 $500 $400 $300 $200 $100 B10-35 Figure 7. Composition of DoD Total Budgetary Resources Description FY 2012 ($ in billions) DoD Enacted Appropriations U.S. Treasury Contribution for $645.7 Military Retirement and Health Benefits 76.8 Civil Works Projects Executed by the USACE 5.7 Trust Fund Receipts 125.3 Trust Fund Resources Temporarily Not Available (61.3) Total Appropriations Reported on SBR $792.2 Brought Forward Unobligated Budget Authority 214.9 Spending Authority from Offsetting Collections 117.2 Contract Authority 80.5 Total Budgetary Resources $1,204.8 23 $0 $667.0 $666.0 187.0 153.0 $691.2 163.0 159.0 115.1 480.0 513.0 528.2 529.0 530.6 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Base Budget OCO $688.0 $645.7 Management’s Discussion and Analysis
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