department of defense agency financial report fiscal year 2012

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Department of Defense Agency Financial Report for FY 2012 National Defense Authorization Act for Fiscal Year 2005.” In addition, the Congress has authorized the use of Contingency Construction Authority to enable flexible use of military construction funds to build wartime facilities at combat outposts, forward operating bases, and airfields. Also, the Department remains heavily dependent upon the transfer authorities granted by the Congress within the annual appropriations, which allow the Department to be more financially agile in a rapidly changing world. Within prescribed limits, the Department uses its authority to transfer funds within accounts to meet changing priorities. When those limits must be exceeded, the Department requests specific, above-threshold approval for each transfer from the congressional oversight committees. In FY 2012, transfer authority allowed the Department to accelerate selected programs and projects in response to the new Defense Strategic Guidance, positioning the Department to meet defense needs in the coming era. For example, the Department gained congressional approval to expedite the preparation of Bahrain-based patrol craft to defend U.S. Navy vessels against hostile fast attack craft. DoD photo by Erin Kirk-Cuomo The Congress provided additional financial tools for the Department when the Global Security Contingency Fund (GSCF) was created as a four-year pilot project by the FY 2012 National Defense Authorization Act (P.L. 112-81), Section 1207. The GSCF is jointly administered and funded by the Department of State (DoS), and the Department of Defense. The Department recently reprogrammed $21.8 million in support of security activities with partner nations across the globe. This newly created financial tool enables better cooperation among DoS and DoD activities for national security. Finally, as part of its Strategic Management Plan, the Department’s Chief Financial Officer tracks the time to process above threshold reprogramming requests. This metric provides a view of how well the Department supports its requests with the congressional oversight committees and responds to the needs of the warfighter for adjusting resources to meet evolving requirements. This year, the Department averaged 24 days – a 50 percent reduction from FY 2009 – to process and receive Congressional approval for UONS reprogramming. In summary, financial flexibility gives the Department critical management tools to balance between available resources and urgent security needs to ensure that our Armed Forces can meet the demands of the U.S. National Security Strategy. 30 Defense Secretary Leon E. Panetta gives the thumbs up during his launch sequence of an AV-8B Harrier Jet on board the USS Peleliu in the Pacific Ocean. Management’s Discussion and Analysis
Department of Defense Agency Financial Report for FY 2012 Financial Improvement and Audit Readiness (FIAR) Initiative Although the Department’s FY 2012 financial statements are not auditable, the Department is effectively managing and spending the dollars appropriated to it by Congress for the purposes intended. With only limited exceptions, the Department’s dedicated financial management workforce pays DoD personnel, contractors, and other commitments accurately and on time, and also accurately records obligations and expenditures in the general ledgers of DoD financial systems. Failure in either of these responsibilities would result in unavoidable problems that would impact the warfighter and the Department’s ability to accomplish its challenging, worldwide mission. The evidence shows that this is not happening. While we are confident that we effectively manage taxpayer funds, the Department currently lacks the ability to demonstrate reliable and well-controlled business processes, and to consistently provide supporting documentation in a timely manner to the auditors. These capabilities are required to successfully pass a financial statement audit. Part of the challenge lies with DoD’s unique size and mission. Figure 13 shows the magnitude of financial activities processed by DFAS in FY 2012, excluding processing by other DoD entities, such as the U.S. Army Corps of Engineers (USACE) or TRICARE Management Agency (TMA). Financial statement auditability is important to the Department for many reasons. It is required by law, but it Figure 13. FY 2012 Transactions Processed and Managed by DFAS Description FY 2012 Number of Active DoD Appropriations Managed 1,215 Number of Pay Transactions 164,900,000 Number of People/Accounts 6,600,000 Disbursements to Pay Recipients $556,500,000,000 Number of Travel payments 7,100,000 Number of Commercial Invoices Paid 11,300,000 Military Retirement and Health Benefit Funds Managed $631,200,000,000 also will validate that the Department is properly and effectively managing and executing the resources entrusted to it by Congress and the taxpayers. To better enable the Department to move toward auditable financial statements, the Department refocused its FIAR initiative in 2009 on the information most often used to manage the Department. With the change in focus, two financial improvement priorities were established: budgetary information (i.e., auditable SBR) and accountability of mission critical assets, validated by existence and completeness audits. 31 U.S. Army World Class Athlete Program rifle shooter Sgt. Vincent Hancock won the Olympic gold medal in men’s skeet after competing at the Royal Artillery Barracks in London during the 2012 Summer Olympics. The 23-year-old Hancock is assigned to the U.S. Army Marksmanship Unit. U.S. Army photo by Tim Hipps Management’s Discussion and Analysis
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department of defense agency financial report fiscal year 2012

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