department of defense agency financial report fiscal year 2012

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Department of Defense Agency Financial Report for FY 2012 Additionally, sharing the MAFT between multiple installations is more cost effective than retaining permanent trainers at each location. The Manager’s Internal Control Program also plays a role in ensuring that these kinds of improvements are sustained and remain relevant to mission needs. ASSESSMENT The Department’s management uses the following criteria to classify conditions as material weaknesses in internal control: • Merits the attention of the Executive Office of the President and the relevant Congressional oversight committees; • Impairs fulfillment of essential operations or mission; • Significantly weakens established safeguards against waste, loss, unauthorized use or misappropriation of funds, property, other assets, or conflicts of interest; • Constitutes substantial noncompliance with laws and regulations; or • Represents nonconformance with government-wide, financial management system requirements. Individual DoD Components issue assurance statements that assess and certify the effectiveness of internal controls. The Components’ assurance statements serve as the primary basis for the Deputy Secretary’s assurance statement on the effectiveness of the Department’s entity wide internal controls. Information gathered from various sources serves as the basis for the assurance statements. This information includes management-initiated internal controls testing, program reviews, and evaluations. In addition, the IG DoD and the Government Accountability Office conduct reviews, audits, inspections, and investigations, and the findings are considered in the individual Component’s assurance statements and provide the foundation for their individual assessments. 42 Members of coalition special operations forces wait for an air drop of supplies in the Shah joy district in Afghanistan’s Zabul province. Such drops help resupply forces in remote areas of Afghanistan. U.S. Navy Petty Officer 2nd Class Jon Rasmussen The Department has effective processes in many key areas. As a result, there has been significant progress toward improving both financial and operational internal controls; however, it remains clear that the most daunting of challenges remain ahead, and more emphasis on effective and efficient operations is critical. In the upcoming fiscal year, the Department will continue to provide best practices and facilitate more validation assessments in order to meet the challenge. Management’s Discussion and Analysis
Department of Defense Agency Financial Report for FY 2012 MATERIAL WEAKNESSES The Department’s outstanding material weaknesses for FY 2012 are listed in Figure 15. Additional details related to the material weaknesses reported in the table, such as corrective action plans and timelines, are included in Addendum A, “Managers’ Internal Control Program,” of this report. Figure 15. Department of Defense Outstanding Material Weaknesses Areas of Material Weakness Number of Material Weaknesses 1 Financial Reporting 18 FY 2001 2 Financial Management Systems 43 Year Identified Component 1 FY 2001 3 Acquisition 1 FY 2011 4 5 Communications, Intelligence and/or Security Comptroller and/or Resource Management 4 FY 2006 2 FY 2011 6 Contract Administration 2 FY 2006 DepartmentwideDepartmentwide Departmentwide OSD; Navy; Air Force; USAFRICOM Departmentwide Departmentwide Target Correction Year FY 2017 FY 2017 Reassessed annually based on incremental improvements FY 2013 FY 2017 Reassessed annually based on incremental improvements 7 Force Readiness 2 FY 2011 Air Force FY 2013 8 Personnel and/or Organizational Management 3 FY 2006 9 Property Management 1 FY 2011 10 Supply Operations 1 FY 2011 Total Material Weaknesses 35 Departmentwide Departmentwide Departmentwide FY 2015 FY 2016 Reassessed annually based on incremental improvements Management’s Discussion and Analysis
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