FIND IT BEFORE THE AUDITOR DOES!

Marlene Lynn, CPPM Manager of Asset Management,

BAE SystemsElectronic Solutions

July 25, 2011

Why Are You Here?

To understand why we are doing self-audits and how they can help you in your Government audit.

To learn some things you might want to look at during your self-audit.

To share some “Things to Remember” that can help with your self-audit.

Learning ObjectivesYou will be able to relate “Outcomes” to your “Processes”.

You will be informed about DCMA Instruction Folder #34 and how it relates to what the DCMA audits.

You will leave the session with suggestions on where to focus your attention during your self-assessments, so you feel ready for your Government audits.

What is DCMA Instruction Folder #34?

This document replaces DoD 4161.2M – DoD Manual for Performance of Contract Property Administration.

It provides guidance to the DCMA GPAs on how to perform their audits of our property systems.

You can find it at the following link:

http://guidebook.dcma.mil/34/index.cfm

This is currently being revised.

Why Are We Doing Self-Audits?- Self –audits show us where we can improve and

allow us to make corrections before the GPA Audit

- They make it easier and faster for GPAs to do their audits, if they audit our self-audits

- Besides . . . FAR 52.245-1(f)(3) requires it!

So what questions should you be asking during your self-audit?

AcquisitionDo you know what assets are supposed to be furnished,

fabricated or acquired under each contract?

Before you acquire something, are you screening your other programs to see if there is something that you can borrow or have transferred to your program?

Do you have the proper accounting and source data for your acquisitions?

Are purchases properly authorized?

AcquisitionAre quantities in line with the requirement?

Are there minimum buys or long lead items?

Have you got a clean audit trail for each acquisition?

Receiving & IdentificationIs the contract number identified in some way on your

Receipt document? If not, did you get the information and document it?

Do you have receipts for both Government Furnished Property and Contractor Acquired Property?

Do you have receipts for property (Equipment, Special Tooling, Special Test Equipment), Repair assets, Government Furnished Material and Contractor Acquired Material?

If items come in with a UID, are you recording the UID in your system?

Receiving & Identification

Were there any misdirected shipments, damaged or discrepant receipts, such as incorrect quantities, etc.? If yes, were Reports of Discrepancy (RODs) done and submitted?

Have asset tags been assigned to appropriate items?

Are the assets properly recorded in your system(s) of record?

Do the asset tags identify the asset as Government Property?

Are items adequately protected and stored during the receiving process?

What do you consider your record to be?

Do your records contain all of the fields required by the FAR? 

Is all of the data in your record accurate?

Do you have the UID recorded in your system?

Do you do both a Floor to Record and a Record to Floor audit?

Records

Do any of your contracts require additional record keeping, (ie: CAV)?

Are sensitive and classified property identified in your system?

Records

Do you have an inventory plan that describes your process and schedule?

– What inventory is being performed: ST, STE, EQ, material

– How it is being performed: manual count, barcode scan, RFID

– When is it being performed, including frequency

– Who is performing the inventory

Physical Inventory

Are your assets located where the record says they are?

Was everything found during your inventory?

Was there a reconciliation to ensure everything was found?

Did it include ST, STE, EQ, Repairs, GFM, CFM?

Do you have your Loss reports available for review?

Did you provide summary information on material adjustments to your DCMA GPA in your inventory report?

Physical Inventory

Did you submit your report on your physical inventory to the DCMA and/or your customers?

Did you do your physical inventory on time, in accordance with your procedures?

Are your inventories being done by people other than those who maintain your records or have physical custody of the property?

Can you show the auditor the actual inventory files?

Physical Inventory

Was your physical inventory reported on time and in accordance with your procedures?

Did it include fixed assets, repairs, Government Furnished Material and Contractor Acquired Material on Cost and T&M type contracts?

Did you have any Reports of Discrepancy and were they reported to the Government?

Did you have any Losses to report?

Reports

Did you perform a self-audit and make the findings available to the GPA?

Are you submitting records to the IUID Registry?

Do any of your contracts require any additional reports (for example, CAV)?

Reports

UtilizationMovement

– Are the dates items were moved listed accurately in your record?

– Are you including both internal and external moves?

– Do you maintain proper documentation for movement?

– Are external moves documented appropriately (DD1149s, DD250s, Commercial Shippers)?

UtilizationStorage

– Do you have an authorized access list on the door of each storage area?

– Are Government assets segregated from Company owned assets?

– Are storage areas neat, clean and organized?

UtilizationConsumption

– Do your records show what contract the material was used for?

– Are quantities used reasonable as compared to the requirements?

– Can you justify the requirements stated in your record?

– Do you document consumption reviews to determine proper utilization?

UtilizationConsumption

– If you have an Material Management Accounting System (MMAS), can you identify what quantity of parts were used on what contracts?

– If you have an MMAS system, when was it last reviewed by DCAA and do you have a copy of the approval letter?

UtilizationUtilization

– Do you screen for excess property?

– Do you maintain a file of letters or modifications to contracts authorizing use of property on another contract?

– If you are using Government assets on another contract and the Government has authorized use on a rental basis, are you correctly determining and allocating the appropriate rental amount?

UtilizationUtilization

– Review your period of performance end dates – is property submitted for disposition within a reasonable amount of time from the end of the period of performance?

MaintenanceCan you identify Government Property in your Metrology

system?

Are you documenting maintenance as well as calibration?

Do the Calibration tags show the same Cal Date and Cal Due Date as the record?

Are the assets cal’d on or before the Cal Due Date?

Are the assets being put back where they were taken from after they are maintained?

MaintenanceDo you get prior authorization from the GPA, PCO or ACO

for replacement or capital rehabilitation of Government Property?

Subcontractor ControlDo you have a process to periodically review the property

management systems of your Subcontractors to determine the adequacy of those systems?

Do your subcontractors provide inventory certifications to you in accordance with your Subcontract with them?

Are you flowing down the necessary and appropriate clauses to your subcontractors?

Does your subcontract identify the specific assets to be furnished?

Relief of StewardshipDoes your process identify property which has been

– declared as excess?– submitted for Plant Clearance?

Can you provide the authorization for disposition of any items not submitted for Plant Clearance?

Do you remove all tags and markings prior to disposal, unless the item has a virtual UII assigned and the tag is the innate mark on the item?

If there were proceeds from the sale of Government assets, where did the money go? Was this appropriate?

Contract Property Close-OutAre you reviewing the Periods of Performance on your

contracts to ensure that you are starting the disposal and close-out process in a timely manner?

Are you checking your contracts for disposition instructions?

Are you checking for assets, repairs, material, sensitive, hazardous and COMSEC?

Do you do a physical inventory at the end of the contract sufficient for disposal purposes? Is it documented in a procedure?

Contract Property Close-Out

Are you screening in-house to see if the property is needed?

For transfers between contracts, do you get mods to both the gaining and losing contract?

Do you get proper authorization for disposals?

Do you send your GPA a certification of contract property completion report?

Do you document the contract close in your system?

Things to Remember . . .

One of the most important things you should do is find out what your contracts require and discuss that with your GPA.

If you ask, they might even share their work papers with you so you can see exactly what they look for.

Find out if they are planning to incorporate your self-audit with their audit.

More Things to Remember . . .

Say what you do and do what you say!

Keep in mind what your procedures say and also any special requirements in your contracts.

When possible, use the same samples for multiple functions. It will make your life easier. For example, you can use the same samples for Records and Physical Inventory or Acquisition and Receiving.

Have copies of documents to backup each of your audit worksheets.

Still More Things to Remember . . .

Don’t be afraid to find things wrong with your samples.

NO SYSTEM IS PERFECT!

The important thing is that you find the problem and correct whatever caused the discrepancy.

Record the finding, but also prepare and monitor the Corrective Action. Make this available to the GPA and report findings if they are significant.

Questions?????