united states coast guard real property completeness & existence asmc dc chapter luncheon 16...

United States Coast GuardReal Property Completeness & Existence

ASMC DC Chapter Luncheon16 March 2011

05/03/23 2

AgendaAgenda

• General CG Audit Strategy– Balance Sheet– Accountability vs. Accounting (Why You Need Both)

• Quick Overview of Management Assertions• How does CG get there for Real Property?

– Cumulative Cost-based Asset Enrollment Trips based on co-located units– Use best practices learned from Personal Property Remediation: Let the

Inventory cleans the account, behavior, and make program healthy.• Mythbusters

Size (Materiality) MattersSize (Materiality) Matters

3

CG in DOT CG in DHS CG is 18% of DHS Assets CG is 41% of DHS Liabilities

Coast Guard Audit Readiness StrategyCoast Guard Audit Readiness Strategy

Size

Scope

System

Sustainability

Focus on those items most material to the DHS Balance Sheet

Attack the items that can be remediated outside of current financial system limitations

‘Fix it once’ Remediate the root causes of the issue, not just a ‘quick fix’. To get through a current year audit

4

Divide the world of work into “Assessable Units”

CG Balance Sheet Year End 2008 2009 2010 Intra-governmental Assets Consolidated Consolidated Consolidated Fund Balance With Treasury $5,229,134,757.00 $5,519,352,180.31 $6,502,107,962.33 Investments, Net $3,100,795,038.27 $3,416,763,004.82 $3,480,932,732.29 Accounts Receivable $232,767,853.89 $247,229,469.87 $209,128,878.59 Due from Treasury $0.00 $0.00 $0.00 Total Other Intragovernmental Assets $12,279,603.84 $17,081,187.23 $10,609,119.80 Total Intragovernmental Assets $8,574,977,253.00 $9,200,425,842.23 $10,202,778,693.01 Cash and Other Monetary Assets $8,758,012.35 $5,944,818.27 $7,065,240.27 Investments $72,399.54 $63,037.22 $87,043.14 Accounts Receivable, Net $28,108,999.17 $34,682,821.58 $55,116,261.35 Direct Loans, Net $0.00 $0.00 $0.00 Inventory and Related Property, Net $335,899,976.97 $375,101,005.75 $278,762,343.58 General Property, Plant and Equipment, Net Land and Land Rights $39,157,254.12 $39,137,651.65 $39,143,355.99 Total Improvements to Land $0.00 $0.00 Construction-in- Progress $3,715,614,649.29 $4,101,953,503.62 $3,102,317,078.39 Total Buildings, Improvements and Renovations $789,390,792.37 $755,497,111.42 $810,797,278.19 Total Other Structures and Facilities $192,949,962.33 $174,696,880.28 $170,380,326.01 Total Equipment $3,730,199,386.52 $4,097,422,925.19 $5,643,486,124.10 Total Assets Under Capital Lease $759,654.97 $739,215.83 $718,776.69 Total Leasehold Improvements $0.00 $0.00 $0.00 Total Internal Use Software $55,540.09 $0.00 $0.00 Internal Use Software in Development $767,187.22 ($0.00) ($0.00) Total Other Natural Resources $0.00 $0.00 $0.00 Total Other GPP&E $0.00 $0.00 ($0.00)General Property, Plant and Equipment, Net $8,468,894,426.91 $9,169,447,287.99 $9,766,842,939.37 Other Non-governmental Assets Advances and Prepayments $9,206,570.21 $8,435,765.26 ($0.00) Other Assets $0.00 ($0.00) Total Other Non-governmental Assets $9,206,570.21 $8,435,765.26 ($0.00) Total Assets $17,425,917,637.15 $18,794,100,578.30 $20,310,652,520.72 Total Liabilities $33,530,527,402.63 $39,440,419,969.98 $46,378,056,859.75

Total Net Position($16,081,097,490.45

)($20,637,432,930.16

)($26,055,822,227.61

) Total Liabilities and Net Position $17,449,429,912.18 $18,802,987,039.82 $20,322,234,632.14

USCG Balance Sheet

MAP Focus AreasMAP Focus Areas

• Segregated Mission Action Plan (MAP) focus areas into two tracks– Track One – those with largest impact on DHS balance sheet, can be

fully remediated in current system state & sustained into the future– Track Two – less material, but needed for full remediation of balance

sheet line items

• Consolidated (DHS) Balance Sheet Audit for now– Stand-alone audit in the future?– Performance audits?– Internal Controls audits?

FY11 EffortsFY11 Efforts

• Military HR Internal Controls

• Civilian HR Internal Controls• Actuarial Medical Liabilities• Capitalized Property

• CIP• Real Property• Major Electronic Systems• Operating Materials &

Supplies

Continuation of FY10 Efforts

• Environmental Liabilities• Budgetary Resource Management• Accounts Payable• Accounts Receivable• Fund Balance with Treasury

(Non Payroll)

New Efforts

% of Total GPP&E by NBV% of Total GPP&E by NBV

% of Total GPP&E NBV Comparison By Asset Type Over Time

Total NBV Comparison By Asset Type Over Time

Accountability vs. Accountability vs. AccountingAccounting

• Accountants are at CGHQ & FINCEN• Keep them there!

• Accounting is the Byproduct of Operations• We want to leverage what units already do• Units know more than any of the accountants about

their “stuff”

Financial Statements & Management Assertions

• Completeness• Existence and Occurrence• Valuation and Allocation• Rights and Obligations• Presentation and Disclosure

• Completeness• Existence and Occurrence• Valuation and Allocation• Rights and Obligations• Presentation and Disclosure

What does this really mean?


• Completeness – floor-to-record• Existence and Occurrence – record-to-floor• Valuation and Allocation – approximates historical

cost• Rights and Obligations – do we own it or effectively

own it, or does someone else own it? (e.g. Is it leases or on loan, etc.?)

• Presentation and Disclosure – Has something been delivered that is still accounted for in CIP


How do we get there for Real Property?

• Step 1: Target higher cost geographic areas first, and enroll assets methodically

• Step 2: Use the best practices of Personal Property remediation: Leverage units through a CG-wide capitalized property inventory, and use inventory to cleanse account, behavior, and make program healthy.

Major Unit District Cost Cumulative Cost Unit % of TotalCumulative %BSU Kodiak 17 400,756,505.61$ 400,756,505.61$ 13.30% 13.30%SECTOR New York 1 113,520,857.45$ 514,277,363.06$ 3.77% 17.07%TRACEN Cape May 5 98,841,923.64$ 613,119,286.70$ 3.28% 20.35%USCGA 1 92,561,705.13$ 705,680,991.83$ 3.07% 23.43%BSU Seattle 13 80,338,423.53$ 786,019,415.36$ 2.67% 26.09%CEU Juneau 17 77,814,788.91$ 863,834,204.27$ 2.58% 28.68%TRACEN Petaluma 11 74,624,790.89$ 938,458,995.16$ 2.48% 31.16%BSU Honolulu 14 72,291,751.38$ 1,010,750,746.54$ 2.40% 33.56%BSU Alameda 11 71,413,231.85$ 1,082,163,978.39$ 2.37% 35.93%SECTOR San Juan 7 70,325,390.77$ 1,152,489,369.16$ 2.33% 38.26%ATC Mobile 8 62,343,040.42$ 1,214,832,409.58$ 2.07% 40.33%BSU Portsmouth 5 62,011,329.22$ 1,276,843,738.80$ 2.06% 42.39%AIRSTA Cape Cod 1 61,353,202.33$ 1,338,196,941.13$ 2.04% 44.43%BSU Elizabeth City 5 59,883,443.71$ 1,398,080,384.84$ 1.99% 46.41%BSU Boston 1 54,221,803.30$ 1,452,302,188.14$ 1.80% 48.21%TRACEN Yorktown 5 53,300,006.45$ 1,505,602,194.59$ 1.77% 49.98%AIRSTA Sitka 17 39,424,757.45$ 1,545,026,952.04$ 1.31% 51.29%AIRSTA Clearwater 7 38,894,348.24$ 1,583,921,300.28$ 1.29% 52.58%BSU San Pedro 11 32,618,121.23$ 1,616,539,421.51$ 1.08% 53.67%SECTOR Long Island Sound 1 30,855,635.97$ 1,647,395,057.48$ 1.02% 54.69%AIRSTA Miami 7 30,846,903.22$ 1,678,241,960.70$ 1.02% 55.72%SECTOR San Diego 11 30,355,465.48$ 1,708,597,426.18$ 1.01% 56.72%CG Yard 5 29,937,135.21$ 1,738,534,561.39$ 0.99% 57.72%SECTOR Columbia River 13 29,441,242.10$ 1,767,975,803.49$ 0.98% 58.69%BSU Ketchikan 17 28,503,598.57$ 1,796,479,402.06$ 0.95% 59.64%CEU Oakland 11 23,380,653.84$ 1,819,860,055.90$ 0.78% 60.42%

Major Unit District CostBSU Kodiak 17 400,756,505.61$ SECTOR New York 1 113,520,857.45$ TRACEN Cape May 5 98,841,923.64$ USCGA 1 92,561,705.13$ BSU Seattle 13 80,338,423.53$ CEU Juneau 17 77,814,788.91$ TRACEN Petaluma 11 74,624,790.89$ BSU Honolulu 14 72,291,751.38$ BSU Alameda 11 71,413,231.85$ SECTOR San Juan 7 70,325,390.77$ ATC Mobile 8 62,343,040.42$ BSU Portsmouth 5 62,011,329.22$ AIRSTA Cape Cod 1 61,353,202.33$ BSU Elizabeth City 5 59,883,443.71$ BSU Boston 1 54,221,803.30$ TRACEN Yorktown 5 53,300,006.45$ AIRSTA Sitka 17 39,424,757.45$ AIRSTA Clearwater 7 38,894,348.24$ BSU San Pedro 11 32,618,121.23$ SECTOR Long Island Sound 1 30,855,635.97$ AIRSTA Miami 7 30,846,903.22$ SECTOR San Diego 11 30,355,465.48$ CG Yard 5 29,937,135.21$ SECTOR Columbia River 13 29,441,242.10$ BSU Ketchikan 17 28,503,598.57$ CEU Oakland 11 23,380,653.84$

BSU Seattle

TRACEN Petaluma

CEU Juneau CEU Honolulu

BSU Alameda

ATC Mobile

BSU Portsmouth

AIRSTA Cape Cod

BSU Elizabeth City

BSU Boston

TRACEN Yorktown

AIRSTA Sitka

AIRSTA Clearwater

BSU San Pedro

SECTOR Long Island Sound USCGA

AIRSTA Miami

SECTOR San Diego

CG Yard

CEU Oakland

SECTOR Columbia River

BSU Ketchikan

SECTOR New York

TRACEN Cape May

BSU Kodiak

SECTOR San Juan

How are we going to do it?

+ +0

Reconcile

Tab Description AppendixAviation-Related Structures (other than buildings) Tab ABuildings (other than housing, barracks, berthing, & lodging) Tab B

Category Codes (CATCODEs) Tab C

Data Consolidation Tab DEducation/Training Facilities (other than buildings) Tab EField-level Sketches Tab F

GPS, Imaging, & Marking (latitude/longitude)Tab G

GHousing, Barracks, Berthing, & Lodging Tab HIdentification of Non-land Assets Tab INot Used Tab J & KLand Tab LMeasurements (units & techniques) Tab MAtoN Tab NOther Structures Tab OProcedures for Facility Enrollment & Validation Tab POracle Fixed Asset Procedures Tab QRecreational Facilities (other than buildings) Tab RSAM Database Procedures Tab STowers & Electronics (non-AtoN) Tab TUtilities Tab UNot Used Tab VWaterfront Facilities Tab WOther Linear Structures Tab XNot Used Tabs Y & Z

How to Use the Classification Guide

Phas

e II

: Site

Vis

it Ex

ecut

ion

Phas

e II

I: Pa

ckag

e A

ssem

bly

Phas

e IV

: Clo

seou

t and

R

ecor

d R

eten

tion

Phas

e I:

Pre-

site

Pr

epar

atio

n

P1

Note

Phase II is the actual site visit. Follow all procedural directions closely

Note

Phase I is the pre-site visit and should be started two months before visit

Land?Tab L Yes

Is the asset a

building or a structure?

No

Is the asset a linear structure?

Is the asset housing/barracks?

TabH

Yes No

Tab B

Tab XTab UTab OTab N Tab TTab R

Tab M

TabG

P3

Note

Gather GPS data for assets

NoteGather all

required data on templates

Tab DNote

Phase III post site visit

documentation

TabS

Note

SAM data entry

Tab F

Note

Refer to Tab F for field sketch specifics

TabQ

Process complete

Note

OFA data entry

P4

Utilities, Waterfront, and Other Linear

Structures (roads and pavements)

Yes

Aviation, Education, AtoN, Recreational Facilities, Tower/

Electronics, and Other Structures

No

Tab W

Building

Education

Structure

Note

Found asset P2

Figure 5 – How to Use the Classification Guide

Other Linear Structures

Tab ETab A

AtoNAviationTowers

Recreation

Utilities

Other StructuresWaterfront

Start

05/03/23 21

Inventory High-level StrategyInventory High-level Strategy

• Let inventory expose other problematic life cycle procedures– Acquisitions– Disposals– Transfers– Improvements– Impairments

• Use Unit Personnel and CO/OIC/Unit level Supervisor to reconcile financial and subsidiary systems to get accurate count at each rung of hierarchy– Use each unit’s inventory as a building block for the entire CG’s

inventory– Use asset UID’s to track across several systems– Process flows drive decisions to arrive at standardized/repeatable

result

05/03/23 22

Grass Roots Effort - Clear & Detailed Grass Roots Effort - Clear & Detailed ProceduresProcedures

05/03/23 23

Grass Roots Effort - “Sailor-Proof” Grass Roots Effort - “Sailor-Proof” Procedure Flowchart Procedure Flowchart

05/03/23 24

Procedure - Physical Inventory Report / Procedure - Physical Inventory Report / Count SheetCount Sheet

Once asset has been verified, initial & date each asset on report as shown:

Each capitalized personal property asset that is inventoried needs to be initialed & dated by the CT.

CT needs to initial & date bottom of each page of report.

05/03/23 25


If edits are necessary, strike through the report, as shown below:

Line-out & write-in individual data fields for corrections of characteristics listed on the report.

05/03/23 26


The last page of the Physical Inventory Report needs to include signatures and date of each CT member, APO, and PA .

Signatures and dates are required on last page of Physical Inventory Report, as shown:

As a reminder, the actual sign off is performed once the subsidiary system reconciliation has been completed.

05/03/23 27

Procedure - Subsidiary System Procedure - Subsidiary System ReconciliationReconciliation

System Reconciliation:Currently, there is no interface and/or reconciliation between Oracle Fixed Asset (OFA) databases and Subsidiary Systems (e.g. AOPs, ALMIS, SAM, etc). This provides a very high probability that the CG has two different sets of property assets, and potentially unaware of disposal of assets. In turn, this could result in potential under/overstatement of PP&E account balance.

Reconciliation

Subsidiary System #1

Subsidiary System #2

FinancialSystem

05/03/23 28

Procedure - Subsidiary System Procedure - Subsidiary System ReconciliationReconciliation

Some Subsidiary System Reports to be used during the Physical Inventory Count:

Aviation Logistics Management Information System (ALMIS) - used to record operations & logistics of aircraft (also used for small boats).

Abstract of Operation System (AOPS) - used to record the operations & logistics of small boats & vessels.

Auxiliary Management Information System (AUXMIS/AUXDATA) - used to record auxiliary activities, including operations & logistics of small boats & vessels.

Fleet Logistics System (FLS) - used to record the operational aspects of general purpose property, electronics, & occasionally real property.

Shore Asset Management System (SAMS) - used to record the operational aspects of real property.

05/03/23 29

Once assets have been identified & matched, initial & date each asset on subsidiary system report, as shown:

Procedure – Subsidiary System Reconciliation Procedure – Subsidiary System Reconciliation Report Example: AOPS for boatsReport Example: AOPS for boats

Each asset is reconciled to Physical Inventory Report needs to be highlighted, initialed, & dated by CT.

Any discrepancies found during the reconciliation between the subsidiary system report & OFA report needs to be noted on subsidiary system report.

Follow-Through – The Property “War Follow-Through – The Property “War Room”Room”

Inventory Units Reporting Time RequiredSep-08 ~40-60% 12 MosSep-09 100% 5 MosMar-10 100% 5 WeeksSep-10 100% 10 DaysMar-11 100% 7 Days

Chain of Command Involvement & MetricsChain of Command Involvement & Metrics

05/03/23 32

High Level Capitalized Property Inventory Timeline High Level Capitalized Property Inventory Timeline (Aug 09 - Sep 12)(Aug 09 - Sep 12)

Sept '09Aug ‘0 Jan '10 March '10 Aug '10 Spt '10September Inventory

SEP 09

Pilot Inventory District 14 and Draft

Procedures

AUG 09

Update FRMM

JAN 10

March Inventory

MAR 10

Updated PMM

AUG 10

September Inventory

SEP 10

Assert to Completeness, Existence, and Valuation for Vessels, Aircraft, and Small Boats

Dec 10 inventory - CANX

March Inventory

MAR 11

September Inventory

SEP 11

First RP Asset enter into Capitalized Physical Inventory

March Inventory

MAR 12

September Inventory

SEP 12

Assert to Completeness, Existence, and Valuation for Real Property

How are we going to do it?

+ +0

Reconcile

05/03/23 34

CFO CommitmentCFO Commitment

• Include Real Property into CG-wide Managed Capitalized Property Physical Inventory

• Nine (9) New Positions at CEUs/SILC/CG-4 in FY10• Environmental Specialists• Realty Specialists• Real Property Specialists

• USCG Facilities Classification Guide Publication• Environmental Specialists• Realty Specialists• Real Property Specialists

• Real Property Manual, Vehicle Manual & PMM Rewrites

05/03/23 35

Myth Busters – Things to Myth Busters – Things to OvercomeOvercome

• “I found everything on my record”

• “This is Extra Work”

• “This is only to pass the CFO Audit”

• “We know where everything is”

• “That’s not my property”

05/03/23 36

LCDR Robert E. Hart

GPP&E Team Lead, Office of Financial Management Transformation & Compliance (CG-852)

[email protected]

Extra Slides

% of Total GPP&E by Cost% of Total GPP&E by Cost

% of Total GPP&E Cost Comparison By Asset Type % of Total GPP&E Cost Comparison By Asset Type Over TimeOver Time

Total Cost Comparison By Asset Type Total Cost Comparison By Asset Type Over TimeOver Time

Year End 2008 2009 2010Land and Land Rights $39,157,254.12 $39,137,651.65 $39,143,355.99 Total Buildings, Improvements and Renovations $1,594,481,482.26 $1,602,159,202.54 $1,709,747,823.77 Total Other Structures and Facilities $1,115,484,050.56 $1,144,577,904.88 $1,170,776,218.64 Total Equipment $7,939,890,175.63 $8,618,341,186.07 $11,352,274,662.09 Total $10,689,012,962.57 $11,404,215,945.14 $14,271,942,060.49

Year End 2008 2009 2010

Land and Land Rights 0.37% 0.34% 0.27%Total Buildings, Improvements and Renovations 14.92% 14.05% 11.98%Total Other Structures and Facilities 10.44% 10.04% 8.20%

Total Equipment 74.28% 75.57% 79.54%Total 100.00% 100.00% 100.00%

% of Total GPP&E Cost % of Total GPP&E Cost Comparison By Asset Comparison By Asset Type Over TimeType Over Time

Total Cost Comparison By Total Cost Comparison By Asset Type Over TimeAsset Type Over Time

Management Assertions

• Completeness – Assertions about completeness address whether all transactions and accounts that should be presented in the financial statements are so included.

Source: Auditing: 2004 Edition, Becker Conviser CPA Review, p. A2-34


• Existence and Occurrence – Assertions about existence concern the actual existence of the assets and liabilities reported on the balance sheet as of a particular date.

– Assertions about occurrence address whether recorded transactions have in fact taken place. This assertion addresses the validity of the recorded amounts on the financial statements, specifically with respect to overstatement of the account balances.



• Valuation and Allocation – Assertions about valuation and allocation address whether asset, liability, equity, revenue, and expense components have been included in the financial statements at appropriate amounts.

– This assertion addresses concepts such as historical cost, consistency, accrual accounting, accounting estimates, impairment of assets, and allocation of costs.



• Rights and Obligations – Assertions about rights and obligations address whether assets are the rights of the entity (actually owned by the company) and liabilities are the obligations of the entity at a given date.



• Presentation and Disclosure – Assertions about presentation and disclosure address whether particular components of the financial statements are properly classified, described, and disclosed.


united states coast guard real property completeness & existence asmc dc chapter luncheon 16...

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