Big milestones are coming up in 2017 for the FIAR (Financial Improvement and Audit Readiness) Directorate, which will affect the way defense contractors do business. It is imperative that all contractors understand and follow the new Directorate, and also understand how Auto ID technology such as barcode and RFID, lies at the core of FIAR compliance.
The Department of Defense has made it clear that it is committed to having fully auditable financial statements by the end of September 2017 and they have remained committed to this timeline. This was the deadline that was established by Congress in the National Defense Authorization Act of 2010. The FIAR Plan has evolved and matured since the plan was first issued in 2005, but the bottom line is that the DoD needs to capture and account for all mission critical assets.
Asset Existence and Completeness
In validating existence of an item, the accountable property system of record (APSR) must match a physical item or set of items. This may seem simple but it takes time and resources. Add the requirement to validate the completeness of the record within the APSR and now you’ve got a major challenge. The reason for that challenge is that completeness requires that the entire record match the actual pedigree of the physical item.
This task is made much more difficult if the discipline of IUID, a globally unique asset identifier, has not been incorporated. The addition of IUID and RFID technology can save property managers and comptrollers countless hours, ensuring that assets are correctly captured, recorded, reported, and that the data involved will remain documented in the APSR. Validating completeness has challenged property managers and comptrollers for many years and will continue to do so UNTIL the discipline of IUID or RFID is incorporated. Staying compliant to the FIAR initiative will be much more difficult for those not utilizing this technology.
The IUID Policy
The Department’s IUID Policy is at the core of this plan and outlines the use of and regulations for utilizing barcode technology. For those that are unfamiliar, Item Unique Identification (IUID) is a method of using a 2D barcode to create a globally unique asset identifier. This unique ID or barcode represents a one-of-a-kind item in the possession of the military or the defense contracting community. Labeling each unique asset is the first step in this process. Once the item has been marked or labeled that unique asset information has to be reported to the IUID Registry.
Although it is possible to submit asset data to the IUID Registry manually, it is not recommended. The use of barcode scanning technology to commission an asset, enter into a database, associate it with specific asset pedigree and then track the movement or custody changes of that asset with the barcode represents a significant improvement over the manual clipboards and spreadsheets historically found in military environments. This can generate a 10:1 return on time alone, meaning a 10-hour manual inventory can take as little as 1-hour to perform with IUID. At the end of the day, not only will barcode technology save time and labor; but, it also enables more frequent inventory cycle counting which translates to improved database accuracy and audit-readiness.
RFID, on the other hand, is not a mandated technology for asset identification; but, can complement IUID very nicely as a wireless asset identification technology using radio frequency to identify the asset. This can generate a 30:1 return on time alone, meaning a 30-hour manual inventory can take as little as 1-hour to perform with RFID.
Contact us to learn more about IUID and RFID and how it can help your organization become better prepared and audit-ready for the FIAR deadlines. You can also download our free Guide: The 2017 FIAR Directorate – how to be audit-ready and fully compliant to FIAR.