Data Accuracy is Crucial to Audit Readiness
By Peter Collins
Audit Readiness is a major initiative in 2018 for the Defense Department and this is putting increased importance on financial, property and inventory data accuracy.
The first annual department-wide Audit in Department of Defense (DoD) history is currently underway. DoD Comptroller, David Norquist, stated that by spring of 2018 “We will have over 1,200 auditors inspecting the Department of Defense from book to floor and floor to book.” Ensuring that all trackable property exists in the appropriate Government system of record and can be produced when requested is of paramount importance and a requirement for an organization’s successful audit completion.
The Financial Improvement and Audit-Readiness (FIAR) Plan has evolved and matured over the years, but the current deadlines and regulations were set by Congress in the National Defense Authorization Act of 2010. The White House, the Pentagon and Congress have all made it clear that they are committed to holding the Defense Agency accountable. “Beginning in 2018, our audits will occur annually with reports on Nov. 15,” Norquist said.
This audit is massive. It’s also more than simply an investigation into accounting and record keeping. The Pentagon says that auditors will review records and inspect Defense programs with government property responsibilities. The audit will examine every aspect of the department attempting to verify accountability for all qualifying assets and inventory. And to take it one step further, the audit will also attempt to verify the existence and completeness of inventories performed at an organization.
The challenge here is that in order to have “fully auditable financial statements” the DoD is required to capture and account for all serialized assets — a complete inventory of all Department property. Not an easy task for such an enormous organization.
The Role of Property Management
FAR 52.245-1 requires that the contractor shall have a system of internal controls to manage (control, use, preserve, protect, repair and maintain) government property in its possession. All assets that are used, maintained, modified, distributed or disposed of while being managed by the contractor are required to be reported to the Item Unique Identification (IUID) Registry via Invoicing, Receipt, Acceptance and Property Transfer (iRAPT). In many cases, the Government will send the contractor additional assets over time that the contractor stores and modifies throughout the course of contract execution.
The contractor is then responsible to update and keep current all property records related to these additional assets. All of this property, once ready to be returned to the government, generally must be reported to government systems such as iRAPT, IUID Registry and eventually Plant Clearance Automated Reutilization Screening System (PCARSS) for disposition.
What Does IUID Policy Have To Do With It?
The IUID Policy was created to simplify and streamline the process of asset accountability. An IUID, often represented as a barcode, is a globally unique number that is assigned to a particular asset, permanently marked on that asset and then registered in the IUID database accordingly. The DoD has established iRAPT and the IUID Registry as part of the Wide Area Workflow, or WAWF e-Business Suite, as the master e-Commerce platform for all invoicing and asset data, both serialized and non-serialized.
This process of capturing and reporting on unique asset information for all DoD government property is no small feat; however, in recent years the branches of the military along with military contractors have made significant strides towards this goal. To date, there are approximately 37.9 million serialized assets with IUID’s that have been reported to the IUID Registry. But, compare that to the estimated 110 million assets that remain unregistered —and you get an idea of how massive this challenge is.
The Importance of Accurate Asset and Inventory Data
At the end of the day, being prepared for an inventory audit – where the auditors are comparing the actual inventory on the ground to the Government system of record – requires accurate asset and inventory data.
Consistently managing assets throughout their lifecycle using reliable tools and processes is essential for maintaining operational-ready property and equipment, but investing in the infrastructure and resources necessary to support accurate property data is important for strategic reasons as well. Accurately managing asset and inventory data from acquisition through disposition allows you to identify record keeping errors early on and to correct them before the error is propagated. This takes planning and effort, but it’s worth it. Once erroneous tracking data has been submitted to iRAPT and the IUID Registry or another registration authority, the mistake becomes increasingly complicated and costly to correct.
As most people in the Defense Industry know, Military Standard 130 (or MIL-STD-130) is a set of detailed requirements and specifications for the marking and identification of US Military property. MIL-STD-130 is one of the building blocks of the IUID Policy. At the most basic level it ensures that every asset is marked with an Individual Unique Identification number (IUID). This standard was established to ensure that compliant processes were followed to mark, capture and report items properly to the IUID Registry.
Single Source of Truth
The IUID Registry was built to have a single location where all DoD property is logged with a purchase date, purchase price and other pedigree information. Establishing this “Master Database” is crucial, as it provides the Pentagon a single, trusted source of truth.
… To continue this article click here and turn to p27 of the Property Professional magazine.
About the Author
Peter Collins, A2B Tracking President and CEO, has worked with many industries, including the Department of Defense, on Auto ID policy development and implementation. He has played a key role as a consultant to the DoD in the department’s effort to adopt the use of IUID technology in 2004. He received the ID Global Leadership Award in 2009 for his role in worldwide adoption of IUID, and is an active participant in IUID industry trade associations.