Improving Reporting of Property, Plant and Equipment in the Department Of Defense.
The Chief Financial Officers (CFO See Chief Financial Officer. ) Act of 1990, as expanded by the Government Management Reform Act of 1994, mandates important reforms in federal financial management to promote greater accountability in managing the finances of the federal government. Among those reforms are requirements for the preparation and audit of individual financial statements for the federal government's 24 largest departments and agencies. Another key requirement of the CFO Act, essential for achieving the intended reforms, is the requirement for integrated agency accounting and finance systems.
The Department of Defense (Department/DoD) is committed to improving its financial management processes and systems, so much so that the Secretary of Defense expanded the Defense Reform Initiatives to include Financial Management Reform. Taking positive and effective measures to correct systemic systemic /sys·tem·ic/ (sis-tem´ik) pertaining to or affecting the body as a whole.
1. Of or relating to a system.
2. deficiencies is a Department-wide management challenge, not just a financial management community problem. It has been estimated that a significant amount of the information reported in the Department's financial statements originates in nonfinancial systems (e.g., logistics, acquisition, medical, property, etc.).
The Department has adopted a two-tracked approach to improving its financial management processes. One track is a long-term approach, which addresses improvements or replacement of current systems throughout the Department to meet the requirements of new government-wide accounting standards. The expected completion date, at the earliest, is 2003. The second track, a short-term interim approach, aggressively addresses the most significant deficiencies in the financial management process and in many cases is expected to be accomplished with the support of contractors. The expected completion date varies by project, but incremental Additional or increased growth, bulk, quantity, number, or value; enlarged.
Incremental cost is additional or increased cost of an item or service apart from its actual cost. progress is to be achieved each year.
DoD financial management is extremely complex for numerous reasons. To begin with, the DoD mission is worldwide. The Department maintains over 500 bases in 150 countries and territories throughout the world. The Department is comprised of three Military Departments, fourteen Defense Agencies, and eight Field Activities that typically perform their operations differently and use different processes and support systems. The DoD's business activities are very diverse. In support of the DoD mission, the Department maintains airports and shipyards, depots and maintenance facilities, research facilities and laboratories, hospitals, commissaries, schools and universities, and various types of housing facilities. To operate such activities requires extensive amounts of property, plant and equipment (PP&E). The Department uses PP&E that is valued at nearly a trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time.
(mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed.
In the USA and Canada, 10^12. dollars and is located throughout the world.
Additionally, and adding to the complexity of DoD financial management, there are voluminous types and quantities of PP&E supporting the DoD Components in accomplishing the Department's mission. Furthermore, since the Department's mission is global, DoD's PP&E is located worldwide. The Department's PP&E can, and often times must, be mobile. In addition, large amounts of PP&E in the Department are classified. Finally, National Defense PP&E (weapons systems and weapons systems related) is not bought "off the shelf" but, rather, is researched and developed by the Department, further adding to the complexity of the accounting and reporting requirements for such PP&E.
As previously indicated, the DoD mission is very PP&E intensive. Critical to effectively achieving the Department's mission is the "readiness" of the Military Services. That is, without sufficient quantities of PP&E in the right place, at the right time, and in the right condition, the Department would not be ready to fulfill ful·fill also ful·fil
tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils
1. To bring into actuality; effect: fulfilled their promises.
2. its mission, as mandated by the Constitution--to support and defend the Constitution of the United States Constitution of the United States, document embodying the fundamental principles upon which the American republic is conducted. Drawn up at the Constitutional Convention in Philadelphia in 1787, the Constitution was signed on Sept. and to provide for the common defense of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The Department employs thousands of property managers and logisticians to safeguard the DoD PP&E and to ensure that such PP&E is where it needs to be in sufficient quantities and in a fully operational condition. Property managers and logisticians have always taken accountability for the PP&E entrusted to them very seriously.
However, accountability for PP&E is quite different than the accounting for PP&E. Accountability requires safeguarding the PP&E from loss, destruction, or improper
adj. condition. Accounting for PP&E requires recording acquisition costs, acquisition dates, disposal dates, depreciation, maintaining documentation supporting such transactions, etc. While safeguarding and maintaining PP&E has always been important to the logisticians and property managers, previously, accounting for PP&E was much less important. However, with the CFO Act, as much emphasis as the Department placed on PP&E accountability in the past now must be placed on accounting for PP&E.
PP&E Accounting Requirements
In October 1990, the Comptroller General Noun 1. Comptroller General - a United States federal official who supervises expenditures and settles claims against the government
functionary, official - a worker who holds or is invested with an office , the Secretary of the Treasury, and the Director of the Office of Management and Budget The Office of Management and Budget (OMB), formerly the Bureau of the Budget, is an agency of the federal government that evaluates, formulates, and coordinates management procedures and program objectives within and among departments and agencies of the Executive Branch. (OMB OMB
Office of Management and Budget
Noun 1. OMB - the executive agency that advises the President on the federal budget
Office of Management and Budget ) agreed to establish the Federal Accounting Standards Advisory Board The Federal Accounting Standards Advisory Board (FASAB) is a United States federal advisory committee whose mission is to develop generally accepted accounting principles for federal financial reporting entities. (FASAB FASAB Federal Accounting Standards Advisory Board
FASAB Financial Accounting Standards Advisory Board ) to consider and recommend accounting standards and principles for the federal government. Those standards and principles are published as Statements of Federal Financial Accounting Concepts and Standards.
In November 1995, the FASAB issued Statement of Federal Financial Accounting Standards (SFFAS SFFAS Statement of Federal Financial Accounting Standards
SFFAS San Francisco Fall Antiques Show
SFFAS Superfund Financial Assessment System (EPA) ) No. 6, "Accounting for Property, Plant and Equipment." The SFFAS No. 6 establishes four categories of PP&E: General PP&E, National Defense PP&E, Heritage Assets, and Stewardship stewardship
the occupation of being a steward or custodian. Referring to animals it implies the caring sort of relationship based on an acceptance of the need to include the rights of animals in overall plans to maintain financial viability. Land. General PP&E consists of tangible assets Tangible Asset
An asset that has a physical form such as machinery, buildings and land.
This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. , including land, that meets the following criteria: (1) an estimated useful life of 2 years or more, (2) not intended for sale in the ordinary course of operations, and (3) acquired or constructed with the intention of being used, or being available for use, by the entity General PP&E also includes assets acquired through capital leases, including leasehold improvements Leasehold Improvement
Improvements on a leased asset that increase the value of the asset.
A leasehold improvement is classified as an asset that must be depreciated over time. ; property owned by the reporting entity in the hands of others (e.g., state and local governments, colleges and universities, or contractors); and land rights.
General PP&E is further divided into two categories: real property and personal property Real property includes land, buildings and other structures. Personal property includes equipment, furniture, vehicles, computers, and software.
The SFFAS No. 6 establishes the reporting requirements for General PP&E. General PP&E is to be recorded at acquisition cost and depreciated Depreciated may refer to:
National Defense PP&E consists of weapons systems and weapons systems related items. Heritage Assets are items that are unique because they possess one or more of the following characteristics: of historical or natural significance; have cultural, educational or artistic importance; or have significant architectural characteristics. Stewardship land is all land owned by the federal government that was previously public domain or donated do·nate
v. do·nat·ed, do·nat·ing, do·nates
To present as a gift to a fund or cause; contribute.
To make a contribution to a fund or cause. to the government and includes land purchased by the federal government which was/is not acquired for, or used in connection with, items of General PP&E. Examples include military installations, training ranges, national parks This is a list of national parks ordered by nation. Africa
The reporting requirements for National Defense PP&E, Heritage Assets and Stewardship Land are contained in SEFAS No. 8, "Supplementary Stewardship Reporting" The standard was published in June 1996 with an implementation date of September 30, 1998. This article does not focus on either Heritage Assets or Stewardship Land. The SFFAS No. 8 requires that the DoD report either the historical cost or the latest acquisition cost of the DoD National Defense PP&E in a Supplementary Stewardship Report accompanying its annual financial statements. These costs are to be reported to be spoken of; to be mentioned, whether favorably or unfavorably.
See also: Report by major types. However, since the FASAB currently is considering changing the reporting requirements for National Defense PP&E, the Department has not yet implemented those requirements. Rather, the Department is reporting quantities of National Defense PP&E in a Supplementary Stewardship Report. The SFFAS No. 8 also requires the reporting of condition information for National Defense PP&E assets. Under SEFAS No. 8, the acquisition costs of Na tional Defense PP&E are considered an expense and, therefore, the costs are not capitalized Capitalized
Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. and not placed on the Balance Sheet. National Defense PP&E reporting is discussed further later in this article.
Neither the accountability nor accounting for most of the DoD's General PP&E assets is accomplished through the Department's financial systems. Instead, the Department relies on its property management and logistics systems to provide the financial information needed for annual financial statements. The DoD property management and logistics systems were designed to support mission requirements and were not designed to be accounting subsidiary ledgers Noun 1. subsidiary ledger - details of an account supporting the amount stated in the general ledger
account book, book of account, ledger, leger, book - a record in which commercial accounts are recorded; "they got a subpoena to examine our books" . As a result, reporting financial information from such systems is very difficult and problematic. The design of such systems did not include the capabilities to record acquisition, improvement and disposition costs; record the date of the acquisition, the date placed in service and the date disposed; nor did they provide the capability to calculate current year and accumulated ac·cu·mu·late
v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates
To gather or pile up; amass. See Synonyms at gather.
To mount up; increase. depredation DEPREDATION, French law. The pillage which is made of the goods of a decedent. Ferr. Mod. h.t. amounts. Additionally, as much of the DoD's PP&E is older than 6 years and 3 months--the maximum federal document retention requirement-- supporting documentation for the acqui sition cost of most of the DoD's PP&E either no longer exists or is not readily available. The DoD's existing property management and logistics systems capabilities and lack of supporting documentation requires that the DoD use other means to address the CFO Act accounting and reporting requirements. Therefore, the DoD has implemented interim strategies to address the systems and documentation shortcomings A shortcoming is a character flaw.
Shortcomings may also be:
Implementation Strategies. In a June 1998 letter to the Secretary of Defense, the Office of Management and Budget (0MB) listed a number of material deficiencies in the Department's fiscal year (FY) 1997 financial statements, as identified by the audit community. The Department's PP&E was one of the primary deficiencies identified. In July 1998, the Department began developing alternative methodologies as an interim approach to improve its accounting and reporting deficiencies. These alternative methodologies, now called "implementation strategies," were adopted as remedies to the financial reporting problems for which the Department received a disclaimer of opinion Disclaimer of opinion
An auditor's statement that does not express any opinion regarding the company's financial condition.
disclaimer of opinion from the auditors on its financial statements. The implementation strategies addressing PP&E include business practice reforms required by the DoD Components (financial and nonfinancial) and the hiring of certified See certification. public accounting (CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. ) firms to help the Department address issues identified by the auditors. The strategies develop ed were reviewed and agreed upon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations"
noncontroversial, uncontroversial - not likely to arouse controversy by the Department, OMB, and the audit community.
General PP&E deficiencies identified by the auditors concern: (1) existence and/or completeness with the property management and logistics systems, and (2) valuation of the PP&E in those systems. The seven items discussed below are the implementation strategies pertaining per·tain
intr.v. per·tained, per·tain·ing, per·tains
1. To have reference; relate: evidence that pertains to the accident.
2. to PP&E that have been approved by the OMB and the audit community and presently are in various stages of progress, as explained in each section.
a) Existence and Completeness of PP&E. The SFFAS No.6 requires that all PP&E assets in the possession or control of the Department be properly and accurately recorded in the Department's systems. Auditors perform tests of "existence" (Can all of the PP&E recorded in the Department's property systems be traced to actual physical assets?) and "completeness" (Are all of the PP&E assets that exist recorded in the Department's property systems?). The existence and completeness deficiencies are indicators of accountability and stewardship problems. The Military Departments take quite seriously their stewardship responsibilities. Stewardship relates to readiness. Military units conduct periodic inspections and inventories of PP&E during the year. Thus, military commanders know the location and condition of the PP&E assigned to their commands, and the control over, and access to, such equipment is more than adequate. However, with the implementation of the CFO Act and the requirement to produce auditable financial st atements in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.
As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with federal-wide accounting standards, the Department must improve its business practices to further demonstrate its role as stewards and also to comply with the current requirements under the Act.
In that regard, the Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), with the assistance of a CPA firm, developed and issued a DoD Directive (DoDD) (DoDD Number 5000.nn) and Manual (DoD 5000.nn-M, "Property, Plant and Equipment Accountability") which establishes policy and assigns responsibilities for PP&E accountability within the DoD. With the implementation of the accountability policy in the Directive, there should be an increased probability that the previous deficiencies regarding existence and completeness will be greatly diminished di·min·ish
v. di·min·ished, di·min·ish·ing, di·min·ish·es
a. To make smaller or less or to cause to appear so.
b. . The Directive's requirements for maintaining supporting documentation, mandatory minimum internal controls and use of systems in the recording of acquisition, use, and disposal of PP&E should prove to be of tremendous value for improving the reporting of PP&E in the DoD's financial statements.
In addition to the issuance of the Directive and Manual described above, the Military Departments and Defense Agencies are required to prepare comprehensive plans with milestones addressing: (1) corrective actions A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or to ensure installation-level databases are regularly and accurately reconciled to headquarters and/or other centralized cen·tral·ize
v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es
1. To draw into or toward a center; consolidate.
2. databases, (2) corrective actions to ensure that future financial statements accurately reflect the timely capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of Construction-in-Progress amounts, and (3) corrective actions to ensure future financial statements accurately reflect the data in the property management systems.
Finally, the Department is pursuing the wide-spread deployment of the Defense Property Accounting System (DPAS DPAS Defense Property Accountability System
DPAS Drugs Prevention Advisory Service (United Kingdom)
DPAS Defense Priorities and Allocation System (US DoD)
DPAS Deep Purple Appreciation Society ) in an effort to achieve financial and physical control over personal property. The Department is completing the fielding of the DPAS throughout the DoD with the exception of the Air Force and a few Defense Agencies. The Air Force is completing modifications to the Air Force Facility and Equipment Maintenance System, the Automated au·to·mate
v. au·to·mat·ed, au·to·mat·ing, au·to·mates
1. To convert to automatic operation: automate a factory.
2. Civil Engineer System, and the Information Processing information processing: see data processing.
Acquisition, recording, organization, retrieval, display, and dissemination of information. Today the term usually refers to computer-based operations. Management System to achieve compliancy com·pli·an·cy
Noun 1. compliancy - a disposition or tendency to yield to the will of others
complaisance, obligingness, compliance, deference with the CFO Act and other regulations and requirements.
b) Capitalization Threshold. As part of this implementation strategy the Department hired two CPA firms to study the appropriateness of both the real and personal property capitalization thresholds and recovery periods used for depreciation purposes. After thorough studies, the contractors recommended the Department retain the current capitalization threshold of $100,000 and current recovery periods. However, the CPA firms recommended that the capitalization threshold be delinked from the investment and expense funding threshold utilized by the Congress in annual appropriation acts An Appropriation Act is an Act of Parliament passed by the United Kingdom Parliament which, like a Consolidated Fund Act, allows the Treasury to issue funds out the Consolidated Fund. . The Under Secretary of Defense (Comptroller) agreed and issued appropriate revised policy.
c) Valuation of Real Property. In reviews conducted by the audit community, the General PP&E real property databases were determined to be reliable for existence and completeness. As such, the Department hired a CPA firm to assist in the reporting of General PP&E real property values on its annual financial statements. After review, analyses, and testing of the information contained in the Military Departments' real property databases, the CPA firm recommended that the recorded costs be accepted and reported on the respective Military Department's financial statements. The Department accepted the CPA firm's recommendation. However, the Department is presently attempting to resolve a few concerns raised by the audit community.
During the review process, the contractor discovered numerous internal control, process, and procedural weaknesses that need to be corrected, updated and/or strengthened in each of the Military Departments. DoD is in the process of correcting the internal control, process, and procedural weaknesses identified by the CPA firm, and is taking appropriate actions to ensure that (1) the acquisition costs are timely recorded in real property databases, and (2) the supporting documentation is appropriately retained.
d) Valuation of Personal Property. The Department hired a CPA firm to perform existence, completeness and valuation (EC&V) tests of the General PP&E personal property. However, during the first phase of the contract, it was recognized within the Departments of the Army and Navy that implementation of a CFO compliant property system would be required before valid EC&V results could be obtained. Accordingly, the Army and Navy presently are implementing the DPAS with the assistance of the CPA firm. Also during the first phase of the contract, the Department of the Air Force The executive part of the Department of the Air Force at the seat of government and all field headquarters, forces, Reserve Components, installations, activities, and functions under the control or supervision of the Secretary of the Air Force. Also called DAF. See also Military Department. chose to modify its personal property systems to be in compliance with CFO requirements, as well as clean up data problems (e.g., missing costs, and acquisition dates). The CPA firm has been assisting the Air Force resolve its data problems.
While assisting the Military Departments, the CPA firm identified internal control and procedural weaknesses that also needed to be resolved prior to conducting the EC&V tests. In February, the CPA firm recommended the Department consider modifying the implementation strategy approach for improving the reliability of the personal property databases. Specifically, the CPA firm recommended that when it is determined that the personal property values on an entity's financial statement would not be material, rather than perform the valuation portion of the EC&V tests, the Department should concentrate its efforts on improving the reliability of the personal property systems by updating controls, processes and procedures.
The Department is taking steps to address the issues and problems identified by the CPA firm. Those steps are: (1) ensuring that newly acquired General PP&E personal property are capitalized at acquisition cost and the supporting documentation retained in accordance with appropriate regulations; (2) updating and modifying controls, processes and procedures to ensure that additions, deletions, and modifications of General PP&E personal property are recorded in accordance with established DoD policy; and (3) continuing to migrate to property accountability systems that meet federal-wide accounting standards (to include the capability to capture and maintain historical cost data and calculate depreciation) for its General PP&E personal property.
e)Property in Possession of Contractors. A large amount of the Department's General PP&E and National Defense PP&E is in the possession/custody of defense contractors Noun 1. defense contractor - a contractor concerned with the development and manufacture of systems of defense
armed forces, armed services, military, military machine, war machine - the military forces of a nation; "their military is the largest in the region"; . The defense contractors are required to submit annual reports on Defense Department (DD) Form 1662, "DoD Property in the Custody of Contractors. "These reports summarize sum·ma·rize
intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es
To make a summary or make a summary of.
sum the value of the DoD property in the possession of contractors (PIPC PIPC Palisades Interstate Park Commission
PIPC Polska Izba Przemyslu Chemicznego (Polish Chamber of Chemical Industry)
PIPC Political Institutions and Public Choice
PIPC Property in the Possession of Contractors ) by categories. The reported values represent assets either acquired by the government and furnished fur·nish
tr.v. fur·nished, fur·nish·ing, fur·nish·es
1. To equip with what is needed, especially to provide furniture for.
2. to the contractors or acquired by the contractors and owned by the government. The DoD consolidates this contractor furnished information in the Contract Property Management System (CPMS CPMS Centre Psycho-Médico-Social (Belgium)
CPMS Client Process Monitoring System (Oregon DHS)
CPMS Chronic Progressive Multiple Sclerosis
CPMS Civilian Personnel Management Services ), which includes entries for approximately 16,632 contracts as of FY 1999.
Unfortunately, the CPMS and the associated DD Form 1662 source documents include only "summary" PP&E values by category by contract. In order for the Department to report the necessary financial information required under SFFAS No. 6 and No.8, more specific information is required, such as unit costs and acquisition dates.
The total value of the DoD PP&E reported in the CPMS for FY 1999 was $71.3 billion. The $71.3 billion is comprised of both General PP&E and National Defense PP&E. Some of the information on both General PP&E and National Defense PP&E in the possession of contractors is maintained in the property management and logistics systems of the DoD Components. Therefore, it may not be necessary for defense contractors to report annually, for financial statement purposes, PP&E information for all of the PP&E in their possession.
Defense contractors have indicated that the personal property costs recorded in their property information management systems were either derived from appropriate purchase/invoice documents when the assets were constructed, or obtained from documents accompanying the asset when the asset was transferred to the contractor. However today such documentation is: (1) not always available, (2) not easily retrievable, or (3) not reconcilable rec·on·cil·a·ble
Capable of or qualified for reconciliation: reconcilable differences.
rec with the personal property assets that were either constructed by or transferred to the contractor. Additionally, there was no requirement for contractors to maintain such cost information for all of the old PP&E in their possession.
The DoD, along with representatives from the audit community, participated in a series of field visits to several major defense contractor plants. The visits revealed that most General PP&E personal property (excluding Special Tooling and Special Test Equipment (ST&STE STE Saint (French)
STE Suite (US Postal Service)
STE Societe (French: Society)
STE Spanning Tree Explorer
STE Software Test Engineer )) in the possession of the contractors visited had a unit cost less than the DoD capitalization threshold or an acquisition date that would cause capitalized items to be fully depreciated Fully depreciated
An asset that has already been charged with the maximum amount of depreciation allowed by the IRS for accounting purposes.
Of or relating to a fixed asset that has been depreciated to a book value of zero. .
Based on the above findings, the DoD plans to utilize the Defense Contract Audit Agency The Defense Contract Audit Agency (DCAA), under the authority, direction, and control of the United States Under Secretary of Defense (Comptroller), is responsible for performing all contract audits for the United States Department of Defense (DoD), and providing accounting and (DCAA DCAA Defense Contract Audit Agency
DCAA Dansk Center Vedrørende Alkoholisme Og Andre Afhængighedssygdomme (Danish)
DCAA Danish Civil Aviation Administration
DCAA Derby City Agility Association
DCAA Dual Call Auto Answer ) to conduct a more detailed assessment of General PP&E in excess of the DoD capitalization threshold, as well as quantities of National Defense PP&E in the possession of contractors. The DoD plans to implement a methodology for collecting the necessary General PP&E information based on the results and recommendations of a DCAA study The DoD also will take the appropriate actions to improve the accuracy of information in the DoD's National Defense PP&E systems for National Defense PP&E in the possession of contractors based on the results of the study The DCAA began this effort in March of this year and is expected to complete the study before the end of the fiscal year.
f) National Defense PP&E. After years of deliberation deliberation n. the act of considering, discussing, and, hopefully, reaching a conclusion, such as a jury's discussions, voting and decision-making.
DELIBERATION, contracts, crimes. on the accounting and reporting requirements for National Defense PP&E, and as recently as October 4,1999, the FASAB could not achieve a consensus on a specific accounting and reporting method for National Defense PP&E. At a subsequent FASAB meeting, on October 29, 1999, the DoD Deputy CFO, who also is a FASAB member, informed the FASAB that Mr. William Lynn, Under Secretary of Defense (Comptroller)! CFO, was willing to pay for an independent contractual study on the various alternatives for National Defense PP&E accounting and reporting methods, if the Board was willing to consider the results of the study At that same meeting, the Board agreed to consider the findings and recommendations of the contractor. The DoD Deputy CFO also provided the Board with a draft Statement of Work, and the Department incorporated suggested changes from the FASAB's Executive Director.
In January 2000, the Department awarded a contract to study the accounting and reporting alternatives for National Defense PP&E. The contractor--a CPA firm--will provide a report that identifies and discusses the pros and cons pros and cons
the advantages and disadvantages of a situation [Latin pro for + con(tra) against] of each accounting and reporting alternative explored, as well as the estimated costs of implementing the alternatives, required timeframes for implementation, and other pertinent PERTINENT, evidence. Those facts which tend to prove the allegations of the party offering them, are called pertinent; those which have no such tendency are called impertinent, 8 Toull. n. 22. By pertinent is also meant that which belongs. Willes, 319. information for consideration by the FASAB.
The focus of the contract is DoD-wide. Hence, the potential National Defense PP&E accounting and financial reporting requirements to be reviewed and evaluated by the contractor will encompass each of the Military Departments and Defense Agencies. Since variations occur in how one Military Department acquires National Defense PP&E, as compared to how another Military Department or Defense Agency acquires National Defense PP&E, three major National Defense PP&E programs are included in the study The programs are: the Army's Abrams family of tanks; the Navy's DDG-51, Aegis Destroyer destroyer, class of warship very fast relative to its length, generally equipped with torpedos, antisubmarine equipment, and medium-caliber and antiaircraft guns. The newest destroyers are equipped with guided missiles as their chief offensive weapon. ; and either the Air Force's F-15 or F-16 program. A significant number of new major National Defense PP&E acquisition programs are developed and procured jointly with one or more of the allies of the United States. These international cooperative development and procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. programs add an additional complexity to the potential accounting and financial reporting requirements to be considered during the study.
The potential accounting and financial reporting requirements to be reviewed by the CPA firm are not limited to those currently and previously considered by the FASAB, but rather also will include the review of other reasonable alternatives that the CPA firm deems worthy of consideration by the FASAB because of their usefulness to the DoD financial statement users and/or the ability of the DoD to effectively and efficiently implement them. The present schedule for this effort requires the CPA firm to make periodic presentations to the FASAB and to conclude the study by September 30, 2000.
g) Deferred Maintenance Reporting for PP&E. Reporting amounts of deferred maintenance by category of PP&E is a required disclosure in accordance with the SFFAS No. 6 and also is referenced in the SFFAS No. 8. Deferred maintenance is defined as maintenance that was not performed when scheduled or when otherwise required and which, therefore, is delayed until a future period. Maintenance includes preventive maintenance The routine checking of hardware that is performed by a field engineer on a regularly scheduled basis. See remedial maintenance.
preventive maintenance - (PM) To bring down a machine for inspection or test purposes.
See provocative maintenance, scratch monkey. , normal repairs, replacement of parts and structural components, and other activities needed to preserve an asset so that it continues to provide acceptable service and achieves its expected life.
The effective date to report deferred maintenance information was FY 1998. The implementation experience to date has identified many concerns requiring further clarification and guidance. Those issues include: cost-benefit considerations, audit requirements, and the degree of flexibility afforded each agency. As a result, the CFO Council initiated a project to recommend government-wide methods to calculate deferred maintenance estimates and to develop more detailed proposed guidance on the presentation of deferred maintenance in the annual financial statements. The DoD volunteered to chair the project and kicked off this effort in May 1999.
Until the government-wide project is completed and appropriate changes are approved by the FASAB, the Department will be reporting in the DoD financial statements: (1) deferred maintenance amounts reported during the budget process for General PP&E real property, and (2) depot-level deferred maintenance amounts also reported during the budget process for National Defense PP&E assets.
This marriage of accountability and accounting for PP&E assets has been adopted by the Senior Leadership throughout the DoD and commands the highest level of oversight
Oversight may refer to:
William deBardelaben is a Systems Accountant in the Directorate for Accounting Policy, Office of the Deputy Chief Financial Officer, Office of the Under Secretary of Defense (Comptroller). He holds both BS and MS degrees in business administration from Robert Morris College RMC sports teams use the Eagle mascot and the school has one of the largest athletic programs in the state, including basketball, cross country, track, soccer, volleyball, tennis, softball, baseball, bowling, golf, hockey and dance. in Pittsburgh, PA. He also attended Carnegie Mellon University Carnegie Mellon University, at Pittsburgh, Pa.; est. 1967 through the merger of the Carnegie Institute of Technology (founded 1900, opened 1905) and the Mellon Institute of Industrial Research (founded 1913). , School of Urban and Public Affairs Those public information, command information, and community relations activities directed toward both the external and internal publics with interest in the Department of Defense. Also called PA. See also command information; community relations; public information. . Mr. deBardelaben also is a recent graduate of the Federal Executive Institute in Charlottesville, VA. He has nearly 13 years experience in federal financial management and 17 years experience in private sector accounting.