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Lead, follow, or get out of the way: the Marine Corps is way ahead in its goal to achieve financial improvement and compliance with the Chief Financial Officers Act.

The Chief Financial Officers (CFO See Chief Financial Officer. ) Act, the President's Management Agenda The President's Management Agenda is an initiative, announced by U.S. President George W. Bush in 2001, to make the U.S. federal government more efficient and effective. In its drive to make government more "citizen-centered, market-based, and results-oriented," the agenda , and recent authorization and appropriation acts all contain the same basic theme: Produce financial reports that are accurate, timely, and relevant to leadership and that will stand up to independent audit review. There is no easy fix to solving our financial recording and reporting problems. The Marine Corps has recognized this fact and is taking a multifaceted mul·ti·fac·et·ed  
Having many facets or aspects. See Synonyms at versatile.

Adj. 1. multifaceted - having many aspects; "a many-sided subject"; "a multifaceted undertaking"; "multifarious interests"; "the multifarious
 approach to comply with the CFO Act. Auditable financial statements should be nothing more than the by-product by·prod·uct or by-prod·uct  
1. Something produced in the making of something else.

2. A secondary result; a side effect.


 of sound processes and procedures at each segment of a financial event. The entire cycle of obtaining goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. , from Private Jones's "needing stuff" to paying company XYZ XYZ  
interj. Informal
Used to indicate to someone that the zipper of his or her pants is open.

[ex(amine) y(our) z(ipper).]
 for providing that "stuff," requires process review and improvement.

Determining the Problem

Within the Marine Corps, we started the financial improvement review by asking a very basic question: Is the accounting system the problem? The Marine Corps uses the Standard Accounting, Budgeting, and Reporting System (SABRS SABRS Standard Accounting, Budgeting and Reporting System
SABRS Space Atmospheric Burst Reporting System
) to record all general fund appropriations. To answer the question, the Marine Corps requested the Logistics Management Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective, forward, and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet  Institute (LMI LMI Labor Market Information
LMI Local Management Interface
LMI Logistics Management Institute
LMI Linear Matrix Inequality
LMI Legemiddelindustriforeningen (Norway)
LMI Low to Moderate Income
LMI Lender's Mortgage Insurance
) to evaluate SABRS for compliance with standards established under the Joint Financial Management Improvement Program. The LMI completed this evaluation, and SABRS passed the certification process with a few required corrections that are in the process of being resolved. With assurance that SABRS meets the required standards, the improvement focus shifted to other stakeholders Stakeholders

All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government.
 outside the financial community (for example, contracting, facilities, supply, and personnel). Our stakeholders also extend beyond the Marine Corps since numerous DoD-wide systems are integral to financial improvement.

The majority of business events having a financial impact occur outside our Marine Corps financial management community. Financial managers, for the most part, are not determining requirements, placing orders, receiving goods, etc. Those events happen through other communities such as manpower and logistics. Any sustainable improvements in financial management must include buy-in from them. There has to be a compelling WIIFM WIIFM What's In It For Me?  (What's in it for me?) proposition to change from the status quo [Latin, The existing state of things at any given date.] Status quo ante bellum means the state of things before the war. The status quo to be preserved by a preliminary injunction is the last actual, peaceable, uncontested status which preceded the pending controversy. . Our fundamental WIIFM for other Marine Corps stakeholders was simple: We were losing financial opportunities to support our marines because of our current business practices.

Simply put, we are not getting the maximum bang for our limited bucks.

During peacetime, the typical Marine division's annual operating budget Noun 1. operating budget - a budget for current expenses as distinct from financial transactions or permanent improvements
budget items, operating cost, operating expense, overhead - the expense of maintaining property (e.g.
 and exercise support is about $20 million. With our current business practices, the Corps is wasting (via reverted balances of expired funds), more than this amount each year. Improvements by our stakeholders in their systems, policies, and procedures will help to identify these assets while they are still available for reuse and, thereby, enhance our primary goal of support to our marines and our warfighting missions.

With unity of effort achieved, our next step was to determine the criteria used for compliance and improvement reviews. Every business event has a cause and effect relationship. These relationships impact or are impacted by five key areas: Information Systems; Management Controls; Policies and Procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental ; Organization and Infrastructure; and People. The interaction among these five key strategic areas determines the accuracy and propriety of every business event. For us, each process review focuses on these five areas for compliance, improvement, and mitigation efforts. Figure 1 shows the actions to be taken in each process review.

Figure 1. Five Key Strategic Areas and Actions to Be Taken in Each Process Review

Change Management

Five Key Strategic Areas

Information Systems

* Identify management systems

* Update information systems inventory

* Leverage and integrate enterprise architecture

* Document "To-Be" environment

* Conduct systems compliance assessments

* Conduct systems migration

Management Controls

* Monitor compliance

* Identify assessable units

* Document preventive detective controls

* Develop management control checklists

* Conduct management Control

Policies & Procedures

* Document "As-Is" business processes

* Collect, analyze, and review applicable process references

* Perform "gap analysis" between the "As-Is" process flow and applicable references

* Develop standard operating procedures standard operating procedure Medtalk A technique, method or therapy performed 'by the book,' using a standard protocol meeting internally or externally defined criteria; a formal, written procedure that describes how specific lab operations are to be performed.  (SOPS sop  
tr.v. sopped, sop·ping, sops
1. To dip, soak, or drench in a liquid; saturate.

2. To take up by absorption: sop up water with a paper towel.


Organization & Infrastructure

* Identify key stakeholders and process owners

* Document assign roles and responsibilities

* Identify training requirements

* Develop training materials

* Conduct training classes


* Perform workforce analysis

* Determine staffing requirements

* Conduct competency assessments

* Determine retention requirements

* Implement management procedures

At this point, we had buy-in from our stakeholders and a template for reviewing our processes for compliance and improvement. Then the really hard work began. Where do you start? What is broken? What should our priorities for improvement be to maximize the benefit to the Corps?

Determining Solutions

Our starting point Noun 1. starting point - earliest limiting point
terminus a quo

commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the
 was the Fiscal Year (FY) 2002 Performance and Accountability Report issued by the Department of Defense (DoD) Inspector General. This report identified 13 material weaknesses applicable to DoD financial statements. Our next step was to bring together subject matter experts from our field commands to discuss financial management problems and weaknesses. From these reviews and discussions, we determined the following areas most critical to Marine Corps financial improvement. These improvements are on track to be completed and implemented prior to the beginning of FY 2007:

* Standardize document processing Processing text documents, which includes indexing methods for text retrieval based on content. See document imaging.  

* Simplify and standardize fiscal codes

* Integrate all phases of the programming, budgeting, and execution cycle

* Create environmental liability policy and procedures

* Update policy and procedure manuals

* Standardize fund holder training

* Field compliance with process and procedure changes

Making It Work

To date, we have made significant progress on many of these issues. Policy and procedures were developed and implemented in conjunction with the Deputy Commandant for Installations and Logistics on environmental liabilities. With very few changes, the Office of the Secretary of Defense The Office of the Secretary of Defense (OSD) is part of the United States Department of Defense and includes the entire staff of the Secretary of Defense. It is the principal staff element of the Secretary of Defense in the exercise of policy development, planning, resource  (OSD (1) (On-Screen Display) An on-screen control panel for adjusting monitors and TVs. The OSD is used for contrast, brightness, horizontal and vertical positioning and other monitor adjustments. ) used the Marine Corps product to create the standard policy for environmental liabilities reporting for use across the Department.

Closer to home, in our finance and accounting organization, we formed a working group with representatives from each major installation and command to review step by step how each type of source document is processed. Our review found that over 700 different practices were being used by commands to process source documents. These have been reduced to 57 standard processes that cover every source document or financial transaction condition encountered throughout the Marine Corps and will be implemented Corps-wide in FY 2006.

We found that the Marine Corps used over 3,000 detailed cost accounting codes to classify execution by purpose in the accounting system. How these codes were being used varied from command to command, resulting in execution information at the detail level being extremely inaccurate and of little value to program managers in meeting reporting requirements. We reduced the number of codes to 310 and provided detailed guidance on how and in what circumstances the codes would be used. In addition, we mapped these codes to specific budget line items to reduce significantly the miscoding of cost account information. As a result, we've achieved simplicity and greater accuracy of data.

To assist in our ongoing Activity Based Costing (ABC ABC
 in full American Broadcasting Co.

Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928.
) efforts, we reviewed the coding structures used by each command to identify internal organizations, that is, engineering support, supply, contracting, comptroller, etc. These codes have been standardized for all bases and have been associated with 37 standard business processes, which are the heart of our ABC efforts. This change has dramatically improved the verification and reliability of reported execution data.

We are currently pursuing approval through the Business Management Modernization Program process with OSD to invest funding in development of an authorization database that will seamlessly link the Program Budget information System (a Department of the Navy system), SABRS, and the Marine Corps Programming and Budget Development Database. This new database will distribute funding during the fiscal year and will eliminate the current manual processes: spreadsheet maintenance, manual entries into the accounting system, and the manual creation of authorization messages and letters. This effort will close the loop on integration of programming, budgeting, authorization, and execution information while providing leadership with useful information upon which to base resource decisions.

We also have updated the Marine Corps Order (MCO MCO Managed care organization, see there  7540.2E) on resource evaluation and analysis, thereby providing more teeth to the requirement for reviewing and reporting compliance with established financial policy and procedures. A new unit, the Marine Corps Financial Evaluation and Assistance Team, was established and chartered to develop and provide standardized fund holder training. Further, once all training to units is completed, that team will be providing an outside evaluation or inspection of commands' financial management compliance.

Because of these and other efforts, OSD has selected the Marine Corps to be the test case for demonstrable de·mon·stra·ble  
1. Capable of being demonstrated or proved: demonstrable truths.

2. Obvious or apparent: demonstrable lies.
 financial improvement within the Department. We have been tasked to develop standalone financial statements for Marine Corps appropriations (as a subset of the Department of the Navy's single official audited financial statements) and to obtain an audit opinion using the current accounting system, SABRS. Our roadmap for meeting the improvement mandates has been codified cod·i·fy  
tr.v. cod·i·fied, cod·i·fy·ing, cod·i·fies
1. To reduce to a code: codify laws.

2. To arrange or systematize.
 in the Executive Report: Marine Corps Financial Improvement Plan and submitted to OSD. (See more information.)

By our multifaceted approach of assessing the five strategic areas of business practices, engaging the stakeholders, and beginning at the source where financial transactions are generated, the Marine Corps has come a long way in a relatively short time toward improving our financial management capability. However, there is still quite a way to go before we accomplish the final goal of providing timely, accurate, useful, and auditable financial information to our leadership and external organizations. Until that goal is reached, the Marine Corps will continue its all-encompassing approach to strive for deeds, not just words, concerning financial improvement.

RELATED ARTICLE: DFAS DFAS Defense Finance & Accounting Service (US DoD)
DFAS Decorative and Fine Arts Society (The Hague, Holland)
DFAS Dark Field Alignment System
DFAS Department of Fisheries and Aquatic Sciences
 begins its journey of transformation via BRAC Brač (bräch), Ital. Brazza, island (1991 pop. 13,824), 152 sq mi (394 sq km), off the Dalmatian coast in the Adriatic Sea, Croatia. It is a popular summer resort and tourist spot. Supetar (Ital.  (From a DFAS press release).

In December 2005 site directors at Defense Finance and Accounting Service The Defense Finance and Accounting Service (DFAS), an agency of the United States Department of Defense, provides finance and accounting services for the military and other members of defense.

In FY 2004, DFAS:
  • Processed 104M pay transactions to 5.
 (DFAS) Sites conducted briefings to update employees on the agency's approaching transformation, including DFAS implementation of the 2005 Base Realignment and Closure Base Realignment and Closure (or BRAC) is a process of the United States federal government directed at the administration and operation of the Armed Forces, used by the United States Department of Defense (DoD) and Congress to close excess military installations and realign  (BRAC) Commission's recommendations. DFAS's strategy is to use BRAC as a tool to facilitate its transformation, the most obvious feature of which is to reduce the number of operating sites from 30 to less than 10.

Said DFAS Director Zack Gaddy, "The DFAS mission to provide accounting and finance services for the military departments and Defense agencies will remain constant. And the change is in keeping with the DFAS vision: transforming today to be the trusted financial partner for tomorrow's warfighter. BRAC 2005 provides the opportunity to implement site consolidations, streamline DFAS operations, and support our goat to provide best value to the warfighter."

The transformation, which is underway, will implement changes to DFAS's organization structure, including rollout of High Performing Organization initiatives, establishing Centers of Excellence, and executing the National Security Personnel System (NSPS NSPS National Security Personnel System (US government)
NSPS New Source Performance Standard
NSPS National Society of Professional Surveyors
NSPS National Suicide Prevention Strategy (Australia) 
). NSPS Will improve the way Department of Defense hires, assigns, compensates, and rewards its employees while preserving core merit principles, veterans preference, and important employee protections and benefits of the current system. The DFAS transformation will reengineer business processes and retool re·tool  
v. re·tooled, re·tool·ing, re·tools
1. To fit out (a factory, for example) with a new set of machinery and tools for making a different product.

 skill sets necessary to perform critical functions.

These changes will satisfy the objectives required to meet DFAS's strategic goals, including the implementation of best business practices to increase productivity and reduce costs and reshaping its workforce to meet mission needs.
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Author:Chadwick, John M.
Publication:Armed Forces Comptroller
Geographic Code:1USA
Date:Jan 1, 2006
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