The auditors are coming! The auditors are coming!
In early 2007, the inspector general is going to invite independent auditors to begin their audit of DoD's military equipment programs. And here's the good news: We'll be ready for the auditors, thanks to the Military Equipment Valuation (MEV) initiative.
In case you haven't heard, MEV is a DoD-wide effort to capitalize, depreciate, properly account for, and report military equipment. Basically, we're treating military equipment as capitalized assets instead of expenses, prorating their value over their useful life and recording those values on financial statements that are subject to audit.
With the help of program management offices across the Department, the Property & Equipment (P & E) Policy Office has established the initial value of each item of military equipment in the DoD inventory, using a consistent approach that can be audited. Now we have to update that program information and ensure it's ready for audit.
Updates in CAMS-ME: Due September 30, 2006
The Capital Asset Management System-Military Equipment (CAMS-ME) is the system that the P & E Policy Office and the Space and Naval Warfare (SPAWAR) System Center-San Diego have developed to consolidate the average cost of assets, update total program expenditures, depreciate assets over their useful life, and record asset status. Points of contact who have already been designated in all of the Services will use the CAMS-ME portal Web-based tool to update their military equipment addition, disposal, and transfer data. Training on CAMS-ME for POCs is now being offered as a Web-based module, accessible from the Quick Links menu on our Web site: <www.acq.osd.mil/me>.
Management Assertion for Audit Readiness: Due December 31, 2006
According to Section 1008 of the 2002 National Defense Authorization Act, the under secretary of defense comptroller is responsible for ensuring that resources expended on financial statement preparation are minimized until the reporting entity can demonstrate that it is ready for audit. Typically the financial management community would take care of this. But military equipment is unique.
Information about military equipment must be obtained from the acquisition and logistics communities, so individuals in these communities are required to assert to the accuracy of the information they give to the financial management community. In fact, these communities are involved in four management assertions:
* The Valuation Assertion, which verifies that the assets have been valued in accordance with federal accounting standards and generally accepted accounting principles
* The Completeness Assertion, which verifies that all the programs on the Property, Plant & Equipment (PP & E) line item of the balance sheet that should have been reported have been recorded and reported
* The Rights and Obligations Assertion, which verifies that the Service reporting the item does in fact have the rights to and "owns" the equipment
* The Existence Assertion, which verifies that the military equipment being reported does in fact exist.
Working with the military departments and defense agencies, the P & E Policy Office developed a recommended approach for completing the assertions. To learn more about that approach, visit <www.acq.osd.mil/me>and click on "Management Assertion Training" in the Quick Links menu.
Dotting the I's and Crossing the T's for Our Warfighters
Preparing our military equipment programs for audit is the law. It also has tremendous benefits: It demonstrates renewed responsibility to the taxpayer, and it gives senior management officials the ability to approach Congress and the American people with better knowledge of our military equipment programs--and not just the number of vehicles, ships, and planes, but also what each costs, its current value, and how long it will operate. Ultimately, this information, verified by an independent auditor, will help us to make investment decisions that provide the best support for our warfighters.
Sylvester is deputy director for property & equipment policy within the Acquisition, Resources and Analysis Office, Office of the Under Secretary of Defense (AT & L).
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|Title Annotation:||In the News|
|Author:||Sylvester, Richard K.|
|Publication:||Defense AT & L|
|Date:||Jul 1, 2006|
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