Over the course of the past 13 years, the Army financial management (FM) community has met the unprecedented challenge of resourcing the longest war in our nation's history. We continue our support to our Soldiers in conflict, but now do so during a period with increasing budget constraints, fiscal uncertainty and the need to transform into an audit ready enterprise. Despite these complexities, the Army's FM community continues to meet the resourcing challenges-- while planning a unique and vital effort to transform the FM enterprise to support the Army of 2025.
Achievements in 2014
The Fiscal Year (FY) 2013 "perfect storm" challenges of an extended continuing resolution, sequestration and a significant Overseas Contingency Operation shortfall was one of the most difficult budget environments most can remember. The FM community worked through the uncertainty of these events in real-time, which made even risk management difficult. The consequences of these events-- civilian furloughs, cancelled Combat Training Center Rotations were measurable and consequential as Army readiness levels for units outside the deployment cycle dipped significantly. However, from these events, we carried lessons learned into FY 2014: (1) Communications between Commanders, functional proponents and the FM community is essential to managing uncertainty; (2) Consistent, reliable and timely data optimizes decisions; (3) Efficient processes for managing information and supporting decisions are essential; and, (4) Army Soldiers and civilians are dedicated and resourceful.
Fiscal Year 2014 began with its own set of challenges. The 16 day government shutdown, the first since 1995, required agility and flexibility not often affiliated with government. Resourcing the Army, still at war, in the absence of appropriations amid limited planning, stressed the Department as a whole and the Resource Management community in particular. Two Continuing Resolutions followed the Shutdown into second quarter. The professionalism and dedication displayed by the RM community and the rest of the Army was phenomenal. In December, passage of the Bipartisan Budget Act of 2013 (BBA), provided the Army some relief from the dramatic salami-slice reductions of sequester. More importantly, the BBA established some stability in the fiscal environment by providing Department funding ceilings for both FY 2014 and FY 2015.. The BBA provides Army decision-space to optimize "readiness" within the resources we have. As of this writing, we are approaching the FY 2014 year-end with confidence in our ability to support Army priorities with an agility and clarity of requirements based on the hard work by the FM community, in collaboration with Commanders and Army Staff, to set conditions earlier this fiscal year.
Audit Readiness.
In July 2013, the Army initiated Audit Exam 3 to conduct an examination of our General Fund (GF) Statement of Budgetary Resources (SBR); and included other Army systems that execute or support GF fund execution and audit requirements. This third in a series of exams, completed in April 2014, gained valuable feedback from an Independent Public Accounting (IPA) firm on our audit readiness. Exam 3 focused on the Army's new financial system, General Fund Enterprise Business System (GFEBS), and the business processes and operational environment in various organizations across the Army. The IPA firm noted significant progress from previous exams, where the Army made great improvements in reducing internal control gaps and standardizing business practices. Based on the findings, the Army will continue to drive towards asserting audit readiness of our Statement of Budgetary Activity this year and full financial statement audit assertion by September 2017. In addition, an IPA firm conducted an examination of the Army's real property assets at 24 installations, which account for more than 50% of the Army's real property. The audit confirmed the Army "management's assertion" related to the existence, completeness and rights of general fund real property assets is fairly stated, as defined in the criteria based on Statement of Auditing Standards. This significant accomplishment represented the largest successful fixed asset audit in the Army's history.
Army Financial Management Optimization (AFMO)
In the past year, the Army Financial Management Optimization (AFMO) Task Force made recommendations to the Secretary of the Army for a multi-year transformational effort focused on improving capabilities toward greater efficiency and achieving audit of our financial statements in 2017. AFMO uses a framework for transformation, which considers the entire Doctrine, Organization, Training, Material, Leader Development, Personnel and Facilities (DOTML-PF) construct. The fielding of GFEBS, along with other Army enterprise resource planning (ERP) systems , represents a change in the materiel solution, the "M" in DOTML-PF, driving corresponding change in other elements of the transformation construct. We made numerous recommendations to our finance doctrine -- "D"; enhancing business practices, processes, and policies, better aligned to newly evolving ERPs.. AFMO recommendations also resulted in organizational -- "O" changes, which included the Secretary of the Army's approval to initiate a pilot test of command-aligned hubs. In addition, AFMO efforts included the alignment and training -- "T" of personnel - "P" for the better use of the capabilities of these new ERP systems in order to provide commanders with data and analysis for well-informed resource decisions.
Goals for the Year Ahead
To build upon our recent successes, we prioritized key objectives for the coming year.
Resourcing the Army
Resourcing the needs of the Combatant Commanders remains a top priority during an increasingly complex security environment. World events clearly accentuate the dynamic environment and challenge budgets and assumptions, as initial plans often fail first contact. The FY 2015 OCO budget, submitted to Congress in June 2014, responds to the dynamic environment and reflects DoD's and the Army's efforts to build funding agility through the European Reassurance Initiative and the Counter Terrorism Protection Fund. In accordance with the Army's strategy, we will continue to prioritize near-term readiness and support to our Soldiers and families at the expense of modernization. We expect this readiness versus modernization imbalance to continue through FY 2018. Meanwhile, reductions and reshaping our workforce within a downsized Army will be a significant challenge/opportunity. Our need to reduce our FM footprint without breaking the processes supporting formulation and justification of our budgets, timely funds control and year of execution agility, will require expanded ability to interpret critical information as an enabler to leadership decision making.
Army Financial Management Optimization (AFMO)
To meet the restructuring challenges, while providing enhanced capabilities, the Army will conduct Command-aligned Hub pilots in FY 15 at Fort Bragg, North Carolina and Wiesbaden, Germany. The purpose of the Command-Aligned pilot hubs are to validate the consolidation of standard business process designs associated with the ERP systems and recommend changes to the workforce composition and alignment in support Army FM requirements. We expect Command-aligned hubs to consolidate transactional workload across a better trained and depth of skilled workforce, while enhancing decision support activities remaining with commanders. This enables FM analytical support to Commanders for cost benefit analysis and resource-informed decision making, while gaining efficiencies at the command-aligned hubs. We will draw from lessons learned in the pilot and criteria such as auditability enhancement, and develop recommendations in early 2016 for leadership approval and subsequent Army-wide implementation.
Delivering Auditable Data to Support Cost Culture
The Army will develop GFEBS enhancements to add functionality and remedy challenges identified by the user community to ensure more timely and accurate financial information for decision-making and for audit compliance. Also over the next year, Army organizations will learn from previous audit exams to develop or improve business practices and standard operating procedures and to continue user training so that the Army can achieve the statutory mandate to be auditable by 2017.
Auditable data in GFEBS provides the foundation for Army cost data. Each year, the volume and accuracy of the cost data available in GFEBS continues to improve. These cost data will be readily available and accessible to analysts, managers and leaders; and, will provide the opportunity for better-informed decision-making and more effective stewardship. With each year of GFEBS experience, the Army is in a better position to provide transparent reporting to the Congress and the American people on the use of resources and achievement of established performance objectives. The Army is improving the quality and accuracy of information, enabling cost informed decisions that have a positive impact on the fighting force.
Summary
While budget constraints and headquarters reductions force difficult decisions, the Army will continue to effectively resource Soldiers for training and readiness to achieve the Army's missions at home and abroad. Audit readiness remains a top priority in the FM community and the Army. The achievements of the past year and current course has Army on track to meet auditability requirements by 2017. AFMO supports audit readiness by further enforcing standardized business processes and seeking enterprise transformation centered on the recently fielded ERPs. Leaders will have the ability to leverage auditable enterprise data that enhances analytical outcomes and empowers them to make better resource-informed decisions. Increased analytical capability will allow for a higher return on investment in our Title 10 support to the Nation's defense.
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