From athletes to coaches, actors to directors and business executives to politicians, history is replete with professionals trying to make the jump from one career to a seemingly similar one, with far fewer finding success.
Among those few is Richard Baughman, U.S. Army Financial Management Command Audit Response Center lead accountant, who made the jump from auditor to audit remediator, and whose success earned him the 2021 Louis Dellamonica Award for Outstanding U.S. Army Materiel Command Personnel of the Year.
“This job is not just a paycheck for me,” said Baughman. “I love coming to work at USAFMCOM because I’m able to support the warfighter, I’m trusted to do what is right, and I’m given the freedom to perform my job in a manner I see fit.”
After spending the first six years of his professional career in the private sector, Baughman joined the Defense Finance and Accounting Service in 2007, eventually reaching the position of senior auditor before moving to USAFMCOM in 2017.
“Being a career auditor of any kind and evolving into an audit problem solver isn’t easy because it takes a very different mindset,” said Charlie Lopez, USAFMCOM ARC Financial Reporting Division chief and Baughman’s supervisor during the award period. “But, Richard leveraged his background to produce make some really big strides that had some big impacts on the Army’s overall audibility.”
“Accounting takes a very controls-minded approach, and we want to make sure the financial statements are complete and contain accurate information,” agreed Baughman. “We need to make sure we are as accurate as possible so the military, civilian and political leaders can make the best possible decisions based on the best possible data to provide the best possible resources to our Soldiers, civilian employees and their families.”
Lauded for his efforts to remediate and close three audit notices of findings and recommendations related to financial reporting during the award period, Baughman tackled some of the Army’s biggest audit problems.
Baughman specifically took on NFRs in the areas of military construction activity for the Army Corps of Engineers Financial Management System general ledger balances, Army Dedicated Collections funds and Army Distributed Offsetting Receipts.
NFRs are essentially the way in which auditors inform an agency of control deficiencies they find during an audit, explained Lopez. The more NFRs auditors report based on an agency not showing it has the proper controls in place, the worse the overall audit results will be.
Baughman explained it in terms of manufacturing where the Army’s business and accounting factory is producing millions of transactions each year, and the auditors are the quality assurance technicians taking a small sample of those transactions every so often to ensure they are being done correctly.
“In general, when we are trying to go from a disclaimer of opinion to positive audit opinion, we need to have less NFRs tomorrow than we did today,” Lopez added. “What Richard and his team did completely resolved NFRs, which is the gold-standard in the audit remediation world.”
For his efforts with distributed offsetting receipts, Baughman took a population of transactions first created by Lopez and created a risk assessment document to show the auditors what kind of risks were expected and if transactions were adequately supported.
“The auditors may choose to evaluate anything that appears on our financial statements, and we want everything reflected as accurately as possible,” said Baughman, who also explained that distributed offsetting receipts are those funds that the U.S. Treasury allocates to the agency to offset agency cash outlays.
His efforts with dedicated collections focused on how they were being disclosed in the Army’s financial statements.
These are funds we receive from the public for very specific purposes that can’t be used for anything else, and the Army tracks those separately, hence the need for them to disclosed properly on the financial statements.
“We researched various fund types and determined we were inaccurately reporting some funds in our disclosures, and we had not been reporting one that we should have,” Baughman recalled. “Ultimately for audit purposes, it is very important to ensure we include reliable information in our financial statements, as it really comes down to our credibility.
“If we are putting inaccurate information in, the auditors will be less likely to trust our professional judgement in other areas.”
As part of the Dellamonica award recipient’s other efforts, he also led the his team in reviewing the System and Organization Controls, or SOC 1, report for the Army’s General Fund financial reporting.
“Going back to the machine analogy, we are the team of engineers looking at the blueprints of our accounting machine to make sure we designed the quality controls correctly to catch our errors and omissions,” Baughman explained.
SOC 1 audits are an oversight of a service provider, and in the case of the Army’s General Fund, the service provider is DFAS. The audit seeks to show proper controls are in place and traceable from an Army transaction in the field all the way back to DFAS, who accounts for it on the financial statements.
“We walked through the process with the auditors and (the Office of the Assistant Secretary of the army for Financial Management and Comptroller) used our review process as the model for the auditors,” said Baughman, adding that the General Fund SOC 1 audit was previously reviewed by only one person, so the depth of the report was limited.
“We did a very in-depth review of the SOC 1 report, looking at whether financial statement risks are identified and seeing if controls are in place and designed to properly mitigate those risks,” he continued. “We found a few issues, but we are systematically going through them.”
The ARC team said they are using the Army General Fund Financial Reporting SOC 1 review process as a model for their efforts with reviewing other SOC 1 reports.
Baughman also helped the Army make huge strides with its audit of trading partner transactions.
These are transactions that take place any time an Army agency does business with another federal agency and are delineated into intra-Army, intra-Department of Defense and intragovernmental buckets.
“For intra-Army transactions, which include activities like transferring equipment from one installation to another, nothing should change in our financial statements as it’s like moving money from one pants pocket to another,” said Baughman. “Otherwise, among other things, we’d report having more resources available to accomplish our mission than what we really have available. That concept can be applied at the DoD level between the services and at the federal government level between different agencies.”
With his trading partner efforts, he created a model audit package for sample documentation.
“The auditors had not sampled any of the trading partner documentation in the past, so it was a totally brand new process,” Baughman recalled. “The package included standard operating procedures with step-by-step screenshots and checklists to help the Army’s commands provide the auditors with exactly what they needed.”
“Richard is the consummate team player,” added Lopez. “There were many times he had to jump in to help a teammate and many times he needed to work extra hours with the model audit package, and he did it with no complaining. He’s just very team-focused and results-oriented.”
Providing a model audit package eliminates requirement ambiguity, creates standardization and prevents the Army’s commands from having to go back and forth the with Army auditors in trying to get them what they need.
“It really reduces the workload and rework for our Soldiers and civilians in the field so they can quickly respond to the auditors and get back their primary mission of serving our Soldiers, civilians and their families,” Baughman explained.
He said that focus on supporting the Army’s people is what has driven him since day one.
“I wanted to join the military in high school, but family circumstances weren’t conducive,” Baughman recalled. “But, I still wanted to make a difference and now I get to impact the lives of the military in my own way, and I’m proud of that.”
When asked about his award, he expressed he’s typically uncomfortable with recognition.
“It’s a tremendous honor to be recognized for the accomplishments that I largely leaned on my team to help me accomplish,” Baughman concluded. “In USAFMCOM, no individual is an island, and we rely on our teammates. I worked with a great team in Financial Reporting to accomplish the mission.”
The Dellamonica Award is named in honor of Louis Dellamonica, a general engineer with a 65-year career at the Hawthorne Army Depot who “exemplified integrity, innovation, leadership and outstanding dedication to the Army Materiel Command’s mission.”
Dellamonica’s biggest project in his career was the design and construction of the Western Area Demilitarization Center, which was used to demilitarize ammunition. His efforts helped safely demilitarize more than 67,000 tons of ammunition during his tenure.
USAFMCOM conducts enterprise-level financial operations, provides technical coordination for Finance and Comptroller units and military pay support with commands across the Army, in order to ensure the effective implementation of policies and programs to support optimally resourcing the Army and supporting Soldiers.
ARC executes and implements audit policies, providing oversight and evaluation of enterprise compliance preparedness for audit-of-business processes through discovery, testing and training.