R 241336Z MAY 12

ALCGFINANCE 017/12
SUBJ: MONTHLY FINANCIAL AUDIT STATUS UPDATE - MAY 2012
A. ALCGFINANCE 043/11
B. ALCGFINANCE 011/12
1. This is the eighth in a monthly series of ALCGFINANCE messages
intended to improve financial audit communications and information
sharing throughout the Coast Guard.
2. Current Status:
         A. The Fiscal Year (FY) 2012 audit readiness effort
continues
and is currently in the audit testing phase. A great deal of work has
been accomplished in the field and at the service and logistics
centers. Units will continue to see Provided By Client (PBC)requests,
which are formal requests for information provided by the external
auditor to the Coast Guard.  Many of these requests will impact field
units and individuals. For information on how PBC's impact field
units, please see the 'Audit 101' section of this message below.
         B. Reference A is a description of the audit phases and
Reference B explains PBC requests. Additionally, please visit the
following link to view Admiral Papp's video message on the FY 2012
financial audit (http://cgvi.uscg.mil/media/main.php/f/Audit2012).
3. Audit 101:
         A. Last year, the Coast Guard reached a major milestone by
becoming the first military service to have an auditable Balance
Sheet. The objective for this fiscal year is expanded to all of our
financial statements.  This will give the auditors unprecedented
visibility into the Coast Guard's financial management processes and
reporting. This full scope audit is underway, and efforts to prepare
for the additional scrutiny from external auditors will impact almost
everyone in the Coast Guard.
         B.  One way the auditors validate our expenses and verify
our
internal controls is through testing our financial transactions.
This year, they will perform expense testing.
         C. During an audit, a series of large samples will be tested
by the external auditor to ensure the integrity of the service's
financial statements and to validate the transactions. This process,
known as substantive testing, begins when the external auditor
obtains a sample group of financial transactions. The field
experienced this type of testing over Undelivered Orders (UDO's) in
FY 2011. After selecting the sample population, the auditor will
submit a PBC request to the Coast Guard for more detailed information
on specific attributes (properly signed procurement requests,
receiving documents, member travel claims, unit approved plans, etc.)
in order to validate that units are following Coast Guard policy.
         D. When the PBC is received, the Coast Guard sampling team
determines which forms and documents are necessary to support those
specific expenses. These required forms and documentation for each
document type are outlined in the Documentation Support Matrix,
accessible online at
(https://collab.uscg.mil/lotus/myquickr/cg-85-office-of-financial-tra
nsformation/documentation-support-matrix).
         E. Depending on the type of expense and the location of the
required supporting documents, sample team personnel will contact
field units to request additional documentation. To learn more about
this process, please review the supporting docs for audit sample
training at
(https://collab.uscg.mil/lotus/myquickr/cg-85-office-of-financial-tra
nsformation/documentation-support-matrix).
         F. Once the external auditor examines the Coast Guard's
available support for selected expenses, they will make an assessment
as to whether our financial statements are correct or if there is a
risk of a material misstatement. Significant problems in the sample
may impact the auditor's ability to opine on the financial
statements.
         G. Additional information on financial audit readiness can
be
found on the CG Portal page for the Office of Financial Management
Transformation and Compliance (CG-85) at
(https://collab.uscg.mil/lotus/myquickr/cg-85-office-of-financial-tra
nsformation).
Information, training materials and links to other audit related
resources are stored under the 'Audit Basics' tab.
4. Monthly Audit Tips:
         A. It is essential that field units respond promptly to
audit
(PBC) requests and provide the necessary supporting documentation so
that the dissemination and validation of requested samples can be
completed in a timely manner. Your input and hard work is needed to
make sure the sample is fully supported. This will enable the Coast
Guard and DHS to reach the goal of an unqualified audit opinion in FY
2012.
         B. Program Element Managers, Authorizing Officials,
Storekeepers and other financial management personnel should follow
these guidelines:
         1. Proactively manage all current and expired program
elements, including keeping detailed documentation on file.
         2. Ensure program element reconciliation is current.
         3. Ensure proper supporting documentation for all components
of financial transactions that lead to a disbursement of Coast Guard
funds (i.e., commitment, obligation, receipt and invoice).
         C. Field units should direct any questions about audit (PBC)
requests to Commandant (CG-84), Ms. Laurie Holly, at
Laurie.J.Holly(AT)uscg.mil.
         D. View the available training in the 'Audit Readiness
Training' folder at the CG-85 portal site
(https://collab.uscg.mil/lotus/myquickr/cg-85-office-of-financial-tra
nsformation/documentation-support-matrix)
and ensure all applicable personnel at field units are familiar with
the Documentation Support Matrix.
         E. View Admiral Papp's video message on the FY 2012
financial
audit (http://cgvi.uscg.mil/media/main.php/f/Audit2012) and present
or distribute this video to all hands at field units to increase
audit awareness and readiness.
5.  Ms. Margo Sheridan, Director of Financial Operations/Comptroller,
sends.
6.  Internet release authorized.