R 211622Z AUG 12 ALCGFINANCE 026/12 SUBJ: MONTHLY FINANCIAL AUDIT STATUS UPDATE - AUGUST 2012 A. COMDT COGARD WASHINGTON DC 151825Z NOV 11/ALCGFINANCE 043/11 1. This is the eleventh 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. Testing is currently underway, with auditors taking samples and exposing the Coast Guard's financial management framework to rigorous testing and analysis. For more information on audit phases, see Reference A. B. Auditors and CG-8 staff will be conducting property field site visits in mid-August. Coast Guard Headquarters and Logistics Center/Service Center staff are receiving Provided By Client (PBC) requests from the external auditor on a regular basis and are responding to requests as they are received. 3. Audit 101: A. We have spent the last few months illustrating open obligations/undelivered orders and the importance of proper record keeping, accountability and associated validation requirements. As part of the Fiscal Year 2012 audit emphasis on open obligations, we will now discuss applicable fiscal law and important legislative regulations related to financial obligations. B. One of the most important fiscal laws related to financial obligations is the Antideficiency Act (ADA), codified as 31 U.S.C. 1341, which consists of several statutes that authorize civil and criminal penalties for the unlawful obligation/expenditure of government funds. The ADA affects all Coast Guard employees, military and civilian, who work in financial management. C. Among other things, the ADA makes it illegal for federal employees to authorize or make expenditures from (or obligate under) any fund beyond the amount already available in the fund. It prohibits employees from incurring financial obligations on behalf of the government before funds have been appropriated, and prohibits excess obligations/expenditures of an apportionment or reapportionment. D. Three specific statutes that comprise the ADA and apply to Coast Guard Financial Managers limit the availability of budgetary resources for obligation/expenditure by regulating the purpose, time and amount of the obligation/expenditure. They are: (1). The Necessary Expense Doctrine (31 U.S.C. 1301a). Known as the PURPOSE provision, this statute states that funds will be obligated/used only for the applications and objects for which they were made or originally intended. (2). The Bona Fide Needs Rule (31 U.S.C. 1502). Known as the TIME provision, this statute states that funds balances intended to be used during a certain period of time are only available for expenditures properly incurred during (and not beyond) that specific period of time. (3). Limitations on Expending and Obligating Amounts (31 U.S.C. Sections 1341, 1342, and 1517). Known collectively as the AMOUNT provisions, these statutes prohibit Coast Guard employees from over obligating funds by exceeding the specific amounts in funds/appropriations and require employees to decline voluntary/free services (such as from the private sector) not authorized by law. 4. Monthly Audit Tips: A. It is extremely important for financial management personnel (and those who supervise financial managers, military and civilian) in the Coast Guard to familiarize themselves with the Antideficiency Act and all of the composite regulations described in the AUDIT 101 section of this month's newsletter. For more information on the ADA Act see the following GAO Link: http://www.gao.gov/legal/lawresources/antideficiencybackground.html B. Familiarization with applicable fiscal laws and regulations is an essential part of achieving the Coast Guard's objective of increasing fiscal accountability, improving our financial management framework, and the overall success of our Fiscal Year 2012 audit. Along those lines, financial management personnel should remember the lessons learned from the last expense sample done by the external auditor: (1). All expenses need to have supporting documentation in accordance with the Documentation Support Matrix (https://collab.uscg.mil/lotus/myquickr/cg-85-office-of-financial-tra nsformation/documentation-support-matrix). (2). As per federal law, expenses cannot exceed the obligated amount in the fund/appropriation or the obligation time period. When processing payments make sure to check that the underlying obligation has enough funding available to cover the payment. This includes payment of travel obligations. (3). Obligations must be approved before invoices are paid against them. (4). Accounts payable need to be recorded when goods and services are received. The Coast Guard often receives goods and services before the invoice is received. The Coast Guard is liable to pay for the goods and services upon receipt and acceptance, even if an invoice has not been provided yet. This underscores the importance of tracking receipts at the unit level, maintaining all packing slips and receipts in your unit procurement files, and date stamping each receipt. (5). Correct Vendor Identification is important when recording invoices in order to identify the appropriate Trading Partner for financial reporting. Each Department within the Federal Government is assigned a unique Trading Partner Number - these unique identifiers allow for the elimination of Intra-governmental transactions when the financial statements are consolidated. (6). When processing invoices be sure to check if it is a partial invoice or a final invoice. Identifying final invoices in the system is critical to keeping obligation status audit-ready. The external auditors are planning to test the Coast Guard's expenses again in September and it is important that adequate supporting documentation is available in a timely manner to support the expenses. C. 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. 5. Ms. Margo Sheridan, Director of Financial Operations/Comptroller, sends. 6. Internet release authorized.