R 281230Z SEP 12

ALCGFINANCE 038/12
SUBJ: MONTHLY FINANCIAL AUDIT STATUS UPDATE - SEPTEMBER 2012
A. COMDT COGARD WASHINGTON DC 151825Z NOV 11/ALCGFINANCE 043/11
B. COMDT COGARD WASHINGTON DC 201615Z DEC 11/ALCGFINANCE 046/11
1. This is the twelfth 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
near completion. As we move into the fourth and final phase of the
audit, financial systems test results are being analyzed, and audit
remediation staff are continuing to respond to Provided By Client
(PBC) requests and receiving Notices of Findings and Recommendations
(NFR's) from the independent auditor. For more information on audit
phases, see Reference A.
3. Audit 101:
A. We first introduced you to the concept of internal controls in our
December 2011 newsletter (see Reference B). To reiterate, internal
controls are activities within financial processes that are designed
to prevent undesirable outcomes. They identify problems, reduce
errors, and ensure the Coast Guard's financial processes are working
correctly. While internal controls are often used to prevent waste,
fraud and abuse, they also increase the effectiveness and efficiency
of resources that are used.
B. This month we will focus on the legal history of internal
controls. The original catalyst and driving force behind implementing
internal controls in the Coast Guard was the Federal Managers
Financial Integrity Act of 1982 (FMFIA). Codified as 31 U.S.C. 3512,
the FMFIA enacted an internal control structure within each
government executive agency that required continuous monitoring,
testing and reporting of each agency's internal accounting
procedures, practices and financial processes. Think of the FMFIA as
a government version of the Sarbanes-Oxley Act of 2002.
C. In our case, there are two parts of the FMFIA that require the
Secretary of the Department of Homeland Security to issue statements
of assurance on behalf of DHS, including the Coast Guard. Section two
requires an annual statement of assurance on the agency's oversight
of financial operations to prevent fraud, waste or abuse, and our
compliance with applicable federal laws and regulations. Section four
of the FMFIA additionally requires an annual statement of assurance
on the agency's ability to conform to government-wide accounting
principles, standards and related requirements prescribed by the
Comptroller General.
D. The FMFIA is implemented using the guidance in the Office of
Management and Budget (OMB) Circular A-123. OMB A-123 explicitly
requires that government agencies:
      (1). Conduct continuous testing of their internal financial
management frameworks and report annually on internal control.
      (2). Identify material weaknesses found (during testing) within
the agency's financial management framework and the corrective
actions the agency is taking.
      (3). Consider independent input from the Office of the
Inspector
General while in the process of reporting annually.
4. Monthly Audit Tips:
A. This month's audit tips will also focus on internal controls.
Virtually everyone in the Coast Guard is affected by the internal
controls process in one way or another, and everyone can help improve
the Coast Guard's internal controls.
B. Proper stewardship of Federal resources is a requirement of all
military and civilian members of the Coast Guard, from the purchasing
of Maritime Law Enforcement equipment to the expenditure of
government travel funds on TDY trips. As part of the ongoing effort
to improve internal controls, all employees should:
      (1). Ensure that resource use is consistent with our agency's
mission, in compliance with applicable laws and regulations, and not
wasteful, fraudulent or mismanaged.
      (2). Ensure that unit and function-specific operations have
Standard Operating Procedures that comply with Coast Guard financial
management and accountability requirements.
      (3). Retain and maintain detailed documentation on all
financial
expenditures, including unit-level expenditures and personal
expenditures during official travel/TDY trips when using government
funds or your Government Travel Charge Card.
      (4). Obtain proper review and approval by military/civilian
chain of command prior to the expenditure of government resources,
and adequate oversight during the expenditure.
C. As part of the FY12/FY13 financial audit, 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