R 251801Z JAN 12 ALCGPSC 014/12 SUBJ: OVERSIGHT RESPONSIBILITY OF THE MWR PROGRAM A. COAST GUARD MORALE, WELL-BEING, AND RECREATION MANUAL, COMDTINST M1710.13 (SERIES) B. COMDT COGARD WASHINGTON DC 291235Z SEP 11 ALCOAST 451/11 C. U.S. COAST GUARD PERSONAL PROPERTY MANAGEMENT MANUAL, COMDTINST M4500.5 (SERIES) D. COAST GUARD NONAPPROPRIATED FUND INSTRUMENTALITIES (NAFI) MANUAL, COMDTINST M7010.5 (SERIES) E. COMDT COGARD WASHINGTON DC 141845Z JUN 11 ALCOAST 291/11 1. IT IS TIME AGAIN TO PROVIDE FEEDBACK ON THE COMMON AREAS OF CONCERN IN MANAGING MWR PROGRAMS. THIS FEEDBACK WAS COMPILED FROM COMMUNITY SERVICES COMMAND (CSC) INSPECTIONS AND OPERATIONAL RISK ASSESSMENT (ORA) REPORTS, CG FORCECOM (FC-75) INSPECTION REPORTS, AND CPA-ENGAGED AUDITS CONDUCTED DURING THE PAST YEAR. IDENTIFYING AND UNDERSTANDING COMMON WEAKNESSES HELP US TO AVOID THEM AND STRENGTHEN OUR MWR PROGRAMS. TYPICALLY, THE MOST SIGNIFICANT AREAS OF CONCERN HAVE REVOLVED AROUND INTERNAL CONTROLS, SERVING ALCOHOLIC BEVERAGES, AQUATIC OPERATIONS, GAMES OF CHANCE, AND SAFETY. HERE ARE SOME OF THE MOST COMMON PROBLEM AREAS THAT WERE IDENTIFIED: A. BETTER INTERNAL CONTROLS IN THE MANAGEMENT OF NONAPPROPRIATED MORALE FUNDS: 1. ONE OF THE MOST SIGNIFICANT OBSERVATIONS WAS THE LACK OF SEGREGATION OF DUTIES INVOLVED IN THE MANAGEMENT OF NONAPPROPRIATED FUNDS (NAF). WE HAVE FOUND THIS TO BE SPECIFICALLY EMPHASIZED BY CPA FIRMS CONDUCTING FINANCIAL AUDITS AT FIELD MWR PROGRAMS. THE LACK OF SEGREGATION OF DUTIES PLACES MORALE FUNDS AT HIGHER RISK FOR FRAUD. ALTHOUGH IN MANY INSTANCES, WE HEAR THAT THERE ARE INSUFFICIENT PERSONNEL RESOURCES TO PROVIDE THE IDEAL SEGREGATION OF DUTIES, WE MUST STILL RECOGNIZE THESE THREATS AND IMPLEMENT PROCEDURES TO MINIMIZE THEM. CHAPTER 1.J OF REFERENCE A PROVIDES GUIDANCE IN THIS AREA. FOR COMMANDS WITH ESTABLISHED MWR PROGRAMS, THE CSC LOSS PREVENTION ORA PROGRAM CAN ASSIST IN IDENTIFYING THESE WEAKNESSES AND MAKE RECOMMENDATIONS FOR RISK MITIGATION. 2. ANOTHER INTERNAL CONTROL CONCERN IS THE FAILURE TO MAINTAIN RECORDS AND SUPPORTING DOCUMENTS, INCLUDING BANK STATEMENTS, FOR THE PRESCRIBED PERIOD OF SIX YEARS AND THREE MONTHS. RECORD MAINTENANCE PROVIDES AN AUDIT TRAIL. 3. OTHER OCCURRENCES OF INTERNAL CONTROL CONCERNS INCLUDE THE FAILURE TO CONDUCT MORALE FUND AUDITS WITHIN TWELVE MONTHS AS PRESCRIBED THROUGH REFERENCE A. A FINANCIAL AUDIT AND THE COMPLETION OF THE MWR PROGRAM INSPECTION CHECKLIST PROVIDE VITAL INFORMATION ON THE OVERALL HEALTH OF THE MWR PROGRAM. CONDUCTING FINANCIAL AUDITS AND FOLLOWING UP ON FINDINGS AND RECOMMENDATIONS ARE CRITICAL COMPONENTS OF SOUND FINANCIAL STEWARDSHIP. B. QUARTERLY AND ANNUAL SAFETY INSPECTIONS OF ALL MWR FACILITIES AND EQUIPMENT ARE NOT BEING CONDUCTED IN ACCORDANCE WITH REFERENCE A. WE MUST ENSURE THAT OUR FACILITIES AND EQUIPMENT ARE SAFE FOR BOTH OUR PATRONS AND OUR EMPLOYEES. THIS INCLUDES AN ANNUAL SAFETY INSPECTION BY SOMEONE QUALIFIED TO PROVIDE ONE (I.E. UNIT SAFETY COORDINATOR OR A SAFETY AND ENVIRONMENTAL HEALTH OFFICER). IN ADDITION, REFERENCE B WAS RECENTLY PROMULGATED ANNOUNCING THE AVAILABILITY OF COMPREHENSIVE SAFETY CHECKLISTS THROUGH THE UNIT SAFETY ASSESSMENT TOOL (USAT). THE COMPLETION OF THE USAT IS REQUIRED ANNUALLY. C. AUTHORIZATION IS NOT ON FILE TO OPERATE WATERCRAFT WITHIN THE MWR PROGRAM. WATERCRAFT INCLUDES CANOES AND KAYAKS. COMMANDS MUST BE IN FULL COMPLIANCE WITH CHAPTER 5.B.8 OF REFERENCE A IN ORDER TO OPERATE WATERCRAFT WITHIN THE MWR PROGRAM. D. PROHIBITIONS ON THE USE OF MORALE FUNDS ARE NOT BEING ADHERED TO. CHAPTER 6.C OF REFERENCE A PROVIDES EXAMPLES IN THIS AREA. E. USE AGREEMENTS FOR PATRON RENT, LEASE, OR USE OF MWR EQUIPMENT, PROPERTY, OR LODGING DO NOT CONTAIN THE REQUIRED HOLD HARMLESS/INDEMNIFICATION CLAUSE. CHAPTER 1.F.2.G OF REFERENCE A IDENTIFIES THIS REQUIRED INFORMATION. ADDITIONALLY AND FOR INTERNAL CONTROL PURPOSES, USE AGREEMENTS MUST BE PRE-NUMBERED AND TRACKED FOR AUDIT PURPOSES. F. COMMANDS WITH POOLS MAY NOT BE IN COMPLIANCE WITH ENCLOSURE 7 OF REFERENCE A AS IT APPLIES TO THE FOLLOWING: 1. INSTRUCTIONS REGARDING POOL USE NOT BEING POSTED. 2. GLASS MIRRORS BEING USED IN BATHHOUSES/LOCKER ROOMS. 3. CURRENT LIFEGUARD CERTIFICATION DOCUMENTATION FROM AN APPROVED ORGANIZATION NOT BEING FORWARDED TO THE CSC FOR PLACEMENT IN EMPLOYEES OFFICIAL PERSONNEL FILE. G. COMMANDS WITH MORALE FUND DISTRIBUTION RESPONSIBILITIES DO NOT HAVE A WELL DOCUMENTED WRITTEN DISTRIBUTION PLAN, APPROVED BY THE APPROPRIATE CHAIN OF COMMAND, FOR THEIR RESPECTIVE AREA OF RESPONSIBILITY (AOR). IN ACCORDANCE WITH CHAPTER 9.C.3 OF REFERENCE A, COMMANDS WITH MORALE FUND DISTRIBUTION RESPONSIBILITIES MUST DEVELOP AND KEEP ON FILE AN UPDATED, APPROVED WRITTEN PLAN FOR THE FURTHER DISTRIBUTION OF MWR NAF FUNDS THROUGHOUT THEIR AOR. H. PROPERTY RECORDS ARE NOT UP TO DATE. MORALE FUND PROPERTY PURCHASED WITH EITHER APPROPRIATED FUNDS (APF) OR NAF MUST BE ACCOUNTED FOR IN ACCORDANCE WITH REFERENCE A. NAF MWR PROPERTY MEETING THE CRITERIA FOR INCLUSION INTO ORACLE FAM MUST BE RECORDED AND INVENTORIED IN ACCORDANCE WITH REFERENCE C. I. AT THOSE COMMANDS IN WHICH CHECK CASHING IS ALLOWED, THE CHECK CASHING POLICY IS NOT POSTED. J. COMMANDS ARE NOT FOLLOWING THE GUIDANCE IN ENCLOSURE 2 OF REFERENCE A FOR RELATIONSHIPS WITH PRIVATE ASSOCIATIONS. THE COAST GUARD HAS HAD VERY STRONG, POSITIVE RELATIONSHIPS WITH PRIVATE ASSOCIATIONS. HOWEVER, SINCE THESE ASSOCIATIONS ARE SEPARATE AND DISTINCT FROM THE COAST GUARD, THEY MUST BE DEFINED. ONE SPECIFIC REQUIREMENT OF ENCLOSURE 2 TO REFERENCE A IS TO DOCUMENT THE RELATIONSHIP IN WRITING. K. UNITS ARE ENGAGING IN THE RESALE OF MERCHANDISE AND VENDING OPERATIONS WITHOUT CSC APPROVAL. IN ACCORDANCE WITH REFERENCE D, ON SHORE INSTALLATIONS, WITH THE EXCEPTION OF VENDING ONBOARD AFLOAT UNITS, THE COAST GUARD EXCHANGE SYSTEM (CGES) HAS THE RIGHT OF FIRST REFUSAL TO SELL MERCHANDISE AND OPERATE VENDING. WE ENCOURAGE COMMANDS WITH EXCHANGES TO WORK WITH LOCAL CGES PERSONNEL TO MEET THE UNIQUE MERCHANDISE NEEDS OF THESE UNITS. IF CGES CAN NOT MEET THE NEEDS OF THE COMMAND, WRITTEN APPROVAL FROM CSC MUST BE ON FILE TO ENGAGE IN RESALE OR VENDING VIA THE UNIT MORALE FUND. ALLOWING CGES TO PROVIDE ITS SERVICES TO COMMANDS WILL ELIMINATE THE NEED TO MANAGE RESALE INVENTORIES AND SALES BY COLLATERAL DUTY PERSONNEL AND TIE VALUABLE MORALE FUNDS IN INVENTORY. AS A REMINDER AND IN ACCORDANCE WITH REFERENCE E, UNIT BALL CAPS CAN ONLY BE PURCHASED FROM CGES. 2. THE GOAL OF OUR OVERSIGHT PROGRAM IS TO ENSURE THAT OUR MWR PROGRAMS EFFICIENTLY AND EFFECTIVELY FULFILL THEIR MISSION READINESS AND RETENTION RESPONSIBILITIES AS CRITICAL NON-PAY BENEFITS. PROPER MANAGEMENT OF MWR PROGRAMS WILL ENABLE READINESS, SUPPORT OUR PEOPLE, AND DEMONSTRATE STEWARDSHIP OF OUR SCARCE RESOURCES WITHIN THE PROGRAM. 3. WE WELCOME YOUR FEEDBACK TO THE INFORMATION PROVIDED ABOVE. CSC POC IS MR. RON RAY, PROGRAM RESOURCES SPECIALIST, AT 757-842-4927. 4. RADM DANIEL R. MAY, COMMANDER, CG PERSONNEL SERVICE CENTER, SENDS. 5. INTERNET RELEASED AUTHORIZED.