R 182011Z DEC 07 ZUI ASN-A00352000035 ZYB
FM COMDT COGARD WASHINGTON DC//CG-1//
TO ALCOAST
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UNCLAS //N01710//
ALCOAST 574/07
COMDTNOTE 1710
SUBJ: OVERSIGHT RESPONSIBILITY OF THE MWR PROGRAM
A.  COAST GUARD MORALE, WELL-BEING, AND RECREATION MANUAL,
COMDTINST M1710.13(SERIES)
1. IT IS TIME AGAIN TO PROVIDE FEEDBACK ON THE COMMON AREAS OF
CONCERN IN MANAGING MWR PROGRAMS.  THIS FEEDBACK WAS COMPILED FROM
COMDT (CG-103) STAFF VISITS, MLC COMPLIANCE INSPECTION REPORTS, AND
CPA-ENGAGED AUDITS AND REVIEWS 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 REVOLVE AROUND INTERNAL CONTROLS,
SERVING ALCOHOLIC BEVERAGES, AQUATIC OPERATIONS, GAMES OF CHANCE,
PROVIDING SERVICE TO CHILDREN UNDER THE AGE OF 18, 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: ONCE AGAIN, 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 THAT
CONDUCTED FINANCIAL AUDITS AT SOME FIELD MWR PROGRAMS.  THE LACK OF
SEGREGATION OF DUTIES PLACES MORALE FUNDS AT HIGHER RISK TO FRAUD.
ALTHOUGH IN MANY INSTANCES WE HEAR THAT THERE ARE NOT SUFFICIENT
PERSONNEL RESOURCES TO PROVIDE THE IDEAL SEGREGATION OF DUTIES, WE
MUST STILL RECOGNIZE THESE THREATS AND IMPLEMENT PROCEDURES TO
MINIMIZE THE RISK.  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.
ACCURATELY MAINTAINING RECORDS PROVIDES AN AUDIT TRAIL FOR TESTING
CURRENT AND PREVIOUS ACCOUNTING PROCEDURES. ADDITIONALLY, INVOICES
WERE SIGHTED THAT DID NOT HAVE ANY INDICATION OF APPROVAL PRIOR TO
PAYMENT AND WERE NOT MARKED AS PAID TO AVOID POTENTIAL DUPLICATION
OF PAYMENT.  LASTLY, SIGNATORY CARDS FROM BANKS DID NOT AGREE WITH
UNIT RECORDS. THE BANK ACCOUNT SIGNATURE CARD MUST BE UPDATED
WHEN PERSONNEL ARE REASSIGNED.
 B. MORALE FUND AUDITS ARE NOT BEING CONDUCTED WITHIN TWELVE
MONTHS AS PRESCRIBED.  A FINANCIAL AUDIT AND THE COMPLETION OF THE
MWR PROGRAM INSPECTION CHECKLIST PROVIDE THE COMMAND VITAL
INFORMATION ON THE OVERALL HEALTH OF ITS MWR PROGRAM.
 C. PROCEDURES ARE NOT BEING FOLLOWED UPON RELIEF OF MORALE FUND
CUSTODIANS.  THIS WOULD INCLUDE A FINANCIAL AUDIT OF THE MORALE
FUND ACCOUNT.
 D. RESALE INVENTORY IS NOT INVENTORIED WITH EACH AUDIT.  RESALE
INVENTORY IS AN IMPORTANT ASSET ON THE BALANCE SHEET.  FAILURE TO
TAKE A PHYSICAL INVENTORY DURING THE AUDIT PROCESS MAY NOT PERMIT
THE AUDITOR TO PLACE MUCH RELIANCE ON ITS VALUE.  IN ADDITION,
RESALE INVENTORY SHOULD BE RECONCILED AGAINST THE MORALE FUND
INVENTORY ACCOUNTING SHEET (CG-5017),OR OTHER BOOK VALUES OF THE
INVENTORY.
 E. QUARTERLY SAFETY INSPECTIONS OF ALL MWR FACILITIES AND
EQUIPMENT ARE NOT BEING CONDUCTED IAW REF A.  WE MUST ENSURE THAT
OUR FACILITIES AND EQUIPMENT ARE SAFE FOR BOTH OUR PATRONS AND OUR
EMPLOYEES.
 F. COMMANDS HAVE ACCEPTED GIFTS IN THE PAST TWELVE MONTHS NOT
IAW THE PROVISIONS OF CHAPTER 6.K OF REF (A).
 G. FEDERAL EMPLOYEE IDENTIFICATION NUMBERS (FEIN) ASSIGNED BY
THE IRS ARE NOT ON FILE.  REF A PROVIDES GUIDANCE ON THE
ACQUISITION OF A FEIN FROM THE IRS.  UNITS WITH FEINS ON FILE
SHOULD CONTACT THE IRS TO ENSURE THE FEIN SPECIFICALLY IDENTIFIES
THE MWR PROGRAM BY NAME.
 H.  UNITS ARE ENGAGING IN THE RESALE OF MERCHANDISE AND VENDING
OPERATIONS WITHOUT COMDT (CG-103) APPROVAL. ON SHORE INSTALLATIONS,
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
UNIQUE MERCHANDISE NEEDS.
2. THE LISTING ABOVE REPRESENTS THE MOST PREVALENT AREAS OF CONCERN
DOCUMENTED SINCE THE LAST UPDATE.  THIS INFORMATION IS BEING
PRESENTED WITH THE INTENT THAT YOU WILL USE IT TO IMPROVE THE
MANAGEMENT OF YOUR MWR PROGRAMS AND THOSE OF COMMANDS SUBORDINATE
TO YOU FOR MWR PURPOSES.
3. THE GOAL OF OUR OVERSIGHT PROGRAM IS TO ENSURE THAT OUR MWR
PROGRAMS CAN EFFICIENTLY AND EFFECTIVELY FULFILL THEIR MISSION
READINESS AND RETENTION RESPONSIBILITIES AS A CRITICAL NON-PAY
BENEFIT.  PROPER MANAGEMENT OF MWR PROGRAMS WILL ENABLE READINESS,
SUPPORT OUR PEOPLE, AND DEMONSTRATE STEWARDSHIP OF OUR SCARCE
RESOURCES WITHIN THE PROGRAM.
4. WE WELCOME YOUR FEEDBACK TO THE INFORMATION PROVIDED ABOVE.
COMDT (CG-103) POC IS MR. GARY SCHEER, CGMWR DIRECTOR, OR MR. RON
RAY, PROGRAM RESOURCES SPECIALIST, AT (757) 420-2480, EXT. 3035 OR
3033, RESPECTIVELY.
5. INTERNET RELEASE AUTHORIZED.
6. RADM CLIFFORD I. PEARSON, ASSISTANT COMMANDANT FOR HUMAN
RESOURCES, SENDS.
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