Pentagon releases 2022 Protection Audit Outcomes

The DoD launched their annual department-wide Audit outcomes for FY2022 final week and for the fifth consecutive yr the Protection Division was unable to attain a clear audit opinion. 

Formally, the Inspector Normal issued a disclaimer of opinion on the Division’s FY 2022 consolidated monetary statements. Which suggests the DoD didn’t cross the audit and had been unable to account for greater than half of their belongings.

2022 Protection Audit Outcomes

This end result was anticipated by many within the Protection Business and shouldn’t come as a giant shock to anybody. This full monetary audit is very large in scope and accounts for greater than $3.5 trillion price of belongings and concerned over 1,600 auditors. Many within the trade have beforehand advised that it’ll take a decade or extra to attain a clear audit opinion.

It’s vital to notice that the Pentagon is absolutely dedicated to those annual audits and have repeatedly referenced the worth it brings to the enterprise course of and techniques throughout the Division.

“I would like to see extra progress, after all, however we’re peeling off the layers,” 

Mike McCord, Below Secretary of Protection, stated.

By most accounts, the 2022 audit outcomes didn’t change very a lot from earlier yr’s outcomes. Nevertheless, McCord did spotlight some areas the place progress has been made lately, notably there have been positive factors in IT and improved expertise like automated robots for warehouse choosing.

2022 DoD Agency Financial ReportCompany Monetary Report

Along side the announcement for the Audit outcomes the US Protection Division additionally launched its Company Monetary Report for FY2022.  This 294-page report particulars the 2022 audit findings and gives a high-level overview of the DoD’s funds.

The Company Report incorporates a bit entitled Audit Priorities which states: 

The Division continues to deal with long-standing areas of fabric weaknesses together with; Property within the Possession of Contractors, Actual Property, Stock, Working Supplies and Provides and the Joint Strike Fighter Program.”

These priorities talked about above are areas that the Division acknowledges have to be significantly addressed, monitored and improved.

Materials Weaknesses

The Inspector Normal’s workplace additionally recognized 28 Materials Weaknesses within the Division’s monetary assertion reporting. These management-identified weaknesses are decided by assessing inner controls and are designed to focus on areas of concern. Within the desk beneath are the Materials Weaknesses as outlined within the FY2022 Company Report.

2022 Defense Audit ResultsAuthorities Property within the Possession of Contractors

Protection Contractors ought to take word that “Authorities Property within the Possession of Contractors” is among the 28 Materials Weak spot – together with being recognized as one of many Audit Priorities by the Division. 

This clearly highlights the truth that the DoD believes that the administration of Authorities Property by Protection contractors must be addressed and improved shifting ahead. It stands to motive that auditors might be particularly in search of and analyzing the accountability of Authorities property.

What it means for Contractors

Protection contractors who handle Authorities Property must be on excessive alert to place themselves favorably for a property audit. This contains ensuring that they perceive their contract obligations and that they’re doing all the pieces they’ll to remain in compliance. Program managers ought to evaluation their procedures and inner enterprise techniques not solely to guarantee that procedures are documented appropriately; however, additionally to make sure they’re in accordance with the contract obligations. 

FAR 52.245-1 is the Authorities Property clause. It stipulates that Authorities contractors must have a system of inner controls to handle Authorities property in its possession. Moreover, perceive {that a} Property Administration system is among the six key enterprise techniques for presidency contractors as acknowledged within the Contractors Enterprise Programs clause (DFARS 252.242-7005).

In case your group is counting on a spreadsheet (or related homegrown answer) to handle Authorities property it might be prudent to research extra sturdy options. There are a variety of causes why spreadsheets are insufficient right here however, the most important shortfall is that they cannot make the most of automated knowledge seize techniques and benefit from improved velocity and accuracy when performing inventories.

Fashionable Authorities Property Administration

A contemporary Authorities Property Administration system ought to assist organizations with complete IUID Compliance, superior barcode and RFID to trace belongings by means of their total lifecycle and supply automated knowledge change (reporting through EDI) to authorities techniques.

A2B Monitoring’s Authorities Property Administration answer gives contractors with an Asset Administration system that meets all necessities of FAR 52.245-1 and gives essential assist to cross DCMA property audits.

If in case you have questions on Authorities Property administration and want to converse with one among our specialists please be at liberty to attain out to us right here.

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