United States Coast Guard Real Property Completeness

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United States Coast GuardReal Property
Completeness Existence

• ASMC DC Chapter Luncheon
• 16 March 2011

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Agenda

• General CG Audit Strategy
• Balance Sheet
• Accountability vs. Accounting (Why You Need Both)
• Quick Overview of Management Assertions
• How does CG get there for Real Property?
• Cumulative Cost-based Asset Enrollment Trips
  based on co-located units
• Use best practices learned from Personal Property
  Remediation Let the Inventory cleans the
  account, behavior, and make program healthy.
• Mythbusters

7/11/2021
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Size (Materiality) Matters
CG in DOT CG in DHS CG is 18 of DHS
Assets CG is 41 of DHS Liabilities
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Coast Guard Audit Readiness Strategy
Divide the world of work into Assessable Units
Scope
Size
Focus on those items most material to the DHS
Balance Sheet
Fix it once Remediate the root causes of the
issue, not just a quick fix. To get through a
current year audit
Sustainability
Attack the items that can be remediated outside
of current financial system limitations
System
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USCG Balance Sheet
CG Balance Sheet      
Year End 2008 2009 2010
   
Intra-governmental Assets Consolidated Consolidated Consolidated
   
Fund Balance With Treasury 5,229,134,757.00 5,519,352,180.31 6,502,107,962.33
Investments, Net 3,100,795,038.27 3,416,763,004.82 3,480,932,732.29
Accounts Receivable 232,767,853.89 247,229,469.87 209,128,878.59
Due from Treasury 0.00 0.00 0.00
Total Other Intragovernmental Assets 12,279,603.84 17,081,187.23 10,609,119.80
   
Total Intragovernmental Assets 8,574,977,253.00 9,200,425,842.23 10,202,778,693.01
   
Cash and Other Monetary Assets 8,758,012.35 5,944,818.27 7,065,240.27
Investments 72,399.54 63,037.22 87,043.14
Accounts Receivable, Net 28,108,999.17 34,682,821.58 55,116,261.35
Direct Loans, Net 0.00 0.00 0.00
Inventory and Related Property, Net 335,899,976.97 375,101,005.75 278,762,343.58
   
General Property, Plant and Equipment, Net  
Land and Land Rights 39,157,254.12 39,137,651.65 39,143,355.99
Total Improvements to Land 0.00 0.00
Construction-in- Progress 3,715,614,649.29 4,101,953,503.62 3,102,317,078.39
Total Buildings, Improvements and Renovations 789,390,792.37 755,497,111.42 810,797,278.19
Total Other Structures and Facilities 192,949,962.33 174,696,880.28 170,380,326.01
Total Equipment 3,730,199,386.52 4,097,422,925.19 5,643,486,124.10
Total Assets Under Capital Lease 759,654.97 739,215.83 718,776.69
Total Leasehold Improvements 0.00 0.00 0.00
Total Internal Use Software 55,540.09 0.00 0.00
Internal Use Software in Development 767,187.22 (0.00) (0.00)
Total Other Natural Resources 0.00 0.00 0.00
Total Other GPPE 0.00 0.00 (0.00)
General Property, Plant and Equipment, Net 8,468,894,426.91 9,169,447,287.99 9,766,842,939.37
   
Other Non-governmental Assets  
Advances and Prepayments 9,206,570.21 8,435,765.26 (0.00)
Other Assets 0.00 (0.00)
Total Other Non-governmental Assets 9,206,570.21 8,435,765.26 (0.00)
   
Total Assets 17,425,917,637.15 18,794,100,578.30 20,310,652,520.72
Total Liabilities 33,530,527,402.63 39,440,419,969.98 46,378,056,859.75
Total Net Position (16,081,097,490.45) (20,637,432,930.16) (26,055,822,227.61)
   
Total Liabilities and Net Position 17,449,429,912.18 18,802,987,039.82 20,322,234,632.14
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MAP Focus Areas

• Segregated Mission Action Plan (MAP) focus areas
  into two tracks
• Track One those with largest impact on DHS
  balance sheet, can be fully remediated in current
  system state sustained into the future
• Track Two less material, but needed for full
  remediation of balance sheet line items
• Consolidated (DHS) Balance Sheet Audit for now
• Stand-alone audit in the future?
• Performance audits?
• Internal Controls audits?

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FY11 Efforts
Continuation of FY10 Efforts

• Military HR Internal Controls
• Civilian HR Internal Controls
• Actuarial Medical Liabilities
• Capitalized Property
• CIP
• Real Property
• Major Electronic Systems
• Operating Materials Supplies

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of Total GPPE by NBV
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of Total GPPE NBV Comparison By Asset Type
Over Time
Total NBV Comparison By Asset Type Over Time
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Accountability vs. Accounting

• Accountants are at CGHQ FINCEN
• Keep them there!
• Accounting is the Byproduct of Operations
• We want to leverage what units already do
• Units know more than any of the accountants about
  their stuff

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Financial Statements Management Assertions

• Completeness
• Existence and Occurrence
• Valuation and Allocation
• Rights and Obligations
• Presentation and Disclosure

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Financial Statements Management Assertions

• Completeness
• Existence and Occurrence
• Valuation and Allocation
• Rights and Obligations
• Presentation and Disclosure

What does this really mean?
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Financial Statements Management Assertions

• Completeness floor-to-record
• Existence and Occurrence record-to-floor
• Valuation and Allocation approximates
  historical cost
• Rights and Obligations do we own it or
  effectively own it, or does someone else own it?
  (e.g. Is it leases or on loan, etc.?)
• Presentation and Disclosure Has something been
  delivered that is still accounted for in CIP

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How do we get there for Real Property?

• Step 1 Target higher cost geographic areas
  first, and enroll assets methodically
• Step 2 Use the best practices of Personal
  Property remediation Leverage units through a
  CG-wide capitalized property inventory, and use
  inventory to cleanse account, behavior, and make
  program healthy.

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? BSU Seattle
? SECTOR Columbia River
? AIRSTA Cape Cod
BSU Boston?
? USCGA
SECTOR Long Island Sound?
? SECTOR New York
? TRACEN Cape May
? CG Yard
? TRACEN Petaluma
? BSU Alameda
? TRACEN Yorktown
CEU Oakland?
? BSU Portsmouth
? BSU Elizabeth City
? BSU San Pedro
? SECTOR San Diego
? ATC Mobile
? AIRSTA Clearwater
? AIRSTA Miami
? CEU Honolulu
? CEU Juneau
? BSU Kodiak
? AIRSTA Sitka
BSU Ketchikan?
? SECTOR San Juan
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How are we going to do it?
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Reconcile


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Tab Description Appendix
Aviation-Related Structures (other than buildings) Tab A
Buildings (other than housing, barracks, berthing, lodging) Tab B
Category Codes (CATCODEs) Tab C
Data Consolidation Tab D
Education/Training Facilities (other than buildings) Tab E
Field-level Sketches Tab F
GPS, Imaging, Marking (latitude/longitude) Tab GG
Housing, Barracks, Berthing, Lodging Tab H
Identification of Non-land Assets Tab I
Not Used Tab J K
Land Tab L
Measurements (units techniques) Tab M
AtoN Tab N
Other Structures Tab O
Procedures for Facility Enrollment Validation Tab P
Oracle Fixed Asset Procedures Tab Q
Recreational Facilities (other than buildings) Tab R
SAM Database Procedures Tab S
Towers Electronics (non-AtoN) Tab T
Utilities Tab U
Not Used Tab V
Waterfront Facilities Tab W
Other Linear Structures Tab X
Not Used Tabs Y Z
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Inventory High-level Strategy

• Let inventory expose other problematic life cycle
  procedures
• Acquisitions
• Disposals
• Transfers
• Improvements
• Impairments
• Use Unit Personnel and CO/OIC/Unit level
  Supervisor to reconcile financial and subsidiary
  systems to get accurate count at each rung of
  hierarchy
• Use each units inventory as a building block for
  the entire CGs inventory
• Use asset UIDs to track across several systems
• Process flows drive decisions to arrive at
  standardized/repeatable result

7/11/2021
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Grass Roots Effort - Clear Detailed Procedures
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Grass Roots Effort - Sailor-Proof Procedure
Flowchart
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Procedure - Physical Inventory Report / Count
Sheet

• Once asset has been verified, initial date each
  asset on report as shown

Each capitalized personal property asset that is
inventoried needs to be initialed dated by the
CT.
CT needs to initial date bottom of each page of
report.
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Procedure - Physical Inventory Report / Count
Sheet

• If edits are necessary, strike through the
  report, as shown below

Line-out write-in individual data fields for
corrections of characteristics listed on the
report.
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Procedure - Physical Inventory Report / Count
Sheet
Signatures and dates are required on last page of
Physical Inventory Report, as shown As
a reminder, the actual sign off is performed once
the subsidiary system reconciliation has been
completed.
The last page of the Physical Inventory Report
needs to include signatures and date of each CT
member, APO, and PA .
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Procedure - Subsidiary System Reconciliation

• System Reconciliation
• Currently, there is no interface and/or
  reconciliation between Oracle Fixed Asset (OFA)
  databases and Subsidiary Systems (e.g. AOPs,
  ALMIS, SAM, etc). This provides a very high
  probability that the CG has two different sets of
  property assets, and potentially unaware of
  disposal of assets. In turn, this could result
  in potential under/overstatement of PPE account
  balance.
• Reconciliation

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Procedure - Subsidiary System Reconciliation

• Some Subsidiary System Reports to be used during
  the Physical Inventory Count
• Aviation Logistics Management Information System
  (ALMIS) - used to record operations logistics
  of aircraft (also used for small boats).
• Abstract of Operation System (AOPS) - used to
  record the operations logistics of small boats
  vessels.
• Auxiliary Management Information System
  (AUXMIS/AUXDATA) - used to record auxiliary
  activities, including operations logistics of
  small boats vessels.
• Fleet Logistics System (FLS) - used to record the
  operational aspects of general purpose property,
  electronics, occasionally real property.
• Shore Asset Management System (SAMS) - used to
  record the operational aspects of real property.

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Procedure Subsidiary System Reconciliation
Report Example AOPS for boats

• Once assets have been identified matched,
  initial date each asset on subsidiary system
  report, as shown

Each asset is reconciled to Physical Inventory
Report needs to be highlighted, initialed,
dated by CT.
Any discrepancies found during the reconciliation
between the subsidiary system report OFA report
needs to be noted on subsidiary system report.
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Follow-Through The Property War Room
Inventory Units Reporting Time Required
Sep-08 40-60 12 Mos
Sep-09 100 5 Mos
Mar-10 100 5 Weeks
Sep-10 100 10 Days
Mar-11 100 7 Days
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Chain of Command Involvement Metrics
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High Level Capitalized Property Inventory
Timeline (Aug 09 - Sep 12)
Dec 10 inventory - CANX
March Inventory
March Inventory
MAR 12
MAR 11
SEP 12
Sept '09
Spt '10
March '10
Jan '10
Aug '10
Aug 0
September Inventory
Assert to Completeness, Existence, and Valuation
for Real Property
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How are we going to do it?
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Reconcile


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CFO Commitment

• Include Real Property into CG-wide Managed
  Capitalized Property Physical Inventory
• Nine (9) New Positions at CEUs/SILC/CG-4 in FY10
• Environmental Specialists
• Realty Specialists
• Real Property Specialists
• USCG Facilities Classification Guide Publication
• Environmental Specialists
• Realty Specialists
• Real Property Specialists
• Real Property Manual, Vehicle Manual PMM
  Rewrites

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Myth Busters Things to Overcome

• I found everything on my record
• This is Extra Work
• This is only to pass the CFO Audit
• We know where everything is
• Thats not my property

7/11/2021
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• LCDR Robert E. Hart
• GPPE Team Lead, Office of Financial Management
  Transformation Compliance (CG-852)
• 202-372-3449
• Robert.e.hart_at_uscg.mil

7/11/2021
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Extra Slides
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of Total GPPE by Cost
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of Total GPPE Cost Comparison By Asset Type
Over Time
Year End 2008 2009 2010
Land and Land Rights 0.37 0.34 0.27
Total Buildings, Improvements and Renovations 14.92 14.05 11.98
Total Other Structures and Facilities 10.44 10.04 8.20
Total Equipment 74.28 75.57 79.54
Total 100.00 100.00 100.00
Total Cost Comparison By Asset Type Over Time
Year End 2008 2009 2010
Land and Land Rights 39,157,254.12 39,137,651.65 39,143,355.99
Total Buildings, Improvements and Renovations 1,594,481,482.26 1,602,159,202.54 1,709,747,823.77
Total Other Structures and Facilities 1,115,484,050.56 1,144,577,904.88 1,170,776,218.64
Total Equipment 7,939,890,175.63 8,618,341,186.07 11,352,274,662.09
Total 10,689,012,962.57 11,404,215,945.14 14,271,942,060.49
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of Total GPPE Cost Comparison By Asset Type
Over Time
Total Cost Comparison By Asset Type Over Time
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Management Assertions

• Completeness Assertions about completeness
  address whether all transactions and accounts
  that should be presented in the financial
  statements are so included.

Source Auditing 2004 Edition, Becker Conviser
CPA Review, p. A2-34
42
Management Assertions

• Existence and Occurrence Assertions about
  existence concern the actual existence of the
  assets and liabilities reported on the balance
  sheet as of a particular date.
• Assertions about occurrence address whether
  recorded transactions have in fact taken place.
  This assertion addresses the validity of the
  recorded amounts on the financial statements,
  specifically with respect to overstatement of the
  account balances.

Source Auditing 2004 Edition, Becker Conviser
CPA Review, p. A2-34
43
Management Assertions

• Valuation and Allocation Assertions about
  valuation and allocation address whether asset,
  liability, equity, revenue, and expense
  components have been included in the financial
  statements at appropriate amounts.
• This assertion addresses concepts such as
  historical cost, consistency, accrual accounting,
  accounting estimates, impairment of assets, and
  allocation of costs.

Source Auditing 2004 Edition, Becker Conviser
CPA Review, p. A2-34
44
Management Assertions

• Rights and Obligations Assertions about rights
  and obligations address whether assets are the
  rights of the entity (actually owned by the
  company) and liabilities are the obligations of
  the entity at a given date.

Source Auditing 2004 Edition, Becker Conviser
CPA Review, p. A2-34
45
Management Assertions

• Presentation and Disclosure Assertions about
  presentation and disclosure address whether
  particular components of the financial statements
  are properly classified, described, and disclosed.

Source Auditing 2004 Edition, Becker Conviser
CPA Review, p. A2-34