DoD on track to achieve audit readiness

The Pentagon is making notable progress towards its 2014 and 2017 audibility mandates, according to Beth McGrath, the Pentagon's deputy chief management officer...

The Department of Defense is on track to achieve the mandates of the Statement of Budgetary Resources in 2014 and the Financial Improvement Audit Readiness Plan by 2017, according to Beth McGrath, the DoD’s deputy chief management officer.

“The department has had a multi-pronged approach to achieving auditability both for ’14 and ’17,” she said. “Certainly, the Statement of Budgetary Resources, the assessable units, if you will, they’re looking at will serve as a great platform to then bring us to the 2017 timeframe.”

McGrath spoke on In Depth with Francis Rose Wednesday about the newly released Strategic Management Plan for Fiscal 2014 and 2015.

Beth McGrath, deputy chief management officer for Department of Defense
McGrath’s office has asked the military components and agencies to bring forward their financial audit readiness plans. Every quarter, she and DoD Comptroller Robert Hale meet with all those parties to track progress against the plans and identify potential roadblocks.

“It has been really illuminating, I think, for the entire department to really understand the business processes,” she said. “Because at the end of the day, the financial audit is a byproduct of good, sound business processes and internal controls, and so, it really has driven us toward tighter internal controls and understanding of our business practices.”

The Strategic Management Plan serves as the home of the business priorities of the Department of Defense.

“Obviously, it needs to be connected to both our national strategy and our defense strategic documents, and so the Quadrennial Defense Review is the document that is most notable from people’s perspective and certainly the business space needs to ensure that we’re achieving the overall outcomes of the Department of Defense. We must absolutely have alignment.”

McGrath outlined four goals contained within the SMP, adding they are very much aligned with the 2012 and 2013 SMP goals.

“I think we consolidated some of the goals that align to the acquisition, technology and logistics space into a single goal, which is now goal four,” she said. “And we also took a couple of the broad-based goals around performance improvement and optimizing business processes and turned those into strategic imperatives or guiding principles to ensure that we’re constantly looking at things like instilling a cost culture, business process optimization, alignment to the core mission, those kinds of things.”

McGrath said the SMP encapsulates the business goals DoD is pursuing.

“The first one looks at the workforce, the total workforce, both the military and civilian, and has a lot of initiative nested under each one of those,” she said. “People are our most critical asset. I think that’s true for any organization, both public or private sector.”

The Strategic Management Plan for Fiscal 2014 and 2015 contains four broad goals that encapsulate the Department of Defense’s business priorities. (DoD graphic)

In the area of financial management, DoD is aiming toward achieving audit- readiness, both in 2014 and 2017. “So, there’s a lot of management, not only in Mr. Hale’s organization, our comptroller, but across our department,” McGrath said.

The third goal focuses on DoD using its cyber/information technology infrastructure in a more optimal way.

“And also, how is it helping us to execute our mission, both on the tactical side and the business,” McGrath said.

The final goal brings together all of the priorities the acquisition, technology and logistics team are focused on, most notably better buying power.

“That’s absolutely a focus that the department has, and so, broadly speaking, it has taken the strategic priorities that, individually, some of the components or organizations are leading, and brought them together so that we can look at them in a much more holistic way,” she said.

DoD is adopting a more comprehensive approach in order to help it achieve its business goals.

“So, it’s not just the responsibility of the comptroller, for example, to achieve audit readiness,” McGrath said. “It’s everybody has to play. Virtually anything we do in the business space requires a multi-functional participation.”

Adopting an overarching, holistic business strategy for DoD can present a challenge for the various services, when it comes to combining and not combining business approaches in areas like health care.

“We are all feeling the fiscal pressure right now,” she said. “Under pressure, you think differently and I’ve seen people and organizations really look at, well, if the Air Force has something that’s working well for them, the Army is looking to adopt it, as opposed to building their own. When in years past there was more money and they would’ve probably decided to do what was good for them only and not really expand their aperture and see what the other military departments were doing.”

Rather than viewing this as a loss of independence, McGrath sees it as elements of DoD being willing to “fight together” in a joint environment to achieve their shared business goals.

“I think over time, especially in the last 10 years of the respective conflicts that we’ve been involved in, it has really brought the colors of the military together much more than I think has existed in the past, and I’m seeing the same thing in the business space,” she said.

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