Audit Readiness for Property, Plant and Equipment at US Coast Guard
Dive into the challenges and importance of audit readiness for Property, Plant and Equipment at the United States Coast Guard. Explore the life cycle of property, business impacts, audit assertions, and the significance of PP&E stewardship.
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The Big Challenge for Audit Readiness: Property, Plant and Equipment at the United States Coast Guard Margo Sheridan, CDFM, Comptroller, U S Coast Guard Presented to: American Society of Military Comptrollers RDML K. Taylor | DHS CFO Brief | 25 JAN 2010 Washington, DC Chapter July 2012
Agenda Why PP&E audit readiness is important Life cycle of property Business lines impacted by property Types of property and associated challenges Relationships with liabilities, costs, and budgets Where we are, where we are going Assistant Commandant For Resources 1
Assistant Commandant For Resources 2 2
PERCV Audit Assertions: management representations embodied in the financial statements: Presence and disclosure Existence Rights and Obligations Completeness Valuation Most audit work is done to prove these assertions Obtain and evaluate evidence Assistant Commandant For Resources Reference: FAM section 235.02 3
Life Cycle of Property Identify need Conduct research & development Program and budget for acquisition Acquire/build Place in use Repair/maintain/upgrade Dispose Assistant Commandant For Resources For Resources Assistant Commandant 4
Baseline Business Processes Budget formulation to execution Scope Request to procure Procure to pay Reimbursable management Bill to collect Grants management Acquire to dispose Record to report System Assistant Commandant For Resources 5
Why is PP&E important to you? You can t know what you need if you don t know what you have Major equipment and construction projects are itemized in legislation and must be discretely tracked in execution Both accountants and budgeteers must report expenditures for equipment and other property Age, location, and condition of PP&E matter to operational units and commanders mission effectiveness It is not about the audit it is about stewardship and public trust that we will preserve resources Assistant Commandant For Resources For Resources Assistant Commandant 6 6
Why is Capitalized PP&E a problem? In the beginning a purchase request was issued, a requisition launched, a MIPR created Object class 25**? 26**? 31**/32**? LOA who validates? Certifier? Fund manager? Procurement official? Accounting technician? Property manager? Critical paperwork is misplaced: purchase order/ contract, evidence of ownership, receiving report, invoice Direct and indirect costs incurred to place PP&E in use are difficult to identify and document Assistant Commandant For Resources For Resources Assistant Commandant 7 7
Why is Capitalized PP&E a problem? (cont.) Internal Controls Other challenges: easements, software, items installed on leased equipment, property transfers, surveys, deployments, upgrades Environmental liabilities while in use, during repair/upgrade, at disposal Assistant Commandant For Resources For Resources Assistant Commandant 8 8
What information is needed to book a property asset? Acquisition/construction cost Date acquired or placed in service/BOD Useful life Dimensions/configuration Location Composition Unique identifier code/VIN /HIN/bumper number Disposal value (if any) Assistant Commandant For Resources 9
What if key data points are missing? Refer to SFFAS 3, 6, 10, 35, and AAPC Technical Release 13 Options: Date in service (DIS): VIN/HIN, mid-month or mid- year convention Valuation: PRV indexed to DIS (deflation of current replacement), appraisal, expenditure information, budget/appropriation data Don t forget property in contractors possession Assistant Commandant For Resources 10
Environmental Liabilities SFFAS 5 & 6, AAPC Technical Releases 2 & 10 Most property has associated environmental liabilities that is probable and measurable Buildings lead paint, asbestos, stored materials Vehicles, vessels, mission equipment CARC paint, mercury, phosphorescent paints, zinc oxide, lead, fiberglass Land and ranges lead, unspent munitions, petroleum products, chemicals, underground water contamination Assistant Commandant For Resources 11
Questions?? Assistant Commandant For Resources For Resources Assistant Commandant 12 12
