Recently, as part of the A2B Tracking’s Webinar Series, I presented an online session to discuss the latest developments in the FIAR Initiative and specifically How to prepare for the 2019 Defense Audit.
The Financial Improvement and Audit Readiness (FIAR) Initiative began in FY2013 with the goal of improving the DoD’s financial management operations. The DoD is the largest and arguably the most complex organization in the world. The Department is responsible for more than 70 percent of the US Federal government’s assets.
In his November 2017 FIAR Status Report, DoD Comptroller/CFO David Norquist stated: “The Department’s assets total more than $2 trillion, making this likely the largest financial audit ever undertaken. Along with sheer size, there exists significant complexity. However, these are not reasons to delay the audit; they are reasons to begin.”
Obviously, with an organization of this magnitude, producing auditable financial statements requires a strategic, long-term plan — which is clearly what the FIAR Mandate has become. The 2018 Audits have been executed and we are all eagerly awaiting the official audit opinion to be released next month. The only thing that seems certain is that the property audits will continue on an annual basis.
The 2019 Defense Audit
The US Congress, the current Administration and the Pentagon have all committed to these annual department-wide audits. The entire Defense community needs to embrace this audit initiative and make sure that their organizations are properly prepared.
FAR 52.254-1
For most Government Property Managers the place to begin their audit preparation is by familiarizing themselves with their military contracts. In many cases, the most important contract clause for property managers is FAR 52.245-1. Within that clause there are ten data elements that are required for compliance. These data elements include information such as part #, IUID #, the unit of measure, quantity received, date received, accountable contract #, location and other critical asset information that the DCMA auditors will hold property managers accountable for.
FAR 52.245-1 is in place to establish that all mission critical assets need to be properly marked with a MIL-STD-130 IUID label. Not only do the assets need to be marked; but, FAR 52.245-1 also requires that all mission critical assets be reported to the IUID Registry. This reporting requirement is applicable to assets that are newly acquired items, legacy items, as well as Government Furnished Property (GFP).
IUID Registry
The IUID Registry is the central repository for all IUID information and serves as the master database for all assets. It works as the gateway to identify what each item is, when it was acquired and who has custody, as well as, recording other IUID information.
Making sure that your organization is compliant to FAR 52.245-1 and that all of your mission critical assets are properly marked and reported to the IUID Registry is a great place to start your audit preparation. The next step in the audit process is to be able to perform a book-to-floor and floor-to-book inventory with speed and accuracy.
The ability to have accurate and complete property data in this “Defense Audit Era” is essential for your success as a government contractor in 2019. Your organization needs to leverage a property management software system that utilizes Auto-ID technology and can accurately track and manage your inventory, as well as, help you maintain compliance to these complex regulations.
Watch the video
To take a deeper dive and learn more about how to prepare for the 2019 DoD Property Audit take a look at this segment of my webinar from earlier this Fall. I will walk you through my top questions to consider in preparation for a DCMA audit. Watch this video now.
