Financial Improvement and Audit Remediation Plan

10 U.S.C. § 240b
in effect
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(a) Financial Improvement and Audit Remediation Plan.—(1) In general.—The Under Secretary of Defense (Comptroller) shall, in consultation with the Performance Improvement Officer of the Department of Defense, maintain a plan to be known as the “Financial Improvement and Audit Remediation Plan”. (2) Elements.—The plan required by paragraph (1) shall—(A) describe specific actions to be taken, including interim milestones with a detailed description of the subordinate activities required, and estimate the costs associated with—(i) correcting the financial management deficiencies that impair the ability of the Department of Defense to prepare timely, reliable, and complete financial management information; (ii) ensuring the financial statements of the Department of Defense go under full financial statement audit, and that the Department leadership makes every effort to reach an unmodified opinion as soon as possible; (iii) ensuring the audit of the financial statements of the Department of Defense for each fiscal year after fiscal year 2020 occurs by not later than March 31 following such fiscal year; (iv) achieving an unqualified audit opinion for each major element of the statement of budgetary resources of the Department of Defense; (v) addressing the existence and completeness of each major category of Department of Defense assets; (vi) meeting resource requirements, including personnel and information technology infrastructure; and (vii) identifying long-range goals and measurable objectives, including audit cycle timelines, control testing frequency, and auditor-validated corrective action plans; and (B) systematically tie the actions described under subparagraph (A) to business process and control improvements and business systems modernization efforts described in section 2222 of this title. (b) Report and Briefing Requirements.—(1) Annual report.—(A) In general.—Not later than July 31 each year, the Under Secretary of Defense (Comptroller) shall submit to the congressional defense committees a report on the status of the implementation by the Department of Defense of the Financial Improvement and Audit Remediation Plan under subsection (a). (B) Elements.—Each report under subparagraph (A) shall include the following:(i) An analysis of the consolidated corrective action plan management summary prepared pursuant to section 240c of this title. (ii) Current Department of Defense-wide information on the status of corrective actions plans related to critical capabilities and material weaknesses, including the standard data elements recommended in the implementation guide for Office of Management and Budget Circular A–123, for the armed forces, military departments, and Defense Agencies. (iii) A current description of the work undertaken and planned to be undertaken by the Department of Defense, and the military departments, Defense Agencies, and other organizations and elements of the Department, to test and verify transaction data pertinent to obtaining an unqualified audit of their financial statements, including from feeder systems. (iv) A current projected timeline of the Department in connection with the audit of the full financial statements of the Department, to be submitted to Congress annually not later than six months after the submittal to Congress of the budget of the President for a fiscal year under section 1105 of title 31, including the following:(I) The date on which the Department projects the beginning of an audit of the full financial statements of the Department, and the military departments, Defense Agencies, and other organizations and elements of the Department, for a fiscal year. (II) The date on which the Department projects the completions of audits of the full financial statements of the Department, and the military departments, Defense Agencies, and other organizations and elements of the Department, for a fiscal year. (III) The dates on which the Department estimates it will obtain an unqualified audit opinion on the full financial statements of the Department, the military departments, the Defense Agencies, and other organizations and elements of the Department for a fiscal year. (v) A current estimate of the anticipated annual costs of maintaining an unqualified audit opinion on the full financial statements of the Department, the military departments, the Defense Agencies, and other organizations and elements of the Department for a fiscal year after an unqualified audit opinion on such full financial statements for a fiscal year is first obtained. (vi) A certification of the results of the audit of the financial statements of the Department performed for the preceding fiscal year, and a statement summarizing, based on such results, the current condition of the financial statements of the Department. (vii) A description of audit activities and results for classified programs, including a description of the use of procedures and requirements to prevent unauthorized exposure of classified information in such activities. (viii) An identification of the manner in which the corrective action plan or plans of each department, agency, component, or element of the Department of Defense, and the corrective action plan of the Department as a whole, support the National Defense Strategy (NDS) of the United States. (ix) A detailed estimate of the funding required for the next fiscal year to procure, obtain, or otherwise implement each process, system, and technology identified to address the corrective action plan or plans of each department, agency, component, or element of the Department of Defense, and the corrective action plan of the Department as a whole, for purposes of this chapter during such fiscal year. (x) The number and scope of automated processes implemented, including reconciliation, inventory validation, and internal controls. (2) Semiannual briefings.—(A) Not later than January 31 and July 31 each year, the Under Secretary of Defense (Comptroller) and the comptrollers of the military departments shall provide a briefing to the congressional defense committees on the status of the corrective action plan. (B) The January 31 briefing under subparagraph (A) shall include a ranking of all of the military departments and Defense Agencies in order of how advanced each is in achieving auditable financial statements, as required by law. (3) Annual report by bottom quartile.—Not later than June 30 of each year, the head of each military department and Defense Agency that was ranked in the bottom quartile of the report submitted under paragraph (2)(B) for that year shall submit to the congressional defense committees a report that includes the following information for that military department or Defense Agency:(A) A description of the material weaknesses of the military department or Defense Agency. (B) The underlying causes of such weaknesses. (C) A plan for remediating such weaknesses. (D) The total number of open audit notices of findings and recommendations (in this paragraph referred to as “NFRs”) for the most recently concluded fiscal year and the preceding two fiscal years, where applicable. (E) The number of repeat or reissued NFRs from the most recently concluded fiscal year. (F) The number of NFRs that were previously forecasted to be closed during the most recently concluded fiscal year that remain open. (G) The number of closed NFRs during the current fiscal year and prior fiscal years. (H) The number of material weaknesses that were validated by external auditors as fully resolved or downgraded during the current fiscal year relative to prior fiscal years. (I) A breakdown, by fiscal year, of which open NFRs are forecasted to be closed. (J) Explanations for any unfavorable trends in the information included under paragraphs (1) through (9). (4) Critical capabilities defined.—In this subsection, the term “critical capabilities” means the financial statement audit priorities designated by the Secretary of Defense for the fiscal year in which the report is submitted. (c) Selection of Audit Remediation Services.—The selection of audit remediation service providers shall be based, among other appropriate criteria, on qualifications, relevant experience, and capacity to develop and implement corrective action plans to address internal control and compliance deficiencies identified during a financial statement or program audit.

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