Financial Improvement and Audit Readiness Methodology
Assertion Work Product Example
Process and System Documentation – Business Process Narratives and Flowcharts
Detailed Activity 1.3.1 – Prepare Process and System Documentation (Reporting Entities)
Detailed Activity 1.5.1 – Prepare Process and Controls Documentation (Service Providers)
NOTE: The Tool/Template/Work Product below includes instructions for preparing business
process narratives and business process flowcharts, as well as two example narratives and two
example flowcharts.
Table of Contents
Business Process Narratives – Instructions and Examples
Business Process Narrative Instructions ................................................................................................... 2
Business Process Narrative Examples
Example Business Process Narrative #1 – Wave 2, Military Pay......................................................... 5
Example Business Process Narrative #2 – Wave 3, Existence and Completeness of Mission Critical
Assets .................................................................................................................................................. 11
Business Process Flowcharts – Instructions and Examples
Business Process Flowchart Instructions ................................................................................................ 19
Business Process Flowchart Examples
Example Business Process Flowchart #1 – Wave 2, Military Pay Gross-to-Net Reconciliation ....... 22
Example Business Process Flowchart #2 – Wave 3, Property & Equipment Acquisition and
Management........................................................................................................................................ 25
Business Process Narrative Instructions
Instructions – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 2
Financial Improvement and Audit Readiness Methodology
Assertion Work Product Example
Business Process Narrative Instructions
Detailed Activity 1.3.1 – Prepare Process and System Documentation (Reporting Entities)
Detailed Activity 1.5.1 – Prepare Process and Controls Documentation (Service Providers)
NOTE: This document contains detailed instructions for preparing a business process narrative.
The document identifies the key information required to be included in the narrative, including
identification of key process owners, key risks, financial reporting objectives, key control
activities, key systems and supporting documentation, detailed description of business processes
at a transactional level, laws and regulations impacted, interfaces with other business cycles, and
financial statement line items impacted.
1. Preparer Name: Enter the name of the person preparing the business process narrative.
2. Date Prepared: Enter the date the process narrative is prepared.
3. Reporting Entity: Enter the name of the reporting entity (e.g., Army, Navy, Air Force)
or other defense organization (i.e., DCMA, DTRA, DLA).
4. Business Process/Assessable Units and Sub-processes: Enter the name of the high level
end to end business cycle (i.e., Hire to Retire, Procure to Pay, Budget to Report) and
specific sub-process associated with the control activity (i.e., reconciliation of military
payroll).
5. Purpose/Scope: Identify the purpose of the document (e.g., “to describe the process for
calculating, processing, disbursing and recording military payments, and to identify the
risks of material misstatement and associated internal controls over financial reporting).
The scope should be specific and narrowly focused on the specific part of the process
being described (i.e., DCA Military Pay Gross-to-Net (G2N) Reconciliation process (a
sub-assessable unit of the Military Pay process)
6. Process Description at a Transactional Level – Provide a description of the process at a
transactional level. The process must be documented in chronological order, including
the initiation, authorization, processing, recording and reporting of transactions.
Documenting the process in the order in which it occurs allows for traceability from
inception to reporting (e.g., how are good ordered, received, paid for and reported in the
financial system). Ensure that the following are identified in the description of the
process:
a. Key Personnel/ Process Owner: Identify the name/title/role of person executing the
transaction performing the process (e.g., Systems Accountant, Assistant Director,
Disbursing Officer).
INSTRUCTIONS
Business Process Narrative Instructions
Instructions – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 3
b. Risks of Material Misstatement (ROMM): Within the process narrative, identify
the key risk(s) of material misstatement which may occur in the financial statement
line item, accounting application and associated business process. A ROMM is a risk
that a financial statement misstatement may occur and not be prevented or detected in
a timely manner. Note: The risk of material misstatements must be obtained from the
listing of key risk(s) of material misstatements in Appendix C (sections C.1.2, C.2.2,
C.3.2 and C.4.2) of the FIAR Guidance.
c. Financial Reporting Objectives (FROs): Identify the financial reporting
objective(s) that is relevant to the aforementioned business process(es) and mitigates
the identified key risk(s) of material misstatement. Note: The financial reporting
objective(s) must be from the listing of financial reporting objectives/outcomes in
Appendix C (sections C.1.2, C.2.2, C.3.2 and C.4.2) of the FIAR Guidance.
d. Key Control Activities: Identify the key control activities within the process that are
currently in place to mitigate the key risk(s) of material misstatement and achieve the
aforementioned financial reporting objective(s). Include a detailed description of the
control activity, noting the following:
i. Who performs the control activity? For manual control activity, there should
be a preparer and reviewer/approver. For IT controls, identify the Information
Technology General and Application controls.
ii. How is the control activity performed?
iii. How frequently (and when) is the control activity performed?
iv. How is performance of the control activity documented and evidenced (i.e.,
signature and date on form).
e. Key Systems Used: Identify and provide a description of all significant and relevant
systems used to execute transactions and store key supporting documents.
i. Financial, mixed and non-financial systems may be in-scope.
ii. Consider micro-applications (i.e., spreadsheets, databases, etc.).
iii. Provide a description of the hardware, software and any system interfaces.
f. Key Supporting Documents: Identify the documents that support execution of the
processes or transactions (i.e., timesheets, contracts, invoices, payment vouchers,
earnings and leave statements, DD-254, employee pay schedules, etc.). Also identify
the location where the documents are stored (i.e., system names for electronic
documentation or physical location for physical hard copy documentation).
g. Financial Statement General Ledger Account Codes: Identify the accounting
transactions that occur and associated general ledger accounts that are impacted
through execution of the business process.
h. Relevant Laws and Regulations and Policies/Procedures: Identify policies and
procedures relevant to the business cycle/process being described (e.g., Prompt Pay
Act for Procure to Pay business cycle).
INSTRUCTIONS
Business Process Narrative Instructions
Instructions – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 4
i. Interfaces with Other Business Cycles: Identify any interfaces with other business
cycles (e.g., procure to pay interfaces with budget to report).
j. Acronyms Listing: Provide a list, if any, of acronyms used throughout the process
narrative.
INSTRUCTIONS
Example Business Process Narrative #1
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 5
Financial Improvement and Audit Readiness Methodology
Assertion Work Product Example
Example Business Process Narrative #1
Detailed Activity 1.3.1 – Prepare Process and System Documentation (Reporting Entities)
Detailed Activity 1.5.1 – Prepare Process and Controls Documentation (Service Providers)
NOTE: The following is an example Business Process Narrative for a Wave 2, Statement of
Budgetary Resources assessable unit. The narrative describes the process for reconciling gross-
to-net Military Pay and includes all the elements necessary to support Component audit readiness
efforts and achieve auditability. A Business Process Narrative may also be referred to as a Cycle
Memorandum.
Preparer Name: John Doe
Date Prepared: July 20, 2013
Reporting Entity: Defense Component Agency
Business Process/Assessable Units and Sub Processes: Military Pay Gross-to-Net
Reconciliation
Purpose/Scope: To document the process used by Defense Component Agency (DCA) to
reconcile entitlements certified in the Defense Joint Military pay System (DJMS)
Active Component (AC) (DJMS-AC) to the actual payments processed through
the disbursing system and reported to Treasury. Specifically, to document the
Military Pay Gross-to-Net (G2N) Reconciliation process (a sub-assessable unit of
the Military Pay process)
MilPay Gross-to-Net Reconciliation Process Description:
1. As part of the MilPay monthly processing cycle, the DJMS-AC Production Control creates
the 1A summary file (see the separate narrative write-up on the MilPay monthly processing
cycle for more information). The 1A summary file contains both active and reserve personnel
appropriations; the file is stored in DJMS.
2. The Disbursing Accountant downloads the 1A file to his/her computer and imports the text
file (.txt) into Microsoft Excel. After import, the 1A summary spreadsheet is emailed to the
service branch personnel office for their use in month-end closing activities.
3. The Disbursing Accountant executes macros in the DJMS RECON Excel template to
crosswalk and summarize the 1A file Summary Account File Identifiers (SAFID) into
entitlement and deduction pay categories. This step creates the G2N_MONTH_YR Excel
workbook.
4. The Disbursing Accountant verifies that the “Out of Balance” amount in the
G2N_MONTH_YR workbook matches the last amount on the 1A file. If the amounts match,
the reconciliation continues in Step 7. If the amounts do not match, the Disbursing
Accountant must determine why the mismatch occurred as described in Step 5.
EXAMPLE
Example Business Process Narrative #1
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 6
KC1 – Disbursing Accountant verifies that the gross deductions and gross entitlements
equal and match the 1A and G2N_MONTH_YR files.
5. If the last amount on the 1A file and the “Out of Balance” amount in the G2N_MONTH_YR
workbook do not match, the Disbursing Accountant will review the DJMS-AC Summary of
Out of Balance Listing Report (JUH099C0119) to verify the correct out of balance amount
and confirm the correct 1A file was downloaded by checking day and month. If the incorrect
file was imported, the Disbursing Accountant will download the correct 1A file and restart
the reconciliation at Step 1. If the Disbursing Accountant downloaded the correct file, he/she
contacts DJMS-AC Production Control to research and resolve the difference (Step 6).
6. The DJMS-AC Production Control analyst will either regenerate the 1A file or provide a new
dollar amount for one or multiple SAFIDs. The Disbursing Accountant can make the
correction(s) provided by DJMS-AC Production Control directly in the G2N_MONTH_YR
Excel workbook (and continue with Step 7), or go back to the start (Step 1) and reprocess the
regenerated 1A file.
7. The Disbursing Accountant uses DJMS-AC report JUH099871 to verify that suppressed
transactions and carried-forward amounts match the amounts per the 1A file (these
transactions are not included in the end-of-month cutoff for disbursement). The Disbursing
Accountant researches any discrepancies and makes the appropriate corrections in the
G2N_MONTH_YR workbook. Carried-forward transactions are identified by unique
SAFIDs included as entitlements in the 1A file, but are not included as disbursements in the
payment file.
KC2 – Disbursing Accountant verifies that suppressed transactions and carried-
forward amounts on DJMS-AC report JUH099871 match the 1A and
G2N_MONTH_YR files.
8. The Disbursing Accountant prints the G2N_MONTH_YR Excel workbook and gives the
hard copy to the Deputy Director, Disbursing.
9. The Deputy Director, Disbursing reviews the G2N reconciliation to ensure that it was
performed timely and accurately, and that all reconciling items were researched and resolved
in a timely manner. Once he verifies that the reconciliation was performed timely and
accurately, he approves the G2N reconciliation by signing and dating the hard copy
G2N_MONTH_YR workbook printed by the Disbursing Accountant. The Deputy Director
scans the signed printout and forwards to the personnel office via email.
KC3 – Deputy Director, Disbursing, reviews and approves the monthly G2N
reconciliation.
10. The Personnel Office retrieves the G2N reconciliation, and reviews and signs it, then sends
the reconciliation to Disbursing Operations for retention.
EXAMPLE
Example Business Process Narrative #1
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 7
11. Next, the Disbursing Accountant obtains the Military Pay Distribution Schedules Report
(DJMS-AC JUH099C160) and compares it to the G2N_MONTH_YR. Then, the Disbursing
Accountant logs into the disbursement system and obtains six payment files (these have not
yet been transmitted to the Federal Reserve Bank). The payment files retrieved are: NetPay
EOM, Daily EFT, Debt, Allotments, Separations and Garnishments. The Disbursing
Accountant verifies the amounts and gross deductions match between the payment files,
JUH099C160 report and the G2N_MONTH_YR workbook. If amounts do not match, the
Disbursing Accountant searches for data entry or formula errors in the workbook, and
corrects them to resolve the difference(s) before proceeding to Step 12.
KC4 – Disbursing Accountant matches payment file amounts with the Military Pay
Distribution Schedules Report and the G2N_MONTH_YR spreadsheet.
12. The Disbursing Accountant uses the DJMS-AC JUH099C160 and JUH099C194X reports,
and the disbursing system payment files to populate separate tabs for each type of payment
in a new Excel spreadsheet, and saves the file as DJMS_WKS_MMYY, where MMYY is
the two-digit month and year. This determines the voucher amount for each payment type.
The DJMS_WKS_MMYY workbook is used to create the month-end disbursement vouchers
by line item for Allotments, Debt, Separations, Garnishments and end-of-month payroll. A
disbursement voucher will be created for each payment type (line item).
13. Once the DJMS_WKS_MMYY workbook is completed by the Disbursing Accountant, a
Disbursing Technician obtains the file and manually creates vouchers in the disbursing
system for each payment type; the tabs in the workbook provide the voucher amount. Once
all the manual vouchers are created, the Disbursing Technician manually signs the voucher
coversheet and returns it to the Disbursing Accountant. [Note: a manual voucher is not
created for NetPay EOM because this voucher is automatically created by the disbursing
system when the payment file is processed; also, the manual vouchers are created with a "no
check" code, which means a payment is not created, but the transactions are accounted for
in the payroll files.]
14. The Disbursing Accountant reviews the Line of Accounting (LOA) for each voucher as well
as the voucher amount by comparing the voucher to the DJMS_WKS_MMYY. For the
NetPay EOM automated vouchers, the Disbursing Accountant compares the voucher and
DJMS_WKS_MMYY amounts to the DJMS-AC Net Pay Summary Report (C914) and
Suppression Report (C322) to ensure the vouchers are accurate. If the voucher details agree
with the DJMS_WKS_MMYY, the G2N reconciliation is complete and voucher processing
continues in the off-line payment delivery process.
KC5 – Disbursing accountant verifies voucher amount and LOA.
15. If the voucher details do not agree, the Disbursing Accountant will look for formula/data
entry errors and correct them. If the DJMS_WKS_MMYY does not have any errors, then the
voucher is sent back to the disbursing technician who entered it for correction in the
disbursing system. Once corrections have been made, Step 14 is repeated.
EXAMPLE
Example Business Process Narrative #1
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 8
16. Once the reconciliation is complete, the Deputy Director, Disbursing, performs a final
review of the reconciliation to ensure that all payment amounts identified for disbursement
are accurate. Once he validates that all amounts are correct, he approves the payment
vouchers for processing.
KC6 – Deputy Director, Disbursing, reviews reconciliation to ensure all payment
amounts are accurate prior to processing payments for disbursement.
Key Personnel/Process Owners:
Name
Title
Department
Contact Information
John Paymaster
Director
Disbursing
Operations
John.paym[email protected]il/
(XXX) XXX-XXXX
Carol Smith
Disbursing
Accountant
Disbursing
Operations
Carol.Smith@DCA.mil/
(XXX) XXX-XXXX
Tim Johnson
Disbursing
Technician
Disbursing
Operations
Tim.Johnson@DCA.mil/
(XXX) XXX-XXXX
Victoria Hirer
HR Specialist
Service Branch
Personnel Office
Victoria Hirer@DCA.mil/
(XXX) XXX-XXXX
Key Risks of Material Misstatement:
1. Recorded payroll obligations, expenses, accruals, and disbursements may not be valid.
2. All military payroll obligations, expenses, accruals and disbursements may not be recorded, or
may not be recorded timely.
3. Military payroll obligations, expenses, accruals, and disbursements may be recorded at
incorrect amounts.
4. Military Pay G2N reconciliation files may be accessed by unauthorized individuals.
Financial Reporting Objectives:
1. Recorded military payroll obligations, expenses, accruals and disbursements represent
economic events that actually occurred, are properly classified and pertain to the reporting entity.
2. All military payroll obligations, expenses, accruals and disbursements are recorded in a timely
manner.
3. Military payroll obligations, expenses, accruals, and disbursements mare recorded at correct
amounts and are properly classified.
EXAMPLE
Example Business Process Narrative #1
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 9
4. Access to the Military Pay G2N reconciliation files is restricted to authorized individuals.
Key Control Activities:
KC1 – Disbursing accountant verifies gross deductions and gross entitlements equal and match
the 1A and G2N_MONTH_YR files.
KC2 – Disbursing accountant verifies that suppressed transactions and carried-forward amounts
on DJMS-AC report JUH099871 match the 1A and G2N_MONTH_YR files.
KC3 – Deputy Director, Disbursing, reviews and approves the G2N reconciliation.
KC4 – Disbursing accountant matches payment file amounts with the Military Pay Distribution
Schedules Report and the G2N_MONTH_YR spreadsheet.
KC5 – Disbursing accountant verifies voucher amount and LOA.
KC6 –Deputy Director, Disbursing, reviews reconciliation to ensure all payment amounts are
accurate prior to processing payments for disbursement.
Key Systems Used:
Defense Joint Military pay System-Active Component (DJMS-AC) is the payroll processing
system for the service branches. DJMS-AC calculates gross pay, deductions, withholdings and
net pay for active duty military personnel in the Army, Navy and Air Force.
Disbursing System is DFAS-owned system that processes all disbursements for Service Branch,
including military and civilian pay, vendor pay and travel reimbursements.
DJMS_RECON is an Excel-based micro-application used to import MilPay payroll data from the
1A summary text file into and Excel spreadsheet.
Key Supporting Documents:
G2N_MONTH_YY Excel spreadsheet printout
DJMS-AC JUH099C0119 Summary of Out of Balance Listing Report
DJMS-AC JUH099871 Report (suppressed and carried-forward transactions)
DJMS-AC JUH099C160 Military Pay Distribution Schedules Report
DJMS-AC JUH099C194X Voucher Report
DJMS-AC JUH099C914 Net Pay Summary Report
DJMS-AC JUH099C322 Suppression Report
General Ledger Account Codes:
6100 – Operating expenses
1010 – Fund Balance with Treasury (disbursements)
EXAMPLE
Example Business Process Narrative #1
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 10
4902 Delivered Orders - Obligations, Paid
4610 Allotments - Realized Resources
Relevant Laws, Regulations, Policies and Procedures:
Department of Defense Financial Management Regulation (DoD FMR) 7000.14-R, Volume 7C,
Chapter 2
Office of Management and Budget, Circular A-123, “Management’s Responsibility for Internal
Control”.
Interfaces with Other Business Processes:
Off-line Payment Delivery Process
Financial Reporting Process
EXAMPLE
Example Business Process Narrative #2
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 11
Financial Improvement and Audit Readiness Methodology
Assertion Work Product Example
Example Business Process Narrative #2
Detailed Activity 1.3.1 – Prepare Process and System Documentation (Reporting Entities)
Detailed Activity 1.5.1 – Prepare Process and Controls Documentation (Service Providers)
NOTE: The following is an example Business Process Narrative for a Wave 3, Existence and
Completeness of Mission Critical Assets assessable unit. The narrative describes the process for
acquiring General Property, Plant, and Equipment (G-PP&E), and includes all the elements
necessary to support Component audit readiness efforts and achieve auditability. A Business
Process Narrative may also be referred to as a Cycle Memorandum.
Preparer Name: John Doe
Date Prepared: July 20, 2013
Reporting Entity: Defense Component Agency
Business Process/Assessable Units and Sub Processes: Acquisition of G-PP&E
Purpose/Scope: To document the process used by Defense Component Agency (DCA) to
acquire and account for G-PP&E.
Business Process –G-PP&E Acquisition and Management:
G-PP&E includes property items other than real property, military equipment, inventory and
operating materials and supplies. Items such as forklifts, machinery, photocopiers and computers
are G-PP&E. Improvements to leased property, referred to as leasehold improvements, are also
considered G-PP&E. The G-PP&E cycle starts when a need for G-PP&E is identified and funds
are reserved (committed) for the acquisition. The cycle ends with the retirement, disposal or
transfer of the asset.
Capitalization Policy
DCA’s capitalization policy states that all G-PP&E will be capitalized (i.e. recorded on the
balance sheet and depreciated) if its acquisition cost is $250,000 or more and its service life is 2
years or more. Acquisition cost includes:
• Amounts paid to the prior owner or seller
• Fair market value of any donated assets
• Shipping costs and administrative fees.
• Other expenditures necessary to place the asset into service (such as installation or
configuration costs, and additional transportation charges).
Note: Maintenance contracts purchased at the time of acquisition are not included in
acquisition cost, but should be recorded to maintenance expense.
EXAMPLE
Example Business Process Narrative #2
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 12
G-PP&E subject to capitalization includes:
• Individual items meeting the capitalization criteria.
• Groups of assets such as furniture, information systems networks or telephone systems, if
the group as a whole meets the capitalization criteria (even if the items valued
individually do not meet the capitalization criteria).
• Replacement of individual components of such capitalized groups even if the
replacement item does not meet the capitalization criteria.
Depreciation
Depreciation is the systematic and rational allocation of the cost of the equipment asset, less any
salvage value, over its useful life. DCA depreciates all capitalized equipment in accordance with
DCA policy, generally using the straight-line method over useful lives of 3 to 10 years and
assuming no salvage value.
G-PP&E Acquisition
The G-PP&E acquisition cycle begins with identification of a need to procure an asset. The
process includes the following actions:
• Create an Equipment Purchase Request
• Certify availability of funds
• Process the Equipment Purchase Request
• Obligate funds
• Receive equipment
Create Equipment Purchase Request
The transaction process begins when the Program Office prepares an Equipment Purchase
Request (EPR). The analyst prepares the EPR in PROCURE (the acquisition system), which
assigns a document number for tracking throughout the process. The document number consists
of the 3-character program office designator and a 5-digit sequential number (assigned by
PROCURE). The analyst submits the completed form in PROCURE, which performs edit checks
and routes the EPR to the approving official. The Approving Official reviews the EPR and
approves the request by electronically signing the form in PROCURE. [KC1 – EPR must be
approved by an authorized official.] The approved EPR is then routed by the system to a funds
certifying official.
Certify Funds
The Funds Certifying Official is notified by PROCURE and calls up the approved EPR. The
FCO will determine if sufficient funds are available for commitment on the request using DBEX
EXAMPLE
Example Business Process Narrative #2
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 13
(see the narrative for the Budget-to-Report cycle for a discussion of the funds control process).
The FCO will verify the funds citation and if sufficient funds are available, will electronically
certify funds for the EPR in PROCURE. [KC2 – Funds Certifying Official verifies funding
citation and certifies availability of funds.] PROCURE will create a commitment transaction
that is transmitted to DBEX.
Process the Equipment Purchase Request
Once the EPR is approved and funded, PROCURE routes the request to the Contracting Office
for processing. The requesting office and financial management office also receive notification
that the EPR is being processed. PROCURE adds the line of accounting based on the input from
the originating office and funds control. An analyst in the Budget Branch will approve the
commitment transaction in DBEX for the nightly interface with GLSYS.
Obligate Funds
Once a contract is awarded for the EPR, PROCURE creates the contract documents; routing
occurs automatically. When the contract is electronically signed by the Contracting Officer the
obligation transaction is created, which is automatically sent to DBEX. The Contract Specialist is
notified that the signed contract is ready for delivery to the vendor. The originating office is
notified that the contract has been awarded. The financial management office is notified that the
obligation has been sent to DBEX; the budget analyst will verify the obligation record in DBEX
and approve the transaction for transmittal to GLSYS. [KC3 – The Budget Analyst verifies
that the contract is signed by an authorized official and then records an obligation]. The
Logistics Branch is notified that the equipment has been ordered and receives a list of the
expected items and delivery destination. Any department or office along the process can view
and print the acquisition documents as needed.
Receive Equipment
Logistics notifies the receiving location and hand receipt holder of the impending delivery. Upon
delivery, the receiving location will attach a barcode label(s) to the item(s) received in a
conspicuous place on the equipment. The receiving location completes Form DD-250, Material
Inspection and Receiving Report, signed and dated by the receiving clerk, and forwards a copy of
the completed form, including the assigned barcode(s) to a property specialist in the Logistics
office and to the requesting office. [KC4 – Receiving department acknowledges receipt and
acceptance of equipment on DD-250.] The property custodian at the receiving location retains
the original DD-250 and enters the following information into DCA’s accountable property
system of record, DPROP, for each item received: barcode, description, manufacturer, serial
number, date received, asset type, document number, location, sub-location and hand receipt
holder. [KC5 – Property custodian verifies receipt and barcoding of the assets, and enters
the assets into the accountable property system of record.] The hand receipt holder
acknowledges custody of the property by electronically signing the hand receipt in DPROP.
The property specialist prepares an Asset Valuation Form using the contract and disbursement
information and adds that to the document package in PROCURE. The property specialist then
EXAMPLE
Example Business Process Narrative #2
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 14
retrieves the asset record in DPROP, verifies the information entered by the property custodian
against the DD-250, and enters the acquisition cost from the Asset Valuation Form. The Asset
Valuation Form is reviewed for accuracy by a G-PP&E accountant in the Financial Management
Office. If the FMO accountant finds errors or has questions, he/she will contact the property
specialist in Logistics to resolve the issue. [KC6 – Acquisition cost is reviewed by an
accountant in FMO for accuracy.] The property specialist coordinates with the originating
office and property custodian and enters the activation date into DPROP when the asset is placed
into service. The property specialist also uploads the DD-250 to Wide Area Work Flow
(WAWF). Each night, DPROP interfaces with GLSYS to record the pending asset in the general
ledger system.
G-PP&E Management
Management of DCA property involves:
• Acceptance of the asset and placing it in service.
• Assigning the appropriate acquisition cost
• Calculating and recording appropriate depreciation
• Disposing of or transferring property as required
• Conducting periodic G-PP&E inventories
Acceptance/Placing into Service
After receipt of the asset, the Property Specialist determines what, if any, configuration or
installation of the G-PP&E is necessary and prepares to place it into service. Once the asset has
been configured and/or installed and is ready for use, the project manager in the originating
office notifies Logistics, who enter the activation date into DPROP and verifies the property type
code. [KC7 – The Logistics Property Specialist verifies property type in DPROP to ensure
the correct useful life is used for depreciation.] Useful life is determined by the property type
code entered by the property custodian; asset type also maps to the appropriate account number
in GLSYS. The barcode is the unique property identifier. The table below identifies the property
type codes for G-PP&E.
DCA G-PP&E Type Codes
Code Description
Useful Life
(months)
GL
Account
Accumulated
Depreciation
GL Account
10
Major Equipment (non-ADP)
120
1750
1758
11
General Equipment (non-ADP)
60
1751
1758
12
ADP Equipment
36
1752
1759
20
Software
36
1760
1769
30
Leasehold Improvements
120
1770
1779
40
Furniture
60
1780
1789
Depreciation
EXAMPLE
Example Business Process Narrative #2
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 15
Depreciation is automatically calculated by DPROP using the straight-line method over the
useful life of the asset. Depreciation starts in the month of the activation date. On the 25
th
of each
month, the depreciation routine is executed in DPROP and the data is transferred to GLSYS as
part of the nightly interface.
Disposals and Transfers
The Property Custodian or the project manager may identify equipment that is no longer useful
or needed, or must be transferred to another location. The Property Custodian completes Form
1348-1A, Issue Release/Receipt Document, obtains approval from the Accountable Property
Officer and sends the form to Logistics. [KC8 – Dispositions or transfers of G-PP&E must be
approved by a supervisory authority.] Logistics updates the DPROP record and works with
the property custodian to arrange for transfer of the item to the Defense Reutilization and
Marketing Office (DRMO). All DCA G-PP&E dispositions are handled through DRMO. Once
the asset has been physically disposed of or transferred, the Property Custodian updates the asset
record in the APSR. [KC9 – The Accountable Property Officer reviews the asset record and
supporting documentation to ensure that the disposal/transfer was recorded accurately and
completely].
If a property item is being transferred within DCA, the transferring property custodian is
responsible for updating the hand receipt holder information in DPROP; once this is done, the
receiving property custodian updates DPROP with the new location and sub-location
information.
Periodic Inventory
At least once per year, every hand receipt holder must re-certify that he/she is in possession of
the specified property, or has personally verified its location. The property custodian prints the
hand receipt forms from DPROP, distributes them to the respective hand receipt holder, and
tracks and reviews them. Any discrepancies are resolved by the property custodian, hand receipt
holder and Logistics and DPROP is updated accordingly.
Additionally, Logistics conducts a complete physical inventory of all DCA G-PP&E annually.
The Logistics supervisor notifies the Accountable Property Officers that a 100 percent inventory
will be conducted within 3 days of notification. Inventory is conducted using a barcode scanner
when possible. The Logistics inventory team will scan or record all G-PP&E, compare the results
to DPROP records and resolve any differences promptly. [KC10 – Physical assets are
periodically compared to the accounting records for accuracy.] See the section entitled
“Physical Inventories” in the Logistics Procedures Manual for more information about physical
inventory.
G-PP&E Reporting
The Financial Management Office is responsible for reconciling and reporting G-PP&E. On a
monthly basis, an FMO accountant obtains property reports from DPROP and reconciles the
balances to the general ledger. An FMO supervisory accountant reviews and approves the
reconciliation. [KC11 – The property subsidiary ledger is reconciled to the general ledger on
EXAMPLE
Example Business Process Narrative #2
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 16
a regular basis.] Any variances are researched and resolved by the FMO accountant and
Logistics.
Key Personnel/Process Owners:
Name Title Department Contact Information
Susan Smith
Division Chief
Logistics Mgmt.
Email/telephone contact info
John Doe
Property Specialist
Logistics
Email/telephone contact info
Mary Jones
Branch Chief
Financial Mgmt.
Email/telephone contact info
Joe Carrier
Warehouse Tech
CONUS Warehouse
Email/telephone contact info
Sally Kayo
Contract Specialist
DCA Contracting
Email/telephone contact info
Al Neuman
Property Custodian
Facilities Mgmt.
Email/telephone contact info
Risks of Material Misstatement:
ROMM #1: Unauthorized G-PP&E transactions may occur and not be prevented or detected in a
timely manner.
ROMM #2: Recorded G-PP&E may not exist at a given date, or may not be supported by
adequate supporting documentation.
ROMM#3: The reporting entity may not have rights to recorded G-PP&E.
ROMM #4: G-PP&E and all transactions they accumulate are valued on an inappropriate basis.
ROMM #5: Depreciation or Amortization expense is calculated improperly and recorded at
incorrect amounts (FAM 395B: 9, 11).
ROMM #6: Valid G-PP&E exist but are omitted from the APSR and/or general ledger.
ROMM #7: Recorded G-PP&E may not be properly classified and described in the APSR and
general ledger.
Financial Reporting Objectives:
FRO#1: All G-PP&E transactions are authorized and approved by an appropriate authorizing
official.
FRO#2: Recorded G-PP&E exists at a given date, are supported by appropriate detailed records
that are accurately summarized and reconciled to the account balance.
EXAMPLE
Example Business Process Narrative #2
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 17
FRO #3: The reporting entity has rights to recorded G-PP&E.
FRO #4: All valid G-PP&E is recorded in the APSR and general ledger.
FRO #5: G-PP&E balances and all the transactions they accumulate are recorded at correct
amounts, are properly classified and described in the financial statements.
FRO #6: Depreciation or Amortization Expense is recorded at correct amounts, based on the
capitalized cost, useful life, date of service, and salvage value of the asset, and is measured
properly.
FRO #7: Recorded G-PP&E is properly classified and described in the APSR and general ledger.
Key Control Activities:
KC1 – An authorized official must review and approve each Equipment Purchase Request form
before a purchase can be made.
KC2 – The Funds Certifying Official verifies funding citation and certifies availability of funds.
KC3 – An obligation can only be recorded once the contract is signed by an authorized official
and verified by a Budget Analyst.
KC4 – Receiving department conducts inspections of all equipment received and acknowledges
receipt and acceptance of equipment on the DD-250.
KC5 – The Property Custodian verifies receipt and barcoding of the assets, and enters the assets
into the accountable property system of record.
KC6 – An accountant in FMO reviews all equipment acquisition cost for accuracy.
KC7 – The Logistics Property Specialist verifies property type in DPROP to ensure the correct
useful life is used for depreciation.
KC8 – Dispositions or transfers of G-PP&E must be approved by a supervisor.
KC9 – The Accountable Property Officer reviews the asset record and supporting
documentation to ensure that the disposal/transfer was recorded accurately and
completely.
KC10 – Physical assets are periodically compared to the accounting records for accuracy.
KC11 – The property subsidiary ledger is reconciled to the general ledger on a regular basis.
Key Systems Used:
DCA General Ledger System, (GLSYS) is the online financial management system that manages
DCA’s general ledger, financial reporting, Accounts Payable and Disbursements and Accounts
Receivable and Collections functions.
The PROCURE system, which is operated by the Joint Program Management Office (JPMO),
supports the acquisition of goods and services from initial request to formation of contracts
through contract close-out.
EXAMPLE
Example Business Process Narrative #2
Example – Business Process Narratives – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 18
The DCA Budget Execution System (DBEX) is DCA-owned system developed to provide budget
formulation, funds control and budget execution functions for DCA.
The DCA Property Management System (DPROP) is a DFAS-owned accountable property
management and tracking system used by DCA, which provides financial and reporting
functionality for managing property. DPROP calculates depreciation and interfaces with GLSYS.
Wide Area Work Flow (WAWF) is an internet-based system that enables electronic form
submission of Invoices, government inspection, and acceptance documents. It provides the
technology for government contractors and authorized DoD personnel to generate, capture, and
process receipt and payment-related documentation online.
Key Supporting Documents:
Equipment Purchase Request
Material Inspection and Receiving Report, Form DD-250
Vendor Invoice
General Ledger Account Codes:
1750 Major Equipment (non-ADP)
1751 General Equipment (non-ADP)
1752 ADP Equipment
1758 Accumulated Depreciation of Non-ADP Equipment
1759 Accumulated Depreciation of ADP Equipment
1760 Software
1769 Accumulated Depreciation of Software
1770 Leasehold Improvements
1779 Accumulated Depreciation of Leasehold Improvements
1780 Furniture
1789 Accumulated Depreciation of Furniture
1790 Pending Assets
Relevant Laws, Regulations, Policies and Procedures:
• Department of Defense (DoD) Federal Management Regulation (FMR) Volume 4, Chapter 6,
Property, Plant and Equipment
• DCA Directive 5800, Volume I, Section 3, Accountable Property
• DCA Acquisition Directorate, Desk Procedures, updated September 2011
• DCA Logistics Management, Policies and Procedures
Interfaces with Other Business Cycles:
Procure-to-Pay
Financial Reporting
Budget
EXAMPLE
Business Process Flowchart Instructions
Instructions – Business Process Flowcharts – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 19
Financial Improvement and Audit Readiness Methodology
Assertion Work Product Example
Business Process Flowchart Instructions
Detailed Activity 1.3.1 – Prepare Process and System Documentation (Reporting Entities)
Detailed Activity 1.5.1 – Prepare Process and Controls Documentation (Service Providers)
NOTE: This document contains detailed instructions for preparing a business process flowchart.
The document identifies the key information required to be included in the flowchart, including
identification of key process owners, key risks, key control activities, key systems and
supporting documentation, and an illustrative description of business processes at a summary
level. You can construct a flowchart using either Microsoft Word©, Microsoft Visio©, or
another appropriate software program. With Microsoft Visio©, it will be easier to construct and
connect the symbols.
A business process flowchart is a diagram that chronologically depicts the steps in a business
process. It provides a graphical illustration of an end-to-end process at a summary level. The
flowchart complements the business process narrative by allowing the reader to obtain a clear
understanding of the process at a high level without having read the detailed narrative. The
flowchart summarizes the significant transaction flows in terms of inputs and outputs,
processing steps, files and data used, control activities performed, and any interfaces with other
business cycles. The information contained in the flowchart MUST BE consistent with the
information presented in the process narrative.
1. Preparer Name: Enter the name of the person preparing the business process flowchart.
2. Date Prepared: Enter the date the business process flowchart is prepared.
3. Reporting Entity: Enter the name of the reporting entity (e.g., Army, Navy, Air Force)
or other defense organization (i.e., DCMA, DTRA, DLA).
4. Business Process/Assessable Units and Sub-processes: Enter the name of the high level
end to end business cycle (i.e., Hire to Retire, Procure to Pay, Budget to Report) and
specific sub-process associated with the control activity (i.e., reconciliation of military
payroll).
5. Purpose/Scope: Identify the scope of the process being depicted in the flowchart. The
scope should be specific and narrowly focused on the specific process (i.e., DCA Military
Pay Gross-to-Net (G2N) Reconciliation process (a sub-assessable unit of the Military Pay
process).
6. Illustrative Process Depiction at a Summary Level: Provide a description of the
process at a summary level using different figures and shapes. The process must be
documented in chronological order, or the order in which it occurs. Ensure that the
following are included in the process flowchart:
INSTRUCTIONS
Business Process Flowchart Instructions
Instructions – Business Process Flowcharts – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 20
a. Start/End: Identify the start and end of the process.
b. Process: Provide a description of the process at a summary level.
Ensure that the title/role of person executing the transaction or performing the process
is clearly identified.
c. Risks of Material Misstatement (ROMM): Within the process
flowchart, identify the key risk(s) of material misstatement which may occur in the
financial statement line item, accounting application and associated business process.
Note: The risk of material misstatements must be obtained from the listing of key
risk(s) of material misstatements in Appendix C (sections C.1.2, C.2.2, C.3.2 and
C.4.2) of the FIAR Guidance.
d. Key Control Activities: Identify the control activities within the
process that are currently in place to mitigate the key risk(s) of material misstatement
and achieve the aforementioned financial reporting objective(s). Include a detailed
description of the control activity, noting the following:
i. Who performs the control activity? For manual control activity, there should
be a preparer and reviewer/approver.
ii. How is the control activity performed?
iii. How is the control activity performed?
iv. How is performance of the control activity documented (i.e., what forms are
used)?
v. How is performance of the control activity evidenced (i.e., signature and date
on form)
e. Key Systems Used: Identify all relevant systems that are used to
process transactions or store key supporting documents.
INSTRUCTIONS
Business Process Flowchart Instructions
Instructions – Business Process Flowcharts – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service
Provider) 21
f. Key Supporting Documents: Identify the documents that support
execution of the processes or transactions (i.e., timesheets, invoices, payment
vouchers, earnings and leave statements, DD-254, employee pay schedules, etc.) Also
identify the location where the documents are stored (i.e., system names for electronic
documentation or physical location for physical hard copy documentation).
g. Decision: Identify the point in the process where a decision is
necessary, commonly a Yes/No question or True/False test.
h. Off Page Connector: Used to show the continuation of the flow from one
page to another. When you reach the bottom of the page and need to continue the
flowchart on the next page, draw this symbol and connect it to the last item on the
chart. Label it with a letter or number to indicate where the process continues.
i. Incoming Connector: Used to show the continuation of the flow from the
previous page. At the top of the page, draw this symbol and connect it to the first item
on the chart where the process description continues from the previous page. Label it
with a letter or number to indicate the page that the process is being continued from.
INSTRUCTIONS
Military Pay Gross-to-Net Reconciliation
DISBURSING OPERATIONS PROD CNTRLPERS OFF
Phase
1. Monthly, DJMS-
AC Production
Control creates the
1A Summary file
Start
2. Disbursing
Accountant
downloads 1A file
from DJMS,
imports to Excel
format, & emails to
PERS OFF monthly
9. Deputy Director,
Disbursing, reviews and
approves G2N
Reconciliation printout and
sends scanned copy to
PERS OFF.
3. Disbursing
Accountant
summarizes and
crosswalks 1A file
SAFIDs, creating
“G2N_MONTH_YR”
workbook
8. Disbursing Accountant
prints G2N workbook and
provides to Deputy
Director, Disbursing
7. Using JUH099871
report, Disbursing
Accountant verifies
suppressed and carried-
forward amounts and
makes corrections.
JUH099871
1
Regenerate the
1A file?
No
Yes
6b. Disbursing Accountant
corrects G2N workbook
created from original 1A
file
Correct 1A file
imported?
5a. Disbursing
Accountant reviews
JUH099C0119
report
6a. DJMS-AC Production
Control researches and
resolves discrepancy
DJMS
4. Disbursing
Accountant
matches “out of
balance” amounts
in G2N workbook
to last amount in
1A file
Do
Amounts
Match?
No
Yes
5b. Disbursing
Accountant
downloads correct 1A
file
5c. Contact DJMS-AC
Production Control
for resolution
No
G2N.xls
Yes
G2N_MONTH_YR.xlsx
1A
1A.xlsx
KC1
KC2 KC3
10. PERS OFF reviews and
signs G2N Reconciliation
and returns to Disbursing
Operations for retention.
G2N.xls
G2N.xls
R1 R3R2 R4
R1
R2 R3 R4
R1 R2 R3 R4
EXAMPLE
Example Business Process Flowchart #1
22
Example – Business Process Flowcharts – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service Provider)
DISBURSING OPERATIONS PROD CNTRLPERS OFF
Phase
11a. Disbursing Accountant retrieves 6
payment files and compares to
JUH099C160 report and
G2N_MONTH_YR workbook.
13. Disbursing Technician
manually creates vouchers in
the disbursing system, signs
voucher cover sheet, and
returns it to Disbursing
Accountant
14. Disbursing Accountant
reviews LOA and voucher
amount for accuracy.
Manual
Vouchers
cover sheet
DisbSys
12. Disbursing Accountant
populates 6 separate tabs
in DJMS_WKS_MMYY
workbook using 6 payment
files and the JUH099C160
and JUH099C194X reports.
Do amounts and
gross deductions
match?
Are LOA and
amounts
correct?
11b. Disbursing Accountant locates and
corrects data entry or formula errors.
15. Disbursing
Accountant looks for
and corrects data or
formula errors in the
DJMS_WKS_MMYY
spreadsheet.
Otherwise, the
Disbursing Technician
corrects the voucher in
the disbursing system.
OPD Process
DJMS_WKS_MMYY
1
G2N.xls
6 Pymt Files
JUH099C160
KC4
No
Yes
6 Pymt Files
JUH099C194X
JUH099C160
DJMS_WKS_MMYY
KC5
No
G2N Recon process ends
MilPay processing
continues with Offline
Payment Delivery Process
16. Disbursing Deputy
Director reviews
reconciliation for
accuracy and approves
payment vouchers for
processing.
Yes
KC6
R2 R4R1 R3
R1
R2
R3
R4
Military Pay Gross-to-Net Reconciliation
EXAMPLE
Example Business Process Flowchart #1
23
Example – Business Process Flowcharts – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service Provider)
Legend
Predefined
Process
System
Decision
Document
Process
Risk
Key
Control
(KC)
DCPS SSAE
No. 16 Key
Control
DCPS SSAE No. 16
Control
Off-page
Connector
EXAMPLE
Example Business Process Flowchart #1
24
Example – Business Process Flowcharts – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service Provider)
Property & Equipment Acquisition & Management
FINANCIAL MGMT PROGRAM OFFCONTRACTINGLOGISTICS
RECV
LOCATION
Phase
Start
1. Complete
Equipment
Purchase Request
EPR
PROCURE
2. Route to
authorizing official
for approval
3. Return to
requestor for
reconsideration
EPR Approved? To AYes
No
A
4. Certifying official
verifies availability of
funds
Funds
certified?
PROCUREDBEX
KC2
No
5. Process EPR
Yes
EPR
EPR
PROCURE
6. Award contract and
send obligation to
budget system
DBEXPROCURE
7a. Verify obligation
and approve for
posting
DBEX GLSYS
KC3
7b. Property
Specialist notified of
awarded contract
8. Property Specialist
notifies receiving
location of impending
delivery
9. Receiving location
accepts delivery of
equipment
PROCURE
DD-250
10. Property
Custodian barcodes
property and enters
into property system
KC4
KC5
DD-
250
DPROP
11. Property Specialist prepares
Asset Valuation form, updates
DPROP, uploads DD-250 to
WAWF and forwards asset
package to Financial Mgmt
To B
B
12. Financial Mgmt
Accountant reviews and
verifies asset acquisition
cost
KC6
DPROP
WAWF
DD-
250
Continue to
Property
Mgmt
KC1
R1
R1
R1
R2
R2
R3
R4
R3
R3
EXAMPLE
Example Business Process Flowchart #2
25
Example – Business Process Flowcharts – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service Provider)
Property & Equipment Acquisition & Management
LOGISTICSPROP LOCATIONFINANCIAL MGMT
Phase
Property
Mgmt
13. Project Manager
notifies Property
Specialist asset is
configured and placed
into service
14. Logistics Property
Specialist verifies DPROP
data and enters activation
date
DPROP
KC7
15a. Property Custodian or
Project Manager determines if
transfer or disposal
appropriate and completes
Form 1348-1A
16. Accountable Property
Officer approves transfer
or disposal and forwards
to Logistics
17. Based on approved
1348-1A, Logistics
contacts DRMO and
updates DPROP
1348-1A
DPROP
18a. Logistics conducts
annual physical inventory
at all locations.
KC10
DPROP
Inventory database
19. Logistics and property
custodians reconcile
physical inventory
discrepancies and update
DPROP.
18b. Hand receipt holders
annually recertify
possession and location of
accountable property.
DPROP
20. FM Accountant
reconciles depreciation
and subsidiary ledger to
general ledger monthly.
DPROP GLSYS
KC11
R7R6R5
R5 R6
15b. Form 1348-1A is
reviewed and approved
by an authorized
supervisory
KC8
KC9
1348-1A 1348-1A
R2
R2
R2
EXAMPLE
Example Business Process Flowchart #2
26
Example – Business Process Flowcharts – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service Provider)
Legend
Predefined
Process
System
Decision
Document
Process
Risk
Key
Control
(KC)
DCPS SSAE
No. 16 Key
Control
DCPS SSAE No. 16
Control
Off-page
Connector
EXAMPLE
Example Business Process Flowchart #2
27
Example – Business Process Flowcharts – Activity 1.3.1 (Reporting Entity)/1.5.1 (Service Provider)
