stepped up erm teresa mckay director, defense finance and accounting service asmc washington chapter...
TRANSCRIPT
Stepped Up ERM
Teresa McKay Director,
Defense Finance and Accounting Service
ASMC Washington Chapter
September 17, 2008
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Agenda
Enterprise Risk ManagementWhy We Need Enterprise Risk
ManagementCase Studies
Wounded Warrior Out of Country Payments Accounts Payable
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A Complex Environment Fraught with Risk
6.9 million travel payments
$328 billion in military retirement
managed865 active DoD appropriations
54.5 million general ledger accounts with billions of
transactions
$446 billion in disbursements
154.6 million payroll payments
14 million commercial invoices
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What is Enterprise Risk Management?
Enterprise Risk Management (ERM): An organization-wide approach that proactively identifies inherent risks and prevents or manages them
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Why do we use Enterprise Risk Management?
Why do we use Enterprise Risk Management?
Why ERM
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DFAS’ Approach to ERM
Assess Plan Execute Sustain
DFAS ERMP Implementation Activities: ERM Governance Business Environment
Identification KRI Identification and
Monitoring ERM Reporting Compliance Management
Taxonomy, Risk Classification, and Policy
Establish DFAS Risk Appetite
ERM System/ Dashboard Development
Incident Capture Process
Communication, Training, and Awareness
Risk and Control Identification and Assessment
Control Testing Issue Management and
Remediation
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Current State Desired State, Implementation
Implementation Activities
Governance DevelopmentTrainingSub-Core Self AssessmentCore Area Risk AssessmentMap Key ProcessesPerform Risk & Control
Identification and AssessmentEstablish Risk ToleranceRisk Mitigation Develop Test PlansDevelop Internal Control
Questionnaires
Implementation Outcomes
Dashboard ReportingProactive, Risk-Aware
WorkforceCentralized repository of
policies and procedural guidance
Process Excellence
ERM Evolution
DFAS Enterprise
Risk Management
Program
Ad Hoc Managed Standardized Integrated Optimized
DFAS Risk Management Maturity
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Identifying Risk
Document the process Identify risks and establish
controls to mitigate those risks
Evaluate, test and -- if necessary -- revise
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Accountability is Key
Accounts Payable: Own the process Identify Risks: What all can go wrongPrioritize: Develop an integrated strategy for solutions
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Compliance
Audit oversight Internal reviewFederal Managers’ Financial Integrity Act Compliance Improper Payments Information ActFinancial Improvement and Audit ReadinessFederal Financial Management Improvement ActClinger-Cohen ActBalanced ScorecardDepartment of defense Information Assurance and
Certification Accreditation ProcessFederal Information Security Management Act
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Outcomes
• Streamlined accounting and personnel processes
• Better support for our customers
• Peace of mind for Warfighters and their families
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Case Study: Wounded Warrior
BackgroundBackground
ResultsResults
• Inaccurate pay to wounded soldiers resulted in soldiers owing money to the government
• Pay and personnel systems unable to handle situation
• Congress and media were outraged
• Number of erroneous payments significantly reduced
• Hospitalized Soldiers contacted personally
• Wounded In Action (WIA) database developed
• Available financial personnel at Walter Reed and Landsthul hospitals
• Overall processes and procedures improved
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Case Study: Out of Country Payments
BackgroundBackground
ResultsResults
• Billions of dollars spent on the Global War on Terror
• DoD unable to support financial operations in Iraq and Afghanistan using standard operating procedures
• Army needed to improve internal controls for soldiers to be supported properly
• Regulations for soldiers in contingency environment revised
• Partnered with Army to improve controls and ensure payments are properly supported
• Communication, training and interagency planning improved
• Oversight/follow-up procedures established
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Case Study: Accounts Payable
BackgroundBackground
ResultsResults
• Disparate accounts payable processes.
• Consolidated operations and standardized processes
• Improved efficiency and effectiveness, exceeding customer expectations
• In FY07 saved $53m by eliminating rework and increasing productivity
• 55 errors identified
• Dollar impact $7,166,567
• Employee coding training opportunities identified
• Opportunities to apply Business Activity Monitoring identified
Reduced improper payments
Identified Fraud
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Business Activity Monitoring
The Future of BAM with DFAS
Improper Payments are detected and corrective action injected automatically at the source.
Detect and Prevent
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Questions