2023.03.13 FMS_RFI_Atch 3_DoD J8 FM Strategy.pdf

TOGETHER, WE DELIVER.TOGETHER, WE DELIVER.

DOD and J8 FM Strategy Briefers: Mr. John Tetzner TCJ8-P

Mr. Roger Kuhlmann TCJ8-CM

UNCLASSIFIED

TOGETHER, WE DELIVER.

DoD and USTC J8 FM Strategy Goals

DoD FM Strategy Cultivate a skilled and inspired FM workforce Optimize taxpayer dollars for the highest value outcomes Increase the integrity of financial results Simplify and optimize our end-to-end business environment Empower data-driven, fiscally informed decision-making USTC J8 FM Strategy Create an Innovative, Diverse, and Agile Workforce Operationalizing Financial Information Transparency and Compliance Modernization and Systems

Cultivate a Skilled and inspired FM Worforce

• DOD Strategic objectives GOAL 1

• 1.1 Build and maintain a premier FM workforce: Recruit and retain a diverse and skilled FM workforce by providing career opportunities that appeal to top talent and driving workforce planning initiatives that position employees for success.

• 1.2 Optimize and evolve FM training solutions: Provide forward-thinking, accessible, skills-based training and education that prepares our workforce for tomorrow’s FM requirements.

• 1.3 Foster an FM community of practice: Provide forums, tools, and experiences that promote information-sharing, networking, mentoring, and collaboration across the workforce.

• DOD Strategic objectives Goal 1 How to measure

• 1.1 Build and maintain a premier FM workforce

• What to measure: 1.1.1 Increase employee engagement and satisfaction scores

• Why it matters: Our people are a priority and measuring our employee engagement and satisfaction enables us to identify pockets of excellence to replicate elsewhere, as well as areas of opportunity to implement targeted, data-informed change initiatives.

• DOD Strategic objectives Goal 1 How to measure

• 1.1 Build and maintain a premier FM workforce

• What to measure: 1.1.2 Establish a proficiency assessment model and increase workforce proficiency scores.

• Why it matters: It is critical that we foster an environment where our workforce has opportunities to specialize in its craft as well as broaden its skillsets. Accountants should have a basic understanding of the budget process, how audits work, and how to use data for decision support analytics, just as much as budget analysts should understand enough about accounting data to make decisions as the budget is executed. Monitoring the distribution in skills and proficiency of our workforce provides us with data to inform changes to training and career development opportunities.

• DOD Strategic objectives Goal 1 How to measure

• 1.2 Optimize and evolve FM training solutions

• What to measure 1.2.1 Increase the percentage of the workforce holding relevant certifications, test-based where possible.

• Why it matters The DoD Financial Management Certification Program (DFMCP) is a requirement for employment of many FM professionals throughout DoD already. Increasing the number of other relevant FM certifications held by our workforce, such as the Certified Public Accountant (CPA) certification, among others, indicates an increase in continuous learning, which is critical to maintaining the competitive advantage of the Department and our nation.

• DOD Strategic objectives Goal 1 How to measure

• 1.2 Optimize and evolve FM training solutions

• What to measure: 1.2.2 Establish FM training on leadership and mission-critical management skills, including tradeoff analysis, risk management, etc., and increase the percentage of the workforce trained in these critical skills.

• Why it matters: Management and leadership skills may not be addressed by the aforementioned certification programs, but they are a core set of skills critical to the career development of our people – and just as important to the success of the FM community as technical skills are. Focused attention on these trainings is critical to increasing employee engagement and satisfaction, improving our office culture, and providing our workforce with tools and enablers to manage their careers.

• DOD Strategic objectives Goal 1 How to measure

• 1.2 Optimize and evolve FM training solutions

• What to measure: 1.2.3 Establish an FM data, analytics, and digital curriculum, and increase the percentage of the workforce trained in these critical skills.

• Why it matters: Digital innovation is changing the way we produce and consume information and how modern business systems operate. Opportunities abound at DoD to improve our systems environment and to leverage trusted data that is used for purposes of the financial statement audit and decision-making. Positioning our FM workforce to be ready for these opportunities requires training on modern data and analytics practices, as well as training on modern cloud-based solutions, automation solutions, and other enablers critically shaping the way we operate.

• DOD Strategic objectives Goal 1 How to measure

• 1.3 Foster an FM community of practice

• What to measure:1.3.1 Establish on-the-job forums to share leading practices across the Department.

• Why it matters: As the FM workforce strives to make transformative improvement over the next few years, it is essential that there are forums to recognize and share leading practices and accomplishments with others so that they can be replicated elsewhere.

• DOD Strategic objectives Goal 1 How to measure

• 1.3 Foster an FM community of practice

• What to measure:1.3.1 Establish on-the-job forums to share leading practices across the Department.

• Why it matters: As the FM workforce strives to make transformative improvement over the next few years, it is essential that there are forums to recognize and share leading practices and accomplishments with others so that they can be replicated elsewhere.

• USTC J8 Strategic objectives GOAL 1

• 1.1 Build and maintain a premier FM workforce: Connect with Staff, On-Boarding and J8 Newcomer’s Orientation. Recruit and retain a FM workforce by providing career opportunities that appeal to top talent and driving workforce planning initiatives that position employees for success.

• 1.2 Optimize and evolve FM training solutions: Diversity and Inclusion Training, Provide forward-thinking, accessible, IDP /ITP/CAT training and education that prepares our workforce for tomorrow’s FM requirements. Competency Focused Training Plan

• 1.3 Foster an FM community of practice: Rotational positions within J* to provide forums, tools, and experiences that promote information-sharing, networking, mentoring, and collaboration across the workforce.

Optimize taxpayer dollars for the highest value outcomes

• DOD Strategic objectives GOAL 2

• 2.1 Optimize budget to execution: Refine the budget to execution process, enabled by Congressional collaboration, reduction of outdated regulations and policies, and use of streamlined end-to-end standard capabilities, in order to provide total funds visibility and to ultimately deliver defense mission capabilities faster and with agility.

• 2.2 Manage cost, performance, and risk together: Deliver and act on financial insights focused on cost, performance, and enterprise risk management (ERM) simultaneously, the results of which should inform tradeoff analyses, cost controlling, and resource budgeting and forecasting activity.

• 2.3 Foster a high integrity funds control environment: Provide fiscal control over assets, including the dissemination of funds, the tracking of budget execution, and the realignment of funds.

Optimize taxpayer dollars for the highest value outcomes

• DOD Strategic objectives Goal 2 How to measure

• 2.1 Optimize budget to execution

• What to measure: 2.1.1 Increase budget to execution visibility with near real-time execution data using modern enterprise solutions.

• Why it matters: An optimal budget to execution process requires visibility that can be provided by modern enterprise solutions. The number of systems used to orchestrate PPBE represents a substantial share of systems in the FM portfolio, which has historically complicated this task.

Achieving end-to-end funds visibility using enterprise solutions is a necessary step to achieve further meaningful outcomes in simplifying the budget to execution process and improving data quality.

outcomes

• DOD Strategic objectives Goal 2 How to measure

• 2.1 Optimize budget to execution

• What to measure: 2.1.2 Increase visibility into execution against disaster and emergency response funding by implementing a capability to track rapid response.

• Why it matters: When an emergency occurs, we must have data on hand to respond rapidly and also have the ability to track progress against our response, including execution of funds.

Having a clear process and capability to track this Department-wide is critical to responding to the next incident.

outcomes• DOD Strategic objectives Goal 2 How to measure

• 2.2 Manage cost, performance, and risk together

• What to measure: 2.2.1 Reduce volume and magnitude of recurring, controllable revolving fund indicators and warnings.

• Why it matters: Revolving funds exist as a flexible funding mechanism to help support mission outcomes and are an excellent example of where it is critical to measure cost, performance, and risk together in order to remain solvent and performant. Indicators and warnings relating to revolving funds include cash balances breaching upper or lower threshold limits as well as inventory and accounts receivable patterns that ultimately put cash management at risk.

Reducing indicators and warnings in this area is an indication that we are effectively managing cost, performance, and risk in ways that may support maturation of this framework to be used beyond revolving funds in the future.

outcomes• DOD Strategic objectives Goal 2 How to measure

• 2.3 Foster a high integrity funds control environment

• What to measure: 2.3.1 Increase control over our enacted budget execution by developing spend plans using a standard methodology to compare to monthly execution, identify spend plan variances, and take action to implement cost controls that address changing demands.

• Why it matters: A spend plan should operate like a forecast, typically updated monthly to reflect latest expected events throughout the remainder of the fiscal year, and thus is a better comparison point than the budget, particularly as the year goes on. This metric is a byproduct of something more important: ensuring flexibility to account for emerging requirements. Reducing spend plan variances is an indication that the spend plan process is capturing emerging requirements and that our FM community has a plan to address them with funding. Thus, as dollars are executed, execution is in line with the spend plan, to a reasonable extent, because we had a plan in place to adjust to recent requirements changes.

Optimize taxpayer dollars for the highest value outcomes

• USTC J8 Strategic objectives GOAL 2

• 2.1 Optimize budget to execution: Refine the budget to execution process, enabled by Congressional collaboration, reduction of outdated regulations and policies, and use of streamlined end-to-end standard capabilities. Cost Estimating Relationship and Cost Product Templates in order to provide total funds visibility and to ultimately deliver defense mission capabilities faster and with agility.

• 2.2 Manage cost, performance, and risk together: Agile Workload Forecasting to deliver and act on financial insights focused on cost, performance, and enterprise risk management (ERM) simultaneously, the results of which should inform tradeoff analyses, cost controlling, and resource budgeting and forecasting activity along with gain efficiencies.

• 2.3 Foster a high integrity funds control environment: Provide fiscal control over assets, including the dissemination of funds, Zero Based Budgeting and AOB constraints to track budget execution, and the realignment of funds.

Increase the Integrity of Financial Results

• DOD Strategic objectives GOAL 3

• 3.1 Accelerate the path to an unmodified audit opinion: Build confidence in the efficacy of our financial results by mitigating material weaknesses and achieving an unmodified audit opinion through relentless implementation of internal controls and pursuit of excellence in all financial execution activities.

• DOD Strategic objectives Goal 3 How to measure

• 3.1 Accelerate the path to an unmodified audit opinion

• What to measure: 3.1.1 Increase the number of favorable (unmodified or qualified) financial statement audit opinions.

• Why it matters: If we truly simplify our environment, improve our FM practices, and are successful in our approach to target material weaknesses, we should see the outcome of increased unmodified and qualified audit opinions. Notices of findings and recommendations (NFRs) associated with material weaknesses should be strategically targeted so as to remediate the most material issues in our financial statements. Monitoring this progress is critical to achieving an environment of financial integrity. As NFRs associated with material weaknesses are resolved and the number decreases, the Department will find itself closer to achieving the target of a DoD-wide favorable audit opinion.

• DOD Strategic objectives Goal 3 How to measure

• 3.1 Accelerate the path to an unmodified audit opinion

• What to measure: 3.1.2 Increase the number of favorable (unmodified or qualified) Statement on Standards for Attestation Engagements No. 18 (SSAE-18) opinions.

• Why it matters: Similar to 3.1.1., the more SSAE-18 audit opinions that improve to become favorable, the closer DoD will be to achieving the target of an overall favorable audit opinion for its financial statements. Furthermore, as we make changes to simplify our systems environment, it is critical that we monitor the change in compliance associated with our financial systems. This monitoring encourages smart and sustainable choices when making systems changes.

• DOD Strategic objectives Goal 3 How to measure

• 3.1 Accelerate the path to an unmodified audit opinion

• What to measure: 3.1.3 Centralize all Fund Balance with Treasury (FBWT) reconciliation tools in Advana.

• Why it matters: FBWT is a DoD material weakness and an obstacle to obtaining a favorable audit opinion on our financial statements. The fastest path to adopting proven reconciliation tools requires centralizing all FBWT reconciliations on Advana in order to help identify, prioritize, and address thematic feeder system data quality issues.

• DOD Strategic objectives Goal 3 How to measure

• 3.1 Accelerate the path to an unmodified audit opinion

• What to measure: 3.1.4 Establish processes and controls to clear undistributed disbursements and collections in a timely manner, including posting and matching transactions to obligations.

• Why it matters: Undistributed (or unmatched) disbursements and collections are amounts that have been reported to Treasury but have not been posted to the appropriate obligation in the source accounting system. Proper accounting requires that undistributed disbursements and collections be identified to a specific transaction and organization, involving research, reconciliation, and supporting documentation. Improved processes and controls for obligation matching and transaction posting will enable clearing these accounts and reporting accurate balances in a timely manner.

• DOD Strategic objectives Goal 3 How to measure

• 3.1 Accelerate the path to an unmodified audit opinion

• What to measure: 3.1.5 Reduce undistributed disbursement and collection balances to a small percentage of the total FBWT.

• Why it matters: Undistributed (or unmatched) disbursements and collections occur because of invalid line of accounting values and timing differences, among other reasons. Reducing undistributed amounts, ideally by addressing causes at the source, will increase the integrity of the Department’s financial information as well as enable shifting workforce resources from ad hoc, manual research and reconciliation to higher-value efforts.

• DOD Strategic objectives Goal 3 How to measure

• 3.1 Accelerate the path to an unmodified audit opinion

• What to measure: 3.1.6 Increase systems with appropriate user access control solutions implemented to improve cybersecurity and audit posture.

• Why it matters: Identity and access management deficiencies represent a significant obstacle to achieving unmodified audit opinions for the Department. As these are resolved and the number decreases, it is expected that information technology security NFRs will be resolved, and the Department will find itself closer to achieving the target of a DoD-wide unmodified financial statement audit opinion and, more importantly, improving our cybersecurity posture.

• USTC J8 Strategic objectives GOAL 3

• 3.1 Accelerate the path to an unmodified audit opinion: Build Audit Roadmap to establish confidence in the efficacy of our financial results by mitigating material weaknesses and achieving an unmodified audit opinion through relentless implementation of internal controls and pursuit of excellence in all financial execution activities. Clean up Obligations Balances to free up Budgetary Resources for Current Year use.

Simplify and Optimize our End to End Business Environment

• DOD Strategic objectives GOAL 4

• 4.1 Optimize a secure systems environment: Retire legacy systems and accelerate optimization of modern enterprise solutions by partnering with all stakeholders across end-to-end processes and leveraging proven commercial and federal capabilities.

• 4.2. Leverage innovative digital and automation solutions: Leverage innovative solutions including machine learning, artificial intelligence, and other automation solutions to streamline transaction processing while sustainably improving our analytics and business environment.

• 4.3 Simplify FM regulation and policy: Simplify FM regulation and policy to support desired outcomes of the FM strategy, address cultural barriers, and partner with appropriate stakeholders to create productive change.

• DOD Strategic objectives Goal 4 How to measure

• 4.1 Optimize a secure systems environment

• What to measure: 4.1.1 Decrease the number of legacy, financial statement audit-relevant business systems.

• Why it matters: Modern, scalable business system capabilities exist with a fraction of the maintenance cost of years past. DoD legacy systems are costly, create cyber risk for the Department, and impede our financial statement audit efforts. Retiring legacy systems swiftly allows the Department to avoid unnecessary maintenance costs and other serious risks, while reinvesting in modern capabilities that will better serve our workforce for decades to come.

Additionally, focusing specifically on audit-relevant systems has the added benefit of simplifying our environment that impacts the audit, accelerating strategic objective 3.1.

• DOD Strategic objectives Goal 4 How to measure

• 4.1 Optimize a secure systems environment

• What to measure: 4.1.2 Increase compliance with regulations including Federal Information System Controls Audit Manual (FISCAM), Federal Financial Management Improvement Act (FFMIA), Federal Information Security Management Act (FISMA), and Standard Financial Information Structure (SFIS) across FM systems.

• Why it matters: To streamline business operations, reduce costs, and accurately report DoD’s financial information, all business systems (first and foremost, those relevant to the DoD financial statement audit) should invest the resources necessary to achieve optimal financial and operational outcomes while ensuring systems are compliant with audit and security regulations, such as FISCAM, FFMIA, FISMA, and SFIS. Systems scheduled to retire in the near-term should be deprioritized in favor of enduring systems worthy of investment and likely to impact audit results.

• DOD Strategic objectives Goal 4 How to measure

• 4.2 Leverage innovative digital and automation solutions

• What to measure: 4.2.1 Increase automation of end-to-end processes.

• Why it matters: Automating repeatable process steps and interfaces between enduring systems that require manual intervention today will allow us to unlock valuable time to reinvest in modern capabilities.

• DOD Strategic objectives Goal 4 How to measure

• 4.2 Leverage innovative digital and automation solutions

• What to measure: 4.2.2 Streamline intra-governmental transaction processing in all target FM systems.

• Why it matters: Understanding progress on leveraging Treasury’s G-invoicing solution provides insight into DoD’s ability to transition to innovative digital and automation solutions to optimize resources and improve auditability.

• DOD Strategic objectives Goal 4 How to measure

• 4.3 Simplify FM regulation and policy

• What to measure: 4.3.1 Simplify regulations or policies to address priorities throughout the FM strategy.

• Why it matters: As changes to FM systems and processes are implemented throughout the implementation of this strategy, issuing simplified regulations and policies that address barriers to fully enabling standardization will demonstrate that a common understanding and advocacy exists across stakeholders to create productive change to achieve our objectives.

• USTC J8 Strategic objectives GOAL 4

• 4.1 Optimize a secure systems environment: Fully Fund IT across FYDP, Retire legacy systems and accelerate optimization of modern enterprise solutions by partnering with all stakeholders across end-to-end processes and leveraging proven commercial and federal capabilities.

• 4.2. Leverage innovative digital and automation solutions: IT Financial Oversight to leverage innovative solutions including machine learning, artificial intelligence, and other automation solutions to streamline transaction processing while sustainably improving our analytics and business environment.

• 4.3 Simplify FM regulation and policy: Simplify FM regulation and policy to support desired outcomes of the FM strategy, address cultural barriers, and partner with appropriate stakeholders to create productive change and continued work with DFAS /ASC to Enforce TAC Policies

Empower Data-Driven, Fiscally Informed Decision-Making

• DOD Strategic objectives GOAL 5

• 5.1 Drive universal use of secure, single-source reporting: Leverage Advana as the single enterprise data and analytics environment for all fiscally informed decisions and management reporting.

• 5.2 Instill confidence in FM data for decision-making: Improve data quality as well as universal data management and modeling standards that make data easier to use for decision-making.

• DOD Strategic objectives GOAL 5

• 5.1 Drive universal use of secure, single-source reporting

• What to measure: 5.1.1 Produce a supportable UoT balance as a percentage of financial statement balances.

• Why it matters: We have over 28 general ledger systems and dozens more feeder systems complicating our environment. Producing a UoT focused on coverage of financial statement balances is crucial to our objectives for audit as well as for furthering the use of data and analytics across the FM community. In many cases, the fastest path to reconciling data for audit and using data for decision-making is completing the enterprise-wide UoT available in Advana.

• DOD Strategic objectives GOAL 5

• 5.1 Drive universal use of secure, single-source reporting

• What to measure: 5.1.2 Increase Advana customer satisfaction and retention score.

• Why it matters: For DoD to optimize use of an authoritative FM data source as an asset to improve decision-making and overall FM mission execution, the FM community must be satisfied with and embrace the Advana capability. Encouraging a customer-first approach helps us to ensure all offerings of our enterprise data and analytics environment are serving our customers well. Recurring feedback allows us to iterate quickly and continuously improve.

• DOD Strategic objectives GOAL 5

• 5.1 Drive universal use of secure, single-source reporting

• What to measure: 5.1.3 Decrease the number and cost of discrete data lakes, data warehouses, dashboards, micro-apps, etc.

• Why it matters: Treating Advana as a single source for FM data and analytics introduces simplicity. The proliferation of redundant systems and applications today creates siloed approaches to data management. As adoption of Advana increases, the number of redundant data lakes, warehouses, and other applications should naturally decrease.

• DOD Strategic objectives GOAL 5

• 5.2 Instill confidence in FM data for decision-making

• What to measure: 5.2.1 Increase data quality scores.

• Why it matters: Making reconcilable data transparently available in the Advana enterprise UoT will allow more rapid identification of data quality issues to address with source system owners, which in turn should drive change and increases in data quality scores over time. Data quality measures will include DoD-wide approved standards per the DoD CDO, as well as FM-mandated data standards such as SFIS, Standard Line of Accounting (SLOA), Procurement Data Standard (PDS), and Procurement Request Data Standard (PRDS), among others.

• USCT J8 Strategic objectives GOAL 5

• 5.1 Drive universal use of secure, single-source reporting: Leverage Advana as the single enterprise data and analytics environment for all fiscally informed decisions and management reporting. Incorporation of Analytics, Implement RPA bots, Develop FM dashboards and Daily BR dashboards.

• 5.2 Instill confidence in FM data for decision-making: Improve data quality as well as universal data management and modeling standards that make data easier to use for decision-making.

Map Order Processes, Perform BPR, and Automate TCB.

ACTION/MOVEMENT

• SOO sent to SAF Business Governance and Performance

• J8 Strategic focus areas

Operationalizing Financial Information Create an Innovative, Diverse, and Agile Workforce.

Modernization and Systems.

Transparency and Compliance

• “Work center LOEs” Budget Accounting Robotics Analytics People

• J8 FM Schedule Planner Reporting Tool Road to track progress of LOEs Division Chief set schedule and timelines