PWS_Attachment_1_-_Installation_FIAR_Guide_FINAL_17Mar2016.pdf

Air Force Civil Engineer Center

(AFCEC)

Financial Improvement and

Audit Readiness (FIAR)

Installation Guide

March 2016 Version 1.0

This Page Intentionally Left Blank

TABLE OF CONTENTS

1. FIAR INTRODUCTION

2. PURPOSE

3. FINANCIAL AUDIT READINESS

4. FIAR ROLES AND RESOURCES

5. FIAR PHASE I

a. Existence and Completeness (E&C)

b. Key Supporting Documents (KSD)/Valuation

6. FIAR PHASE II

a. Existence and Completeness (E&C)

b. Key Supporting Documents (KSD)/Valuation

7. RIGHTS AND OBLIGATIONS

8. PRESENTATION AND DISCLOSURE

9. PHYSICAL INVENTORY

10. DD FORM 1354

APPENDICES

A. USAF/CC Financial Improvement and Audit Readiness (FIAR) Memo, 28 Oct

B. HQ USAF Real Property (RP) Financial Improvement and Audit Readiness (FIAR) Memo, 20 Feb 2015

C. HQ AF/A4 Real Property (RP) Financial Improvement and Audit Readiness (FIAR) Existence and Completeness (E&C) Memo, 30 Jul 2015

D. DD Form 1354 Template

E. DD Form 1354, Transfer and Acceptance of DoD Real Property, Segregation of Duties

F. Attestation Memo Template

G. Alternative Valuation Methodology Memo

H. Physical Inventory Form

1. INTRODUCTION

FINANCIAL IMPROVEMENT AND AUDIT READINESS (FIAR) In November 1990, President George H. W. Bush signed Public Law 101-576 into law, thus establishing one of the most significant pieces of financial management legislation ever enacted – the Chief Financial Officers Act of 1990 (CFOA or Act). The CFO Act was passed to address congressional interest in improving fiscal accountability within the Federal government. This act established the framework to improve federal financial management and establish roles and responsibilities in key financial management, leadership and accountability functions. The CFOA intent:

• Provide more effective general and financial management practices within the federal government.

• Provide the framework for each agency of the federal government to improve accountability, financial management and internal controls.

• Ensure the reporting of reliable financial information, deterring potential fraud, waste and abuse of government resources.

• Provide for the production of complete, reliable, timely, and consistent financial information for use by the Executive Branch and the Congress.

• Provide reports of RP holdings on a periodic basis.

With the passage of the CFO Act, executive agencies began taking actions to comply with its provisions.

After ten years of minimal progress within the DoD, Congress inserted requirements into the FY 2002 National Defense Authorization Act (NDAA) (Public Law 107- 107), which elevated improved financial management as a Department priority. Specifically, the FY 2002 NDAA, Section 1008, required the DoD to “submit…a report on the reliability of the [DoD] financial statements” to include “a summary of the specific sections of [DoD’s] annual Financial Management Improvement Plan…that detail the priorities, milestones, and measures of success that apply to the preparation of the financial statements…and provide an estimate of when each financial statement will convey reliable information.”

In FY 2010, a new urgency was placed upon the Department’s financial improvement efforts with the enactment of the FY 2010 NDAA (Public Law 111- 84), which mandated creation of an audit readiness plan. As stated in Section 1003, DoD “shall…develop and maintain a plan to be known as the ‘Financial Improvement and Audit Readiness Plan’.” Furthermore, the FY 2010 NDAA established a clear deadline for achievement of audibility which included ensuring the Department’s financial statements are validated as ready for audit not later than September 30, 2017. APPENDIX A: USAF/CC Financial Improvement and Audit Readiness (FIAR) Memo, 28 Oct 2012; APPENDIX B: HQ USAF Real Property (RP) Financial Improvement and Audit Readiness (FIAR) Memo, 20 Feb 2015

2. PURPOSE

This FIAR Installation Guide is designed to equip Air Force personnel with the basic FIAR understanding and the procedures to help Air Force bases prepare for the accurate recording of their real property financial information. This guide is written specifically for the Real Property community;

however, the life cycle of a real property asset crosses many functional communities as it goes from a good idea through planning and resources to acquisition and management and ends with disposal and data archive. FIAR guidance is located on OUSD Website: http://comptroller.defense.gov/FIAR.aspx http://comptroller.defense.gov/FIAR.aspx

3. FINANCIAL AUDIT READINESS

An audit is a formal examination of an organization’s account, financial situation, and compliance with laws, regulations, and operational requirements. The financial audit will hold Air Force organizations accountable for their actions with regards to ensuring all financial records are relevant, accurate, complete and fairly presented. The Air Force needs to focus on documenting and improving processes and internal controls in order to achieve a successful Air Force audit.

These processes and controls should meet the following three criteria:

• Traceable: The ability to obtain readily available supporting documentation as evidence of financial events.

• Repeatable: The ability to perform the process/control again and again.

• Sustainable: The ability to maintain repeatable processes over an extended length of time.

Resources and funding for individual Air Force programs will be impacted if effective internal controls are not in place. Programs that demonstrate better results are more likely to see an increase in their budget. Conversely, programs unable to account for their funds or demonstrate program success can realistically expect budget cuts.

Auditors have the discretion to combine or disaggregate financial statement assertions, the five commonly accepted financial statement assertions are existence, completeness, valuation, presentation & disclosure and rights & obligations.

BOTTOM LINE: The Air Force installations must ensure that all assets recorded in the APSR exist (existence), all of the assets are recorded in their system (completeness), have the right to report all assets (rights), and assets are consistently categorized, summarized, and reported period to period (presentation and disclosure).

4. FIAR ROLES AND RESOURCES

Installation Commanders must understand that Financial Improvement and Audit Readiness (FIAR) is everyone’s responsibility! Correction Action Plans (CAP) and FIAR taskers require significant focused manpower to pass installation audit. It is important that key personnel from each of these communities be involved in the planning and execution of the audit preparation.

THE INSTALLATION BASE CIVIL ENGINEER (BCE):

• Per AFI32-9005 AF/A4 Guidance Memo, the Installation Civil Engineer (BCE) must appoint a POC assigned to the squadron with sufficient experience (Grade of GS-12 or above, Officer or Senior NCO) and authority to be the RP FIAR lead. This will be accomplished using an internal appointment letter.

• Ensures the Installation real property data in the APSR is accurate, complete, up-to-date, and all key source documentation is maintained for every AF-owned asset for audit purposes in accordance with AFMAN 33-363. Initiate internal controls and performance measures on base to monitor compliance with requirements across functions.

• Directs systematic inventories IAW regulations to ensure real property inventory accuracy.

• Signs or designates appropriate signature authority for the DD Form 1354, Transfer and Acceptance of DoD Real Property, as the accepting or transferring official for DoD in accordance with FIAR Plan. The Real Property Office shall not be a designated appointee to sign the DD Form 1354. The designated appointee shall sign construction acceptance documents for construction projects from construction agents for capital projects. Transfers of property within DoD are signed at the appropriate level IAW the affected transaction.

THE REAL PROPERTY ACCOUNTABLE OFFICER (RPAO)

Per the DoDI 4165.14 Real Property Inventory (RPI) and Forecasting, an RPAO, though not all inclusive, are to:

• Ensure an organization’s formal property records, systems, and financial information in connection with government real property, irrespective of the organization using or funding the property, are established and maintained in accordance with DoD Component and DoD policy.

• Document real property into the RPI, ensuring all acquisitions are accurately recorded in the RPI.

• Verify that information recorded is accurate, complete, and retained in accordance with applicable laws and regulations and the DoD Components’ records management manual.

• Ensure all disposals are accurately recorded in the RPI.

• Ensure all real property transactions are auditable.

• Implement and adhere to internal controls for operations, reporting, and compliance.

INSTALLATION FIAR TEAM

FIAR Team Lead will leverage manpower, contract support and any additional resources available to perform the tasks required by the Corrective Action Plans (CAP):

• Shop Foreman/Utility Shops

• Cultural Resource Manager

• Site Inspectors

• Engineering, GeoBase/AutoCad Technicians

• Augmentees

• Housing Office

• Facility Managers

AFCEC/CIT ACCOUNTABILITY & FIAR TEAMS

• Ida Campbell: ida.campbell@us.af.mil

• Darren Ledger: darren.ledger@us.af.mil

• Ana Lemmon: ana.lemmon.1.ctr@us.af.mil

• Greg Rogers: gregory.rogers.10.ctr@us.af.mil

• Diana Simmons: diana.simmons.1@us.af.mil

• Cathy Ward: catherine.ward@us.af.mil

• Sherri Youngs: sherri.youngs@us.af.mil

E. Accountability/FIAR Workflow Email Address: AFCEC.CIT-.A@us.af.mil

F. Tyndall Reach Back Center: 1-850-283-6995; DSN 312-523-6995 mailto:darren.ledger@us.af.mil mailto:ana.lemmon.1.ctr@us.af.mil

5. FIAR PHASE I - INSTALLATION AUDIT PREPARTION

Beginning in August 2015, teams from AFCEC and SAF were tasked to assist 12 installations (one per MAJCOM) in accomplishing evaluating Existence and Completeness & Valuation assertions by conducting physical inventories for buildings and vertical structures, identifying data anomalies and obtaining key supporting documentation (KSDs) for each identified asset. These visits are referred to as the Air Force FIAR Phase I Installation visits. APPENDIX C. HQ AF/A4 Real Property (RP) Financial Improvement and Audit Readiness (FIAR) Existence and Completeness (E&C) Memo, 30 Jul 2015

The 12 identified FIAR Phase I installations are listed below:

Barksdale AFB, LA Luke AFB, AZ Edwards AFB, CA March ARB, CA Fairchild AFB, WA Nellis AFB, NV Hurlburt Field, FL Otis ANG Base, MA Joint Base Andrews, MD U.S. Air Force Academy, CO Joint Base Elmendorf-Richardson, AK Vandenburg AFB, CA

Existence and Completeness (E&C) – Phase I

During Phase I, FIAR Team members conducted a physical inventory on buildings and vertical structures to test E&C. As a result of the physical inventory, the E&C findings/possible discrepancies from the Phase I visit were grouped into four areas by the SAF FIAR Team: 1) Existence, 2) Completeness, 3) Assets Unable To Be Verified (non-contiguous sites included) and 4) Misclassifications.

Utilizing a current 7115 report for each installation, the teams inventoried assets and tested Existence assertion by verifying if the assets existed, never existed or had been disposed. To test Completeness, the teams identified assets that were unrecorded in the APSR (findings) or assets not owned by the AF (out of scope). Assets that could not be found after a thorough search or assets at remote or inaccessible locations were categorized as an Unable to verify finding. Assets that had category code, activity status, serviceability, or other classification errors that would affect valuation and financial reporting were grouped as Misclassification findings.

All installations will report results and corrective actions on the Physical Inventory tracking sheet and send to the AFCEC/CIT FIAR Team on a scheduled cycle reporting basis. These updates will continue until all corrections have been completed. Suspense: 30 March 2016

IAW HQ AF/A4 FIAR Memo, the following E&C assertion timelines and actions will apply to FIAR Phase I installations:

• Between the months of June and Sept 2016, AFCEC/CIT will conduct a 10% Sample Validation

Review for all E&C assertions submitted from all FIAR Phase I installations. AFCEC will continue to work with installations as necessary.

• Between the months of June and Sept 2016, A4C will conduct a 2.5% Sample Validation Review for all FIAR Phase I E&C assertions reviewed by AFCEC/CIT Team.

Key Supporting Documents – Phase I

During Phase I installation visits, SAF FIAR Team members reviewed and scanned KSDs located in all existing facility jackets to test Valuation assertion. Supporting documentation validates the original acquisition cost, acquisition recorded costs, the placed in service date for owned real property as well as capital leases. The supporting records should also validate the costs and dates of any improvement and the method date of disposal.

The review focused on ensuring the following information was available, if applicable for each asset:

• Original construction documents showing Placed In Service (PIS) Date, for example, o DD 1354, Transfer and Acceptance of DoD Real Property o AF Form 1430, Real Property Accountable Record - Buildings o Original BEAMS cards)

• Original AF Form 1432, Real Property Accountable Record – Miscellaneous Structures

• AF Form 123, Request for Changed Use of Real Property

• Memorandums for PIS Date, Category Code support and Inventory Adjustment identifications

For Real Property Assets Placed-in-Service (PIS) before 1 Oct 2013, the SAF FIAR Team collected adequate documentation necessary to perform Plant Replacement Value (PRV) valuation of RP assets.

For the RP assets PIS on or after 1 Oct 2013, the SAF FIAR Team collected and analyzed the

KSD to validate the Value of the RP assets.

The KSD findings/possible discrepancies were grouped into six areas by the SAF FIAR Team: 1) Missing Facility Jacket, 2) Placed is Service Date, 3) CATCODE, 4) Description, 5) Unit of Measure (UM), and 6) UM Quantity (UMQ).

Each of the six areas were identified in a KSD tracker with individual columns for each Phase I installation and marked with 1) , 2) X or 3) M markings by the SAF FIAR Team. These markings are defined below:

= Attribute agrees based on the detailed comparison of the scanned KSD to ACES-

RP.

X = Attribute does not agree based on the detailed comparison of the scanned KSD to ACES-RP, or was considered insufficient during on-site physical inventory. Follow-up action on Attribute required.

M = Exception noted - facility jacket file could not be located/found by Real Property Office (RPO) officials during the conduct of the on-site physical inventory.

Recommended KSD corrective actions:

Missing Facility Jacket If it is confirmed that a facility jacket file does not exist, actions may include the creation of:

• Jacket folder with Facility Number which will be maintained in designated storage area.

• DD Form 1354 with original acquisition cost. Refer to UFC 1-300-08 for DD 1354 completion guidance.

o Attestation Memo signed by RPO officials to support asset attributes such as PIS date, CATCODE, UM, UMQ, and asset description.

o Memo for Record o If there is a complete AF Form 1430, original building card that shows PIS date, CATCODE, UM, UMQ, and asset description there is no requirement for creating a DD 1354.

o As of 31 Oct 2013, all capital Improvements over $250K will be documented on a DD 1354 and placed in Facility Jacket folder.

Placed In Service Date (PISD) Discrepancy

• If the Building is OVER 40 years old or if a structure is OVER 20 years old, DO NOT update the Placed in

Service Date (PISD) in the Accountable Property System of Record (APSR).

• If the building is UNDER 40 years, or if a structure is UNDER 20 years, update the PISD in the APSR to match the original acquisition document's PISD. Update the Facility Built Date/RPA Placed In Service Date on the DODI/RPIR, Facility Tab.

CATCODE Discrepancy

• If a CATCODE change for an asset is required, an AF Form 123 will be completed and approved.

• Once approved, RPO will update APSR in addition to the facility jacket.

• Maintain evidence of all actions and correspondence related to the CATCODE results in facility jacket folder.

UM Discrepancy

• If a UM change for an asset is required, a DD Form 1354 will be completed and approved. Once approved, the RPO will update APSR in addition to the facility jacket.

• Maintain evidence of all actions and correspondence related to the UM results in facility jacket folder.

UMQ Discrepancy

• If a UMQ change for an asset is required, a DD Form 1354 will be completed and approved. Once approved, the RPO will update APSR in addition to the facility jacket.

• Maintain evidence of all actions and correspondence related to the UMQ results in facility jacket folder.

Table 5.1 below lists Acceptable Key Supporting Documentation List, IAW DOD 7000.14.V4 C6

Table 5.1

6. FIAR PHASE II - INSTALLATION AUDIT PREPARATION

Existence and Completeness (E&C) – Phase II

All Air Force installations will validate E&C by accomplishing a FIAR compliant Book-to-Floor, Floor-to- Book Inventory of buildings and vertical structures under the leadership of the Real Property (RP) FIAR Lead identified by the Base Civil Engineer (BCE). The inventory will include non-contiguous sites, restricted areas and inaccessible areas. Available to assist installations at any time during this assertion testing is the AFCEC/CIT Accountability/FIAR Team and the AFCEC/CIT Action Officers (AOs) .

The objective of the physical inventory (PI) is for the PI teams to make accurate determinations for the seven assertions below.

A. Book-to-Floor: Does the asset that is listed on the Physical Inventory Tracker exist on the installation and the Accountable Property System of Record (APSR)? i.e. ACES, NEXGEN, etc.

B. Does the asset exist in Geobase and is it depicted accurately on the map?

C. Does the asset have a facility number visible on the asset or an affixed sign next to the facility?

D. Does the asset have the correct CATCODE listed on the Physical Inventory Tracker?

E. Does the asset have the correct Unit of Measure listed on the Physical Inventory Tracker?

F. Does the asset have the accurate size (Unit of Measure Quantity) listed on the Physical Inventory Tracker?

G. Does the asset exist on the installation but not but not in the APSR?

Installation Action Physical Inventory Tracker Requirements

The team/RPO will provide a “Yes” or a “No” response from the pull down options for Inventory Results on the Tracking Sheet. An assertion question with a “Yes” response does not require additional action and a “N/A” will be reflected on the installation action required portion of the Physical Inventory Tracker. However, a “No” response will require corrective action as necessary.

For all “No” responses, the FIAR team/RPO will need to complete the “Installation Action Required” columns of the Physical Inventory Tracking Sheet. There will be nine columns which will include Type of Update, Form Used for Remediation for each Inventory Results assertion (A-G) , Name of Approver and a Comments column. Ensure that all fields within the Physical Inventory Tracking Sheet are completed. Inputs for columns will be updated using the example below.

Per HQ AF/A4 FIAR Memo, the following FIAR Phase II E&C assertion timelines and actions will apply:

All installations will report results and corrective actions on the Physical Inventory tracking sheet and will submit Physical Inventory Tracking Sheet to applicable MAJCOM folder on the AFCEC Share Point Site on a monthly basis. These updates will continue until all corrections have been completed. Suspense: 10 June 2016.

Link:

https://afcecportal.lackland.af.mil/sites/CI/cit/acct_taskers/Forms/AllItems.aspx?RootFolder=%2Fsites%2FCI %2Fcit%2Facct%5Ftaskers%2F2016%20%2D%20Phase%20II%20FIAR%20Physical%20Inventory%20and %20KSD%20Results&FolderCTID=0x01200044A6677117D8BD42BCAD8F7CFDA88A9E&View={3671A24

B-4122-4A7B-8767-17D3C525BF8A}

Important E& C Timelines: – Phase II

• On or about 11 July 2016, AFCEC/CIT will compile all results provided by each installation and submit to SAF/FM FIAR Team.

• Between the months of June and Sept 2016, AFCEC/CIT will conduct a 10% Sample Validation

Review for all E&C assertions submitted from all Phase II installations. AFCEC will continue to work with installations as necessary.

• Between the months of June and Sept 2016, A4C will conduct a 2.5% Sample Validation Review for all

E&C assertions reviewed by AFCEC/CIT Team.

The Phase II E&C Checklist below will be used by KSD Review Teams to accomplish the E&C assertion requirements.

Phase II - Existence and Completeness Checklist

Per AFI32-9005 HAF/A4 Guidance Memo, a Real Property (RP) FIAR Lead for installations has been identified by the Installation Civil Engineer (BCE) with sufficient experience (Grade of GS-12 or above, Officer or Senior NCO) and authority to be the RP FIAR lead.

Inventory team members have been identified and briefed by Installation FIAR Team Lead on how to make determinations for the five assertions below.

A Physical Inventory (PI) Tracker has been obtained from AFCEC/CIT FIAR Team.

Inventory Count Sheets are printed, legible, and provided to each PI team.

Installation maps from the Geobase Office are obtained, printed, legible and provided to each PI team.

Inventory tools have been identified and provided to PI teams: digital camera, extra batteries, memory cards, clip boards, chargers, radios measuring tools and other necessary tools to assist in accomplishing a PI.

During the inventory, each PI team at all installations will be required to mark the Physical Tracker with "Yes" of "No" for each of the five determinations below.

1. Does the asset that is listed on the Physical Inventory Tracker exist on the installation?

If team response is "Yes", photograph asset and include date stamp and number of photo.

Upon return, print photo and file in appropriate asset jacket folder.

If team response is "No", the FIAR team and/or Real Property Office (RPO) must review jacket folder and coordinate with appropriate CE personnel to determine if facility actually exists, was disposed of, or if another situation exists such as incorrect facility number in the Accountable Property System of Record (APSR). The corrective action needed will be based on identified discrepancy.

2. Does the asset have a facility number visible on the asset or an affixed sign next to the facility?

If team response is "Yes", no additional action is required at this time.

If team response is "No", the FIAR team and/or RPO will coordinate with necessary personnel to ensure request is submitted, approved and processed. Follow-up with facility manager to ensure facility number and a facility number is added.

3. Is the facility located correctly on the map from the Geobase office?

If team response is "Yes", no additional action is required at this time.

If team response is "No", the FIAR team will annotate exact location on the provided map. The installation FIAR team/RPO will coordinate with necessary GIS personnel to ensure the installation GIS Maps are updated with exact location of each existing asset.

4. Does the asset have the correct CATCODE listed on the Physical Inventory Tracker received from AFCEC/CIT FIAR Team?

PI teams should be familiar with current facility use; however, if necessary, teams may need to access facilities to ensure Catcode is correct. If the Installation FIAR Team needs to gain access to the facility, the AFCEC/CIT FIAR Team recommends a complete physical inventory. Make any adjustments in APSR as necessary and file inventory form in asset jacket folder. Use recommended Physical Inventory Form, APPENDIX H in this Guide. Installation RP FIAR lead will ensure coordination is accomplished with tenants, keys are obtained if applicable and any sensitive areas are identified.

If team response is "Yes", no additional action is required at this time.

If team response is "No", RP FIAR Lead must work with appropriate personnel to ensure an AF Form 123 is completed and goes through the board process approval process. Once category change is completed, the installation FIAR Lead will ensure the APSR is updated with current Category Code for facility. Refer to Category Code book located on AFCEC Internal Accountability Share Point site for assistance: https://afcec-portal.lackland.af.mil/sites/CI/cit/accountability/Category%20 Codes/

5. Does the asset have the correct Unit of Measure (UM) and Size (Unit of Measure Quantity) listed on the Physical Inventory Tracker received from AFCEC/CIT?

PI teams should observe for obvious erroneous descriptions that may have resulted as a capital improvement and led to any SF changes.

If team response is "Yes", no additional action is required at this time.

If team response is "No", the team and /or Real Property Office (RPO) conduct a complete physical inventory, make any adjustments in APSR as necessary and file inventory form in asset jacket folder. Also, a DD 1354 will also need to be created and approved to reflect accurate UM and Size (UMQ).

Per HQ AF/A4 FIAR Memo, all installations will report results and corrective actions on tracking sheet to AFCEC/CIT FIAR Team on a monthly basis, until all corrections have been completed.

Suspense: 10 June 2016

Key Supporting Documentation (KSD) – Phase II

All Air Force installations will review and validate all KSD located in all existing facility jackets to test Valuation assertion. Supporting documentation validates the original acquisition cost, acquisition recorded costs, the placed in service date for owned real property as well as capital leases. The supporting records should also validate the costs and dates of any improvement and the method date of disposal.

The review will focus on ensuring the following information is available, if applicable for each asset:

• Original construction documents showing Placed In Service (PIS) Date

• Original AF Form 1430, Real Property Accountable Record - Buildings

• Original AF Form 1432, Real Property Accountable Record – Miscellaneous Structures

• AF Form 123, Request for Changed Use of Real Property

• Memorandums for PIS Date, Category Code support and Inventory Adjustment identifications

For Real Property Assets Placed-in-Service (PIS) before 1 Oct 2013, the FIAR Team will collect adequate documentation necessary to perform Plant Replacement Value (PRV) valuation of RP assets.

For the RP assets PIS on or after 1 Oct 2013, the FIAR Team will collect and analyze the KSD to validate the Value of the RP assets.

The KSD Review Teams at all installations will be required to mark the KSD Tracker with "Yes" of "No" for each of the six determinations:

A. Does a Facility Jacket File exist for each asset?

B. Does the Placed-in-Service Date (PISD) from the KSD Collection Tracking Sheet match the PISD on the

KSD?

C. Does the Category Code match from the KSD Collection Tracking Sheet match the Category Code on the

KSD?

D. Does the Unit of Measure (UM) from the KSD Collection Tracking Sheet match the UM on the KSD?

E. Does the Size (Unit of Measure Quantity) from the KSD Collection Tracking Sheet match the Size on the

KSD?

F. Does the Historic Status from the KSD Collection Tracking Sheet match the Historic Status on the KSD?

Installation Action KSD Collection Tracker Requirements

The team/RPO will provide a “Yes” or a “No” response from the pull down options for KSD Results on the KSD Collection Tracking Sheet. An assertion question with a “Yes” response does not require additional action and a “N/A” will be reflected on the installation action required portion of the KSD Tracker. However, a “No” response will require corrective action as necessary.

For all “No” responses, the FIAR team/RPO will need to complete the “Installation Action Required” columns of the KSD Collection Tracking Sheet. There will be eight columns which will include Date and Form Used for Remediation for each KSD Results assertion (A-F), Name of Approver and a Comments column. Ensure that all fields within are KSD Collection Tracking Sheet are completed. Inputs for columns will be updated using the example below.

Missing Facility Jacket If it is confirmed that a facility jacket file does not exist, actions will include the creation of:

• Facility Jacket folder with Facility Number which will be maintained in designated storage area.

• DD Form 1354 with original acquisition cost. Refer to UFC 1-300-08 for DD 1354 completion guidance. APPENDIX D, DD 1354 Template

• In preparation for the Air Force Real Property Financial Improvement and Audit Readiness, segregation of duties is required for personnel creating, approving, and entering data into the Real Property Inventory (RPI) from the DD Form 1354. APPENDIX E, Segregation of Duties Memo

• Attestation Memo signed by RPO officials to support asset attributes such as PIS date, CATCODE, UM, UMQ, and asset description. APPENDIX F, Attestation Memo Template

• New policy was issued on January 19, 2016 authorizing the use of an alternative valuation methodology for establishing opening balances for buildings, structures and linear structures.

APPENDIX G. Alternative Valuation Methodology Memo

• If there is a complete AF Form 1430, original building card that shows PIS date, CATCODE, UM, UMQ, and asset description there is no requirement for creating a DD 1354.

• As of 31 Oct 2013, all capital Improvements over $250K will be documented on a DD 1354 and placed in Facility Jacket folder.

Placed In Service Date (PISD) Discrepancy

• If the Building is OVER 40 years old, or if a structure is OVER 20 years old, DO NOT update the Placed in Service Date (PISD) in the APSR.

• If the building is UNDER 40 years, or if a structure is UNDER 20 years, update the PISD in the APSR to match the original acquisition document's PISD. Update the Facility Built Date/RPA Placed In Service Date on the DODI/RPIR, Facility Tab.

For additional guidance on PISD, see APPENDIX G, extraction from the Office of the Assistant Secretary of Defense for Energy, Installations and Environment (OASD (EI&E)) Placed in Service Date Guide.

CATCODE Discrepancy

• If a CATCODE change for an asset is required, complete an AF Form 123 and get approval from the appropriate authority. Refer to AFI 32-9002, Use of Real Property Facilities for authority approvals.

• Once approved, RPO will update APSR and file AF Form 123 in the facility jacket. Maintain evidence of all actions and correspondence related to the CATCODE results in facility jacket folder.

UM Discrepancy

• If a UM change for an asset is required, a DD Form 1354 will be completed and approved. Once approved, the RPO will update APSR and file DD 1354 in the facility jacket.

• Maintain evidence of all actions and correspondence related to the UM results in facility jacket folder.

Size Discrepancy

• If a UMQ change for an asset is required, a DD Form 1354 will be completed and approved. Once approved, the RPO will update APSR and file Dd 1354 in the facility jacket.

• Maintain evidence of all actions and correspondence related to the Size results in facility jacket folder.

For Real Property Assets Placed-in-Service (PIS) before 1 Oct 2013, the FIAR Team will collect adequate documentation necessary to perform Plant Replacement Value (PRV) valuation of RP assets.

For the RP assets PIS on or after 1 Oct 2013, the FIAR Team will collect and analyze the KSDs to validate the Value of the RP assets.

F. Historic Status Discrepancy When a facility or asset reaches 45 years from the placed in service date (PISD), the Automated Civil Engineer System-Real Property (ACES-RP) triggers an Error/Warning Message to initiate evaluation for Heritage Asset consideration (Automated). The FIAR Team and RPO will coordinate with installation CRM who will be able to identify/verify assets in the APSR records eligible for preservation that have historic potential, and assesses their historical significance in relation to the National Register of Historic Places (NRHP) eligibility criteria (36 CFR Part 60.4).

If a Historic Status update is required, the Installation Cultural Resource Manager (CRM) will:

• Obtain access to APSR.

• Installation CRM updates Historic Status Codes for Buildings or Structures.

• Include a copy of the SHPO concurrence or the Consultation Supporting Documentation that determines the

Historic Status in the Real Property Office’s Jacket Folder.

The Phase II KSD Collection Checklist below will be used by KSD Review Teams to accomplish the Valuation assertion.

Phase II - Key Supporting Documentation (KSD) Checklist

Per AFI32-9005 HQ AF/A4 Guidance (AFGM) Memo, a Real Property (RP) FIAR Lead for installations has been identified by the Installation Civil Engineer (BCE) with sufficient experience (Grade of GS-12 or above, Officer or Senior NCO) and authority to be the RP FIAR lead.

KSD Review team members have been identified and briefed by Installation RP FIAR Team Lead on how to identify and obtain KSDs for inclusion in each facility jacket folder. Refer to Installation FIAR Guide, Chapter 6 for KSD guidance.

A KSD Collection Tracker has been obtained from AFCEC/CIT FIAR Team.

KSD Count Sheets are printed, legible, and provided to each KSD Team.

File location of facility jacket folders for each asset listed on the tracker has been identified.

Per HQ AF/A4 Real Property (RP) FIAR Memo guidance, KSD Review teams will open and review each facility jacket folder and scan the following documents for each asset:

1. DD Form 1354, if applicable for original construction that places the asset into service.

2. Most recent DD Form 1354 to include modifications and capital improvements.

3. AF Form 1430 or AF Form 1432, if applicable, for Original Construction that places the asset into service.

4. AF Form 123, if applicable if the CATCODE has changed since the original acquisition.

5. Any Memorandums, if applicable.

The KSD Review Team will review each Jacket folder identified on the KSD Collection Tracker received from AFCEC/CIT and will annotate findings/possible discrepancies into the six identified areas. The following questions must be addressed: 1) Is there a facility jacket file for each asset? 2) Does the Placed-in-Service Date from the KSD Tracking Sheet match the Placed-in-Service Date on the KSD? 3) Does the CATCODE from the KSD Tracking Sheet match the CATCODE on the KSD? 4) Does the Unit of Measure (UM) from the KSD Tracking Sheet match the UM on the KSD? 5) Does the Size (UM Quantity) from the KSD Tracking Sheet match the Size from the KSD?

For each areas, the KSD Team will annotate with one of two responses:

Yes = Attribute agrees based on the detailed comparison of the scanned.

No = Attribute does not agree based on the detailed comparison of the scanned KSD to ACES-RP.

Is there a facility jacket file for each asset?

If the pulldown response is a Yes, then update the facility jacket file with any outstanding KSD, and ensure the facility jacket file is stored and maintained in the designated storage area.

If the pulldown response is a No, the team or RPO will create a jacket folder with appropriate facility number and update any outstanding KSD and ensure the facility jacket file is stored and maintained in the designated storage area.

Does the Placed-in-Service Date from the KSD Tracking Sheet match the Placed-in-Service Date on the KSD?

If the pulldown response is a Yes, no additional KSD is required for this assertion.

If the pulldown response is a No, the FIAR team or RPO will follow business rules for updating

PISD:

• If the Building is OVER 40 years old, or if a structure is OVER 20 years old, DO NOT update the Placed in Service Date (PISD) in the APSR.

• If the building is UNDER 40 years, or if a structure is UNDER 20 years, update the PISD in the APSR to match the original acquisition document's PISD. Update the Facility Built Date/RPA Placed In Service Date on the DODI/RPIR, Facility Tab.

Does the CATCODE from the KSD Tracking Sheet match the CATCODE on the KSD?

If the pulldown response is a Yes, no additional KSD is required for this assertion.

If the pulldown response is a No, the FIAR team or RPO will complete an AF Form 123 and get approval from the appropriate authority. Refer to AFI 32-9002, Use of Real Property Facilities for authority approvals. Once approved, RPO will update APSR and file AF Form 123 in the facility jacket. Maintain evidence of all actions and correspondence related to the CATCODE results in facility jacket folder.

Does the Unit of Measure (UM) from the KSD Tracking Sheet match the UM on the KSD?

If the pulldown response is a No, the FIAR team or RPO will complete a DD Form 1354 and obtain approval/ signature. Once approved, the RPO will update APSR and file DD 1354 in the facility jacket. Maintain evidence of all actions and correspondence related to the UM results in facility jacket folder.

Does the Size (UM Quantity) from the KSD Tracking Sheet match the Size from the KSD?

If the pulldown response is a No, the FIAR team or RPO will complete a DD 1354 and obtain approval/signature. Once approved, the RPO will update APSR and file DD 1354 in the facility jacket. Maintain evidence of all actions and correspondence related to the Size results in facility jacket folder

Does the Historic Status from the KSD Collection Tracking Sheet match the Historic Status on the KSD?

If the pulldown response is a Yes, no additional KSD is required for this assertion.

If the pulldown response is a No, the FIAR team or RPO will coordinate with installation CRM who will be able to identify/verify assets in the APSR records eligible for preservation that have historic potential, and assesses their historical significance in relation to the National Register of Historic Places (NRHP) eligibility criteria (36 CFR Part 60.4). If a Historic Status update is required, the Installation Cultural Resource Manager (CRM) will obtain access to APSR, update Historic Status Codes for Buildings or Structures and include a copy of the SHPO concurrence or the Consultation Supporting Documentation that determines the Historic Status in the Real Property Office’s Jacket Folder.

Per HQ AF/A4 FIAR Memo, all installations will report results and corrective actions on tracking sheet to AFCEC/CIT FIAR Team on a monthly basis, until all corrections have been completed. Suspense: 10 June 2016

7. RIGHTS AND OBLIGATIONS

Rights and Obligations mean the Air Force holds or controls the rights to assets and that the liabilities are the obligations of the entity at a given date. An Air Force deficiency identified as a result of previous audits determined that Real Estate instrument jacket files did not include Host Tenant Support Agreement (HTSA) Memorandum of Record (MOU), Memorandum of Agreement (MOA), Real Estate Usage Agreement (REAU) documentation in order to identify the rights and obligations for granted property.

In order to meet rights and obligation assertion, the following will occur:

• Based on A4C policy memo regarding the appropriate documentation the RPO will include and maintain in the real estate instrument jacket files in order to identify rights and obligations including HTSA, MOU, MOA, and REUA documentation.

• Installation will run a grants report from APSR to identify all real estate instruments, and selects a sample of grant instruments. Trace the sample items to the real estate instrument jacket files to determine if the jacket files contain KSD for HTSA, MOU, MOA, and REUA. In addition, confirm the completeness and accuracy of the KSD.

• The Installation will ensure that within 10 business days of execution the HTSA, MOU, MOA, or REUA is recorded in APSR.

• The Installation will ensure that within 10 business days of execution an HTSA, MOU, MOA, or REUA the associated KSD is provided to the RPAO and maintained in the real instrument jacket file

• Installation will review on a semi-annual basis (every six months) real instrument jacket files to determine the completeness of the documentation and that HTSA, MOU, MOA, and REUA is present and complete (as needed)

• Validation: run a grants report from APSR to identify all real estate instruments, and select a sample of grant instruments. Trace the sample items to the real estate instrument jacket files to determine if the jacket files contain KSD for HTSA, MOU, MOA, and REUA. In addition, confirm the completeness and accuracy of the KSD.

8. PRESENTATION AND DISCLOSURE

Presentation: Assets are consistently categorized, summarized, and reported period to period. The financial and other information in the financial statements is appropriately presented and described and disclosures are clearly expressed. All disclosures that should have been included in the financial statements have been included. Disclosed events and transactions have occurred and pertain to the entity.

9. PHYSICAL INVENTORY

A review of each real property asset record, including a physical inventory of each real property asset, is required every 5 years; except, in accordance with Reference (n), those real property assets designated as historic, which must be reviewed and physically inventoried every 3 years. At a minimum, the DoDI 4165.14, Real Property Inventory and Forecasting, January 17, 2014 data specified in the inventory checklist must be verified as being accurate in the RPI and supported by proper documentation. Proper documentation includes results of the physical inventory.

The Real Property Office should use a Facility Inventory form when evaluating key asset data elements to ensure the installation’s real property inventory is accurately reflected in the APSR. Use of form in Procedures section below can be used to provide auditors a reasonable assurance that the Installation is managing its real property inventory adequately.

Per DODI 4165.40, the minimum asset information to be validated during a physical inventory is below.

Physical Inventory Procedures

Use APPENDIX H Physical Inventory Checklist in this Guide to accomplish a physical inventory.

Physical Inventory Checklist Instructions:

1. Complete the fields on the form using information from the current APSR as applicable.

2. The Latitude and Longitude can be obtained from the APSR. If the coordinates are missing or incorrect, coordinate with the Local Geobase (GIS) team to obtain the correct information. This will be the same for every asset at the site.

3. If asset is missing from Geobase, coordinate with GIS team to update GIS map (security permitting).

4. If 911 Address is required, work with local authorities and determine process to obtain.

5. Perform a physical inspection:

a. Date the inspection at the top right of the physical inventory form.

b. Verify the length, width, and height using field measurements.

c. Verify the facility has a building number sign (security permitting).

d. Verify the physical location directions or provide written notes to be able to locate easily.

e. Verify each unit/POC in the facility.

f. Verify the area used by the unit and the use of the space.

g. Review existing photograph and ensure photo depicts current condition.

6. Review findings with the Facility Manager and have the individual sign and date the inspection form at the bottom left.

7. After verifying the data field entries, have the inspection signed and dated at the bottom right. This person should be identified in a MFR located in the office. Enter any necessary adjustments into the APSR and file the inspection checklist in the facility folder.

10. DD FORM 1354, TRANSFER AND ACCEPTANCE OF DOD REAL

PROPERTY

In accordance with DODI 4165.14, the Air Force must maintain and report accurate information about the acquisition, management and disposition of real property assets in which they hold a legal interest on behalf of the United States. The key to accomplishing this begins with the completion of the DD 1354 at time of acquisition. UFC 1-300- 08 covers the entire DD Form 1354 process beginning with the identification of the requirement for a DD Form 1354, continuing with the points when the DD Form 1354 is updated, and concluding with the steps taken to provide a final DD Form 1354.

The DD Form 1354, Transfer and Acceptance of DoD Real Property, is an instrument used the Air Force to:

• Accept new construction or capital improvements

• Transfer real property assets between Services

• Document inventory adjustment (found on site) assets into the real property inventory

The three types of the DD Form 1354 during an acquisition are 1) Draft, 2) Interim and 3) Final. Different acquisition methods typically require different types of the DD Form 1354. Completion of each type of the DD Form 1354 is defined in table below.

DRAFT DD Form(s) 1354

The draft version of the DD Form 1354, although not required, is generally used for the Acquisition by Construction and Capital Improvement to Existing Facilities acquisition methods. It is often initiated to enable effective capture of information during the design or Request for Proposal (RFP) preparation stage. This information may be updated upon any of the following:

• Changes in scope

• Changes in cost estimates

• Addition or deletion of RPUID

The purpose of the draft DD Form 1354 is to capture the information obtained once funding has been authorized and to forecast the changes to the real property inventory. The draft establishes the level of detail and the different components of a project, and shall be provided by the construction agent in accordance with the Services’ guidelines.

Interim DD Form(s) 1354

The purpose of an interim DD Form 1354 is to allow transfer of accountability from the construction agent to the accountable Service on the placed-in-service date prior to determination of final costs, such as in contract closeout, claims settlement, etc. The interim DD Form 1354 may be required for both the Acquisition by Construction and Capital Improvement to Existing Facilities acquisition methods. It may be initiated at any point after the draft but is usually prepared after substantial completion of construction, in preparation for the facility acceptance.

The interim DD Form 1354 will include actual project costs to be capitalized as reflected in the CIP account by RPUID. It includes costs such as P&D, SIOH, and construction contracts. The cost matrix illustrating the types of construction costs that should be accumulated in the CIP account is available in the CIPR document. The interim DD Form 1354 should also include primary and secondary units of measure by category code(s) for each RPUID.

Final DD Form 1354

Acquisition by Construction and Capital Improvement to Existing Facilities – When final costs of construction are accrued, the construction agent furnishes the final DD Form 1354 to the accountable Service. There is only one final project DD Form 1354, even where there are multiple interim DD Forms 1354. The purpose of the final DD Form 1354 is to establish in writing the final costs incurred for each facility in a project. All additional expenses incurred following the placed-in-service date or the date the interim DD Form 1354 was signed shall be transferred from the CIP account to the real property asset account in accordance with the final DD Form 1354. The final DD Form 1354 distributes unallocated costs across the assets as appropriate.

APPENDIX A

APPENDIX B

APPENDIX C

APPENDIX D

DD Dorm 1354 (Back)

APPENDIX E

DEPARTMENT OF THE AIR FORCE

HEADQUARTERS UNITED STATES AIR FORCE

MEMORANDUM FOR AFCEC/CIT FROM:

HQ USAF/A4CS

1260 Air Force Pentagon Washington, DC 20330-1260

8 April 2015

SUBJECT: DD Form 1354, Transfer and Acceptance of DoD Real Property, Segregation of Duties

Segregation of duties ensures that no single individual controls a transaction from beginning to end by comparing existing asset recorded accountability. Segregation of duties will assist the installation to reach audit readiness as it will strengthen supporting documentation and if not implemented represents an automatic failure point. In preparation for the Air Force Real Property Financial Improvement and Audit Readiness, segregation of duties is required for personnel creating, approving, and entering data into the Real Property Inventory (RPI) from the DD Form 1354.

Effective immediately, Real Property Accountable Officers (RPAO), if delegated, may only sign the “Accepted By” field on the DD Form 1354 if they are not entering the DD 1354 data into the RPI. Other acceptable signatures for the “Accepted By” field shall be the flight chief managing real property, Deputy Base Civil Engineer (DBCE), Base Civil Engineer (BCE), or other designated accepting official appointed by the BCE.

The “Transferred By” field will be signed by the Construction Agent, or a CE Operations or Programming delegated representative, to include facilities constructed in prior years with no proper audit trail. DD 1354 for Federal transfer will be signed by SAF/IEE. AFI 32-9005, Real Property Accountability and Reporting, 4 Mar 15, will be updated to reflect this policy.

Appreciate your support in preparing Air Force Real Property for audit readiness.

This supersedes all previous memos with this subject. If your staff has any questions or concerns, please contact Maj Raymond E. Kerr, AF/A4CS, DSN: 222-9678, Comm: (703) 692- 9678, E-mail: raymond.e.kerr.mil@mail.mil.

WILLIAM F. ENG, GS-15, DAF

HAF/A4C Sustainment Division DCS/Logistics, Installations & Mission Support cc:

Installation CES/CC Installation RPAO mailto:raymond.e.kerr.mil@mail.mil

APPENDIX F

APPENDIX G

OFFICE OF THE UNDER SECRETATY OF DEFENSE

1 100 DEFENSE PENTAGON

WASHINGTON, DC 20301-1100

JAN 1 9 2016

MEMORANDUM FOR ASSISTANT SECRETARY OF DEFENSE FOR ENERGY,

INSTALLATIONS , AND ENVIRONMENT

ASSISTANT SECRETARIES OF THE MILITARY DEPARTMENTS (FINANCIAL

MANAGEMENT AND COMPTROLLER)

DIRECTORS OF THE DEFENSE AGENCIES DIRECTORS OF THE DOD FIELD

ACTIVITIES

SUBJECT: Alternative Valuation Methodology for Establishing Opening Balances for Buildings, Structures and Linear Structures

This memorandum establishes policy guidelines for using plant replacement value as the methodology for calculating deemed cost in establishing opening balances…