A006 - Quality Control Plan.pdf

DD FORM 1423-1, FEB 2001

CONTRACT DATA REQUIREMENTS LIST

(1 Data Item)

PREVIOUS EDITION MAY BE USED.

Form Approved OMB No. 0704-0188

The public reporting burden for this collection of information is estimated to average 110 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing the burden, to the Department of Defense, Executive Services and Communications Directorate (0704-0188). Respondents should be aware that notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information if it does not display a currently valid OMB control number. Please do not return your form to the above organization. Send completed form to the Government Issuing Contracting Officer for the Contract/PR No. listed in Block E.

A. CONTRACT LINE ITEM NO. B. EXHIBIT C. CATEGORY:

TDP ________ TM _______ OTHER

D. SYSTEM/ITEM E. CONTRACT/PR NO. F. CONTRACTOR

1. DATA ITEM NO. 2. TITLE OF DATA ITEM 3. SUBTITLE

4. AUTHORITY (Data Acquisition Document No.) 5. CONTRACT REFERENCE 6. REQUIRING OFFICE

7. DD 250 REQ

8. APP CODE

9. DIST STATEMENT

REQUIRED

10. FREQUENCY

11. AS OF DATE

12. DATE OF FIRST SUBMISSION

13. DATE OF SUBSEQUENT

SUBMISSION

14. DISTRIBUTION

a. ADDRESSEE

b. COPIES

Draft Final

Reg Repro

15. TOTAL

16. REMARKS

17. PRICE GROUP

18. ESTIMATED

TOTAL PRICE

G. PREPARED BY H. DATE I. APPROVED BY J. DATE

Page of Pages

DD Form 1423-1, FEB 2001 Page 2 of 2

CDRL A006, Quality Control Plan (QCP)

The Contractor’s quality control plan shall outline the tasks performed by the Contractor to sustain or improve quality or work and ensure work meets contract requirements.

The Contractor shall include in the plan:

A. Quality Control:

1) Details of surveillance methods to be used.

2) Assigned significance levels for each QC inspection.

3) Identification of the frequency of QC inspections and the process used to determine the most appropriate frequency.

4) Lot and sample size determinations.

5) Criteria for determining conforming vs. non-conforming results.

6) Documentation requirements.

7) How corrective action will be developed, implemented and monitored to correct non-conformances and mitigate future non-conforming outcomes for all QC checklist questions assigned a significance level of critical or major.

8) Preventive action plans to reduce future nonconformance.

9) Lines of communication with QC results will be provided to the Government within 24 hours of completing a QC inspection.

10) QC Inspection Checklists that include the Control Activities in Attachment 1A, 1B and 1C and other requirements identified in Attachment J1, Performance Work Statement and Attachment J.2, Site-Specific Requirements (e.g., Equipment Maintenance, Safety, Security, Training, etc.). All Control activities shall be given a significance level of Major.

Additionally, Attachments 1A, 1B and 1C provide controls that the Contractor's processes impact. These controls are tested at Distribution Headquarters.

11) Methodology for monitoring and determining trends that may impact APL performance.

12) Revision and updates in response to both internal QC inspections as well as QA surveillance results to ensure identified problem areas receive attention and closer monitoring.

13) Roles and Responsibilities and Lines of Authority for the QC Program.

Attachments:

Attachment 1A: Distribution Processes Control Activities Attachment 1B: Distribution Physical Inventory Control Activities Attachment 1C: Distribution Shipment of Materiel Attachment 2: Monthly QC Report Format Attachment 3: Sample Corrective and Preventive Action Request (CPAR) Attachment 4A: Distribution Processes Control Activities "As Required" Testing Report Attachment 4B: Distribution Physical Inventory Control Activities "As Required" Testing Report Attachment 4C: Distribution Shipment of Materiel Control Activities "As Required" Testing Report

CDRL A0006 Attachment 1A

717-770-5886 717-770-8988

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information Receiving, Inspection and Acceptance of Goods

Assets recorded in the inventory management system do not exist at a given date.

Verify Kind, Count, and Condition During Receiving For every receipt, the Distribution Receiving worker visually verifies and validates the MIL-STD-129 specified markings on the physical materiel received against the receiving documentation or Web Federal Logistics Information System (WebFLIS). Specific material attributes verified against the receiving documentation are:

• National Stock Number (NSN)

• unit of issue

• visual appearance of materiel condition

• physical quantity of materiel received Distribution Receiving Worker signs and dates the receiving documentation DLA Distribution retains the receiving documentation.

Yes Recurring Preventive Manual Controls provide reasonable assurance that inventory receipts are completely and accurately recorded in the Inventory Management system.

Test Procedure:

Observe the Distribution Worker performing a KCC inspection of the materiel:

1. Reconciles the part number on the materiel and the quantity received with the receiving document(s)

2. Verifies the condition code by visually inspecting the materiel for any damage or defects

3. Enters the quantity received and Condition Code of the materiel within DSS to induct

4. Signs, dates, and records the Operations Control Number (OCN) on the receiving document(s) as evidence that the reconciliation was performed. The signed receiving document(s) are saved by the Distribution Worker for submission to DLA J6 (Document Services) to be uploaded into DACs-RM.

None

Preparer: Jennifer Eisenhour Phone Number:

Reviewer: Denise Kanelos Phone Number:

Review Period: FY19

Test Objective/Procedures Deficiency

Classification

End-to-End Process: Distribution Processes

Process(es)/Sub-Process(es) Key Risk of Material

Misstatement (ROMM) Control Activity Description

Key Control (Yes/No)

Type of Control Activity

NOTE: Controls highlighted in ‘yellow’ shall be performed at the Contractor and included in the QCP. The controls in ‘white’ are performed and tested by DLA Distribution HQ staff. Contractor to be aware the performance of the standard processes impact the results of these controls.

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information

Test Objective/Procedures Deficiency

Classification Process(es)/Sub-Process(es)

Key Risk of Material Misstatement (ROMM)

Control Activity Description Key Control

(Yes/No)

Type of Control Activity

Receiving DLA Distribution does not have rights to record the inventory in the inventory management system.

Notification of ‘no PMR’ At time of receipt, for every receipt entered or scanned without PMR, the Inventory Management system prepares a notification of no PMR and transmits this notification to the user entity’s system, either via DAAS or directly.

Yes Recurring Preventive Manual - Dependent on system generated information

Controls provide reasonable assurance that inventory receipts are completely and accurately recorded in the Inventory Management system.

Test Procedure:

Observe the Distribution Worker:

1. Locate the PMR in DSS for each selected receipt materiel. Document the following actions:

a. Verify PMR is available

b. If available, the Distribution Worker selects the appropriate PMR by verifying the NSN and Document/Contract Number on the receiving documents.

2. If PMR was NOT available, the Distribution Worker will determine the materiel owner by checking the following items:

a. Owner RIC clearly indicated on the receiving documentation

b. If receiving documentation does not clearly indicate the owner RIC, utilize WebFLIS to receipt into the current Item Manager’s/Source of Supply’s RIC or if no longer managed by any activity receipt into the last known Item Manager’s/Source of Supply’s RIC

None

Receiving DLA Distribution does not have rights to record the inventory in the inventory management system.

SDR Transmitted for Discrepancies At time of receipt, for every receipt with a discrepancy, the distribution worker completes an SDR in the Inventory Management system, which prepares the SDR to transmit to the user entity’s system, either via DAAS or directly.

Yes Recurring Preventive Manual Controls provide reasonable assurance that inventory receipts are completely and accurately recorded in the Inventory Management system.

Test Procedure: Observe receipt discrepancies, if any.

If receipt discrepancies are identified, observe the Distribution Worker create a Supply Discrepancy Report.

None

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information

Test Objective/Procedures Deficiency

Classification Process(es)/Sub-Process(es)

Key Risk of Material Misstatement (ROMM)

Control Activity Description Key Control

(Yes/No)

Type of Control Activity

Receiving DLA Distribution does not have rights to record the inventory in the inventory management system.

SDR for no Supply Owner RIC Provided on Receiving Documents At time of receipt, for every receipt without PMR and without a valid owner RIC identified on receiving documentation, the receiving distribution worker will determine the owner RIC in accordance with DLA Distribution Standard Operating Procedure (SOP) 4000.02:

Receiving – Wholesale New Procurement Receipt or DLA Distribution SOP 4000.03: Receiving

– Wholesale Non-Procurement Receipts. The Inventory Management system prepares and transmits this SDR notification to the user entity’s system, either via DAAS or directly.

Yes Recurring Preventive Manual Controls provide reasonable assurance that inventory receipts are completely and accurately recorded in the Inventory Management system.

Test Procedure: Observe Distribution Worker verify there is no supply owner RIC on receiving documentation. Observe Distribution Worker submit an SDR.

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information

Test Objective/Procedures Deficiency

Classification Process(es)/Sub-Process(es)

Key Risk of Material Misstatement (ROMM)

Control Activity Description Key Control

(Yes/No)

Type of Control Activity

Warehousing/Stow Assets recorded in the inventory management system do not exist at a given date.

Stow Materiel into Storage Location Prior to the physical stow of materiel, the Distribution Worker verifies and validates the Putaway Label against the materiel by visually verifying:

• location

• National Stock Number (NSN)

• unit of issue

• visual appearance of the material condition

• quantity

• shelf life code (if applicable)

• expiration date (if applicable)

Yes Recurring Detective Manual Controls provide reasonable assurance that storage and issuance of inventory are accurately and completely recorded in the Inventory Management system.

Test Procedure:

Observe the Distribution Worker perform the validation and verification of each materiel receipt to be stowed, specifically;

1. A Mission Putaway Label (providing the Putaway Control Number-PCN) was used to verify and validate materiel in the distribution stow process.

Specific key attributes verified include

a. National Stock Number (NSN)

b. Quantity

c. Location

d. Unit of Issue

d. visual appearance of Condition Code

e. shelf life code (if applicable)

f. expiration date (if applicable)

2. Discrepancies identified are escalated to a Supervisor for resolution before any further Stow activity on the related materiel is performed.

None

Warehousing/Stock Readiness - SDR

Assets recorded in the inventory management system do not exist at a given date.

Distribution SDR and SQCR Processing DLA processes all discrepancy instructions received from user entities within time frame per DLAI

4145.4 for responses to SDRs and SQCRs.

Yes Recurring Preventive Manual- Dependent on System Generated

Information

Controls provide reasonable assurance that inventory is completely and accurately recorded in the Inventory Management system.

Obtain data population of open SDRs/SQCRs to determine if discrepancy instructions are completed within timeframes. Review status of system change by user entities (military services).

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information

Test Objective/Procedures Deficiency

Classification Process(es)/Sub-Process(es)

Key Risk of Material Misstatement (ROMM)

Control Activity Description Key Control

(Yes/No)

Type of Control Activity

Warehousing/Pick Assets recorded in the inventory management system do not exist at a given date.

Pick Materiel from Storage Location Distribution Worker will verify and validate the pick ticket against the materiel by visually verifying the:

• location

• NSN

• unit of issue

• visual appearance of the material condition

• quantity

• shelf life code (if applicable)

• expiration date (if applicable)

• Unique Item Identification (UII) (if applicable)

• Exception data (if applicable)

Yes Recurring Preventive Manual Controls provide reasonable assurance that storage and issuance of inventory are accurately and completely recorded in the Inventory Management system.

Test Procedure:

1. Observe the Distribution Worker perform the validation and verification of one Materiel Release Order during the pick process for all possible scenarios.

Determine if the following actions took place and document the results of actions performed:

a. Visually verifying the location, NSN, exception data, quantity, unit of issue, and condition code. When applicable, the shelf life code and expiration date.

b. If a discrepancy exists, the Distribution Worker alerts the lead/supervisor or designee of the discrepancy.

c. If no discrepancy exists, the Distribution Worker routes the materiel to packing.

None

Warehousing/Pack Assets recorded in the inventory management system do not exist at a given date.

Pack Materiel for Shipment Distribution Worker visually verifies and validates the Issue Release/Receipt Document (DD Form 1348-1A) against the material by visually verifying:

• NSN

• unit of issue

• visual appearance of the material condition

• quantity

• shelf life code (if applicable)

• expiration date (if applicable)

• Unique Item Identification (UII) (if applicable)

• exception data (if applicable)

Yes Recurring Preventive Manual Controls provide reasonable assurance that storage and issuance of inventory are accurately and completely recorded in the Inventory Management system.

Test Procedure:

1. Observe the Distribution Worker perform the validation and verification of one Materiel Release Order during the pack process for all possible scenarios.

Determine if the following actions took place and document the results of actions performed:

a. A visual inspection of every item on the Materiel Release Order to determine if the NSN, quantity, unit of issue, and condition code match the information on the issue Release/Receipt Document (DD Form 1348-A).

b. If a discrepancy exists, the Distribution Worker alerts the lead/supervisor or designee of the discrepancy.

c. If no discrepancy exists, the Distribution Worker packs the materiel for shipment.

CDRL A006 Attachment 1B

Control Frequency

Preventive or Detective

Manual, Automated or

Manual- Dependent on

System Generated

Information

Physical Inventory Assets of the entity exist but may be omitted from the inventory management system

Floor to Book Counts On a monthly basis, distribution personnel perform floor-to-book blind counts of materiel in storage locations. If the counts do not match the Inventory Management system, a formal inventory is scheduled for the entire NSN by the inventory office.

Yes Monthly Detective Manual Ensure that inventory is recorded completely in inventory management system.

Management will ensure completion of haphazard storage area directed inventories of all assigned warehouse locations counted “blind” within the directed time-frame and compared to the Quantity By Location (QBL) within DSS. Counts are directed by Distribution HQ J3 and executed by each Distribution Center (DC). Each count involves removing the material from location to verify and validate material in location is accurately identified.

b. Management will ensure that all locations in volume are completed IAW plan to achieve the targeted coverage for completeness. This is achieved by accomplishing a quantity of blind counts per month/year which are assessed by post count verifying the system of record quantity by location (QBL) balance and if match, move to next count, if no match, conduct research and schedule a NSN/NIIN inventory for B2F IAW defined policies and procedures when discrepancies are identified.

c. Management will ensure F2B count discrepancies are forwarded to Inventory for a TPIC M Inventory to be scheduled within one business day of F2B count completion where the discrepancy was identified.

None

Physical Inventory Assets recorded in the inventory management system do not exist at a given date.

100% Annual Physical Inventory Perform physical count inventories in line with annual DLA inventory plan to achieve a 100% physical inventory during the fiscal year for items in DLA custody on October 1st (opening balances). Physical count inventories are performed each fiscal year in line with the DLA annual inventory plan on National Stock Numbers (NSN) existing within the Inventory Management system as of October 1st. NSNs receipted into the Inventory Management system after October 1st and through August 15th are inventoried as part of the current fiscal year 100% annual count. New NSNs receipted into storage/custody on and after August 16th are planned for physical counts in the following fiscal year if the NSNs remain within custody and are reflected in the Inventory Management System for opening balance records which are documented each October 1st.

Yes Annually Preventive Manual Ensure that inventory recorded in inventory management system exists.

Annually in mid September – DLA Distribution J3 OC will provide each site their current population of NIINs. For volume and specialized item inventory planning. ILW the SOP for development of the annual inventory plan the Accountable Officer will submit their Annual Inventory plan in volume per month to DLA Distribution J3-OC and J4-BB Sub Process Owner for Inventory. A template inventory schedule will be provided for this submission. Plan will outline the following:

• Controlled Inventory schedule (Classified/Sensitive/Radioactive/L1 Sub Safe)

• Provide HQ DLA Distribution J4-BB Inventory Team with a list of ALL inventory counters, and update the list throughout the FY as required (a new

• Identify difficult, hard to handle, high counts or high risk areas to be completed and which month they are intended to be counted (AREA scheduling approach can be used to direct resources to these areas)

• Identify how many NIINs can be completed per month beginning in October and ending in July; Final plan is refined and signed by the Dist Center AO, Deputy and Director/Commander for submission to DLA Distribution J3OC for review and approval by J3 Financial Audi and J4 Inventory SPO, with ultimate approval by the DLA Distribution Deputy Commander and submitted to DLA HQs nlt 5th business day in Oct.

Annually by the 5th Business day in October – HQ DLA Distribution J3-OC will submit the following to DLA HQs J345:

• The by month, by site allocation plan and 1st quarter by NIIN selections will be provided to DLA HQ for approval

MW (2018-

WCF-NFR-

009 (RI 17))

Test Objective/Procedures Deficiency Classification*

End-to-End Process: Physical Inventory

Process(as)/Sub- Process(as)

Key Risk of Material Misstatement

(ROMM)

Control Activity Description

Key Control

(Yes/No)

Type of Control Activity

NOTE: Controls highlighted in ‘yellow’ shall be performed at the Contractor and included in the QCP. The controls in ‘white’ are performed and tested by DLA Distribution HQ staff. Contractor to be aware the performance of the standard processes impact the

Reviewer: Denise Kanelos Phone Number: 717-770-5886 Review Period: FY19

DoD Entity Name: Defense Logistics Agency - DLA Distribution Preparer: Jennifer Eisenhour Phone Number: 717-770-5886

Control Frequency

Preventive or Detective

Manual, Automated or

Manual- Dependent on

System Generated

Information

Test Objective/Procedures Deficiency Classification*

Process(as)/Sub- Process(as)

Key Risk of Material Misstatement

(ROMM)

Control Activity Description

Key Control

(Yes/No)

Type of Control Activity

Physical Inventory Assets recorded in the inventory management system do not exist at a given date.

Performance of Inventory Counts in the Inventory Management System Inventory personnel identify materiel in location by NSN, count the quantity in location and input the count into the Inventory Management system. The Inventory Management system records the user ID of the Inventory personnel entering the count and associated visit occurrence . The Inventory Management system records a gain, loss or matching inventory.

Yes Recurring Preventive Manual- Dependent on

System Generated

Information

Ensure that inventory recorded in inventory management system exists.

Obtain DSS screen (PIED) to verify the 1st, 2nd, and 3rd counts are performed by three different user IDs. Verify gains, loss, or matching inventory results are record in the inventory management system owner transaction history.

None

Physical Inventory Assets recorded in the inventory management system do not exist at a given date.

Inventory Management System Table P-118 Annually, in the month of October, DLA Distribution HQ J4 Inventory Team verifies the Parameter 118 Table (thresholds for inventory count discrepancies) in the Inventory Management system is in accordance with Defense Logistics Management (DLM) 4000.25-2 Chapter 7, or the parameters are more stringent by site.

Yes Annually Detective Manual- Dependent on

System Generated

Information

To assure automatic adjustments tables are set IAW procedure at every Distribution Center.

DLA Distribution J3 request proof from DLA Distribution J4 Inventory team of their annual table review for P-118 or proof via systemic documentation that table was reviewed.

None

Physical Inventory Assets recorded in the inventory management system do not exist at a given date.

Inventory Management System Retention of Inventory Adjustments The Inventory Management system retains all adjustments to include additions and subtractions of inventory quantities by NSN, condition code and owner by recording Transaction History (Location Transaction History: PIES; Owner Transaction History: P7AO).

Yes Recurring Preventive Automated Ensure that inventory recorded in inventory management system exists.

See ITGC

See ITGC

Physical Inventory Assets recorded in the inventory management system do not exist at a given date.

CAV Review Every month, the Accountable Officer (AO) reviews the Inventory Management system CAV Report and generates the 'CAV trend analysis' QMF and converts non-mandatory adjustment on the CAV to a mandatory Inventory Adjustment Voucher for the following:

• NSN(s) averaging more than one inventory adjustment per quarter for the past 365 days.

• Hazardous items

• Any offsetting gain/loss for same condition code

• More than one adjustment on CAV for same owner and condition code Upon completing the review and associated actions generated from the analysis, the Accountable Officer signs and dates the CAV. DLA Distribution retains the signed CAV.

Yes Monthly Detective Manual To Determine whether management performs a monthly review of all Consolidated Adjustment Vouchers (CAV) inventory adjustments to ensure that all existing assets, as of the reporting date, including property in the custody of third parties, are included in the general ledger and to ensure all appropriate outlays and adjustments are not recorded.

Invalid inventory adjustments may not be reviewed and properly reversed which may result in a misstatement of the inventory and related property balance on the financial statement.

1. For the sample of 45; obtain the previous three month CAV Detail Listing Reports from the months ending during the current fiscal year.

2. Inspect the report and determine if the following attributes are present:

2a. Evidence of review/analysis has been performed on the CAV Inventory Adjustments.

2b. Appropriate and timely review and approval of the report was performed by each approver.

2c. Appropriate and timely approval was performed within DSS.

3. Determine if the management review process was performed in accordance with the documented process.

SD (2018-

WCF-NFR-

040 (RI 17))

Control Frequency

Preventive or Detective

Manual, Automated or

Manual- Dependent on

System Generated

Information

Test Objective/Procedures Deficiency Classification*

Process(as)/Sub- Process(as)

Key Risk of Material Misstatement

(ROMM)

Control Activity Description

Key Control

(Yes/No)

Type of Control Activity

Physical Inventory Assets recorded in the inventory management system do not exist at a given date.

IAV Causative Research Each Inventory Adjustment Voucher (IAV) is required to have an accompanying Causative Research Package. The package will include the IAV Research Checklist and all associated research documentation related to the adjustment researched.

The completed package is signed and dated by the inventory personnel completing the package.

IAV Causative Research Packages are retained by DLA Distribution.

Yes Recurring Detective Manual To determine that the causative research process is an appropriately designed control to ensure that all existing assets, as of the reporting date, including property in the custody of third parties, are included in the general ledger and recorded transactions represent economic events that actually occurred and are properly classified.

1. Obtain one completed Causative Research Package for each sample.

2. Inspect the package and determine if the following attributes are present:

2.a. The "IAV Research Checklist" or similar document is present and complete.

2.b. There is supporting documentation to evidence that the research was performed.

2.c. The IAV was approved by the correct designated authority.

2.d. The IAV was approved and accepted in DSS.

2.e. The Error Classification Code (ECC) aligns with the research package comments within the IAV.

3. If the research resulted in a reversal adjustment, obtain supporting documentation from DSS as evidence to support the transaction was recorded in the Owner Transaction History Record.

None

Physical Inventory Assets of the entity exist but may be omitted from the inventory management system

IAV Packages Reviewed and Approved by Designated Authority Every IAV Causative Research Package is reviewed, signed, and dated by the designated approval authority (cannot be the same as the inventory personnel who created the IAV package) who accepts the IAV in the Inventory Management system within 45 days of original adjustment in accordance with MILSTRAP thresholds.

Each approved IAV Causative Research Package must include a completed DLA Distribution Reviewing Authority IAV/CAV Check Sheet.

DLA Distribution retains IAV Causative Research Packages.

Yes Recurring Detective Manual To determine whether management performs a monthly review of all Inventory Adjustment Vouchers (IAV) inventory adjustments to ensure that all existing assets, as of the reporting date, including property in the custody of third parties, are included in the general ledger (FAM 395B: 8) and to ensure all appropriate outlays and adjustments are not recorded

1. Select a sample of one IAV month end report from the current fiscal year.

2. Inspect the report and determine if the following attributes are present:

2a. Evidence of review/analysis has been performed on the IAV Inventory Adjustments.

2b. Appropriate and timely review and approval of the report was performed by each approver.

2c. Appropriate and timely approval was performed by each approver within DSS.

3. Determine if the management review process was performed in accordance with the documented process. This control is tested for adherence by checking the P8BC and the P8BG DSS reports for two signatures and dates, one from the Reviewing Authority and one from the AO.

None

Physical Inventory Assets of the entity exist but may be omitted from the inventory management system

Review of Open IAVs Every month, the Accountable Officer reviews the Inventory Management system report P8BG (“Mandatory Causative Research Report- Open Vouchers”) to identify IAVs not accepted within the required 45 days from original adjustment, then signs and dates.

DLA Distribution retains the P8BG reports.

Yes Monthly Detective Manual Ensure P8BG reports are reviewed in a timely manner.

Review P8BG reports to ensure the AO performed the review IAW established procedures and policies.

Control Frequency

Preventive or Detective

Manual, Automated or

Manual- Dependent on

System Generated

Information

Test Objective/Procedures Deficiency Classification*

Process(as)/Sub- Process(as)

Key Risk of Material Misstatement

(ROMM)

Control Activity Description

Key Control

(Yes/No)

Type of Control Activity

Physical Inventory Assets recorded in the inventory management system do not exist at a given date.

Inventory Management system Internal QBL to QBO (Book-to- Book) Reconciliation On a daily basis, the Inventory Management system internal batch job P8BM reconciles QBL with QBO in the Inventory Management system, for any inventory that had quantity balance affecting transactions that day.

If there are any mismatches between QBL and QBO, they are listed on the Inventory Management system report P8BK. The following actions are required as part of the Book-to-Book review:

• P8BK is printed, signed and dated each working day.

• Each potential adjustment completed on the P8BK will have a research package printed, signed and dated by the researcher.

• Each P8BK package must include a completed Potential Book-to-Book Research Checklist DLA Distribution retains P8BK Research Packages.

(Documentation required to be implemented in January 2019).

Yes Daily Preventive Automated Ensure that inventory recorded in inventory management system exists.

Obtain P8BK reports. Verify the reports were reviewed, researched, and signed by the appropriate personnel.

None

Physical Inventory Assets of the entity exist but may be omitted from the inventory management system

Reversal Processing of Inventory Adjustments to the Inventory Management System Reversals of inventory adjustments are processed to maintain the accuracy of the Inventory Management system only when applicable inventory research processes have been completed and provide a direct linkage to the original transaction that substantiates the reversal being entered.

Inventory adjustments being reversed must have occurred within the current fiscal year but only within the last 60 calendar days or back to the last formal inventory (whichever is sooner) of the date the original transaction was processed.

Yes Recurring Preventive Manual Ensure reversals are not performed outside of established timeframes.

Obtain a population of reversals and determine if reversals were performed outside of established timeframes.

CDRL A006 Attachment 1C

3/14/2019 1RCM Shipping Controls 1

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information Transportation Expenses and Accounts Payable;

Transportation Revenue

Incorrect shipping data and TAC may be recorded.

Recorded Transportation Expenses/Accounts Payable and Transportation Revenue may not pertain to the reporting entity or maybe recorded at incorrect amounts.

DSS Freight Shipment Review Performed Using DSS program B36P “Equipment Available for Initial Review”, the Transportation Officer or Agent performs initial review of every freight shipment (BOL or TCMD) to ensure the shipment data in DSS is complete, accurate and valid.

Depending on the type and mode of shipment, data fields to be reviewed include, but are not limited to:

• TAC

• shipping and accessorial charges

• Route Order/Release Number

• Destination

• Consignee

• Type of conveyance (equipment code)

• Freight description

• Weight

• Mileage

• Tariff authority

• Customs documentation

• National Motor Freight Classification (NMFC)

• Special instructions

• Hazardous certification statement

• SCAC

• TCN

• Other fields required by the Rate, Review, and Print Process

SOP

Transportation Officer or Agent modifies information if necessary or corrects identified discrepancies prior to printing the BOL/TCMD. DSS retains user ID of the reviewer.

Yes Recurring (Multiple times a day)

Preventive Manual- Dependent on System Generated

Information

Ensure shipping data and TAC are recorded in DSS accurately and correctly. Ensure recorded Transportation Expenses/Accounts Payable and Transportation Revenue pertain to the reporting entity and recorded at correct amounts.

1. Inquire of the TO (or appointed TA) if there is a documented procedure that outlines the DSS Rate and Review Process.

2. Obtain and review policies and procedures to determine if a documented process is in place and appropriately designed to perform the rate and review.

3. Inquire of the TO (or appointed TA) regarding their roles and responsibilities. Specific questions include:

a. Is the TO (or appointed TA) knowledgeable about the process? Ask to describe the Rate and Review process.

b. Is the TO (or appointed TA) authorized to perform the role? Obtain a copy of the authorization letter or memo.

c. Has the TO (or appointed TA) received formal training over the Rate and Review Process?

4. Inquire of the TO (or appointed TA) for an overview of how the Rate and Review process is performed.

Specific questions include:

a. What documents are reviewed to perform the Rate and Review Process?

b. How do you know these documents are complete and accurate?

c. What steps are performed if erroneous or invalid information is identified?

d. What evidential matter is retained, where is it retained and for how long?

5. Observe the TO (or appointed TA) perform the Rate and Review Process for a shipment in DSS and obtain the supporting documentation.

6. Determine if the Rate and Review Process has been performed in accordance with the documented policy and procedures.

FY17

Significant Deficiency

Transportation Expenses and Accounts Payable;

Transportation Revenue

Incorrect shipping data and TAC may be recorded.

Recorded Transportation Expenses/Accounts Payable and Transportation Revenue may not pertain to the reporting entity or maybe recorded at incorrect amounts.

DSS EDI 858 CA Dispatch Report Reviewed On a daily basis, DSS generates EDI 858 Transaction reports in CA-Dispatch. The B39G-3 EDI FREIGHT 858 TRANSACTION ERROR REPORT and B41G-3 EDI FREIGHT 858 TRANSACTION REPORT (Direct-booked SEAVANs) identifies EDI 858R processing errors. The reports are reviewed by the TO and errors are corrected in DSS which allows the 858R transaction to successfully transmit to DAAS. As errors are corrected, the associated record is automatically removed from the B39G-3 or B41G-3 Report.

Yes Recurring (Multiple times a day)

Detective Manual- Dependent on System Generated

Information

Provide reasonable assurance that EDI 858 is transmitted accurately and completely and management review is performed.

Obtain a population of transmitted EDI 858 and determine if any of them are over 3 days old.

None

NOTE: Controls highlighted in ‘yellow’ shall be performed at the Contractor and included in the QCP. The controls in ‘white’ are performed and tested by DLA Distribution HQ staff. Contractor to be aware the performance of the standard processes impact the results of these controls.

DoD Entity Name: Defense Logistics Agency - Distribution Preparer: Jennifer Eisenhour Phone Number: 717-770-5886 Reviewer: Denise Kanelos Review Period: FY19

Phone Number: 717-770-5886

End-to-End Process: DLA Distribution Shipment of Materiel/Transportation

Process(as)/Sub- Process(as)

Key Risk of Material Misstatement (ROMM)

Control Activity Description Deficiency

Classification* Key Control

(Yes/No)

Type of Control Activity

Test Objective/Procedures

3/14/2019 2RCM Shipping Controls 2

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information

NOTE: Controls highlighted in ‘yellow’ shall be performed at the Contractor and included in the QCP. The controls in ‘white’ are performed and tested by DLA Distribution HQ staff. Contractor to be aware the performance of the standard processes impact the results of these controls.

DoD Entity Name: Defense Logistics Agency - Distribution Preparer: Jennifer Eisenhour Phone Number: 717-770-5886 Reviewer: Denise Kanelos Review Period: FY19

Phone Number: 717-770-5886

End-to-End Process: DLA Distribution Shipment of Materiel/Transportation

Process(as)/Sub- Process(as)

Key Risk of Material Misstatement (ROMM)

Control Activity Description Deficiency

Classification* Key Control

(Yes/No)

Type of Control Activity

Test Objective/Procedures

Inventory;

Transportation Expenses and Accounts Payable;

Transportation Revenue

Issuance of inventory may not be accurately and completely recorded in the inventory management system.

Recorded Transportation Expenses/Accounts Payable and Transportation Revenue may not pertain to the reporting entity or maybe recorded at incorrect amounts.

Freight Shipping of Materiel For each conveyance, the driver signs and dates each Bill of Lading (BoL) or TCMD (Transportation Control and Movement Document). The Transportation Agent then selects the correct Equipment ID in the Inventory Management system and performs systemic Driver Sign-Off. Upon completion and as a result of the systemic “Driver Sign-Off”, the Mission Ship Date/Time and Materiel Movement Status are posted to the appropriate system records. The process initiates the transmission of the Shipment Confirmation, Shipment Status and Bill of Lading data to the applicable user entity.

Yes Recurring (Multiple times a day)

Preventive Manual- Dependent on System Generated

Information

Provide reasonable assurance that issuance of inventory is accurately and completely recorded in inventory management system and Transportation Expenses and Accounts Payable and Transportation Revenue are recorded accurately and completely.

Obtain a sample of freight shipments. Ensure that BOLs were signed by the driver before systemic Driver Sign-Off was performed. Verify that EDI transactions were transmitted by DSS.

None

Inventory;

Transportation Expenses and Accounts Payable;

Transportation Revenue

DistrD Small Parcel Shipping of Materiel Prior to carrier arrival, the Distribution Worker systemically prints the Small Parcel manifest within DSS. The Print Manifest process posts the Mission Ship Date/Time and Materiel Movement Status to the appropriate system records. The process also initiates transmission of the Shipment Confirmation, Shipment Status, and Small Package BoL data to the applicable user entity.

Yes Recurring (Multiple times a day)

Preventive Manual- Dependent on System Generated

Information

Provide reasonable assurance that issuance of inventory is accurately and completely recorded in inventory management system and Transportation Expenses and Accounts Payable and Transportation Revenue are recorded accurately and completely.

Obtain a sample of small parcel shipments. Verify that EDI transactions were transmitted by DSS.

None

Inventory;

Transportation Expenses and Accounts Payable;

Transportation Revenue

Issuance of inventory may not be accurately and completely recorded in the inventory management system.

Recorded Transportation Expenses/Accounts Payable and Transportation Revenue may not pertain to the reporting entity or maybe recorded at incorrect amounts.

Local Delivery or Customer Pick-up of Materiel For each local delivery or customer pickup, the distribution worker or transportation agent creates and prints the manifest within DSS. The driver name and pick-up/delivery date are annotated on the manifest. The customer signature and date, or annotation of “refusal to sign”, are also recorded on the manifest at non-ALC sites. As the result of the Pick/Pack process, the system transmits the Shipment Confirmation and Shipment Status to the applicable user entity.

Yes Recurring (Multiple times a day)

Preventive Manual Provide reasonable assurance that issuance of inventory is accurately and completely recorded in inventory management system and Transportation Expenses and Accounts Payable and Transportation Revenue are recorded accurately and completely.

Obtain a sample of local delivery. Verify that EDI transactions were transmitted by DSS and local delivery manifests were signed as applicable.

3/14/2019 3RCM Shipping Controls 3

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information

NOTE: Controls highlighted in ‘yellow’ shall be performed at the Contractor and included in the QCP. The controls in ‘white’ are performed and tested by DLA Distribution HQ staff. Contractor to be aware the performance of the standard processes impact the results of these controls.

DoD Entity Name: Defense Logistics Agency - Distribution Preparer: Jennifer Eisenhour Phone Number: 717-770-5886 Reviewer: Denise Kanelos Review Period: FY19

Phone Number: 717-770-5886

End-to-End Process: DLA Distribution Shipment of Materiel/Transportation

Process(as)/Sub- Process(as)

Key Risk of Material Misstatement (ROMM)

Control Activity Description Deficiency

Classification* Key Control

(Yes/No)

Type of Control Activity

Test Objective/Procedures

Transportation Expenses and Accounts Payable;

Transportation Revenue

Incorrect shipping data and TAC may be recorded.

Recorded Transportation Expenses/Accounts Payable and Transportation Revenue may not pertain to the reporting entity or maybe recorded at incorrect amounts.

Transshipment TAC Applied For every transshipment, the Transportation Officer or Distribution Worker performs the following:

• Ensures that TAC, TCN, DoDAAC, weight, cube, and number of pieces are provided on the source documentation. If not, returns the materiel and the documentation to the requestor.

• Validates TAC from the source documentation by accessing

TGET

o If TAC is invalid, returns the materiel and source documentation to the requestor o If TAC is valid in TGET but not loaded into DSS, contacts DLA Distribution Operations Global Team with request to load TAC o Changes the default “S9NA” TAC in DSS program “STUP” to the TAC listed on the source documentation o Saves the shipping documentation as Evidential Matter

Yes Recurring (Multiple times a day)

Preventive Manual Provide reasonable assurance that Transportation Expenses and Accounts Payable and Transportation Revenue are recorded accurately and completely.

Obtain a sample of transshipments. Verify that transshipment documentation is saved. Verify that TAC recorded in DSS corresponds with TAC on customer's shipping documentation.

3/14/2019 4RCM Shipping Controls 4

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information

NOTE: Controls highlighted in ‘yellow’ shall be performed at the Contractor and included in the QCP. The controls in ‘white’ are performed and tested by DLA Distribution HQ staff. Contractor to be aware the performance of the standard processes impact the results of these controls.

DoD Entity Name: Defense Logistics Agency - Distribution Preparer: Jennifer Eisenhour Phone Number: 717-770-5886 Reviewer: Denise Kanelos Review Period: FY19

Phone Number: 717-770-5886

End-to-End Process: DLA Distribution Shipment of Materiel/Transportation

Process(as)/Sub- Process(as)

Key Risk of Material Misstatement (ROMM)

Control Activity Description Deficiency

Classification* Key Control

(Yes/No)

Type of Control Activity

Test Objective/Procedures

Transportation Expenses and Accounts Payable;

Transportation Revenue

Incorrect shipping data and TAC may be recorded.

Recorded Transportation Expenses/Accounts Payable and Transportation Revenue may not pertain to the reporting entity or maybe recorded at incorrect amounts.

VSM Rate and Review Performed (Freight Only).

Using VSM, the TO rates, reviews, and prints each BOL or TCMD to ensure the shipment data is complete, accurate and valid.

Depending on the type and mode of shipment, data fields to be reviewed include, but are not limited to: TAC, type of conveyance (equipment code), charges reflected in a bill, accessorial charges, freight description, weight, mileage, address, tariff authority, customs documentation, NMFC, special instructions, hazardous certification statement, SCAC, TCN, and other fields required by SOP. If any discrepancies are identified, the TO performs necessary corrective action.

Yes Recurring (Multiple times a day)

Preventive Manual- Dependent on System Generated

Information

Ensure shipping data and TAC are recorded in VSM accurately and correctly. Ensure recorded Transportation Expenses/Accounts Payable and Transportation Revenue pertain to the reporting entity and recorded at correct amounts.

1. Inquire of the TO (or appointed TA) if there is a documented procedure that outlines the VSM Rate and Review Process.

2. Obtain and review policies and procedures to determine if a documented process is in place and appropriately designed to perform the rate and review.

3. Inquire of the TO (or appointed TA) regarding their roles and responsibilities. Specific questions include:

a. Is the TO (or appointed TA) knowledgeable about the process? Ask to describe the Rate and Review process.

b. Is the TO (or appointed TA) authorized to perform the role? Obtain a copy of the authorization letter or memo.

c. Has the TO (or appointed TA) received formal training over the Rate and Review Process?

4. Inquire of the TO (or appointed TA) for an overview of how the Rate and Review process is performed.

Specific questions include:

a. What documents are reviewed to perform the Rate and Review Process?

b. How do you know these documents are complete and accurate?

c. What steps are performed if erroneous or invalid information is identified?

d. What evidential matter is retained, where is it retained and for how long?

5. Observe the TO (or appointed TA) perform the Rate and Review Process for a shipment in DSS and obtain the supporting documentation.

6. Determine if the Rate and Review Process has been performed in accordance with the documented policy and procedures.

None

Transportation Expenses and Accounts Payable;

Transportation Revenue

Incorrect shipping data and TAC may be recorded.

Recorded Transportation Expenses/Accounts Payable and Transportation Revenue may not pertain to the reporting entity or maybe d d i

VSM EDI 858 CA Dispatch Report Reviewed Weekly, the TO retrieves the VSM EDI 858 CA-Dispatch report (VSM Report DPE9-3) and corrects errors. As errors are addressed they are removed from CA-Dispatch Reports DPE9-3.

Yes Recurring (Multiple times a day)

Preventive Manual- Dependent on System Generated

Information

Provide reasonable assurance that EDI 858 is transmitted accurately and completely and management review is performed.

Obtain a population of transmitted EDI 858 and determine if any of them are over 7 days old.

None

Transportation Expenses and Accounts Payable;

Transportation Revenue

Risk of fraud, waste, or abuse exists when Distribution Worker can generate and approve or certify shipments

Syncada/DSS Segregation of Duties Review Quarterly, J3 Distribution performs segregation of duties review of all DLA Distribution DSS and Syncada users. Transactions of users with both DSS access to transportation functions and Syncada roles are reviewed to ensure there is no fraud, waste, or abuse. This review is performed as a risk mitigating control.

No Quarterly Detective Manual Ensure there are no fraudulent or incorrectly generated and approved transactions.

Obtain a list of all employees with DSS access to transportation functions and TPPS roles. Determine whether they used both systems within the same period. If yes, conduct further research to ensure there are no fraudulent or incorrectly approved transactions.

3/14/2019 5RCM Shipping Controls 5

Control Frequency

Preventive or

Detective

Manual, Automated or Manual- Dependent on System Generated

Information

NOTE: Controls highlighted in ‘yellow’ shall be performed at the Contractor and included in the QCP. The controls in ‘white’ are performed and tested by DLA Distribution HQ staff. Contractor to be aware the performance of the standard processes impact the results of these controls.

DoD Entity Name: Defense Logistics Agency - Distribution Preparer: Jennifer Eisenhour Phone Number: 717-770-5886 Reviewer: Denise Kanelos Review Period: FY19

Phone Number: 717-770-5886

End-to-End Process: DLA Distribution Shipment of Materiel/Transportation

Process(as)/Sub- Process(as)

Key Risk of Material Misstatement (ROMM)

Control Activity Description Deficiency

Classification* Key Control

(Yes/No)

Type of Control Activity

Test Objective/Procedures

Transportation Expenses and Accounts Payable;

Transportation Revenue

Incorrect TAC may be recorded. Recorded Transportation Expenses/Accounts Payable and Transportation Revenue may not pertain to the reporting entity or maybe recorded at incorrect amounts.

DSS TAC Logic Review Quarterly, J3 Distribution performs a random testing of DSS TAC logic to ensure DSS applies TACs to each MRO as designed.

No Quarterly Detective Manual Ensure shipping data and TAC are recorded accurately and correctly. Ensure recorded Transportation Expenses/Accounts Payable and Transportation Revenue pertain to the reporting entity and recorded at correct amounts.

Obtain a sample of DSS shipments and ensure that systemic TAC logic was applied as designed and IAW DLA Distribution TAC Policy

None

Transportation Expenses and Accounts Payable;

Transportation Revenue

Syncada Summary Invoices may not be certified in a timely manner.

Timeliness of Syncada Invoice Certification Monthly, DLA Distribution TAC manager performs the review to ensure that Syncada Summary Invoices are certified…