How DOD will survive its next audit

The Defense Department famously completed -- and failed -- its first financial audit in 2018. The ordeal highlighted gaps and inefficiencies in the organization's IT infrastructure, but it also served as a bastion for tech innovation.

FCW caught up with some of the Defense Department's chief financial experts at the American Institute of Certified Public Accountant's Governmental Accounting and Auditing Update Aug. 12 to get their takes on how they plan to survive DOD's second audit and how using automation and robotics is easing the process.

FCW: Simply put, how do you all plan to pass the next audit for 2019?

Douglas Glenn, the Pentagon's assistant deputy chief financial officer

Same way we did last year. We got through it last year -- that'll have been the hardest -- we're going to do it again next year. And you know, it's that question of how do you eat an elephant? One bite at a time. So we just chip away at the NFRs [notices of findings and recommendations], which will lead to reducing the material weaknesses, which will lead to more clean opinions and we'll get there.

Fredrick Carr, associate deputy assistant secretary for the Air Force

We're more efficient now. The first full audit was in 2018. Getting all the documentation to the auditors, timely, entering all the PBCs [provided by client lists], that was really a ruckus. But we really learned from that. We put a tool in place -- we don't have any late PBCs now. That I think is the biggest piece. And we learned from the corrective actions, how to write them, getting at root costs.

Wesley Miller, the Army's deputy assistant secretary for financial operations

With the Army, I don't think we're at a breakthrough point. We're still focusing on the different types of audits that we're performing -- our working capital fund, our conventional ammo -- and taking care of those particular items and then tackling the big general fund as of late.

Victoria Crouse, chief strategy officer for the U.S. Navy's financial operations office

I think we're open to any and all findings that we get from the auditors. We try to be pretty transparent on where we think some of our issues are. We're getting some positive feedback on corrective actions that we've implemented. But they're getting in some areas where they're able to dig a little bit deeper than they did last year. It's a continued learning experience, and we'll go through that prioritization process again and just keep moving forward one step at a time.

FCW: All of you might have mentioned robotics during your presentations, how important is this? I know from the Army side, Army Futures Commander Gen. John Murray has talked about using artificial intelligence and automation to improve the Army's budgeting process. Can you talk a bit about how that's developing and how each of you is using robotic processes?

MILLER: Compare functions. You look for compare functions where you can take one item and have it do the checking. Rather than have someone swivel from one system to another system, you have the robot do the comparison function for you. We want to use a robot to look at individuals who are leaving the service and then comparing that back to individuals who are still remaining and have permissions remaining on the systems. Those are the types of functions that I see initially. They will grow bigger, become more complex after that.

CARR: Across the board, anything we see that is typically not high-value added and repeatable, we can program it. And our goal is to take all that stuff that's low value added and see if we can add robotics to it and get it out of the hands of people manually processing. Because every time you have to put something in a system manually, it's probably going to generate a DFAS [Defense Finance and Accounting Service] bill that's manual -- and that's a huge cost. We can pay $34 for a transaction or we can use an electronic and do it for $2 or $3 a transaction. So that's huge.

FCW: Any new areas for robotic processes that you're looking into?

CARR: So the leave balance for our active duty military is the newest one. Being able to do that instead of having a person go in and see where did Airman Snuffy come back from leave because he didn't clock back in. There's no incentive to do that when you come back from leave because you're back at work the next day. But it's still in the system that way and it shows that you're still gone. Well if robotics can take all that stuff and clean it up, then the [supervisor] doesn't have to worry about that. It's done.

FCW: Where's the Navy on this?

CROUSE: We're in the early stages. Similar to Air Force, we're looking at any of those processes that are highly manual where we might have an opportunity to use robotics. One of the areas we're looking at is retrieval of supporting documentation for the audit.

MILLER: And remember, what we're attempting to do is open up more time for people to actually do analytical work. We don't want them to get hung up on the … work of doing comparisons. We want them there to spend more time analyzing what's behind, what the numbers mean.

FCW: Back to DOD, anything to add?

GLENN: There's a positive ROI [return on investment] there. I forget the numbers, but we estimate that we're saving more annually than we spend on it, just in the few that we've deployed at the office of the secretary level.

FCW: At the Pentagon, Fourth Estate level, are there any new areas that you're looking to apply this sort of automation?

GLENN: We'd love to get into accelerating the de-obligation process and contract close out. I think almost every agency out there is wrestling with closing out old obligations and getting their contracting community to focus on that as opposed to getting new contracts out. So if we could deploy some robots to accelerate that closeout process, lift some of the burden off the contracting officers, it would be a win-win across the government.