UNCLASSIFIED

ROUTINE

R 291748Z SEP 17

FM CNO WASHINGTON DC

TO NAVADMIN

INFO CNO WASHINGTON DC

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NAVADMIN 219/17

MSGID/NAVADMIN/CNO WASHINGTON DC/DNS/SEP//

SUBJ/NAVY AUDIT LEADERSHIP ACCOUNTABILITY, ROLES, AND RESPONSIBILITIES 
(CORRECTED COPY) //

REF/A/DOC/OMB/15DEC16//

REF/B/DOC/DOD/30MAY13//

REF/C/DOC/SECNAV/21JUL14//

REF/D/NAVADMIN 088-17//

NARR/REF A IS OMB CIRCULAR A-123 MANAGEMENT'S RESPONSIBILITY FOR ENTERPRISE 
RISK MANAGEMENT AND INTERNAL CONTROL.  REF B IS DOD INSTRUCTION 5010.40, 
MANAGER'S INTERNAL CONTROL PROGRAM (MICP) PROCEDURES.  REF C IS SECNAV 
INSTRUCTION 5200.35F, DEPARTMENT OF THE NAVY INTERNAL CONTROL PROGRAM.  REF D 
IS NAVADMIN 088/17, LEADERSHIP PRIORITY AND ACCOUNTABILITY FOR EFFECTIVE 
INTERNAL CONTROLS.//

RMKS/1.  Within the next few weeks the Navy independent public auditor (IPA), 
Ernst and Young, will conduct site visits, beginning in the Hampton Roads 
area on 18 September 2017, to validate the Navy's inventories of our major 
assets (real property, ordnance, ships and vessels, aircraft, engines, 
satellites, etc.).  Each of you will contribute and play a pivotal role in 
our success.

2.  Commanding Officers are required to make preparations for the site 
visits.  Property managers (Real and other) and subject matter experts must 
be ready and available to walk bases / flight lines / piers and demonstrate 
accountability for our asset categories.  The IPA will focus on new and 
larger assets of greatest material impact first and then move on to older 
assets.  Additionally, the IPA has planned site visits to San Diego, Patuxent 
River, Guam and Port Hueneme.

3.  As leaders, I expect that every command has familiarized themselves with 
audit processes.  Most business events that take place within your commands 
result in financial transactions.  Regardless of duty station, we are all 
impacted by military entitlements, civilian payroll, travel and 
transportation, contracts, reimbursable work orders, Military Standard 
Requisitioning and Issue Procedures and many others.  These may be more 
familiar to your sailors and civilians as ship repair, refueling, flying 
hours, Defense Travel System and supply purchases.  Our preparedness in the 
areas of property, plant and equipment, Operating Materials and Supplies 
Inventory, accounts payable, accounts receivable and overall balances will 
influence auditor planning.  A series of nine informative audit training 
videos has been developed to spotlight relevant audit processes and systems, 
and further educate what our personnel can do to support audit.  The videos 
are available using your Common Access Cards enabled certificates online at 
https://portal.secnav.navy.mil/orgs
/FMC/FMO/FMO-1/PagesMG/Training.aspx.

4.  The auditors will be well trained and prepared to review and interview 
your commands and systems.  Our success is largely dependent on having the 
appropriate people available beforehand to anticipate, identify problems, and 
prepare clear and concise explanations.  Be honest and be consistent ? build 
and maintain your credibility.  Ensure you fully understand the question 
being asked before your timely submission of documentation or responding to 
the auditor.

5.  Since 2015 the process of preparing for audit has improved the culture of 
accountability, as every senior leader across the DoN embraces their role in 
developing and enforcing appropriate internal controls. Internal Controls are 
inextricably tied to audit.  Each of you must understand references (a), (b), 
and (c) as well as understand risk management that both actively assesses 
day-to-day business processes and makes appropriate changes to ensure 
accountability.  Vice Chief of Naval Operations recently released reference 
(d) stressing the importance of internal controls.  Your internal controls 
supported by an effective Managers Internal Control Program are the 
foundation of our operations.  They help ensure effective operations, 
safeguard our assets, produce reliable financial reports, and ensure 
compliance with laws and regulations.

6.  Regular updates on audit progress, barrier removal and lessons learned 
will be scheduled and planned by the Office of the Assistant Secretary of the 
Navy (Financial Management and Comptroller) and results will be regularly 
reviewed by leadership and the Navy Inspector General.  Vice Director, Navy 
Staff is available to provide additional guidance or assistance throughout 
the audit. For audit readiness questions contact Mr. Freddie Williams, 
Financial Management & Comptroller (FM&C) Audit Response Division (FMO-3) at 
commercial, (703) 602-8438 or via e-mail at freddie.e.williams@navy.mil.

7.  Released by Vice Admiral Luke M. McCollum, Director, Navy Staff 
(Acting).//

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