UNCLASSIFIED Commander Navy Installations Command Financial Management Process

UNCLASSIFIED Commander, Navy Installations Command Financial Management Process Improvements Presentation to: American Society of Military Comptrollers - Washington Chapter Mr. Ric Voigt, CNIC Comptroller August 17, 2011 UNCLASSIFIED 1

Purpose Provide an overview of the depth/breadth of Commander, Navy Installations Command (CNIC) Present CNIC N 8’s approach to process improvement and development of standardized, repeatable and auditable financial management processes Demonstrate Process. Quik, our online process document repository 2

Commander’s Guidance Mission: Deliver effective and efficient readiness from the shore Vision: Be the sole provider of shore capability, to sustain the Fleet, enable the Fighter, and support the Family Guiding Principles } } } } Collaborate through teamwork Practice transparency Deliver best value to our customers Be accountable Develop our people Embrace change Improve continually Foster innovation 3

Navy Shore Domain Today SWA MERGED WITH CNRE DEC 2008 TO FORM EURAFSWA JOINT REGION MARIANAS POPULATION SERVED 328 K Active Duty 65 K Active Reserves (SELRES) 425 K Family Members 575 K Navy Retirees 5/9/11 13 Flags / 7 SES Direct Reports $135 B PRV (Structures, Utilities) 31. 6 K Bldgs, 24. 7 K Structures, 13. 1 K Utilities 63. 3 K pers. : military 24. 1 K, civilians 34. 6 K, KTRs 4. 6 K $12 B resources (appropriations, NAF) - FY 10 @ 9/30/10 11 Regions… 72 Bases… 1. 9 Million Acres 125 Runways… 358 Piers/Wharves…$135 B Plant Replacement Value $12 B Resources: Fortune 200 in Size 4

Shore Facts 55

Shore Readiness Funding Profile Primary drivers of increased requirements: Energy, Joint Basing, Child Care, and Collateral Equipment 66

CNIC N 8’s Process Improvement Landscape Controls Continuous Process Improvement MIC FIP Process. Quik LSS (Risk Management Tool) (Auditability Tool) (Documentation Tool) (Analysis Tool) } Driver: OUSD(C), CNIC N 8, CNIC IG } Scope: Identify, document, and test Managers’ Internal Control points } Approach: Process owners develop MIC Plans to assess internal controls on an annual basis } Driver: FMO } Scope: Identify, document, and test financial internal control points for key end-toend CNIC N 8 financial management processes } Approach: Process discovery and validation, SBR Segment Control Testing, Business Segment Analysis, and Financial Impact Statement Process Improvements } Driver: CNIC N 8 } Driver: ASN, CMO, CNIC N 8 } Scope: High level reengineering of key end-to- } Scope: Targeted end CNIC financial improvement for management processes specific portions or (current focus is on HQ) steps within key end-toend CNIC N 8 financial } Approach: Conduct As-Is management &To-Be focus groups to processes re-engineer processes, identify risks & control } Approach: Value points, post products to Stream mapping & Process. Quik, develop & analysis, develop & implement process execute Improvement change plans & internal plan using scalable controls test plans DMAIC processes Continuous Process Improvement Board (CPIB) Results } Auditability/SBR } Standardization } Operational Efficiency } Statement of Assurance } Testing Results and Commandlevel FIP progress reports Implement Process Improvements 77

Process. Quik is: – An online central repository that houses CNIC N 8’s standardized process information – Accessible to CNIC employees enterprise-wide via CNIC’s Portal – A Share. Point application Process. Quik provides: – Interactive process documentation eliminating the need to update paper-based processes or procedure binders – Standard forms and templates in one repository – A standardized method for training staff – A mechanism for continuous process improvement and encourages employee involvement – One location for internal controls information – Desk guides and Standard Operating Procedures that support transactional level activities Each posted process includes: – A process narrative that contains: a process definition, timeline of key events, SIPOC model, outline of roles and responsibilities of each process performer, and links to applicable systems / desk guides / rules / policies / regulations – An interactive, MS Visio process map diagram that contains: process steps with control points indicated, “clickable” details behind each process step to include descriptions of the control activity, links to test plans, and links to applicable systems/desk guides/rules/policies/regulations 88

CNIC N 8’s Reengineering Methodology Document Current State Scope Determine the Scope of the Process Define the scope of the process (purpose of process, boundaries, process performers, stakeholders) Collect relevant documentation (instructions, policies, existing process maps, etc. ) Conduct Focus Groups to Capture the As-Is Process Conduct collaborative interviews/focus groups with Subject Matter Experts (SMEs) to: – Define the process (definition, SIPOC model, process measures) – Develop As-Is process map and dictionary (if needed) – Identify process improvement opportunities Design Future State Conduct Focus Groups to Reengineer the Process Validate Re. Engineered Process Assess To-Be Process, Define Controls, and Validate Evaluate and select process improvements Define measurement criteria Conduct collaborative focus groups with SMEs to: Conduct collaborative risk assessment on To. Be Process from an internal controls perspective – Develop To-Be process maps, dictionaries, and narratives – Document process change items Obtain buy-in and approval from leadership on the reengineered process Integrate MIC internal controls; additional controls if needed Develop process change implementation plan Develop control test plans Establish deployment approach and address process impacts Implement the New Process Manage Implementation Post to Process. Quik Create Educational briefing for Process Owners to educate staff on process changes Deliver Training Complete Implementation Items Rollout new policies/procedures Test controls & document results Conduct CPIB meetings to ensure processes are operating effectively, internal controls are being tested, and process documentation is current Leadership, Process Owner, and Subject Matter Expert involvement 99

CNIC N 8’s Maturing Process Improvement Effort: 2008 -2010 2008: – Gathered feedback from Headquarters Program Managers, Regions, and internal N 8 staff that revealed a need to standardize our processes and procedures – Committed to process improvement/reengineering of our key financial management processes – Prioritized 19 key financial management processes for reengineering – Developed our initial methodology for process improvement/standardization 2009: – Reengineered four processes – Began formal collaboration with Regions and Headquarters Program Managers – Developed Process. Quik, our online process documentation repository tool 2010: – Reengineered seven additional processes – Fielded Process. Quik on the CNIC Gateway and implemented 11 processes – Integrated FIP and MIC into process improvement methodology • Identified control points on process maps with links to test plans and test results 10 10

CNIC N 8’s Maturing Process Improvement Effort: 2011: – Expanded to the Regions, now doing enterprise-wide process improvement – Employed the integrated approach to reengineer three additional processes – Developed and implemented a holistic strategy to prepare CNIC to attain auditability of Statement of Budgetary Resources (SBR) by the end of CY 12 • Matured the MIC Program • Are incorporating FMO FIP controls and MIC controls into our processes • Are developing transactional-level SOPs and Desk Guides • Are developing an Internal Controls and Testing Page on the Process. Quik site • Began to explore financial control points with CNIC’s supplying partners (NAVFAC, etc. ) – Established the CPIB to provide governance of process improvement/standardization efforts and ensure integration of FIP/MIC program requirements – Implemented an improved Civilian Labor budgeting process • Used actual execution data as basis for projecting requirements to derive the budget (pricing, etc. ) from actual accounting data at the Installation and Program level – Began aligning Process. Quik with workforce development initiatives 11 11

Leadership & Workforce Involvement CNIC N 8 Leadership (Region N 8 s and HQ Division Directors): – – – Identifies and prioritizes key end-to-end financial management processes Acts as process owners accountable for reengineering their processes Communicates progress with the Enterprise N 8 workforce Ensures that Process. Quik contains approved process documentation to serve as a training and workforce development tool Participates on the CPIB to prioritize and integrate CNIC N 8 Process Improvement efforts – currently HQ Division Directors CNIC N 8 Enterprise Workforce: – Participates in process reengineering focus group sessions as subject matter experts – Enacts the reengineered processes, provides feedback on their functioning, identifies additional improvement opportunities, and conducts control testing 12 12

Live Demonstration of Process. Quik is accessed from the “Tools Menu” found on the CNIC Portal homepage under “My Workspace” Process. Quik is found under the “Accounting and Financial” section of the Tools page 13 13

Reimbursable Management CNIC N 8 reengineered both Incoming and Outgoing Reimbursable Management processes using our integrated approach to address: – Lack of standardization – Poor overall management of reimbursables – Inadequate controls and compliance metrics History: FY 06 Roles and responsibilities were defined, but process was not standardized FY 06 -FY 08 FIP effort expanded scope to include Grantor side; however, a lot of effort spent in “discovery” with minimal effort to reengineer process FY 08 -FY 09 Audit Findings required CNIC to include mechanisms to validate reimbursables against Interservice Support Agreements (ISA’s) and Memorandums of Understanding (MOU’s) FY 11 CNIC N 8 integrated efforts of BPR, LSS, FIP and MIC into one consolidated approach; recent guidance to attain auditability has been included FY 11 FMO issued a “system agnostic” version of reimbursable processes (pure process steps without specifics like STARS-FL or ERP); CNIC N 8 ensured alignment 14

Overview of Changes Incoming Reimbursable Management Process (RWO-P) Outgoing Reimbursable Management Process (RWO-G) Old New 15

Integration of FIP and MIC Controls Outgoing Reimbursable Process Map Internal Controls Template Process Dictionary Internal Controls and Testing Page on Process. Quik 16 16 16

Key Discoveries Started out as more of a Lean Six Sigma approach to improve processes, but then learned that it is an excellent vehicle to document internal controls for FIP and MIC auditability Robust vehicle to discover process improvements and to document standardized processes across the enterprise Bringing all of the SMEs together enhances communications and improves each group member’s understanding of the entire process, not just their piece while building camaraderie amongst the participants Integrates the FIP and MIC with improved financial management processes Clarifies and documents the path toward auditability 17 17

Way Forward Achieve auditability of Statement of Budgetary Resources Continue to reengineer and standardize processes enterprise-wide in coordination with Region N 8 s Provide our employees with new workforce development tools and resources Continue to promote the use of Process. Quik throughout the Command 18 18