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TO NAVADMIN
INFO CNO WASHINGTON DC
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NAVADMIN 066/16

MSGID/NAVADMIN/CNO WASHINGTON DC/DNS/MAR//

SUBJ/NAVY AUDIT DOCUMENT RETENTION GUIDANCE//

REF/A/LTR/ASN (FM&C)/08 DEC 2015
REF/B/LTR/DASN (FO)/29 JAN 15//
NARR/REF A IS ASN (Financial Management & Comptroller) Financial
Management Policy Letter 16-01 on Delegation of Authority to Appoint
Accountable Officials.  REF B IS DASN (FINANCIAL OPERATIONS) MEMO
ON REVISED DOCUMENT RETENTION REQUIREMENTS TO SUPPORT DEPARTMENT OF
THE NAVY FINANCIAL STATEMENT AUDITS.//
POC/MURRAY TYNCH/CAPT/00011/WASHINGTON DC/(703) 693-4444//
RMKS/1.  Take refs (a) through (b) forac.

2.  As outlined in ref (b), this NAVADMIN provides updated guidance
and information on the Navy's document requirements related to
financial statement audits. This NAVADMIN may be followed by
subsequent NAVADMINs with additional guidance on document requirements.
In the interim, commands must ensure that Sailors, Civilians, and
Contractors adhere to documentation requirements outlined in refs (a)
through (b) and in this NAVADMIN.

3.  Congress mandated that the DoD have auditable financial statements
in place by 30 SEP 2017. An Independent Public Auditor (IPA) performed
an audit on the Navy in the form of the FY2015 Schedule of Budgetary
Activity (SBA), to determine if the SBA was fairly stated. The IPA
issued 220 notices of findings and recommendations (NFR) based on the
Navy's internal control environment. The IPA determined the Navy could
not consistently provide documented evidence of financial events. As a
result of the issues identified, the IPA could not issue an audit
opinion due to the lack of evidence required.

4.  Common problems the IPA identified with Navy financial
documentation included:

    a.  Lack of or incomplete evidence of approval for transactions
(i.e. authorization of approval, DD577).

    b.  Lack of or incorrect evidence of receipt and acceptance.

    c.  Lack of or incomplete evidence of contractual agreements and
related contract documents (i.e. contract and/or funding documents).

    d.  Lack of or incomplete evidence to support that payments were
made for a valid reason.

    e.  Lack of or incomplete evidence of funding authority.

5.  From an audit perspective if there is no evidence of a financial
event, the auditor cannot validate if the transaction was properly
approved by the appropriate official and /or the transaction was
properly executed. The primary audit finding determined that Navy
requires a renewed focus on retaining the correct documents for the
required duration per refs (a) through ref (b).

6. To ensure the Navy achieves full auditability per Congressional
mandate, DASN (FO) issued the policy contained in ref (b).  To comply
with that policy, all commands are directed to take the following
actions within 60 days and report/provide evidence of completion.

    a.  Per refs (a) through (b) all commands retain the requisite
financial documents as outlined in the Key Supporting Document (KSD)
Matrix. The KSD matrix can be found at
https://arc.portal.navy.mil/sites/collab/FMO5Specific/arcperm/ARC%20Permanent
%20File%20Respository/Forms/Quick.aspx.

    b.  IAW ref (b) each command must be able to retrieve all
auditable documents. It is highly recommended each command establish
a standardized naming convention that includes the fiscal year,
document number (if applicable) and system and/or business process
to increase efficiency.

    c.  Commands are required to properly complete and maintain
written authorization in accordance with ref (b) in the
form of a DD577.

    d.  Within 180 days, Budget Submitting Offices shall utilize
Command Evaluation or Manager's Internal Control (MIC) program to
establish ongoing reviews of command compliance with document
retention requirements.

7.  Be prepared to have spot checks performed on your Commands
document retention practices at a later date. Following 180 days,
the DASN (FO) Evaluation, Prioritization, Remediation (EPR) Program
will perform procedures to validate that commands document retention
practices comply with refs (a) through (b).

8. Commands should direct submissions and inquiries to Ms. LeAnne
Mason at leanne.mason(at)navy.mil.

9. Released by Vice Admiral R. L. Thomas, Director, Navy Staff.//
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