Inside the Air Force Audit and Financial Management Transformation Journey


For many, the term “Air Force” conjures up images of fighter jets and aviators in combat. But there’s a lot more going on behind the scenes. Budgeting, funding, and accounting, for example, are critical to ensuring Air Force fighters are supported to complete the mission.

These back-office initiatives have received increased attention over the past thirty years with the emergence of several laws passed by Congress. For example, in an effort to foster transparency and stewardship of taxpayers’ money, the Chief Financial Officers Act of 1990 required the Department of Defense (DOD), among other agencies, to produce annual financial statements; while the Government Management Reform Act 1994 required these financial statements to be audited. The Air Force is entering its fifth full year of auditing financial statements, and Pierce is helping lead the organization’s audit and financial management transformation journey. Such an important task requires a comprehensive approach. Pierce enlisted the financial management and functional managers of the Air Force, as well as the independent accounting firm Big 4 Deloitte & Touche LLP, to accomplish this mission.

Here, she shares what she’s learned in her role at the Air Force and offers advice for those looking to embark on their own audit and financial management transformation journey.

How did you come to lead the Air Force’s audited financial management initiative?

Pierce: It’s been a trip. I learned government accounting and budgeting as an active duty Marine Financial Management Officer, including a stint as a Marine Expeditionary Force Budget Officer and Forward Deployed Comptroller in Kuwait . As a military spouse, I moved around a lot, which gave me the opportunity to see many different applications of accounting. My first step into the private sector was in the Netherlands, where I was responsible for a planning, reporting and financial analysis division for a well-known international manufacturer and distributor of computer storage. Moving from the military to the private sector in a foreign country was a pretty big leap, but it taught me a lot about the basics of accounting and how to apply it to managerial decision-making. Another unique job was assistant comptroller for a county in California, where one of my main duties was to provide analysis to support negotiations with public sector unions. My last position in the private sector was as a senior operations and maintenance (O&M) financial analyst at Southern California Edison’s San Onofre Nuclear Generating Station. It was a great job, as the information I provided was a much appreciated key input for several major critical engineering and management decisions. After relocating to the DC area, I assisted the military in their military pay turnaround efforts as a contractor. Eventually, I had the opportunity to work as a consultant with the Air Force Medical Service, which I really enjoyed. From there I joined the Defense Health Agency as Chief Financial Reporting and Compliance Officer. In this role, I oversaw remediation efforts for numerous systems and business processes. I have to say that I missed working with the Air Force and was thrilled to come back to be part of this team when the opportunity presented itself.

When I came back to the public sector, I had this outside perspective on what works and doesn’t work in the private sector. It’s not just government that has audit challenges – there have been a few audit issues I’ve encountered in the commercial realm as well. But private companies just think a little differently about these things. In government, everyone thinks about building and executing 100% of the budget and being perfect accountants. The private sector wants to maximize profits and is very used to using estimates to meet the standards of accounting principles, so the approaches to financial and accounting management are quite different. I try to bring that perspective and that experience to my work and my mission today.

To what do you attribute your success in the Air Force?

Pierce: My people. I say this because to do my job I need to be able to trust, develop a vision and a strategy that I communicate to all stakeholders – above, through and outside the organization. A big part of developing and executing our strategy involves listening to my team and understanding their “weak spots”. It’s my job to try to remove those weak points so that my team can do their job. I think being able to bring in people who are willing to take risks, who are willing to try new things – to think differently – has really made our strategy a success. I tell everyone, it’s not me, it’s really everyone who works with me. This is not hyperbole; It’s the truth. That’s why our audit went as quickly as it has since I joined the Air Force.

What auditing and financial management success stories have you witnessed during your time in the Air Force?

Pierce: Per Office of Management and Budget Circular A-123, the Air Force is required to have an internal control program. This means that we are supposed to be able to assess all of an entity’s financial and operational controls and tell Americans whether or not they can trust those controls. It’s hard to do that at DOD because there are so many controls to consider in the business. To meet this requirement, my team partnered with the Air Force Audit Agency. By partnering with the entire Air Force, we were able to achieve positive results a full year ahead of schedule. Being able to identify problems internally before someone outside the Air Force identifies them helps us recognize where we still need to improve. It also adds much-needed credibility to our financial reports and budget results.

What is the Air Force’s biggest obstacle to obtaining an unqualified audit opinion?

Pierce: Systems, systems, systems! Do you remember what I said about pain points? We have over 150 systems that have a direct impact on financial statements. We have systems that feed other systems that eventually reach a general ledger, and that creates our financial statements. Let’s take civilian payroll as an example: we have a system that tracks an employee’s compensation plan and rate of pay. Then this system connects to a timesheet, which is linked to another system. All of these disparate steps and systems must work together to ensure the employee is paid correctly, down to the penny. But when we audit this process, we have to prove that these systems are actually transmitting the correct data. This is where the verifier comes in and asks us to save these transactions. The more systems you have, the more difficult it becomes.

Unfortunately, many of our systems are very old, which introduces a number of cybersecurity and accounting compliance issues. We are making progress in this area, but honestly, we need to get rid of some of our old systems and streamline the whole process to be successful on our audit journey.

What are your priorities for fiscal year 2022?

Pierce: The Air Force audit’s number one priority, which is also the Secretary of Defense’s priority, is to get our fund balance downgraded with material weakness in the Treasury this year. It’s going to be difficult, but it’s something we’re already tackling. Although we must match our records with those of the Treasury, it is essential to know exactly why we do not agree, to understand the differences, before making the required adjusting entries, as we all do with our personal bank reconciliations. .

We also want to make progress in the field of military equipment. I always like to put this in operational terms because it helps us understand asset values, construction costs and inventory balances so we don’t lose valuable assets in the process and can produce reliable financial data on assets to support these tough budget decisions. We have done a lot of work to assess and measure the value of our assets and we have done what we must do in accordance with accounting principles to achieve this. Now it’s up to us to prove it with data and documentation that stands up to audit scrutiny.

What advice would you give to others working in government financial management?

Pierce: Here in the Air Force, it’s hard to change things quickly. And that’s a common challenge for the DOD and the government in general. You have to be really determined to make things better. Don’t get frustrated with bureaucracy; don’t sit down and say, “What’s the point? We will never get there. Just start small. If you see something in your process that doesn’t add value, suggest another way. Or if you see an opportunity for process improvement, make this suggestion. For inspiration, take inspiration from other government agencies or even the private sector. Good ideas are everywhere, and they’re free. Never stop looking for those small wins – sometimes the smallest change can have the biggest impact.

Find out how Deloitte’s team of experts can help your agency undertake financial management and audit transformation.

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