DEFENSE LOGISTICS AGENCY
HEADQUARTERS
8725 JOHN J. KINGMAN ROAD JUL 2 7 2017
FORT BELVOIR, VIRGINIA 22060-6221

 

MEMORANDUM FOR DEFENSE LOGISTICS AGENCY (DLA) EMPLOYEES

SUBJECT: Independent Public Accountant (IPA) Disclaimer of Opinion

On June 12, 2017, the IPA announced their intent to issue a disclaimer of opinion on the
Fiscal Year 2017 Working Capital Fund (WCF) and General Fund (GF) ?nancial
statements. The IPA speci?cally cited the following four primary areas for improvement:

Supportable beginning balances
0 Information technology controls across DLA and ?nancially signi?cant
applications
Complete and accurate supporting documentation
Reconciliations between the sub-ledger and the general ledger

It is important to note that a disclaimer of opinion is not considered a failure. DLA has
been transparent in its problem areas and identi?ed material weaknesses and critical corrective
action plans where necessary. While the Agency will address all of these primary areas for
improvement, the one area impacting the largest segment of workforce is the ability to
provide complete and accurate supporting documentation within the timeframes. The
Agency is counting on its employees to improve the quality and timeliness of supporting
documentation retrieval and ensuring appropriate retention of records.

Disclaimers of opinion are actually quite common for Agencies undergoing a ?rst-year
audit. As a point of reference, the Department of Homeland Security (DHS) took over ten years
to eventually receive a clean audit opinion of its ?nancial statements. DHS had its share of
disappointments and sometimes needed to backtrack and perform intensive rework. DHS
implemented thousands of changes to policies, processes, controls, and systems. Even though
the task was daunting, DHS achieved a clean audit opinion due to the hard work and
commitment of their 200,000+ employees.

Each IPA audit report will help DLA build a better ?nancial reporting foundation and act
as a stepping stone towards each of its clean audit opinions. Receiving a disclaimer of opinion
on the WCF and GF ?nancial statements is con?rmation that DLA must diligently work its
corrective action plans and material weaknesses. DLA has been a leading force in the
Department of Defense?s journey to auditability and will continue to advance its management
and audit practices.




IIL K. WILLIAMS
Lieutenant General, USA
Director