W ORKING C APITAL F UND P RESENTED BY : J OHN S. R EIFSNYDER, CDFM G RADUATE S CHOOL I NSTRUCTOR JOHNREIFSNYDER @ COX. NET 1.

WORKING CAPITAL FUND

PRESENTED BY:

JOHN S. REIFSNYDER, CDFM

GRADUATE SCHOOLINSTRUCTOR

[email protected]

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WORKSHOP FOCUS

History of Working Capital Funds (WCF) Organizations Utilizing WCFs Myths About WCFs Basic Concepts of WCFs

Little or No Appropriated FundsBusiness-LikeBudget Formulation and ExecutionCost AccountingStabilized RatesNo-Year Funding

Financial and Operational Concepts and Statements

HOOVER COMMISSION RECOMMENDATIONS

Resulted in passage of The National Security Act of 1947

Business /Commercial type activities of the military departments are to be financed by revolving or working capital funds

Established the Office Of The Secretary Of Defense and the Department Of The Air Force

Created Comptroller positions with overall responsibility for financial systems

Created Joint Chiefs of Staff 3

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WORKING CAPITAL FUND HISTORYAUTHORIZING LEGISLATION

Public Law 81-216

National Security Act of 1947

Codified in 10 USC 2208

The law authorized working capital funds to provide financing of industrial-commercial type activities, and to effectively control cost of programs and work performed

Implemented by several DoD Financial Management Regulations

WORKING CAPITAL FUNDEVOLUTION

1947 – National Security Act of 1947 authorized establishment of Revolving Funds

1950’S AND 1960’S Stock and Industrial Funds

1980’S – Improved product cost information 1981-1985 – Navy ceased free issue of deport level

reparables (DLRs) moved financing to the Stock Fund

1983 – Asset Capitalization Program 1991 – Army/Air Force moved DLRs to stock fund 1992 – Defense Business Operations Fund

established 1996 – The Army, Navy, Air Force and Defense WCFs

were established on December 11, 1996, the Defense Commissary WCF was established in 1999

WORKING CAPITAL FUNDWHAT IS THE WCF?

A revolving fund financial structure established to promote Total Cost Visibility And Full Cost Recovery of support services provided to fund customers

Receives little or no appropriated funding

Uses reimbursements received from customers to fund its operating expenses

Replaced the Defense Business Operations Fund (DBOF) that was established on October 1, 1991 merging the previously established stock and industrial funds and the defense commercial operations

Derives its name from the cyclic nature of its “cash” flow

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APPROPRIATED-FUNDED ACTIVITIES

Rely on annual congressional action Majority of funding is provided on an annual

basis Agencies must obligate the appropriated

funding or “lose” the unobligated balance for new obligations

Without an appropriation, agency operations must stop

Focus more on using all the appropriated funding rather than effective results or efficient performance

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REVOLVING FUND MYTHS Myth – Break even each year with no

profit or loss Fact

Provide customer price stability Produce an accumulated operating result of

zero in the Budget Year Myth – is expensive and an excuse for

poor management Fact

Reports and makes visible all incurred costs

Provides information for both WCF and customer managers to manage

WCF CHARTER REQUIREMENTS

Signed by the Secretary Of Each Service with approval by the Assistant Secretary Of Defense (Comptroller)

Name and location of the activity

Operating agency responsible for managing the activity

Description of function and type of products/services offered

Statement of exceptions

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WCF ELIGIBILITY CRITERIA

Criteria required to be included within the WCF financial structure

Outputs (goods and services produced) can be identified

Approved accounting system is available

Customers identify products/services required

Advantages/disadvantages of establishing buyer-seller can be evaluated

CURRENT WCFS WITHIN DOD

Army Working Capital Fund

Navy Working Capital Fund

Air Force Working Capital Fund

Defense Working Capital Fund

Defense Commissary Working Capital Fund

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WCF BUSINESS AREA CUSTOMERS

DOD organizations

Non-DOD federal government agencies

Private parties and concerns:

Foreign governments

State and local governments

U.S. manufacturers, assemblers, or developers authorized by DOD

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NON-DEFENSE WCFS

Department of Interior Department of Labor Department of Agriculture Government Printing Office Geological Survey Bureau of Engraving and Printing Federal Aviation Administration General Services Administration

OPERATIONAL STRUCTURE Currently the five DoD WCFs employ about

180,000 civilians and 16,500 military personnel

The five funds are expected to generate approximately $120 billion in revenue annually

Finance operations without fiscal year limitations

Sell goods to customers

Use revenue received from customers to replace or buy inventory and finance the production of goods and services

DEFENSE WORKING CAPITAL FUND (DWCF)

FY 2010 DWCF BUDGETFY 2008 FY 2009 FY 2010

Appropriation (Dollars in Billions) $4.0 $1.5 $1.5

Personnel (Full-Time Equivalents in Thousands)

Civilian 180.9 179.6 179.6

Military 17.5 16.5 16.5

Total Personnel 198.4 196.1 196.1

DWCF Program (Obligation Dollars in Billions)

Army 18.8 18.1 16.0

Navy 24.6 25.4 25.4

Air Force 22.7 23.0 21.9

Defense-wide 54.4 47.9 48.6

Defense Commissary 7.1 7.0 7.2

Total DWCF 127.6 121.5 119.1

CUSTOMERSOPERATING FORCES

READINESS COMMANDSAPPROPRIATES

$ FUNDS

CONGRESSAPPROPRIATED

$ WORKINGCAPITAL

AT FUND INCEPTION

REVOLVINGFUNDS

WORKINGCAPITAL $

$

LABOR COSTS DIRECT MATERIALPRODUCTION OVERHEAD

GENERAL &ADMINISTRATIVE

PLACE ORDERS PAY BILL FOR

COSTS/ SERVICES

FINANCES COST OF PERFORMING WORK

WORKING CAPITAL FUNDHOW IT WORKS

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OVERALL OPERATING CONCEPT

Most funds originated at some point of time from an

appropriation or capitalization of existing “equity”

which formed the “corpus”

Have to be authorized in law

A revolving fund financial structure established to

operate on a business-like basis

“Works” on the basis of being reimbursed for goods

and services sold rather than on an appropriated fund

basis

WORKING CAPITAL FUNDCUSTOMER

The purchaser of support services:

Determines requirements

Requests funding through the budget process

Balances readiness requirements and available resources

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WORKING CAPITAL FUNDPROVIDER

The provider is the support activity that produces goods or provides services:

Satisfy customer requirements

Provides best performance at lowest cost

Use unit cost as a tool

Ensures a READY - to - FIGHT Force

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WCF

StockFunds

IndustrialFunds

SupportServices

Pre - WCF

SupportServices

FUNDED BUSINESS ACTIVITIES

COMMISSARIES (DECA) DEPOT MAINTENANCE (ARMY, NAVY, AF) DISTRIBUTION DEPOTS (DLA & NAVY) FINANCIAL OPERATIONS (DFAS) INDUSTRIAL PLANT EQUIPMENT (DLA) INFORMATION SERVICES (NAVY & DISA) LOGISTICS SUPPORT ACTIVITIES (NAVY) PRINTING & PUBLICATION SERVICES (DLA) PUBLIC WORKS (NAVY) REUTILIZATION & MARKETING SERVICE

(DLA) RESEARCH & DEVELOPMENT (NAVY) SUPPLY MANAGEMENT (ARMY, NAVY, AF,

DLA) TRANSPORTATION (TRANSCOM, NAVY)

WORKING CAPITAL FUND (WCF) BASICS - WCF OPERATING

RESULTS

Stabilized Rates (Set in Advance)

Cost Control (Execution Year)

Time Lag

Revenue Costs

Customers Providers

Loss

Gain

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OPERATING CONCEPTS Builds on business-like principles

Operations related to the needs and requirements of customers

Strives to break even financially

Requires a customer-provider relationshipCustomers determine requirements

Provider reimbursed for products/services provided to customers

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OPERATING CONCEPTS – CONT’D

Focus on total cost visibility and full cost recovery for the Department’s support functions

Business-like cost accounting systems with emphasis on cost per unit of output

“Free” of many Congressional funding limitations

Long term objective is to break even

OPERATING LIKE A BUSINESS Must produce

Quality productOn timeAt least possible cost

Buyer-Seller Relationship Customers pay for what they receiveProduction dependent upon customer ordersMust remain competitive

Operates on a break even point basis over time Has its own inventory Purchases and depreciates capital equipment

STABILIZED PRICE AND RATE MANAGEMENT

WCF business entities operate on a break-even basis Customer prices and rates are established on an end

product basis Prices and rates are established during the budget

process at levels estimated to recoup: - budgeted cost of goods and services provided- prior period gains and losses- as well as approved surcharges for capital asset acquisition

Budget process is the mechanism used to ensure adequate resources are budgeted in the customer’s appropriated fund accounts to pay the established prices and rates

Stabilized rates protect the customer’s buying power…which ultimately, protects Service readiness

RATE STABILIZATION OBJECTIVES

Provide Budget Stability to Customers

Assure Comparable Funding Levels Between WCF and Customer Funds

Ease in Budgeting for Inflation

Develop More Realistic Programs

Promote More Efficient Planning

Foster Better Program Execution

STABILIZED RATE CONCEPT POLICY

Established to Recover: Operating Expenses Profits (Losses) Working Capital To Acquire Assets Plan AOR to Reach Zero at the conclusion of the

execution year Rates Held Stable Throughout Each Year

Exclusions: FMS Non-federal Customers Base Closures Inventory Sales-tenants/satellites Army RESET

WCF BUSINESS AREAS

Two categories of business areas for rate setting purposes

Supply Management

Uses commodity costs in conjunction with a cost recovery factor to establish customer rates/prices

Non-supply Management (depot maintenance, R&D, distribution depots, etc)

Use unit cost rates based on output measures, (cost per direct labor, cost per product, cost per item received or shipped)

SUPPLY MANAGEMENT

Finances the costs of inventories, supplies, and equipment from the time material is requisitioned until issued for use or consumption. Specific objectives are to:

Provide a decentralized system of sound financial and supply management

Provide a flexible system responsive to supply requirements

Provide a uniform and simplified accounting and reporting system

NON-SUPPLY MANAGEMENT Finances end-items such as

Headquarters Services, common services, maintenance depots and research and development activities

Normally develop and assign unit costs based on identified output measuresAssigned unit costs include cost per

direct labor hour, cost per product unit, cost per item received, cost per item shipped, and cost per accounting line processed

COST REIMBURSEMENT PROJECT ORDERS

Performing activity will notify the ordering activity promptly upon learning of any significant change in costs

If it becomes evident that goods or services to be provided will exceed the estimated costs, the performing activity will immediately notify the ordering activity and curtail or cease performance, as necessary, to avoid exceeding the estimated cost.

May result in violation of 31 USC 1301 and 1341

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CUSTOMER’S WORKLOAD PROJECTIONS

Customer’s Workload Projections Affect More Than One Business Area:Turns in reparable andorders new stock

SupplyManagement

Transportation

DistributionDepot

DepotMaintenance

1 2

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Stores DLR for eventualdelivery to customer

Ships Depot Level Reparable(DLR) to Depot Maintenance

Repairs DLR and ships toDistribution Depot

Customer

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Direct Costs Direct Labor – welder Direct Materiel – engines Direct Other – TDY, Contract Services

Indirect (Overhead) Mission

Within Shop– supervisor Above Shop– director

Non Mission BOCIE – janitor G&A – activity commander

Accumulated Operating Results (AOR) Recovery

WHAT’S IN THE RATES WCFS CHARGE THEIR CUSTOMERS? (DEPOT MAINTENANCE)

A rate has three components:

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WHAT IS ACCUMULATED OPERATING RESULTS?

Remember the WCF goal is to break even? Why break even? Because WCFs need just

sufficient spending authority to operate Any excess takes away from the readiness money

for operations The mechanism for controlling profit and loss is

Accumulated Operating Result (AOR). What’s the difference between NOR and AOR?

Net Operating Result (NOR) is your profit and loss statement. Every business has one.

It’s your operating results for the current year AOR is cumulative gains or losses from operations

In private business, AOR would be considered retained earnings

It’s a running total of NORs

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This is used for Execution! How are you doing

This Year?

This is used to calculate your rate

AOR

NOR

NOR

NOR

NOR

NORCum

ulat

ive N

ORs

WORKING CAPITAL FUND (WCF) BUDGET

Developed from the bottom up by element of direct expense (Labor, Material, Contractual Services, Etc.) and top down for overhead costs (Production Overhead Expense And G&A)

Constrained By Factors Not Found In Private Sector Businesses:

OSD/OMB Directed Inflation Rates

Limitations on Manpower

Legislative Constraints

Stabilized Prices

Zero Profit/loss Goals

INTERNAL OPERATING BUDGET (IOB)

Cost center budget providing an approved operating plan for each activity/organization

IDENTIFIES:

Direct/indirect labor hours

Expenses - salaries & wages, materials & other

PURPOSE:

Control expenses

Develop cost application rates

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IOB FUNCTIONS

Fixes responsibility for controlling resources and costs

Provides means of monitoring and controlling resources and costs

Facilitates comparison between projected and actual performance

Basis for developing work center rate

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IOB DEVELOPMENT

IOB Development – Direct CostDirect cost for labor and material are

projected by considering both historical costs and the projected workload for each productive cost center

Consider other direct costs for contractual support and TDY for depot field teams

Total direct costs for each productive cost center are rolled up to a total depot budget

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IOB DEVELOPMENT – CONT’D

IOB DEVELOPMENT - OVERHEAD COSTS

Developed by element of expense

Distributed to the productive cost centers based on anticipated direct labor hours for each productive cost center

Two basic types of overhead cost:

Production overhead - overhead identifiable to the productive cost center

General & Administrative (G&A) - not reasonably identified to a productive cost center

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ANNUAL OPERATING BUDGET (AOB)

Funding document which provides the basis for earning budget authority

Includes an operating and capital budget

Operating budget identifies unit cost output and associated unit cost goal

Capital budget provides obligation authority for investments

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PROJECT ORDERS

Same as a commercial contract to the customer’s appropriation

Extends beyond the life of the appropriation. Up to five years after the appropriation expires for new obligations

Over-billing may create a 31 USC 1517 violation

Normally issued for the overhaul or manufacturing of a specific number of items within a specific time frame for a specific price

WCF activity should incur costs of not less than 51% of the total costs to performing the work

The WCF must not accept the project order if the requirements of the project order regulations are not met

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ECONOMY ACT ORDER CHARACTERISTICS

Order Not Meeting “Project Order” Criteria

Expires With Appropriation Cited

Limited To Service In Current Fiscal Year

Involves Routine Maintenance Or Day-to-day Operation

May Cover Education, Training, Storage, Welfare Or Travel

WCF Activities Who Incur Costs Against Expired Economy Act Orders May Violate 31 USC 1517

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COMMANDER’S ORDERS

Work of an emergency nature

Conditions:

Written assurance or equivalent documented communication that an order will be issued promptly

Bona fide need

Expires not later than 30 days from date of issuance

Signed by the commander or his authorized representative

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ORDER IMPACT ON CUSTOMER/ PROVIDER “BOOKS”

$ 84K

Should complete work by30 Sept. 2016

$ 84K

Must be de-obligated if not Completely liquidated by30 Sept. 2016

Unfilled Orders

Unliquidated Obligations

Provider Books

Customer Books

$ 1.216M

$ 1.216 M

Collections

Payment / Liquidation

$ 1.216M

Billed to Customer based on Cost In support of the Project(SF 1080 bill submitted)

$ 1.216 M

Based on SF 1080 Bill

Reimbursements Earned

Expense/Asset

MIPR ACCEPTANCE $ 1.3MFY ’10 – 16 – AvailableTo complete Work thru30 Sept., 2016

Assumes O&M customer

MIPR ACCEPTANCE $ 1.3M

Project Order(DD 448-2)

Orders Received

Obligations

COST ACCOUNTING A specialized branch of accounting which deals

with the determination of cost

Provides management with the tools to plan, budget, control, and evaluate operations

Collects cost and production data

Serves as a subsidiary ledger for the general ledger

Basis of billing for work performed

COST ACCOUNTING - COST ACCOUNTING SYSTEM REQUIREMENTS

Identification of all products and services within an organization

Identification of all costs, both funded and unfunded, of the products and services produced

Underlying discipline:

Relates dollars of cost to product or service produced

COST ACCOUNTING - TWO PRINCIPLE COST ACCUMULATING SYSTEMS

Job Order Costing

Process Costing

COST ACCOUNTING - JOB ORDER COSTING

Each individual job order is tracked independently

Material and parts are “drawn” for a particular job

Labor hours charged by artisans to the job they are working on

Overhead is applied to direct jobs based on predetermined rates

COST ACCOUNTING - PROCESS COST ACCOUNTING

Method of accounting used when it is not possible to accurately associate costs with specific job orders

Permits uniform distribution of labor costs for direct support functions where reporting by individual job order is difficult to identify

DIRECT/INDIRECT COST CENTERS

Direct cost center

Majority of effort is associated with actual production of work

Indirect cost center

People and resources generally do not come in contact with end items

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ELEMENTS OF COST

LABOR

MATERIAL

CONTRACT

OTHER

THESE ELEMENTS OF COST ARE DIRECT WHEN REQUIRED SOLELY FOR THE BENEFIT OF A SPECIFIC CUSTOMER ORDER (JOB ORDER)

CLASSIFIED AS INDIRECT WHEN IDENTIFIED AS SUPPORT TO THE PRODUCTIVE ORDER i.e..PROD. OVERHEAD OR G& A

TYPES OF RATES

Cost application rate

Cost center labor rate for salaries and benefits

Overhead cost applied to that cost center

Excludes:

Direct Material

Other Direct Costs - Contracts, TDY,etc.

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RATE DEVELOPMENT Average labor rate

Base labor

Fringe benefits

Leave

Overhead applied rates

Production overhead

General and administrative expense

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SickLeave Account

AnnualLeave Account

OtherLeave Account

CSRS/FERSAccount

*Other FringeBenefit Accounts

PAID TO EMPLOYEES ON LEAVE

PAID TO GOVERNMENT AGENCIES

Liability accounts for fringe benefits increase from acceleration and decrease from payments. Eventual balance equals zero

*Includes FICA, health insurance, life insurance, and Medicare portion of FICA for CSRS employees

Cost Accumulation and Cost Recovery Fringe Benefit Cycle

ACCELERATION CHART

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COST APPLICATION RATE

Direct labor• Salaries and benefits of personnel directly

identifiable to a specific job Production overhead expenses

Not identifiable to a specific job Within and above shop overhead Mission costs in support of the productive

effort General and administrative expenses

Not identifiable to a specific job Costs in support of activity

COST APPLICATION RATES USE

To apply costs to individual jobs

EXAMPLE:

Average Labor Rate X DLH = Labor Cost

Overhead Rates X DLH = Overhead Cost Applied

Add: Direct Material Cost Other Direct Cost = Total Cost

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WCF COST ELEMENTSDEPRECIATION EXPENSE

Depreciation is the expending of capital assets over the useful life of the asset

Depreciation expense included in the stabilized rates of prices to generate cash

Capital surcharge added to the rates as required

Depreciation on a straight line basis

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WCF COST ELEMENTSMAJOR REAL PROPERTY MAINTENANCE AND REPAIR (MRPM&R)

Costs associated with repair and renovation of buildings, structures, warehouses and other real property owned/operated by the WCF

Expensed in the period when the maintenance and repair occurs

Included in the WCF operating budget

Passed on to customers in the stabilized rates/prices

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WCF COST ELEMENTSMILITARY PERSONNEL COSTS

Included in the total cost of operations of the WCF activities at the Civilian equivalent rates shown in DOD FMR 7000.14R, Volume 11A

Stabilized customer rates and reimbursement to the MPA are not based on the civilian equivalent rates but on the absolute total dollar amount specified in the President’s budget

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WCF COST ELEMENTSMINOR CONSTRUCTION PROCEDURES

Projects costing $100,000 or more but less than $750,000 are funded through the Capital Investment Program (CIP) depreciation

The upper limit is increased to $1,500,000 or less for projects impacting health, safety, or environment

Projects in excess of $750,000 are funded with the Military Construction Appropriation (MCA)

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WCF CAPITAL INVESTMENT PROGRAM

GOAL:To establish the capability for

reinvestment to facilitate mid and long-term cost reduction

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WCF CAPITAL INVESTMENT PROGRAM OBJECTIVES

Improve product/service quality and timeliness

Reduce cost

Foster competitive business operations

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WCF CAPITAL INVESTMENT PROGRAM POLICY

Managers shall:IdentifyPrioritizeJustifyBudget for Capital Assets

Only projects in President’s Budget financed through CIP (substitutes authorized when necessary)

Capital assets funded through WCF capital budget

Financed through WCF reimbursement rates or capital surcharge

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WCF CAPITAL INVESTMENT PROGRAM DEPRECIATION

CRITERIA

Straight line method

Less residual value if it exceeds 10% of the cost of the asset

Commences on month following:

Date of Receipt

Date Asset Installed/ Ready for Use

Equipment and minor construction projects in support of mobilization will not be depreciated

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CASH MANAGEMENT

A management tool designed to identify and control periods of high and low cash balances

High cash balance:

Bills not paid Rates/surcharges set too high

Low cash balance:

Buying inventory in excess of needs Rates/surcharges set too low

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CASH MANAGEMENT – CONT’D

Generating cash is dependent on:

Rates that recover full costs to include prior year losses

Accurate workload projections

Meeting established operational goals

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CASH MANAGEMENT – CONT’D

Cash level criteria

Dependent on accurate and timely data on cash levels and operational results

Maintain 7 to 10 days operational cost and cash adequate to meet 6 months of capital disbursements

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CASH MANAGEMENT – NEGATIVE CASH BALANCE

Caused by:

Negative NOR

Large CIP cash outlays

Billing/reimbursement cycle lag

Inventory increases

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INVENTORY MANAGEMENT - WHAT IS INVENTORY?

Basically inventory is ...

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INVENTORY MANAGEMENTWHAT IS INVENTORY?

Items that support production and customer service

Raw Materials

Work In Process

Operating Supplies

Finished Goods

Spare Parts

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INVENTORY MANAGEMENT CONTROL

Excessive inventories create unnecessary expenses for HandlingStorageSpoilageObsolescence and theft

Inadequate inventory cause:Unsatisfactory servicePurchase price disadvantageExcessive follow- Up costAdditional production cost

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BASIC FINANCIAL STATEMENTS

Statement of Financial Condition

(Balance Sheet)

Statement of Net Cost

(Income Statement)

Statement of Chance in Net Position

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STATEMENT OF FINANCIAL POSITION

Also referred to as the Balance Sheetassets

dollar amount of future economic benefits owned and managed by the agency

liabilitiesdollar amounts owed by the agency

net position (equity)the difference between assets and liabilities

STATEMENT OF NET COSTS

Also referred to as:Statement of OperationsIncome statement

Purposeintended to provide revenue and expense

detailsreports results (net profit or net loss)

Prepared on basis of general ledger 5000 and 6000 account balances

STATEMENT OF CHANGES IN NET POSITION

Reports the beginning net positioneffect of those transactions that caused

the net position to changeending net position

Prepared on the basis of the Statement of Net Costs and the “Financing Sources”

STATEMENT OF CHANGES IN NET POSITION

ITEMS THAT INCREASE NET POSITION

Excess of revenue over cost

Legislative appropriations

Property obtained from another government agency for which no reimbursed is required

ITEMS THAT DECREASE NET POSITION

Excess of cost over revenue

Property provided to another agency for which no reimbursement is expected

Funds returned to the Treasury

Appropriations returned

MANAGEMENT REVIEW

Net Operating Result Measure of an activities revenues against expenses -

equivalent to a commercial firms annual profit or loss Manhour Execution Rate

Measures planned direct labor hours to actual - man-hour execution impacts on the revenue rate, expensing rate and the NOR

Revenue Rate per Direct Labor Hour Rate charged to customers for a direct labor of

production Expensing Rate per Direct Labor Hour

Rate which costs are charged per direct labor hour NOR Formula

Revenue rate - expensing rate x man-hours executed = NOR

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WCF SUBJECT TO ANTI-DEFICIENCY ACT

Significant areas of operations that, if mismanaged, could result in a statutory violation of 31 USC.

Section 1517, Title 31 of the US Code states that if a WCF over-obligates or over-expends dollars associated with its Capital Investment Program (CIP) approved budget, it violates this statute.

WCFs must effectively manage their CIP to ensure that the current Investment Capitalization criteria is complied with

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WCF SUBJECT TO ANTI-DEFICIENCY ACT

31 USC Violations (continued):Per Section 1342, WCFs cannot accept voluntary services.

Per Section 1341:Cannot create cash disbursements that exceed the total cash available.

Misappropriation, Use of incorrect fund type.

Per Section 1301, Augmentation - Funding expenses from one organization with those from another organization. WCFs need to have clear separation and agreements/ISSAs

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WCF SUBJECT TO ANTI-DEFICIENCY ACT

31 USC Violations (continued):DOD 7000.14R, Financial Management Regulation (FMR), Volume 14 also provides DOD Guidance wrt 31 USC violations.

How Serious? COs and Comptrollers have been

terminated for misappropriating funds.

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WCF SUMMARY – ADVANTAGES Effectively relates resources and workload

Identifies costs to do the job Customer pays for what they get

Helps control costs Financial dependent on:

Obtaining customer orders Balancing expenses and reimbursements

Effective means to control overhead Move people to the workload Finance own inventory

Freedom from appropriation cycle limitations Ability to carryover work CRA impacts minimized

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WCF SUMMARY – DISADVANTAGES

Non-WCF managers do not understand Perceived as too costly Rates fixed 2+ years out (crystal ball) Continued reliance on appropriation type reports

and controls

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QUESTIONS?

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Good Luck and Happy Trails

John S. [email protected]