Thomas W. Harker, assistant secretary of the Navy for financial management and comptroller, and Vice Adm. Dixon Smith, deputy chief of naval operations, fleet readiness and logistics, hosted an audit roadshow in Navy Region Southeast for installation and tenant leadership teams within 50 miles of three Naval installations in Northeast Florida, March 27 and 28.

The audit roadshow educates commanders on the upcoming Navy-wide full financial statement audit (FFSA) of buildings, equipment and parts, and an audit SECNAV expects commanders to demonstrate 100 percent accountability of their inventory.

“This is not about audit for audit’s sake; it is about audit for the lethality of warfighting,” said Vice Adm. Smith, emphasizing the importance of accurate inventory to get the right part to the right person at the right time, every time.

The Navy’s first ever FFSA was completed and disclaimed in fiscal year 2018 due to inadequate financial reporting and accountability, and the inability of the auditors to substantiate the information provided to them. Buildings on Navy inventory lists had long been demolished; newer buildings already a decade old were not found on any list. Supply issues experienced by Navy leaders at different levels led some commands to stockpile parts for a rainy day, only for the parts to be forgotten in a storage locker or Conex box. 

Upkeep and repair funds are tied to buildings – when a building isn’t inventoried properly, it can’t get needed repairs without funds getting pulled from someplace else. Stockpiling parts confuses supply and demand signals, negatively affecting Navy logistics in the future. Harker and Smith laced examples through their presentation, touching on factors that led to poor inventory practices and the critical consequences that resulted.

Furthermore, from a financial standpoint, Harker stated, the Navy needs to change the current culture that if a command doesn’t spend its money, it may negatively impact future budgets. The truth is while Navy wants to spend all its money each year — toward immediate needs of all kinds of warfighters everywhere — giving back a portion of your budget on any particular year won’t have immediate consequences. Only continued fiscal returns would.

Secretary of the Navy Richard V. Spencer established eight audit priorities following the disclaimed audit to bolster the Navy business of warfighting. Harker and Smith are using the audit roadshow to deliver to commanders throughout the Navy the message to remove excess Inventory (Navy Working Capital Fund-Supply Management) and Operating Materials and Supplies from the shelf; improve accuracy of what is in inventory records to 100 percent; implement standard processes for receiving and issuing inventory; and increase the Navy’s ability to get the right part to the right person at the right time — every time.