INDIANAPOLIS, Ind.  –   Defense Finance and Accounting Service (DFAS) provided crucial support to help the Defense Logistics Agency (DLA) achieve its first clean audit for the FY2024 National Defense Stockpile Transaction Fund (NDSTF) financial statements. DLA took responsibility of the NDSTF in 1988, making the clean audit a significant milestone. Currently, the DLA manages $950 million in assets for the NDSTF.     

“DFAS leveraged its extensive audit experience across customers, leaning on our prior success achieving clean opinions and addressing Fund Balance with Treasury (FBwT) material weaknesses to provide DLA with valuable insights throughout the audit process,” said David Bush, director of Audit Support at DFAS Columbus.  

Bush noted from the outset of the audit process that DLA embraced DFAS as full partners, ensuring DFAS was actively involved in all aspects of the audit cycle. Consistent communication was critical at the working and senior management levels, including meetings with the independent public accounting firm, sharing data and insights openly, and working together to address challenges that arose. 

The National Defense Stockpile (NDS) is vital to national security holding critical materials essential to producing weapons, aircraft, and electronics for national defense. Many defense systems rely on minerals that are either scarce or sourced from limited suppliers. The NDS helps maintain production even if imports are interrupted. Expanding the NDS is a priority for the president and secretary of defense. 

Achieving the clean audit for FY24 wasn’t without hurdles. Current deadlines imposed by the Office of Management and Budget necessitated a contract extension, extending the audit cycle to February 2025 to allow thorough testing of the Transaction Fund’s beginning balances before proceeding to end-to-end payables testing.  A further challenge involved providing sufficient evidence to support collections, disbursements, and appropriations received, crucial for establishing the opening balances for FY24.    

“I think the biggest lesson learned from this experience is the amount of resilience that is required to succeed,” Shawn Lennon, DLA’s former deputy chief financial officer said. “DLA could not have achieved this clean audit opinion without the support we received from DFAS. Providing the IPA with sufficient, appropriate evidential matter required DLA and DFAS to commit knowledgeable resources over an extended period of time.” 

Lennon added that DFAS’ role of reconciling collection and disbursement transactions was vital. By running reports dating back several years, the gathering of information allowed the IPA to assess the cash activity reported in the accounting records, ensuring they were accurate and matched the Treasury Department records.
  
Beyond the unmodified opinion, downgrading the material weakness related to FBwT for the DLA Transaction Fund was yet another significant accomplishment. The downgrade to this material financial statement line-item further strengthened DLA’s financial reporting and internal controls. 

“It validates the hard work, dedication, and collaborative spirit we poured into the recent audit success,” Bush said. “Knowing that our contributions were not only effective but also recognized and valued by DLA, its leadership, and Mr. Lennon fuels our motivation to continue delivering high-quality support and to uphold the highest standards of financial accountability within the Department of Defense.”