w orking c apital f und p resented by : j ohn s. r eifsnyder, cdfm g raduate s chool i nstructor...
TRANSCRIPT
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WORKING CAPITAL FUND
PRESENTED BY:
JOHN S. REIFSNYDER, CDFM
GRADUATE SCHOOLINSTRUCTOR
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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)
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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
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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
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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
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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
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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
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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)
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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
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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
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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
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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
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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
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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
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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
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COST ACCOUNTING - TWO PRINCIPLE COST ACCUMULATING SYSTEMS
Job Order Costing
Process Costing
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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
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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
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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
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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
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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
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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
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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”
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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
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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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?
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