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Maritime Logistics Community News : Autumn 2009
20 naVY SuPPLY nEWSLEttER autumn 2009 Fleet Headquarters – Chief Staff officer (Support) Compliance and Assurance Framework Article. Not everything that counts can be counted, and not everything that can be counted counts. BY CaPt a. GRunSELL, Ran and CmdR S. WHEELER, Ran Background For Navy, the Compliance and Assurance Framework (CAF) was formed in 2006, following several problems Navy had with reporting and controlling asset management. Defence audit summarised Navy’s key shortcomings in regard to how Navy demonstrated accountability and records for stores, Articles-In-Use (AIU) accounts and stock control. Further, the Management Audit Branch (MAB) was critical of Navy’s ability to meet the requirements of stock-takes and considered the management of AIUs was poor. Whether Navy was using SLIMS or SDSS or AMPS(PA) to keep track of public assets, our overall score card, for Fleet Units in particular, could have been better. Finally, the results of these shortcomings are ultimately reflected in the (Navy) Group’s annual Financial Statements, which for some years, cast doubt on the confidence held for Navy’s ability to manage public assets. For some years, the Navy’s approach towards managing these activities lacked consistency, internal discipline and was often viewed as a responsibility belonging to the Naval Stores department of a Major Fleet Unit, or in the case of tender (non-self-accounting) vessels, the parent Establishment. Indeed, inventory management and stock-taking reporting, in the context of Fleet units, continues to be the responsibility of the Commanding Officer of Major Fleet Units (MFU), or in the case of tender vessels, the OIC of the Fleet Logistic Support Element (FLSE). To complicate matters, the evolution of the Force Element Groups, System Project Offices (SPO) and the subsequent proliferation of different inventory management systems across the ADO generated a reporting environment punctuated with overlapping and contradictory responsibilities. Also, as the DMO matured as a Prescribed Agency, the roles and responsibilities of SPOs, in particular, became clearer and lead to a greater involvement with the management of public assets. Therefore, consequent to reviews into Defence asset management, a greater level of attention was given to the asset management processes, which resulted in some concern from MAB and the Australian National Audit Office (ANAO). Across Defence Compliance and Assurance Framework (CAF) was introduced with the intent to change the way ‘things are done around here’ and to align metrics to comply with the ADO’s financial statements. To achieve this outcome, Navy embarked upon a journey of change that would affect our business processes and procedures, functional relationships, Enterprise Resource Planning (ERP) system connectivity and culture. For Fleet Units, the net sum changes to the way we have done business for almost two decades, provides a substantial challenge. How does the CaF Work? There are two principle components to the CAF which focus on reporting asset management in the (mandated) ADO ERP system, known as the Standard Defence Supply System (SDSS). Firstly, the System IT Controls Framework (SITF) is designed to provide an electronic check-list and requires account managers to respond to plain English questions about assets management, controls, such as musters, security, distribution and custodians of accountable (permanent) items to name a few. This check-list, which aims to capture how the unit is travelling (in a stock-take sense), is known as the Self Assessment Tool (SAT). The routine completion of the SAT should be a straight-forward exercise of following the requirements drawn from a common reference, but for Fleet units, the SAT debut was anything but straight-forward. Initially, Fleet units could only meet the standard for 40% of SAT controls. In 2008, the Fleet Logistic Support CAF team commenced work on developing an equivalent tool for use with the MFU returns (MFU SAT). This ‘fleet-friendly SAT’ has been reported twice with results in the order of 85% compliant. Although an improvement and a step forward, the MFU-SAT is not fully compliant with the ADO CAF requirements and needs more work to align the controls or assessment questions. Given the latest version of the SAT reflected several changes to previous versions, there exists a compelling need for a customised MFU SAT. Being an IT component, electronic reporting tools should be relatively easy to adopt, however for Fleet units, this is not the case. The (ADO) SAT derives its authority from the Defence/Electronic Supply Chain Manual (ESCM), whereas Fleet Units derive their accounting legitimacy for onboard SLIMS, from NAVSUPMAN 2. To summarise, when comparing the ESCM and NAVSUPMAN 2, the latter provides insufficient guidance and lacks depth and clarity, which results in some loss in translation when completing the SAT. There is also a language barrier in terms regarding ESCM forms, SDSS screens and other functionality which requires alignment to the idiosyncrasies of the maritime environment. To summarise, although the usefulness and relevance of the SAT are exacerbated by the absence of SDSS in MFUs, and the reporting controls prescribed in the SAT do not align with all the business processes or stock-taking activities under NAVSUPMAN 2, FLS has an imperative to move forward through indentifying ways ships can test for compliance within the intent of the SITF.