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<div><p>CoverFinancial Improvement and Audit Readiness MethodologyAssertion Work Product ExampleTest Plans and Test ResultsDetailed Activity 1.3.3 - Execute Tests of Controls (Reporting Entities)Detailed Activity 1.3.4 - Summarize Test Results (Reporting Entities)Detailed Activity 1.5.3 - Execute Tests of Controls (Service Providers)Detailed Activity 1.5.4 - Summarize Test Results (Service Providers)Detailed Activity 1.5.5 - Identify, Classify, and Evaluate Deficiencies (Service Providers)NOTE: The Tool/Template/Work Product in this workbook includes an internal control test plan template and instructions for using the template, as well as two example test plans. Financial Reporting Objectives and Control Activities would be identified if the template is properly completed.Table of ContentsTest Plans and Test Results - Template, Template Instructions, and ExampleTest Plan Template See spreadsheet titled "Test Plan - Template" and "Test Plan - Results - Template"Test Plan Template Instructions See spreadsheet titled "Test Plan - Instructions"Example Test Plan #1 See spreadsheets titled "SBR Test Plan - Example #1" and "SBR Test Plan - Results - EX #1"Example Test Plan #2 See spreadsheet titled "E&amp;C Test Plan - Example #2" and "E&amp;C Test Plan - Results - EX #2"</p></div> <div><p>Test Plan - TemplateTest Plan - Control Background, Test Procedures, Test Results, and Evaluation1DoD Entity4Preparer2Financial Statement Line Item(s)5Preparer'sPhone #3Business Cycle(s)/Assessable Unit/Sub-Assessable Units6Documentation Location7Financial Statement Assertion(s)8Key Risk(s) of Material Misstatement (ROMM)9Financial Reporting Objective(s) (FROs)10Control Activity Description11Test Objective(s)12Control Type13Control Frequency14Testing Period15Test Method16Transaction Universe and Reconciliation17Sampling Technique18Sample Size and Basis19Acceptable Number of Deviations/Tolerable Misstatement20Location of Testing21Test Description22Test Procedures and Testing Attributes23Test Results24Test ResultsEvaluation of Test Results25Control Effectiveness Conclusion26Tester's Signature &amp; Date27Supervisor's Signature of Acceptance &amp; Date </p><p>&amp;"-,Bold"TEMPLATE</p><p>Template Test Plan and Test Results Activities 1.3.3 and 1.3.4 (Reporting Entity)/1.5.3, 1.5.4, and 1.5.5 (Service Provider)&amp;P</p></div> <div><p>Test Plan - Results - TemplateTest Plan - Test Work Table Sample #Sample ID # DescriptionTesting AttributesSample Pass or Fail?Description of Exception/RationaleWork Paper ReferenceAB1Pass2Pass3Pass4Pass5Pass6Pass7PassTotal Sample Failures:00</p><p>Tickmark Legend0No Exception1Exception</p><p>&amp;"-,Bold"TEMPLATE</p><p>Template Test Plan and Test Results Activities 1.3.3 and 1.3.4 (Reporting Entity)/1.5.3, 1.5.4, and 1.5.5 (Service Provider)&amp;P</p></div> <div><p>Test Plan - InstructionsTest Plan - Control Background, Test Procedures, Test Results, and Evaluation1DoD EntityEnter the name of the component (e.g., Army, Navy, Air Force) or other defense organization (i.e., DCMA, DTRA, DLA).4PreparerEnter the name of the person completing the Test Plan form.2Financial Statement Line Item(s)Enter the financial statement line item.5Preparer'sPhone #Enter the preparer's office phone number.3Business Cycle(s)/Assessable Unit/Sub-Assessable UnitsEnter the name of the high level end to end business cycle (i.e., Hire to Retire, Procure to Pay, Budget to Report) and specific sub-process associated with the control activity (i.e., disbursement of civilian payroll).6Documentation LocationIf applicable to the test being performed, cite the location where documents (to support test) are stored. Also cite the office/organization responsible for maintaining the documentation.7Financial Statement Assertion(s)Identify the financial statement assertion (Existence or Occurrence), Completeness, Valuation, Rights and Obligations, or Presentation and Disclosure) that control activity is designed to meet. 8Key Risk(s) of Material Misstatement (ROMM)Identify the key risk(s) of material misstatement which may occur in the financial statement line item, accounting application and associated business process. Note: The risks of material misstatements must be from the listing of key risk(s) of material misstatements in Section 5 or Appendix B (sections B.1.1, B.2.2, B.3.2, and B.3.3) of the FIAR Guidance.9Financial Reporting Objective(s) (FROs)Identify the financial reporting objective(s) that is/are relevant to the aforementioned business process(es) and mitigates the identified key risk(s) of material misstatement. Note: The financial reporting objective(s) must be from the listing of financial reporting objectives/outcomes in Section 5 or Appendix B (sections B.1.1, B.2.2, B.3.2, and B.3.3) of the FIAR Guidance.10Control Activity DescriptionIdentify the control activity that is currently in place to mitigate the key risk(s) of material misstatement and achieve the aforementioned financial reporting objective(s). Include a detailed description of the control activity, noting the following:1) Who performs the control activity? For manual control activity, there should be a preparer and reviewer/approver. 2) How is the control activity performed? 3) How (and when) frequently is the control activity performed?4) How is performance of the control activity documented (i.e., what forms are used)?5) How is performance of the control activity evidenced (i.e., signature and date on form)11Test Objective(s)Enter the purpose/objective of the control test (e.g., to verify that the control activity is operating as described and intended throughout the organization)Example: Verify that the Fund Balance with Treasury Reconciliation: is performed timely and by authorized personnel; is reviewed and approved by appropriate personnel; and identifies reconciling items which are researched and resolved via appropriate adjusting entries. 12Control TypeIdentify whether the control activity is performed manually (e.g., manual authorization, review or reconciliation, etc.), is automated (i.e., system edit checks, system access restrictions and authorizations, automated review and approvals, etc.), or performed manually using system generated information (i.e., physically verifying existence of inventory using system generated inventory report).Note: Control activity should be documented on the "Controls Assessment" form.13Control FrequencyNote the frequency with which the control is performed (e.g., annual, monthly, weekly, daily, recurring). Note: Frequency with which control is performed, number of individuals performing control and number of locations where control is performed must be considered as these factors determine sample sizes to be selected for testing.14Testing PeriodIdentify the timeframe for selecting transactions for control tests (e.g., all disbursements from October 1, XXX1 to March 31, XXX2).15Test MethodDocument the test method(s), to be used to execute control test The four types of tests are: Inquiry, Observation, Examination, and Reperformance. Note: Detailed explanation of each of the test types can be found in Section 3.E of the FIAR Guidance.16Transaction Universe and ReconciliationDocument the transaction universe (i.e., all civilian payroll payments made between October 1, XXX1 and December 31, XXX1) and reconcile the sum of the individual transaction balances (i.e. population) to the general ledger (or equivalent).Note: The transaction universe is any entire collection of transactions or other whole set of items for a given period of time from which we wish to draw conclusions, and from which the sample will be drawn.17Sampling TechniqueDocument the method used to select the sample. Note: The FIAR Guidance requires random sampling for tests of controls. </p><p>18Sample Size and BasisDocument the sample size, and describe rationale for sample size selected. Note: Guidance for determining sample sizes can be found in Section 3.E of the FIAR Guidance. 19Acceptable Number of DeviationsDocument the acceptable number of deviations (i.e., how many exceptions are allowed before control fails the test?) Note: Guidance for determining acceptable number of deviations can be found in Section 3.E of the FIAR Guidance.20Location of TestingNote the location where the test will be performed (e.g., Reporting Entity Headquarters, DFAS Cleveland, etc.)21Test DescriptionProvide a summary of the test.Note: The test should be designed to ensure that the test objectives (Item 11 above) are satisfiedExample: Verify that the Fund Balance with Treasury Reconciliation has been completed and reviewed and all reconciling items have been researched and corrected by examining 3 months of FBWT Reconciliation documents for evidence of timely completion, preparer and supervisory review and approval, and timely and accurate resolution of reconciling items.22Test Procedures and Testing AttributesExplain the test procedures in detail. List each step to be performed to ensure that the test objective is achieved. Identify the testing attribute(s), or element(s) or feature(s) of control activity that the control test is seeking to validate. Example: For each monthly FBWT Reconciliation document selected, examine the reconciliation and all associated documentation (JV forms, etc.) to ensure that: Attribute 1. Reconciliation was performed timely (month end- or within 5 business days thereafter)Attribute 2. Signature and date of preparer exists to evidence performance of reconciliation.Attribute 3. Reconciliation identified errors/exceptionsAttribute 4. Errors were researched and corrected through appropriate adjusting entriesAttribute 5. Documentation exists to support resolution of errors Attribute 6. Reconciliation is reviewed by appropriate personnel (supervisor) and evidence exists to support review </p><p>23Test Results Describe the results of the test work performed (see test work table below). Document the number of sample items where at least one attribute was not met and also describe the number of errors associated with each attribute (e.g., noted that for 17 out of 45 sample items, there was at least one error. Specifically, we noted that for 10 of the 45 sample items, the reconciliations were not completed timely (Attribute 1) and for 12 of the sample items, there was evidence of supervisory review (Attribute 6).)Evaluation of Test Results24Control Effectiveness ConclusionBased on the results of testing, state whether the control activity is (is not) operating effectively to mitigate the key risk of material misstatement and achieve the financial reporting objective. The control activity is deemed not to be operating effectively, if the number of exceptions (e.g., number of samples that had at least one error) exceed the maximum number of errors listed in the FIAR Guidance. 25Tester's Signature &amp; DatePrint the form, and have the tester sign and date this block attesting to the accuracy of the test plan. Note: Electronic signature is acceptable as well (e.g., "/s/ John Smith")26Supervisor's Signature of Acceptance &amp; Date Print the form, and have the tester's supervisor sign and date this block to indicate his review and acceptance of the test plan and documented test results. Note: Electronic signature is acceptable as well (e.g., "/s/ John Smith")</p><p>&amp;"-,Bold"TEMPLATE INSTRUCTIONS</p><p>Template Instructions 1.3.3, 1.3.4, &amp; 1.3.5 (Reporting Entity)/1.5.3, 1.5.4, &amp; 1.5.5 (Service Provider) Work Product-Test Plan, Test Results, and Summarized Test Results&amp;P</p></div> <div><p>SBR Test Plan - Example #1Test Plan - Control Background, Test Procedures, Test Results, and Evaluation1DoD EntityDFAS Columbus (CO)4PreparerJohn SmithDFAS Columbus (CO)2Financial Statement Line Item(s)Gross Outlays - Statement of Budgetary Resources5Preparer'sPhone #XXX-XXX-XXXXGross Outlays - Statement of Budgetary Resources3Business Cycle(s)/Assessable Unit/Sub-Assessable unitsProcure to Pay/Vendor Pay/Disbursing6Documentation LocationDFAS CO - Audit Readiness OfficeProcure to Pay/Vendor Pay/Disbursing7Financial Statement Assertion(s)Valuation/Accuracy, Existence, Rights and ObligationsValuation/Accuracy, Existence, Rights and Obligations8Key Risk(s) of Material Misstatement (ROMM)1. Recorded outlays are for invalid or unauthorized transactions and/or are not supported by disbursement evidence (SBR Wave 2, ROMM #10)3. Outlays and adjustments are reported at incorrect amounts (SBR Wave 2, ROMM #36)1. Recorded outlays are for invalid or unauthorized transactions and/or are not supported by disbursement evidence (SBR Wave 2, ROMM #10)3. Outlays and adjustments are reported at incorrect amounts (SBR Wave 2, ROMM #36)9Financial Reporting Objective(s) (FROs)1. Outlays represent valid, authorized transactions and pertain to the entity (SBR Wave 2, FRO #55)2. Outlays are recorded at the correct amounts (SBR Wave 2, FRO #58)3. Outlays are recorded in the proper period (SBR Wave 2, FRO #60)4. Outlays are in an amount not exceeding the obligation, authorizing the outlay (SBR Wave 2, FRO #62)1. Outlays represent valid, authorized transactions and pertain to the entity (SBR Wave 2, FRO #55)2. Outlays are recorded at the correct amounts (SBR Wave 2, FRO #58)3. Outlays are recorded in the proper period (SBR Wave 2, FRO #60)4. Outlays are in an amount not exceeding the obligation, authorizing the outlay (SBR Wave 2, FRO #62)10Control Activity DescriptionMultiple times per day, the Disbursement Officer (Certification Section) reviews the Disbursement Voucher (prepared by the Accounting Technician) and supporting payment documents (Invoice, Receiving Report and Obligating document) for appropriateness and accuracy by agreeing the information in the invoice against the same fields in the Receiving Report and original Obligating document prior to certifying the voucher for payment. He documents his review and approval by signing and dating the voucher.Multiple times per day, the Disbursement Officer (Certification Section) reviews the Disbursement Voucher (prepared by the Accounting Technician) and supporting payment documents (Invoice, Receiving Report and Obligating document) for appropriateness and accuracy by agreeing the information in the invoice against the same fields in the Receiving Report and original Obligating document prior to certifying the voucher for payment. He documents his review and approval by signing and dating the voucher.11Test Objective(s)To verify that the Disbursement Officer reviewed the Disbursement Voucher and supporting payment documents to ensure that the documentation exists, is sufficient, and supports the validity and accuracy of the payment made. The test will also verify whether documentary evidence exists to support his review and approval (i.e., signature and date on payment voucher).To verify that the Disbursement Officer reviewed the Disbursement Voucher and supporting payment documents to ensure that the documentation exists, is sufficient, and supports the validity and accuracy of the payment made. The test will also verify whether documentary evidence exists to support his revi...</p></div>

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