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Fiscal Year 2010 Department of Army Financial Statements and Notes

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Fiscal Year 2010 Department of Army Financial Statements and Notes 2010 Fiscal Year 2010 United States Army Annual Financial Report America’s Army: Our Families Give Us Strength America’s Army: Our Families Give Us Strength Army Family Covenant We recognize… …The commitment and increasing sacrifices that our Families are making every day. …The strength of our Soldiers comes from the strength of their Families. We are committed to… …Providing Soldiers and Families a quality of life that is commensurate with their service. …Providing our Families a strong, supportive environment where they can thrive. …Building a partnership with Army Families that enhances their strength and resilience. We are committed to improving family readiness by: n Standardizing and funding existing Family programs and services n Increasing accessibility and quality of health care n Improving Soldier and Family housing n Ensuring excellence in schools, youth services, and child care n Expanding education and employment opportunities for Family members ON THE COVER: [main] A daughter clings to her father during a welcome home ceremony. [inset right] A Soldier helps his son explore driver’s seat options, including starting the vehicles, honking the horn, flipping switches and turning on blinkers and fans. [inset left] A family cries while watching the 86th Infantry Brigade Combat Team leave after their departure ceremony in Burlington, VT. DoD photo by Chad J. McNeeley ON THE INSIDE: A Soldier playfully tosses his son, Hunter Johnson, up into the air following the brigade’s deployment ceremony. b Fiscal Year 2010 United States Army*Unless Annual otherwise Financial noted, Report all photos on the cover and inside pages are courtesy of the U.S. Army. (www.army.mil) i Army General Fund and Working Capital Fund Capital Working and Fund General Army A Soldier travels dismounted while on his way back to his outpost from the village of Paspajak, Charkh District, Logar province, Afghanistan. FY 2010 Contents Message from the Secretary of the Army iii Message from the Assistant Secretary of the Army (Financial Management and Comptroller) v Management’s Discussion & Analysis 1 General Fund – Principal Financial Statements, Notes, Supplementary Information, and Auditor’s Report 29 Working Capital Fund – Principal Financial Statements, Notes, and Auditor’s Report 97 John M. McHugh Secretary of the Army ii Fiscal Year 2010 United States Army Annual Financial Report This has been an amazing year for the United States Army. Not only were our men and women deployed in two theaters of iii war for the ninth straight year - ending combat operations in Iraq and ramping up the war effort in Afghanistan - they took on Fund Capital Working and Fund General Army additional missions across the globe and here at home, bringing hope to the flood ravaged plains of Pakistan, Haiti’s shores and New Orleans coast. Those 1.1 million active, guard and reserve Soldiers, and 300,000 civilian employees, are making a difference around the world; serving willingly and selflessly, without fanfare or complaint, standing in harm’s way to defend our way of life. We must continue to ensure they have the best training, equipment and leadership; that their Families have the necessary programs and support back home; and that we care for our wounded and fallen in a manner befitting their service and sacrifice. And we must make certain that the Army, as an organization, is as efficient and adaptable as the American Soldier in the field by being responsible and accountable to the American taxpayer. The Army’s fiscal year 2010 financial statements provide that accountability, disclosing how taxpayer dollars were used to lead, train, organize and equip America’s Army. We are grateful for your support, and mindful of our imperative to find new ways to be more responsive, more efficient and provide taxpayers the value they deserve. We have already begun efforts to identify and implement efficiencies in everything we do, from our business practices and family programs, to our personnel management and equipment acquisitions. We are working as well to eliminate duplication, reduce overhead and excess, and instill a culture of savings and restraint so that we can maintain critical operational capabilities, sustain force structure, and invest in needed modernization. From continuing our in-depth, cost-informed Capability Portfolio Reviews, to transforming the Army’s Generating Force, we are bringing improved discipline to our programs, evaluating and realigning our requirements, and creating institutions and processes that can adapt just as quickly as our combat formations. Despite this past year’s achievements, we know there is more work to do. But with your continued support and partnership, America’s Army can face any challenge, because we are the Strength of the Nation. John M. McHugh Secretary of the Army Mary Sally Matiella Assistant Secretary of the Army (Financial Management and Comptroller) iv Fiscal Year 2010 United States Army Annual Financial Report In fiscal year 2010 (FY 2010), Army financial management responded adaptively to the changing operational needs generated v by the drawdown in Iraq and continued initiatives in Afghanistan. In addition to executing the largest annual budget in Army Fund Capital Working and Fund General Army history, we were able to derive efficiencies that will enable us to align resources more effectively from overhead to direct support of combat operations. While focusing on both budget execution and the efficiencies initiative, we have also made significant progress towards improved financial operations. As the leader of the Army Financial Management and Comptroller (FM&C) community, I am proud to say that we have focused on moving forward on several important initiatives and have seen measurable results. These initiatives include implementation of our new General Fund Enterprise Business System (GFEBS), better integration of cost analysis into the decision-making process, increased emphasis on audit readiness, and further development of our business transformation strategy. As of year-end, the GFEBS has been successfully implemented with 5,500 end users and, in FY 2010, $6.4 billion was obligated using the system. In FY 2011, we anticipate adding over 37,000 additional end users. The GFEBS will provide our accounting and budgeting staffs with more timely data and a better tool to accomplish their responsibilities. Also and of great importance, GFEBS will provide new-to-the-Army cost accounting data that will enable leaders and managers to better focus on the effective as well as efficient use of resources in everyday business decisions across the Army. Another major focus of our attention this year has been continuing the integration of cost analysis into our decision-making process. To cultivate this culture of cost-informed decision making, the Army is executing cost / benefit education and training programs for military and civilian personnel at all levels, supporting both resource management and functional communities. The Army established the graduate level Cost Management Certificate Course in FY 2010 and trained 137 students in this first year. The Army also developed a Cost-Benefit Analysis (CBA) training program to enable resource-informed decision making. Over 1,000 individuals completed the CBA training in FY 2010. In FY 2010, the Army recorded significant accomplishments in several key areas related to audit readiness. The Assistant Secretary of the Army (FM&C) held the first annual Army FIP Conference / Workshop with more than 120 Army command- and field-level attendees and featuring presentations from many distinguished Department of Defense leaders. The Army also built momentum towards meeting the Under Secretary of Defense (Comptroller) priorities of improving the information reported on the Army’s Statement of Budgetary Resources (SBR) and validating the existence and completeness of mission critical assets. Discovery work related to SBR testing and internal controls was completed on a total of 33 locations (including installations, commands, and headquarters). Relating to testing of existence and completeness, the Army completed physical inventories of 5,945 capital assets. We have invested a great deal of time in the past year developing our concept of transformation: what the future of Army financial management should look like. Refinement of the Army Campaign Plan will continue into early FY 2011, and the resulting document will guide the transformation of the Army in coming years. The Army FM&C, as an organization, took the lead on the business operations transformation portion of the campaign plan. Fiscal Year 2010 was a year of great progress for the financial management community in the Army, and we expect that FY 2011 will be the same. Mary Sally Matiella, CPA Assistant Secretary of the Army (Financial Management and Comptroller) A parachute, helmet, and goggles are prepared for Special Forces Soldiers for a jump during Menton Week. vi Fiscal Year 2010 United States Army Annual Financial Report vii Army General Fund and Working Capital Fund Capital Working and Fund General Army “We have magnificent Soldiers, leaders and civilians. They are ordinary people who are doing extraordinary things for our country.” General George Casey, Chief of Staff of the Army viii Fiscal Year 2010 United States Army Annual Financial Report 1 Army General Fund and Working Capital Fund Capital Working and Fund General Army Posting security just outside the walls of a Combined Security Checkpoint. Overview the Army has awarded
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