Writing Effective Corrective Action Plans

November 29, 2007

Ms. Carmen Covey
CFO Compliance and Systems
Directorate
 Purpose

A lighthearted but practical approach to

writing effective A-123 Appendix A
Corrective Action Plans

Disclaimer:
I take credit for all the jokes and illustrations you
enjoy. The rest were slipped in by my staff.

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 Houston, we have a problem.
After we determine we have a problem, what’s next?
a. Ignore it. The problem will go away eventually.
b. Blame it on your predecessor.
c. Create a Corrective Action Plan. He’ll take
care of it!

Answer:
c. Corrective Action Plan

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 Corrective Action Plan
What is a Corrective Action Plan anyway?
Corrective – A practical strategy to resolve the impediment
Action – Active steps we can realistically accomplish
No
Plan – Organized, purposeful, accountable, measurable solution
without a
CAP

+ =
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 Effective Corrective Action Plans
1. State the weakness succinctly
2. Have “owners” who are accountable for results
3. Break the solution into discrete actions
4. Identify the accountable office for each action
A journey of a
5. Set achievable deadlines thousand miles begins
with a single step.

6. Monitor progress and

specify measurable results

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 Corrective Action Plan Components
1. State the weakness succinctly
Address a specific problem related to one of the five audit assertions.* The assertions will be on the
quiz at the end of this slide show.

DON’T: Military equipment is not audit ready (Too vague)

In FY 2007, we reported military equipment of $100M (No problem specified)

This corrective action plan is designed to correct the problem with Accounts Payable which was that we cannot
explain the amount reported on the financial statements because the transactions don’t match up. (Not succinct)

*Completeness, Obligations, Valuation, Existence & Reporting (COVER)

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 Corrective Action Plan Components
2. State the weakness succinctly
Address a specific problem related to one of the five audit assertions.*
DO: Accounts Payable transactions do not reconcile to Thuccinct
the amount reported on the MDA Financial equalth
Statements thucceth

All military equipment is not reported on MDA

Financial Statements

Military equipment may not be valued accurately

on MDA Financial Statements

*Completeness, Obligations, Valuation, Existence & Reporting (COVER)

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 Corrective Action Plan Components
2. Owners who are accountable
The Comptroller is responsible for Appendix A implementation.
Program Managers write Corrective Action Plans.
So who’s in charge? Who’s accountable?
It’s a joint effort.

We’ll share
the work.

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 Corrective Action Plan Components
How do the Comptroller and Program Managers work together?
Step 1: Program Managers identify impediments during their day-to-day routine
Step 2: Program Managers write Corrective Action Plans
Step 3: As part of the Appendix A process, the Comptroller requests Corrective
Action Plans from Program Managers
Step 4: The Comptroller ensures the Plan meets Appendix A requirements

Step 5: Program Managers review/approve any

revisions recommended by the Comptroller
Step 6: The Comptroller checks in with Program
Managers in order to report progress as required by
the Statement of Assurance

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 Corrective Action Plan Components
Bonus slide!! Bonus slide!! Real MDA experience
To increase accountability for Corrective Action Plans:
- In the Targets and Countermeasures Corrective
Action Plan, management specified the number of
additional personnel required to implement the Plan.

- Real Property management included property

accountability targets in their NSPS performance
goals.

- Material weaknesses and associated Corrective

Action Plans for Real Property and Environmental
Liabilities were included in the 2007 MDA Statement
of Assurance.

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 Corrective Action Plan Components
3. Break the problem into discrete actions
Weakness: All military equipment is not reported on MDA Financial Statements
DON’T: E-mail Program Managers with a request for a list of their military
equipment and its value. Add the list of equipment to the financial statement
Too much is included in a single step. Further, critical details are omitted.

How do you eat an

elephant? One bite
DO: a. The Comptroller works with Program Managers at a time.

to inventory assets on hand

b. Jointly document value/title via Form DD 250
c. The Comptroller updates amounts reported on
financial statements with documented inventory

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 Corrective Action Plan Components
4. Identify the accountable office for each action
DON’T: a. MDA issues a data call for Military Equipment
b. MDA reports Military Equipment on its Financial Statements
c. MDA writes an SOP for the new process

DO: a. The Comptroller issues a data call to Program Managers with a request for
Military Equipment asset information
b. Program Managers send a spreadsheet and supporting information to the
Comptroller
c. The Comptroller verifies the information received
d. The Comptroller reports the information on the Financial Statements
e. Program Managers develop SOPs; the Comptroller reviews the SOPs for
adequacy

Many hands make light work in

the kitchen or at the office!
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 Corrective Action Plan Components
5. Set achievable deadlines
DON’T:
Tasks Deadline
- Inventory all MDA real property 28 DEC 2007 (too fast)
- Update SOP for new process 29 NOV 2017 (too slow)
- Move to new system TBD (no accountability)
Deadlines that are too short or too far off are not realistic. TBD is not acceptable.
Unrealistic deadlines and TBD mean that more detail is required.

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 Corrective Action Plan Components
5. Set achievable deadlines
DO:
Task: Deadline
Inventory all MDA real property 30 JUN 2008
a. Determine all MDA locations 28 DEC 2007
b. Obtain POC for each location 11 JAN 2008
c. Meet with all POCs 14 FEB 2008
and request inventory or schedule
property inventory
d. Conduct property inventory 30 JUN 2008
Based on the additional detail, the inventory task can be completed by 30 JUN 2008.

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 Corrective Action Plan Components
6. Monitor progress and specify measurable results
DON’T: - Improve the financial reporting process for Accounts Receivable
- Learn how the current system of calculating payroll accrual operates
- Determine if all Military Equipment is reported on Financial Statements

Hint: If you saw these statements on a resume, you’d think “that person isn’t telling me
anything.” The same philosophy applies here.

DO: - Establish an allowance for loss on Accounts Receivable if needed

- Verify the payroll accrual is accurate
- Inventory MDA Sensors Directorate Military Equipment

This clip art looks like the guy

who created this briefing.
Steve, please stand up and
embarrass yourself.

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 Effective Corrective Action Plans
To recap:
1. State the weakness succinctly
2. Have “owners” who are accountable for results
3. Break the solution into discrete actions
4. Identify the accountable office for each action
5. Set achievable deadlines
6. Monitor progress and specify measurable results

Put these components together and you get ….

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Effective Corrective Action Plans

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 Effective Corrective Action Plans

For my next trick, I will walk you

through two actual Corrective Action
Plans. The first was created weeks ago
expressly for this conference.*

*No animals were harmed during the creation of this Corrective Action Plan

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Example #1 - Straighten the leaning Tower of Pisa*

*Trust me. I’m not an

architect but I stayed in a
Holiday Inn Express last
night.

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 The Leaning Tower of Pisa

Corrective – A practical strategy to resolve the impediment

DON’T DO
• Blow it up and build another • Ensure the land underneath the
tower in its place. Tower is solid and then
• On three, PUSH! straighten the foundation.

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 The Leaning Tower of Pisa

Action – The problem won’t go away on its own

DON’T
• Nature created the problem so
nature will cure it.
• Tilt your head a bit and its fine.
DO
• Assess the foundation and the
land underneath, get the required
permits to do the work, and hire
people to do the work.

• ACT! ACT! ACT!

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 The Leaning Tower of Pisa

Plan – Organized, purposeful, accountable, measurable

DON’T
• No fishing expeditions. (Cast
your line and hope it works)
• No mazes. (Keep going until you
stumble, then back up and try a
new path)
DO
• Concrete, measurable steps with
realistic milestones that lead to a
solution
1. Assess the foundation (January 1)
2. Obtain permits, hire crew (March
1)
3. Straighten the tower (June 1)

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 The Leaning Tower of Pisa
Corrective Action Plan (1 of 3)
Weakness: The Tower of Pisa leans
1. The AALT* will assess the foundation and land
underneath (January 1)
1a. Hire an independent surveyor experienced
with limestone, lime mortar, and marble. Italian
a plus.
1b. The surveyor will assess the tower
foundation and the surrounding land.
1c. The surveyor will write a report stating how
the tower can be straightened. The report will
include the materials and labor required.

AALT: Architects Against Leaning Towers

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 The Leaning Tower of Pisa
Corrective Action Plan (2 of 3)
2. The AALT will obtain permits, hire a team, and procure materials (March 1)
2a. The AALT government liaison will take the report to the Italian
government and request permission to shore up the foundation (and land, if
needed).
2b. The AALT site manager will use the independent surveyor report to hire
a project team and procure the building materials.

AALT: Architects Against Leaning Towers

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 The Leaning Tower of Pisa
Corrective Action Plan (3 of 3)
3. The project team will straighten the tower (June 1)
3a. The AALT site manager will oversee team straightening the tower.
3b. After work is complete, the independent surveyor will re-assess to make
sure the work is acceptable.

AALT: Architects Against Leaning Towers

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Effective Corrective Action Plans

Questions?

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