Currently, DISA is not relying on the DPAS calculation of depreciation for its financial statements. ?Historically, assets were not captured accurately in DPAS so DISA?s accounting function (CFE) has used an alternative method of depreciation based on the funding used to purchase the asset. ?A Material Internal Control Weakness was identified in the FY12 independent audit report of the DISA general fund financial statement regarding property. DISA?s external auditors identified the following material weakness: DISA is unable to capture accurate asset activation dates due in part to: (i) an inability to classify capital asset acquisitions (ii) the grouping of physical/intangible system assets, and (iii) the overall lack of detailed asset listings. DISA is in the process of implementing improved controls to address the material weakness and use DPAS to calculate depreciation for the financial statements. ?However, due to the complex nature of DISA?s operations, it was decided by management that using the mid-year convention for depreciation is an attainable goal which will allow the agency to conform to the DoD FMR using an acceptable depreciation method. ?Currently, DPAS does not allow for the use of a mid-year convention. See Attached Decision Document. Recommended solution: Add an option to DPAS allowing for use of the mid-year convention depreciation method as stated in the DoD FMR (DoD 7000.14-R Section 060205.G2): ?Under the Mid-Year Convention Method, six months of depreciation is computed and expensed in the first and last year of an asset?s useful life, regardless of the actual month the asset was placed in, or removed from, service.? ?Implementation of this method in DPAS would mean that an asset?s ?activation? date for depreciation will always be 3/31 of the fiscal year in which the asset was placed into service. ?For assets using the mid-year convention, calculation of depreciation should occur once per year at the end of the fiscal year on 9/30. Preferred Solution: DISA intends to use the mid-year convention only for assets purchased using the General Fund. ?From the DPAS user?s perspective, they may enter an ?in-service? date but should not enter a date used for activation of depreciation. ?The system should automatically apply an activation date of 3/31 and calculate depreciation once per year. Alternative Solution (short-term): Allow recording of activation dates that are prior to acquisition dates. If users can enter 3/31 as the activation date regardless of whether the asset was purchased later in the fiscal year, depreciation can be calculated using the mid-year convention. Customer priority: 2