oversight

Review of Civilian Pay, Naval Supply Center, Oakland, California

Published by the Government Accountability Office on 1971-01-12.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                       UNITED ST;;TES GENERAL ACCOUNTING OFFICE
                                                             REGIONAL            OFFICE
                                           143 FEDERAL       OFFICE   BUILDING     50 FULTON    STREET
                                               SAN       FRANCISCO,       CALIFORNIA           94102

                                                                                                         G
IN REPLY   REFER   TO

   84825



                        Commandmg Offxcer
                        Naval Supply Center
                        Oakland, California              94625
                        Dear Sir
                             We have made a review of clvllxan psy and rtiated matters
                        at Naval Supply Center, Oekland (WSCO), Californxa,   Thus review,
                        whzch was completed In November 1970, was made pursuant to the
                        Budget and Accounting Act, 1921 (31 U.S.C, 53), and the Accountxng
                        and Auditing Act of 1950 (31 U.S.C. 67).
                                The promary purpose of the review was to provide GAOwath
                        Information for a Defense-wide study on the adminlstration      of
                        civilian    psy and allowances.   Enrployee accounts were fxrst selected
                        on a statastxcal    sampling basxs, Errors disclosed In this sample
                        wlllbe     combined with those of other xnstallatlons   reviewed and
                        the results may be statiscelly     projected for a Defense-wide report.
                        We did not arrive at an error rate, since the sample at any x&vi&
                        ual installation    is too small to project.    We &d, however, expand
                        our review at your lnstallatlon     by selecting addxtlonal records on
                        a judgment sample basis.

                              The revxew covered (1) Internal Controls, (2) Severance Psy,
                        (3) Internal   Remew, (4) Salary Act of 1970, (5) WIthin-grade
                        Increases, and (6) the Coordinated Federal Wage System,
                              We found cerhin defxxencles                          xx3uding the need to improve
                        internal controls.   These matters                        were discussed with officials   of
                        the Plannxng and Comptroller,   and                       Civilian  Personnel Departments
                        at an exit conference on November                         20, 19709 and are summarjzed for
                        your information.
                        Internal   Controls
                               Our review showed there is a need for better compliance wath
                        local lnstructxons   and improved procedures for processing psyroll.
                        Local check and bond distribution    instructions    are not followed;
                        there is inadequate control over employees' leave records; no dollar
                        criteria   has been set for allowable payroll errors; and there has
                        been no perzodx rotation of mloyees'         accounts among payroll
                        clerks.
Commanding Officer
  Naval Supply Center             -2-



     1. We were told that some payroll checks are being received
from the Navy Regional Finance Center (NRFC) by the Payroll Section.
NSCOINST 7bOJJ3 provides that checks and bonds are to be delivered
to the Accountsng Branch and employees handlang checks and bonds
are not to participate in the preparation, approval, or certifica-
tion of the payroll.
      Officzals of the Plenning and Comptroller Department (P&CD)
said that Payroll Section personnel till  be cautioned not to
accept delivery of checks. We believe that NRFC should be requested
to deliver payroll checks only to designated Accounting Branch
personnel.
      2. The present system of bond and check distributxon   is costly
and txme consuzung, not only in the distribution  itself,  but also
in the cost of productsve tune lost by employees cashing checks
during working hours,
       P&CD officials said that check and bond cfistribution    methods
have been under study for some tune, In November 1970 question-
naxres were to have been distrxbuted to all employees w&h their
paychecks for the purpose of.    (1) pointing out the advanteges of
mailing paychecks and bonds, and (2) detemning        employees' wishes
regarding dellvery of paychecks and bonds* We believe other
possrble solutions rmght be distributing     paychecks after the banks
are closed or at the end of the working day,
      3. In March 1970, Navy Area Audit Service reported several
errors in leave administration  and accountmnga Offxials    told us
that posting of leave to service cards is not verified   and pre-
determined totals are not established for proof of posting,
Accordingly,  we believe some method of continuous control should
be xmplemented,
       P&CD offxials    agreed that leave could be more adequately
controlled.     A proposed Bi-Weekly Leave Balance Statement with
mechanized service card controls is being consxdered. As an
interim measure, the cost effectiveness     of manual controls KLIJ. be
evaluated.
     4, We were informed that when 10 or fewer errors are flagged
on the pre-payroll (validation) run, the payroll (earnings) cards
are released to RRFC, without correction, for printing  cheeks,
Commanding 0ffxe.r
  Naval Supply Center              -3-



Corrections are subsequently made by check cancellation    or by deferred
adJustment of next pay period earnings.     Although 10 or fewer errors
msy be considered to be a reasonable criterxa for deferrxng corrective
action, we belaeve the crxteria should be expanded to include a max-
mum allowable dollar error0 Sxnce overpayments due to admxnistra-
tive errors are ususlly eligible    for mver under Public Law 90-636
at the request of the employee, and thus generally result zn excess
costs to the Government, it 1s necessary that some maximum dollar
crlterla   be established for possible overpayments.
      P&CD offxials      stated that NSCOwill attempt to determine
a dollar break-even point for correcting the earnings cards before
they are sent to the Dlsbursfng Offxcer for check wrxtzng, as opposed
to correctxon by check cancellation,       Additionally, definitive
dollar criteria     will be establashed for deterrmnlng whether over-
payments will be corrected by check cameU.atxon or by adjustment
of the employee's next psy period earnLngs.
      5. We were informed that a payroll clerk     could handle the
same employee*s payroll accounts for a year or     more. Sn our opinion,
a per~o&~c switching of accounts between clerks     on a 3 or 6 month
basxs would improve Mxxma3 controls, and the       clerks--knotting  that
someone else would have the accounts la a short     period--would   be
more alert.
      P&CD officials  stated that the turnover   in clerical personnel
and periodic vacations provxde the generally     accepted degree of
internal control,
Severance    Pay

     Although not included in our sample, we rwiewed 17 cases of
employees receiving severance pay for the pay pernod ending
October 17, 1970, and 10 cases of employees who had recexved sever-
ance pay as the result of the 1970 rmd-year reduction In force,
Our review of procedures and internal  controls intieates control
and revTew of documents, computatxons, etc,, to assure tamely and
proper payment are inadequate.
     In the CixLlian    Personnel Department:
     1,     We were told that SF' 50's authorxing  swerance psy-
            ments are reviewed for only obvious errors by super-
            visory personnel authorizing payment.
CommandzLngOfficer
  Navrtl Supply Center             -4-



     2.   E$lployees recexved their first severance payment one
          pay period late 1n four of ten cases we revlewed, because
          the Personnel Department was late m forwarding entftle-
          ment mnformation.   Officials     of Personnel said that the
          Severance Pay Computation Notice (SPCN) will be annotated
          to show amount of servzce by type and forwarded to Pq+roll
          Branch. We were told that supervzsory personnel will
          verify the noncrehtable     rmtitary service and service
          computation dates, using the personnel file, prior to
          szgning the severance pay authorization.
      Officials stated that additional attention wl3.l be directed
toward more tamely processing of smerance pay actions.
     fn the !J!ime, Leave and Payroll    Section of the Plannmg and
Conq?troller Department:
     1.   In 13 of 17 service data cards we revzewed there was no
          evLdence that the payroll clerk had verified  the sever-
          ance pay computations as required in the pqyroU. mstruc-
          tzon.
     2.   We were told that payroll. clerks tid not have information
          available to verify the serv5ce computation dates and
          rmlitary  service dates.

     3.   A severance pay overpa;yment of $250 was recovered from
          a rebred employee before the check was cashed. Prov~%.ng
          payroll clerks mth a summary list of personnel receiving
          smerance pay for cheting before acting on a new hire
          could prevent severance payments to rehired employees.
     4.   We were told that Personnel was receiving, from Ps~oll,
          memoranda of severance payments up to two months after
          the final payment, Such memoranda should be subnntted
          on a more tamely basis, to keep employees personnel files
          current and to prevent overp&qments.
      Since overpayments due to admintstrative  errors are usually
ekgible   for waxver under Public Law 90-616 at the request of the
employee, and thus result in excess payro31 costs to the Government,
1-t is necessary the personnel actlons, payroll computations and
documents be prepared accurately and on a timely basis.
conmlanding Officer
  Ntmal supply center           -5-



      Officials of P&CDinfomed us that ex%st%ngpayroll 5nstruc-
tions would be re-emphasized, Supervisory Personuel Sttif till
verify all d&e computatious prfor to sighing the authorization,
a snummy l.Tst of employees receking swerauce pay for cross-
checking w0.l be provided, and t5mel.y release of inform&&on to
Personnel will. be re-emphasized,
Internal     Revkw
      The Read of the Internal Review Branch told us that a payroll.
audit had not been performed by them since 1968~ Naval Supply
Compaand Instruction 754Q,2 dsted August 26, l$$, requires an
anmml payroll au&L-hto be performed by internal re-~Lew staffs,
       We were told thst because of reduced staff and increased
workload, Internal Revxevprogrems have been lin&ted to sftu&;ional
assignments, cash verifications,   liaison with outside aud%tors,
snd certe3.n cri.Wxl annuel reviews (specirtl pe@~& distrSbution,
etc.).    P&CDtold us that Internal Rtiew*s responsibiUty     for
payroll audxts till be discussed for elerif%cation snth Comptroller
of the Navy in December 1970c
       In our opinion, the Internal R&ew Staff should perform the
reqtired annual audit on a ourrent basis to assure the Command
that improper p?qments are not made, rather than wa5ting for
unscheduled audxfs by outside audit agencies,
Sm         Act of 3.970
      Our statisticsl sample of 50 empbyees ineluded 35 cbssxfied
employees who were entitled to retrocactive pay under the provisions
of salary Act of 1g704 Rased on the salary rates as authorized
by the Act, our review showed that X.5 employees were wepaid     BC
total of approximately $33 and 20 were underpaid 8 total of
approxLmately $40,
       P&CDofficials attributed the eppsrent wer/underpqyments
to the method used xn computing retroact5ve psy. NSCOused six
percent of gross pay rece5xed from kcendber 28, 19Qg, through
April 4, 19'70, to compute employees5 lump sum retroactive pay,
They safd this method saved the Government appromtely      $3,500
m wertime for payroll Cpwks and computer operations, then
alternate methods that could have been used,
c   .




        CommandingOfficer
          Naval Supply Center                  -6-



        W5th5n-grade Increases
               Our statistical  sample of 50 employees lneluded 24 who had
        received within-grade increases during the period covered by our
        audit.    We found no tiscrepancfes 5.n our review of these increases.
        Coordinated Federal WageSystem
              In our statist&x&l. saxuple of 50 there were 5 wage board
        en@oyees who had been converted to the Coordinated Federal Wage
        S~t;em(CFWS)d~ipigtheperfodeoveredbyaur           audit,  tie found
        no discrepancies in our rdew of the above conversions.
        Other
             In addition to our above review of controls and procedures,
        we rev&wed, on a judgment sa@e bash,       ~prex5matel.y 1,%X3
        RetSrement Records (SF-2806) for classified employees to determine
        whether improper rates of pay laeedbbeenestabl%shed as a result of
        emoneous personnel actfons.   We found a total of 7 discrepancies
        amounting to $434 in overpeyments,
               Since RSCOdoes payroll for employees stationed at other
        installations,  these discrepancies were forwarded to the Agency
        concerned and tentative agreement was reached as to the correctxve
        action remred in five cases, The agencjtes involved and dis-
        crepancies are described briefly below:
                1,   RSCOCiviUan    Personnel Department:
                            Promotions were given to two emplcryees after only
                     52 weeks of service in the lower grade 5nstead of one
                     year as required by the Whitten Amendment. These
                     resulted in overpayments totaling $3.22,
        4
                2.   Consolidated Industrial    Relations   Office,    Treasure Island:
                           A $15 overpment was the result of          a quality
                     s&i fncrease (QSI) being given prior to          completion of
                     52 weeks of setice   from the date of the        prior QSI, as
                     required by the Federal. Perrronnel Mamml        @PM) ggf&l.
Commankng     Officer
  Naval Supply Center                   -7-



      3.    M!Jitary    Sealift   CommandPacific:
                    One employee received a within-grade   xncrease
            prior to eligibx&ty      and another empl.oyee was promoted
            prior to completion of one year of service as required
            by the Whitten Amendment. These resulted in overpsqments
            totting     $187,
     4.     Naval Postgraduate      School, Hxterey.
                   !Fwo employees recexved promotions prxor to com-
            pletxon of one year of service xn the next lower
            grade as reqmred by the Whitten Amendment. These
            resated In overpayments totting        $109. We are
            awaltlng this installataon's    reply.


      We would appreczate being advised of the action taken or planned
on the matters discussed m this report.      We wish to acknowledge the
cooperation given our representatives   during the revxew, A copy of
thLs report 1s bexng sent to the Comder,      NavvyAccounting and
Finance Center - Washington, D. C*I and to the Director, Naval Area
Audit Service, San Francisco, Calxfornia for their information,
                                         Sincerely     yours,


                                         A. M, ClaveU
                                         Regional Manager