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
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)