Review for Settlement of Certifying Officers Accounts

Published by the Government Accountability Office on 1971-11-24.

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

         it<;/o~      ~REGIONAL              OFFICE
                           8112 FEDERAL OFFICE BUILDING
                                FIFTH AND MAIN STREETS
                              CINCINNATI, OHIO    45202

                                                              NOV 2 4 1971
 Mr. Po Go Smith, Warden
 United States Penitentiary
 Terre Haute, Indiana   47808

 Dear Mr. Smitht

      We have made a review for the settlement of the accounts of the
 certifying officers at the United States Penitentiary, Terre Haute,
 Indiana, through June 30, 1971. Our review, completed in September
 1971, was made pursuant to the Budget and Accounting Act, 1921
 (31 U. S. Co 53), and the Accounting and Auditing Act of 1950
 (31 U. S. C. 67).

      Each agency has the basic responsibility for proper accounting
 and internal control to provide assurance of the legality, propriety9
 and correctness of disbursements and collections of public funds, In
 recognition of this, we placed major emphasis on the adequacy and
 effectiveness of the accounting and internal controls, including in-
 ternai auditing, and made such tests of transactions as we deemed
 appropriate. Our tests of transactions included those processed at
 the Milan Federal Correctional Institute and at the United States
 Penitentiary, Marion, Illinois, that were transmitted to your insti-
 tution for certification and accounting record control. We considered
 the most recent review by the Bureau of Prisons and the applicable
 fiscal year 1971 internal audits by your institution personnel in
 setting the scope of our work. We did not examine program activities.

      The review indicated that most administrative procedures were
 adequate; however, we found a large number of clerical mistakes which
 may indicate closer supervision is needed. Our findings, which were
 discussed with you or members of your staff and on which corrective
 action was taken or promised, are summarized below.

 Retirement Records

      We found numerous errors and omissions on Individual Retirement
 Records (Standard Form 2806). The omissions and errors were apparently
 caused by procedural weaknesses and clerical carelessness. The errors
 included (1) forty-two erroneous or omitted entries concerning basic
 pay rates or effective dates of personnel actions, (2) thirteen in-
 stances of failure to record information concerning prior temporary
 service when an employee was converted to permanent status, and (3) nine
 omissions or erroneous entries of shift differential paid wage board

                        50TH ANNIVERSARY          1921-1971
employees. Also, an incorrect salary rate was entered for all employees
with a salary change between December 28, 1969, and April 15, 1970.
The Federal Employees Salary Act of 1970 was effective retroactive to
December 28, 1969; however, salary changes during the retroactive period
were all entered as of December 289 1969, rather than the actual date
of change.

     We suggest that (1) the Bureau of Prisons' instructions for entering
the wage board multiple tour pay be obtained and all applicable SF 2806's
be corrected; (2) the SF 2806's of all employees converted to retirement
system coverage be corrected; and (3) a procedure be established to
provide for an audit of retirement records on at least a periodic spot
test basis.

Payroll Records
     We found 20 errors during our tests of payroll records. Our review
of the payroll procedures and controls did not disclose serious problems
and we therefore concluded most of the errors were due to clerical mistakes
which could be reduced by increased supervision and review.

     The errors discovered included (1) three erroneous grade step rates
upon promotions which resulted in overpayments of $2,338.86, (2) one
within-grade increase prior to completion of the required service period
which resulted in an overpayment of $342.209 (3) five promotions prior
to completion of the required service in the lower grade which resulted
in overpayments totaling $149.24, (4) eight timekeeping errors, and
(5) two key punch errors resulting in duplicate shift differential.

     We also noted that retirement deductions were started for one em-
ployee one pay period prematurely. A deduction for FICA should have been
made. The employee was underpaid $7.68 and the Government was overcharged
$7.68 for retirement contributions.

Sick Leave Records

     Unused balances of sick leave of 14 employees who retired during
calendar year 1970 or 1971 was reported to the Civil Service Commission
to increase years of service for retirement benefits. The use of the
leave was not shown on the leave records which were placed in the offi-
cial personnel folders. Sick leave not shown as used on the leave
record could be recredited to the employee in the event of reemployment.

     We suggest that the Civil Service Commission regulations concerning
use of sick leave on retirement be discussed with the clerks responsible
for completing the records and that the appropriate officials of the
Milan and Marion institutions be contacted to determine if the sick leave
records at those locations are accurate since those records were not
available for our review.

Travel Expense Reimbursement

      Our tests of 40 travel vouchers from the Marion and Terre Haute
institutions disclosed 18 errors on 13 of the vouchers. The errors
consisted of (1) six instances of excess travel time totaling 39 hours,
(2) eight instances of incorrect per diem, (3) three instances of ex-
cessive mileage, and (4) one instance of overpaid per diem combined with
an underpayment of temporary quarters allowance.

     Our tests indicated that responsible employees are unfamiliar with
Standardized Government Travel Regulations concerning excess travel time
and computation of allowable per diem when various per diem rates are
applicable. We suggest that these topics be discussed with appropriate
personnel during training sessions and that travel expenses be consi-
dered for additional review by supervisory personnel and internal auditors.

Internal Audit

     Our tests of vouchers covered by an internal audit made in August
1970 disclosed several errors which were not detected by the internal
auditor. Four of six travel vouchers and one of six maintenance vouchers
tested were erroneous. We also noted that the auditor did not always
prepare formal workpapers to show the scope of his work and details of
the tests made,

     Our discussions with your staff disclosed that internal auditing
in the past has been used as a training tool and the assigned auditor
was not always familiar with the subject area. We are of the opinion
that such assignments can provide useful training for employees with a
proper background in auditing standards; however, such employees must
be given adequate time to become familiar with applicable regulations
and adhere to proper standards of field work.

Other Matters

      The salary costs used in computing the cost of steam furnished the
Federal Prison Industries (FPI) during April 1971 contained erroneous
Government contributions for health benefits and life insurance. As
a result the FPI was overcharged $31.42. The error has apparently been
repeated each month; however, we did not determine the exact period of
time to which the error applies. We suggest that the charges be reviewed
by proper supervisory personnel and future bills to the FPI be correctly

     Commercial toll charge calls made on the Federal Telecommunications
System (FTS) lines from the Detroit Community Treatment Center and the
Chicago Community Treatment Center were not certified as in the interest
of the Government. Our review disclosed that officials of the two
activities were unaware such a certification was required by statute.
We suggest officials at these locations be informed of the regulations
and the necessity to certify that only calls in the interest of the
Government were made.

     In accordance with 8 GAO 13 the records of transactions through
June 30, 1971, may be stored as required by your records management

     A copy of this report is being sent to the Assistant Attorney
General for Administration, Department of Justice, Washington, D. C.

     We wish to acknowledge the cooperation given our representatives
during the review. Your comments and advice as to action taken will be

                                   Sincerely yours,

                                   David P. Sorando
                                   Regional Manager