oversight

Naval Supply Center, Pearl Harbor, Civilian Payroll Practices and Procedures

Published by the Government Accountability Office on 1971-05-06.

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

           UNITED STATES GENERAL MCOUNTING OFFKE
                           INTERNATiONAL                          DIVISION
                                           FAR   EAST      BRANCH
                                    I833     KALAKAUA            AVENUE
                                HONOLULU,               HAWAII            96815




 Captain G, G. jjunn
 Commanding Offlccr
IJava Supply Center
I302; 300
FPO San Francisco    96610

Dear Captain   Jhin:

       We have completed our audit of civilian       pay matters at the
Naval Supply Center, Pearl Iiarbor.       Ouz audit $ncJ.udod a review
of personnel   actions prepared by the Consolidated       Civilian
Pcrsonnsi Office which has responsibility        far processin,g such
actions for 4,797 of the 4,995 personnel       included in the payroll
of the Naval Supply Center.     A random sample of 100 employees
was selected for review,    with particular    attention   being given
to those accounts with permanent pay changes during the period
Harch 22, 1970 to Piarch 20, 1971.
      Me found that the selected transactions         were generally
handled in a satisfactory      manner.    %ne procedures   and controls
over within-grade   increases,    conversion   to the Coordinated
Federal Wage System, severance payments, and the retroactive
payments resulting    from the Federal Employees Salary Act of 1970
were adequate.

     We noted the following  matters which were discussed                                with
members of your staff a t the conclusion  of the audit.

     1.   For two employees the Payroll     Branch had U-4 forms on
          file which did not agree with the deductions     being
          made on the payroll,    I{ew forms were executed by these
          ix/o employees which agreed with the payroll.

     2.   One employee was overpaid       $10.16 for overtime work
          which was erroneously     reported     on his time card but
          which he did not actually       perform.     This matter was
          known to the Payroll     Branch from its own post audit of
          the payroll.   Corrective     action was taken and the
          overpayment was collected.




                       50-l-H      ANNIVERSARY                        1921-       1971
       3,   An employee of the Automatic Data Processing Department
            was authorized     to pick up checks and bonds and also
            authorized    to approve and certify   the correctness   of
            entries    on time cards.   Corrective  action was taken to
            cancel the employee's authorization       to approve and
            certify    the correctness  of entries  on time cards.

        The errors noted were of a relatively      minor nature.      we
attribute    this in large part to the effective      internal    control
procedures     that have been established    by the Payroll    J3ranch to
assure the validity     of the data entering    the payroll    computations.

       Despite this situation,       we are still   concerned by the absence
of an internal       review of these activities.      T'ncre has been no
inteimal    review of civilian      pay by the HaVy SUpply Center since
Hay 19G4. The Internal         Xcvic~ Granch was abolished      in October
19G9, and although its functions          were assumed by the Quality
Assurance Branch, the reduction         in staffing   prevented   the performance
of payroll     reviews.

       This appears contrary        to SXCWAVInstruction     7540.1, which
provides    that primary support agencies will direct          the utilization
of internal     review staffs or other personnel as appropriate              in
the absence of formally       orgā€˜anized review staff,     to perform reviews,
at least annually,      of civilian     timekeeping   and payroll   functions.
        IJe were informed by officials     of the Quality Assurance
Divisj.on that negotiations       were bein, 0 conducted with officials      of
the Idavy Audit Cffice      to obtain their services     for the internal
review of civilian       pay on a reimbursable    basis.    A representative
of the Navy Audit Office advised us that his organization's
workload would preclude such an arrangement.

        IJe believe     that the IInvy Supply Center's     internal     control     of
the payroll       function    is adequate; however as pointed out in
OPPIA?rlNST 7540.2, the objectives           of internal review of civilian
timekeeping       and payroll    include not only appraising        the
effectiveness        of internal    control,   but also

      --determining      compliance    with   law, directives,      and policies,

      --determining    whether regulations    governing     pay entitlements
         are correctly   interpreted    and applied,    and

      --determining      whether   records    are reasonably     accurate    and
         complete.
       The payroll     function  is so sensitive,   and so volatile because
of changing regulations,        pay rates, etc., that there is a need
for regularly      scheduled periodic     reviews of the aotivities related
thereto.

        Accordingly,     although we found no significant             weaknesses
at the time of our review,          we are still       of the opinion that the
Navy Supply Center should provide               for internal     reviews of the
payroll    function.      We therefore      recommend that the Navy Supply
Center take action to comply with SECNAV fnstruction                    7540,l by
providing      the Quality Assurance Division            with the resources
required     to perform internal       reviews of civilian         timekeeping
and payroll      operations,     or otherwise      providing   for the performance
of this function.
       Copies of this report are being sent to the Commander, Navy
Accounting and Finance Center, Washington, DoC., and to the
Director,    Naval Area Audit Service for his information.       An
additional    copy of thi s report is furnished    for enclosure with
the audited records when they are shipped to the Federal Records
Center for permanent filing,       By receipt   of this letter,  you are
authorized    to move your pay records through March 31, 1971, to
permanent storage.

      WC wish to acknowledge the courtesies and cooperation
extended to our representatives  during the review.

     Your comments on the matters             discussed    in this       report   will
be appreciated.

                                             Sincerely    yours,



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                                        *A     rector
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