July 6, 2000
To: Paul Eggert
Regional Director, Region 19
From: Jane E. Altenhofen
Subject: Inspection Report No. OIG-INS-08-00-05: Accounting and Reporting Systems in the Seattle Regional Office
This inspection was conducted in conjunction with our audit of the National Labor Relations Board's Fiscal Year 1999 accounting and reporting systems. We selected four Regional Offices, including Region 19, the Seattle Regional Office (Seattle), on a judgmental basis. Our objective was to review functions that could affect the Agency's ability to prepare audited financial statements including financial management, backpay, time and attendance (T&A), and capitalized and sensitive property.
We did not identify anything adversely impacting the Agency's ability to prepare audited financial statements based upon Seattle's financial management. We also determined that procedures provided reasonable assurance that the management of backpay meets Agency objectives.
We did, however, identify several reportable issues. The official inventory of computer equipment and one maintained by Seattle were not in agreement, and neither inventory accurately identified what equipment was assigned to Seattle or the location of equipment within the office. Documentation supporting written approval of flex-time and compressed schedules was not maintained. Support staff approved leave taken by professional employees, and advance sick leave was not granted in accordance with Agency policy. Compensatory time was not regularly approved by supervisors, and was not recorded in the Agency's payroll system. Bi-weekly T&A reports were not initialed by the employee, timekeeper, or supervisor.
We interviewed responsible personnel to identify procedures relating to financial management, the collection and distribution of backpay, controls over capitalized and sensitive property, and the administration of T&A practices. We reviewed applicable documentary evidence and performed a physical inventory of capitalized and sensitive property, including all computer equipment.
Capitalized and Sensitive Property
General Accounting Office Standards for Internal Control in the Federal Government, updated in November 1999, call for accurate and timely recording of transactions and events. Capitalized property consisted of one photocopy machine. Sensitive property included computer equipment, non-capitalized photocopy equipment, one television, and two video cassette recorders. We found that records accurately reflected capitalized and non-computer related sensitive property.
The official inventory of computer equipment and one maintained by Seattle were not in agreement, and neither accurately identified what computer equipment was assigned to Seattle or the location of equipment within the office. Both inventories included central processing units, monitors, and printers; and both identified the name of the employee assigned the equipment, a description of the equipment, serial number, and, in most instances, a bar code number for each item. We found:
12 laptop computers and 10 related printers were not on the official inventory. The office manager maintained a separate listing and sign-out sheets for laptop computers;
2 file servers and related monitors were not on either the official inventory or the one maintained by Seattle;
14 items were included on the official inventory but were not on Seattle's inventory;
19 items, including 16 printers received in March 2000, were included on Seattle's inventory but were not on the official inventory;
39 items, including 12 printers to be excessed, were observed during our physical inventory but were not on Seattle's inventory; and
7 items were not in the location identified in Seattle's inventory.
The computer maintenance contractor did not maintain records identifying computer equipment sent for repair in cases when the equipment was to be returned, as opposed to replaced. Contractor representatives agreed to develop procedures to properly inventory computer equipment.
Maintaining Time and Attendance Records
General Accounting Office Policy and Procedures Manual for Guidance of Federal Agencies, Title 6 - Pay, Leave, and Allowances (Title 6), dated March 22, 1996, states that documents supporting T&A should be completed and maintained. Examples of such documents include those for establishing (1) work schedules, (2) flexiplace arrangements, (3) leave, (4) overtime, (5) compensatory time, and (6) credit hours.
Seattle maintained a work schedule for professional and clerical employees. This schedule did not document supervisory approval. In addition, documentation to work a compressed or flex-time schedule was not consistently maintained. Documentation did not exist for 7 of 28 employees working either a compressed or flex-time schedule.
Employees in Seattle were allowed a one hour lunch period, half of which was in a pay status. 5 U.S.C. § 6101 established a 40-hour work week for Federal employees. The Office of Personnel Management reaffirmed this in guidance which states that Agencies are not allowed to routinely permit employees to work less than 80 hours in a pay period, and hour long meal breaks, half of which is in a pay status are not authorized.
Documentation supporting work-at-home agreements for Seattle employees was maintained in accordance with the applicable union agreements.
Seattle consistently used Standard Form 71 to document sick and annual leave usage. Instead of supervisors, the Office Manager or Assistant Office Manager approved leave usage of less than 8 hours by professional employees.
Advance Sick Leave
Agency policy requires that an employee submit medical certification when requesting advance sick leave. The Regional Director can approve up to 4 days. For 5 or more days, the Regional Director must submit a memorandum to the Division head justifying the advance. The Division head is to respond either approving or disapproving the request.
We identified 5 employees with advance sick leave balances and reviewed 26 related transactions to determine whether documentary evidence was maintained and approval was granted in accordance with Agency policy. Two employees were advanced 5 or more days. Only 1 of the 26 transactions was supported by a medical certificate. Advance sick leave of five days or more was not supported by a memorandum to, or approval by, the Division head.
Advance Annual Leave
Advance annual leave may not be advanced in excess of what the employee could accrue by the end of the pay year. We reviewed all advance annual leave balances and determined that leave was not advanced in excess of the amount allowed.
Compensatory time was neither recorded into the Agency's payroll system nor regularly approved by the employees' supervisor. Instead, compensatory time was tracked by the employee on multi-colored forms that were to be visible on the employees' desk and available for management review. Management stated that employees were contesting whether the forms even need to be readily available for management review.
Overtime and credit hours were not used.
Review and Approval of T&A Reports
Title 6 states that review and approval of T&A reports should be made by the official, normally the immediate supervisor, most knowledgeable of the time worked and absence of the employee. Since at least March 1992, when Administrative Policy Circular (APC) 92-4 was issued, Agency policy requires employees, timekeepers, and supervisors to initial hard copy T&A reports. This policy was reaffirmed in APC 98-01 which was issued in response to an OIG finding that employees, timekeepers, and supervisors frequently did not initial T&A reports as required.
T&A reports, as a matter of practice, were not initialed by the employee, timekeeper, or supervisor. We reviewed 100 T&A reports related to our testing of annual and sick leave transactions and found that none of them were initialed by the employee or timekeeper and only 5 were signed by the supervisor.
This review was done in accordance with the Quality Standards for Inspections issued by the President's Council on Integrity and Efficiency.
cc: Richard A. Siegel