July 6, 2000
To: Elizabeth Kinney
Regional Director, Region 13
From: Jane E. Altenhofen
Subject: Inspection Report No. OIG-INS-09-00-06: Accounting and Reporting Systems in Chicago 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 13, the Chicago Regional Office (Chicago), on a judgmental basis. The 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 Chicago'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 Chicago were not in agreement, and neither inventory accurately identified what equipment was assigned to Chicago or the location of the equipment within the office. Chicago did not use leave request forms to document leave usage, and advance sick leave was not granted in accordance with Agency policy. All compensatory time was not recorded in the Agency's payroll system, and compensatory time recorded in the payroll system was frequently not approved or did not agree with supporting records. 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 equipment, 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. Chicago had no capitalized property. Sensitive property included computer equipment, non-capitalized photocopy equipment, one television/video cassette recorder combination and one mail meter. We found that records, in general, accurately reflected non-computer related sensitive property.
The official computer inventory and one maintained by Chicago were not in agreement and neither accurately identified what computer equipment was assigned to Chicago or location of the equipment within the office. Both inventories included central processing units, monitors, and printers. 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:
6 items were included on the official inventory but were not on Chicago's inventory;
73 items were included on Chicago's inventory but were not on the official inventory;
20 items had an incorrect serial number but, generally, the description, location, and bar code number, when used, were in agreement;
8 items observed during our physical inventory were not on Chicago's inventory; and
6 items on Chicago's inventory were not found.
The computer maintenance contractor did not maintain records identifying computer equipment sent for repairs 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.
Chicago maintained a work schedule for professional and clerical employees. This schedule did not document supervisory approval. Additional documentation to support supervisory approval to work either a compressed or flexible work schedule existed for all but one of 15 employees working a compressed or flex-time schedule.
We received inconsistent information regarding breaks and lunch periods, but the time allowed appeared to routinely be more than 30 minutes. 5 U.S.C. § 6101 established a 40-hour work week for Federal employees. The Office of Personnel Management reaffirmed this in guidance which stated 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.
No Chicago employees participated in the work-at-home program.
Chicago did not use the Standard Form 71 (SF-71) to document sick or annual leave usage. In a May 18, 2000, memorandum, the Regional Director established an office policy requiring the use of SF-71s to document sick and annual leave usage.
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 3 employees with advance sick leave balances and reviewed 16 related transactions to determine whether documentary evidence was maintained and approval was granted in accordance with Agency policy. Two employees were advanced sick leave of 5 or more days. Only 5 of the 16 transactions were supported by a medical certificate. The advance sick leave of 5 days or more was not supported by a memorandum to, or approval by, the Division head.
Advance Annual Leave
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.
Chicago provided formal compensatory time for elections and hearings. We reviewed 50 formal compensatory time transactions. The amount recorded did not agree with supporting documentation for 20 transactions, and 12 transactions were not approved consistent with Chicago's established procedures.
Informal compensatory time, which had to be used within two weeks of earning it, was provided for other contacts with the public occurring in excess of the normal tour of duty. This time was not properly approved nor recorded in the payroll system. The informal compensatory time system resulted from an agreement approved by the Division of Operations-Management and regional office management to remedy a grievance.
Credit hours and overtime 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. The policy was reaffirmed in APC 98-01 that was issued in response to an OIG finding that employees, timekeepers, and supervisors frequently did not initial T&A reports as required.
As a matter of practice, T&A reports were not initialed by the employee, timekeeper, or supervisor. In a memorandum dated May 18, 2000, the Regional Director instructed staff that T&A reports must be initialed by the employee, timekeeper, and 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