Inspection Report No. OIG-INS-06-00-03
Accounting and Reporting Systems in the Brooklyn Regional Office

July 6, 2000

To: Alvin P. Blyer
Regional Director, Region 29

From: Jane E. Altenhofen
Inspector General

Subject: Inspection Report No. OIG-INS-06-00-03: Accounting and Reporting Systems in the Brooklyn 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 29, the Brooklyn Regional Office (Brooklyn), 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 Brooklyn'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 computer inventory did not accurately identify what equipment was assigned to Brooklyn or the location of the equipment within the office. Documentation supporting written approval of flex-time, compressed work schedules, the work-at-home program, and advance sick leave was not consistently maintained. Brooklyn did not consistently use leave request forms to document leave usage. Employees were allowed to accrue compensatory time in excess of Agency limits. 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.

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, one video cassette recorder, and two mail meters. We found that records accurately reflected capitalized and non-computer related sensitive property.

The inventory of computer equipment, however, did not accurately identify what equipment was assigned to Brooklyn, or location of the equipment within the office. The inventory included central processing units, monitors, and printers; it 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:

48 items were found, but were not in the office of the person shown on the inventory;

3 items had an incorrect serial number;

5 items not on hand were reportedly sent to the computer support contractor for repair or replacement;

5 items were not found;

42 items, mostly older equipment, were observed during our physical inventory but were not on the inventory; and

1 laptop computer was not properly signed out.

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.

The Computer Assistant maintained a sign-in/sign-out sheet for the two laptop computers. She telephoned the employee in possession of the laptop computer that was not properly signed out with instructions on the proper procedure.

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.

Work Schedules

Brooklyn generally maintained a work schedule for professional and clerical employees working either a flex-time or compressed work schedule. 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 8 of 18 employees working a compressed work schedule and 10 of 11 employees working a flex-time schedule.

Sixteen Brooklyn employees participated in the work-at-home program. None had written approval from an authorized Agency official.

Brooklyn did not consistently use the Standard Form 71 (SF-71) to document sick and annual leave usage. Of 50 sick and annual leave use transactions judgmentally selected, we found the following results.

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 8 employees with advance sick leave balances and reviewed 25 related transactions of 4 employees to determine whether documentary evidence was maintained and approval was granted in accordance with Agency policy. Three of the four subject employees were advanced sick leave of 5 or more days. Advance sick leave for one employee was not supported by medical certification. The advance sick leave of 5 days or more for one employee was not supported by a memorandum to the Division head, and for two employees, did not have a response from the Division head.

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 properly approved with a few exceptions and all time was recorded in the Agency's payroll system. Brooklyn allowed two employees to accrue more than 60 hours of compensatory time, both of whom carried forward more than 40 hours to the next quarter. Agency policy prohibits an employee from accruing more than 60 hours of compensatory time and limits the amount that can be carried forward into future quarters to 40 hours, unless the leave was earned during the last pay period of the quarter.

Credit hours and overtime were not used.

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.

As a matter of practice, T&A reports were not initialed by the timekeeper, employee, or supervisor. We reviewed 100 T&A reports and found that none were initialed.

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