Pay Files - 2008 Internal Audit - December 2008

National Energy Board - Oné

Sujets

• managers

Informations

• Publié par: Omka
• Nombre de lectures: 17
• Langue: English

Extrait

2008 INTERNAL AUDIT

PAY FILES

December 2008

A.F. (Tony) Mitchell

Internal Audit Advisor

Pay Files Audit 2008

General Outline

A)

Reviewed with Group Leader, Compensation Operations the tests performed by

the Auditor General in prior years.

B)

Reviewed schedules provided by the group Leader

-

Payroll Description

-

System Description

-

Schedule of 2007 Hires and Terminations

-

Schedule of Weekly Hours 2007 - 2008 (Q1 and Q2)

-

Random Overtime Sample Dec 31 2007 year end

-

Schedule of delayed Time Sheets

-

T4 Summary Data 2007

Reviewed Collective Agreement

C)

Reviewed Process for

-

Adding employees

-

Terminating Employees

-

Changing Pay Grades – See summary from JJ

-

Interviewed the Group Leader and 2 of the Compensation Advisors

-

Viewed and questioned actual actions performed by the Group Leader and the

compensation Advisors

D)

Performed detailed review of Overtime hours charged across Business Units at

the Board during 2008

-

Gained access to the TIME system from the Group Leader

-

Reviewed, by BU, hours and patterns of O/T charged and approved

-

Reviewed large sample of O/T claims approved

-

Interviewed Operations and Applications Business Unit Leaders and a

selection of Team Leaders in both OPS and APPS

o

Developed and used standard questionnaire

o

Queried BUL’s and T/L’s as to possible improvements in process

-

Interviewed sample of employees claiming large hours of overtime

E)

Results, Findings, Observations and Recommendations

A)

Prior to commencing the audit the Group Leader, Compensation

Operations was interviewed as to the scope of the annual Cost Recovery

audit performed by the Auditor General.

The AG’s audit is thorough and

focused on overall reasonableness.

After this interview and considering

all risks it was decided to concentrate Internal Audit efforts on:

i.

Testing the controls in place for hiring and terminating

employees and for salary actions (promotions, annual

increments) during 2008,

ii.

Reviewing timeliness of timesheet submissions and approvals,

iii.

Examining the process of claiming and approving Overtime

payments which was the main focus of the audit.

B)

The documents and schedules listed on the General Outline page were

obtained from Compensation.

The Payroll Description and System

Description are attached to this report but the other listed documents are

confidential and will remain in Internal Audit files.

a.

The Payroll and Time System Descriptions are adequate.

The

descriptions are updated each year for the Cost Recovery audit with

changes highlighted from year to year.

b.

Reviewed the schedule of 2007 Hires and Terminations and tested

system inputs.

No issues were identified.

c.

Reviewed the schedule of Weekly Hours for unusual items.

No issues

identified.

d.

Reviewed schedule of delayed Time sheets and discussed with

Compensation.

Improvements have been made in recent years.

e.

The T4 Summary Data for 2007 was perused for unusual items (such

as previously terminated employees) and for reasonableness.

No

issues were identified.

f.

The following policies/procedures were also reviewed:

i.

NEB Salary Determination Guidelines

ii.

Collective Agreement – NEB & PIPSC

iii.

Time System Description

iv.

Hours of Work and Business Hours Policy

v.

Treasury Board Secretariat – Maximum Hours of Work Policy

vi.

An excerpt from the Canada Labour Code

C)

In testing the processes for adding, terminating and changing pay grades,

the Group Leader, Compensation Operations and Compensation Advisors

were interviewed as to their respective roles and their knowledge of policy

and processes.

Live actions were examined as the Group Leader,

Compensation Operations approved and implemented changes to pay

grades and added and terminated employees from the system.

Controls

are well defined and are fully understood by the Group Leader and the

Advisors.

Any variance from the process or lack of required information

is referred back to the appropriate person for corrective action before any

action is undertaken.

It should be especially noted that not only is the

process excellent and documented but also that the Group Leader and the

Advisors are thorough in their application of the process.

Checks and re-

checks of each other’s inputs are diligently implemented.

D)

The control and use of overtime represented the most effort and time in

this audit.

Various aspects of overtime were examined.

Not only was the

amount, nature and business unit usage of overtime examined, particular

attention was paid to the process by which overtime was approved and

paid.

a.

For the period January1, 2008 to October 29, 2008 13,800 hours of

overtime was incurred with the majority of hours charged in

Operations (5785 hours) and Applications (2960 hours).

Most of

Operations overtime related to audits and inspections.

Applications

overtime was mostly related to hearings in progress.

b.

The complete list of overtime by individual was examined and, on a

test basis, individual overtime claims were examined for patterns.

Special attention was paid to individuals who had a pattern of overtime

claims in the range of 20+ hours per week.

c.

In examining the list, unusual patterns of overtime usage were also

examined.

This included individuals who had small amounts of

overtime hours in per week over a longer period of time and not

related to any particular project.

An examination of the explanations / reasons noted on Time Sheets for overtime was

undertaken.

In this extended test it was confirmed that all Time Sheets had been

authorized.

A short questionnaire was developed and the Business Unit Leaders in Operations and

Applications and a large sample of Team Leaders were interviewed as to their practices

in regard to pre-authorizing and authorizing overtime.

The questionnaire and interviews

also tested the attention and importance leaders assign to safety and quality of life issues

with respect to overtime usage

E)

Results, Findings, Observations and Recommendations

Positive and full cooperation was provided by staff in Compensation and

in Operations and Applications.

All staff were generous with their time

and suggestions.

Overtime

Discussed with leaders the need for overtime and whether there

means for reducing the number of hours on a year over year basis.

It was the general belief that while some hours were as a result of

staffing issues that overtime with respect to inspections and audits

in Operations and with respect to hearings in Applications were

demand driven.

In the case of inspections, inspectors were

generally required to be on site while the contractor was working

and that was then followed up by report writing in the evening and

meetings with the contractors prior to the start of the work day the

next morning.

Staff involved agreed with this need.

Leaders had concerns that there were potential safety and health

issues among staff with heavy overtime demands.

All tried to

manage these issues mainly by close contact with those staff.

Staff

interviewed generally, with one exception, had no concerns and

managed their own time very well, with among other things,

driving long distances after a full day.

The one exception also

volunteered that the amount of overtime earned was a large part of

the reason he liked his role.

Pursued with Leaders the question of “Overtime: Burden or

Benefit?”

The response was generally neutral but overtime is held

out as a benefit often when trying to hire professionals from

industry, i.e., while the NEB can not always match the

compensation in industry the NEB does pay for overtime.

Correspondence between the Compensation Advisors and

employees or Team Leaders was reviewed.

Team Leaders rely on

the Compensation Advisors to catch any claims that do not follow

policy or that are otherwise unusual.

For example in one case an

employee had a unique pattern of hours claimed including earning

banked time and claiming lots of overtime on a consistent basis.

At the same time for any days off he was using banked time, not

taking any vacation time and requesting payout of his accrued

vacation.

The Hours of Work Policy states that banked time

should not normally result in any additional costs such as vacation

payout or overtime.

While this may have been a case of a new

employee being a very busy person and not being aware of the

rules, it might have been an attempt to “work the system” and

claim more than entitled hours.

This was only caught and

corrected when the pattern was noticed and reported to the Team

Leader by the Group Leader, Compensation Operations.

Recommendation

While the should continue their review of all TIME

reported prior to final approval, Team Leaders need to be

reminded that they do approve time sheets and therefore

they have the primary responsibility for approving all

payments from the payroll system.

All Leaders interviewed insisted on pre-approving any overtime by

staff reporting to them.

There was no formal or consistent process,

with most expecting an email from the staff member, but in some

cases approval was given verbally.

If overtime was to exceed the

amount of time pre-authorized, Leaders expected to be updated but

were not too concerned with minor variances.

Observation

Based on need, there is no advantage seen to

recommending a more formal process for pre-approval of

overtime.

TIME has the facility to record the justification / reason for

overtime claimed, but this is used by some staff some of the time

and not used by others. It would be very difficult to perform a

qualitative analysis of overtime usage due to the haphazard nature

of the explanations.

Recommendation

It is recommended that TIME require an explanation for

each period in which overtime is claimed by a staff

member.

The software has this facility and Leaders see

value in having this function activated.

Observation

Most employees now receive their pay bi-weekly by means of electronic

deposit to their bank account.

At the same time enveloped paper copies of

the pay stub are delivered to Finance where they are sorted by team.

On

the day the pay is deposited, Finance delivers the pay stubs to the

appropriate team administrative assistant who then hand delivers the stubs

to each employee in their respective teams.

If that staff member is not in

their office, the assistant will send an email to the employee directing

them to retrieve the pay stub from the assistant.

This extended process can be time consuming and adds no value either for

control purposes, confidentiality or otherwise.

Recommendation

Pay stubs are available electronically at

http://www.tpsgc-pwgsc.gc.ca/remuneration-

compensation/txt/index-eng.html

It is recommended that staff be directed to that site to

retrieve pay stubs.

In the alternative, instead of the

PWGSC delivering the pay stubs to Finance, deliver them

(as noted they are in window envelopes) to the mail room

for sorting and delivery to staff.