MARYLAND-NATIONAL CAPITAL PARK & PLANNING COMMISSION

Transcription

1 MARYLAND-NATIONAL CAPITAL PARK & PLANNING COMMISSION Prince George s County Department of Parks and Recreation Report Number: PG April 23, 2014 Distribution: Executive Committee Elizabeth Hewlett Françoise Carrier Patricia Barney Audit Committee Norman Dreyfuss John Shoaff Maryland-National Capital Park and Planning Commission Anju Bennett Darin Conforti Adrian Gardner Ronnie Gathers Tracey Harris Roslyn Johnson Debbie Tyner Joseph Zimmerman Office of Internal Audit Renee Kenney Robert Feeley Maryland-National Capital Park and Planning Commission Office of Internal Audit 6611 Kenilworth Ave., Suite 403 Riverdale, MD 20737

2 Prince George s County Department of Parks and Recreation Table of Contents I. EXECUTIVE SUMMARY A. Background...1 B. Scope, Objective and Methodology of the Audit.. 2 C. Major Audit Concerns....4 D. Overall Conclusions.. 5 II. DETAILED COMMENTARY AND RECOMMENDATIONS 1. Ensure Employees Sign Time Cards Ensure Supervisors Sign Time Cards Enforce Use of Time Clocks Authorize Changes on Time Cards Strengthen Payroll Monitoring Processes Standardize Rules for Meal Times Document Procedures for Manual Time Cards Require Consistent Signatures on Manual Time Cards Exhibits Exhibit A Summary of Findings by Location

3 A. Background The Maryland-National Capital Park and Planning Commission (Commission) utilizes the following methods for recording employee time and attendance: online Kronos; Kronos time clocks; non-kronos time clocks; and paper time cards. Online Kronos is an electronic web-based software product whereby Commission employees use a computer terminal to enter their hours worked directly into the system. A Kronos time clock automatically captures hours worked by having Commission employees swipe identification badges through a time clock electronically connected into the Kronos software system. A non-kronos time clock is a method whereby employees physically place a time card into a time clock which then punches a time onto the time card. A paper time card is a method where handwritten times are penned on the card because time clocks are not available at the facility. Non-Kronos time clock and paper time card use are manual methods of recording employee hours worked and therefore present an increased risk to the Commission for loss of funds due to incorrect or inappropriate reporting of work hours by employees. The following table details the time collection method used by Commission employees: Method Merit System Employees Collective Bargaining Employees Seasonal, Intermittent, Temp. Contract Employees Total Online Kronos 1, ,778 Kronos time clocks ,113 Non-Kronos time 0 0 2,178 2,178 clocks Paper time cards 0 0 1,617 1,617 Totals 1, ,684 6,686 1

4 B. Audit Scope, Objectives, and Methodology The Office of Internal Audit judgmentally selected five facilities where employees record their work hours using non-kronos time clocks and five facilities where employees use paper time cards. The table below, provided by the Central Administration Services Kronos Project Manager, identifies the specific facilities selected and approximate number of employees using these methods: Locations Non-Kronos time clocks Central Area Operations: Bowie Community Center 26 Kettering/Largo Community Center 36 Paper time cards Sports Health & Wellness Division: Fairlands Sports Aquatics Complex 212 Sports and Learning Complex 403 Theresa Banks Memorial Pool 43 Northern Area Operations: Berwyn Heights Community Center 49 College Park Community Center 30 Arts & Cultural Heritage Division: Montpelier Cultural Arts Center 21 Southern Area Office: Temple Hills Community Center 60 Upper Marlboro Community Center 67 The scope of the audit included, but was not limited to, the following audit procedures: Reviewing the Commission s overall policies and procedures related to time keeping and preparing time cards. Interviewing managers, supervisors and administrative employees responsible for collecting time cards to gain an understanding of the procedures followed for ensuring information on time cards is accurate. Obtaining and reviewing documented (written) internal control procedures for time collection, reporting, and review at each identified facility. 2

5 Ensuring division offices are validating expense distribution reports by comparing them to their list of approved and submitted time cards to confirm only legitimate employees are being paid. Physically observing the time cards at each facility. Reviewing a sample of time cards already submitted to payroll from each facility. The audit covered the period of October 6, 2013 through December 31,

6 C. Major Audit Concern The results of our evaluation and testing procedures indicated the following major audit concern: Ensure Employees Sign Time Cards Employees are not consistently validating time cards at three out of the ten facilities reviewed. Additional information can be found in the Detailed Commentary and Recommendation section of this report. 4

7 D. Overall Conclusions The audit was conducted in accordance with Generally Accepted Government Auditing Standards, except for requirements set forth in section The results of our evaluation and testing procedures indicate deficiencies exist in the design or operation of internal controls for manual time cards as noted in the audit concerns section of this report, see definition below. We believe all deficiencies identified and communicated are correctable and that management s responses to all recommendations satisfactorily address the concerns. It is the responsibility of management to weigh possible additional costs of implementing our recommendations in terms of benefits to be derived and the relative risks involved. We wish to express our appreciation to the Prince George s County Department of Parks and Recreation management and staff for the cooperation and courtesies extended during the course of our review. Renee M. Kenney, CPA, CIA, CISA Chief Internal Auditor April 23, 2014 Conclusion Definitions Satisfactory No major weaknesses were identified in the design or operation of internal control procedures. Deficiency A deficiency in the design or operation of an internal control procedure(s) that could adversely affect an operating unit s ability to safeguard assets, comply with laws and regulations, and ensure transactions are properly executed and recorded on a timely basis. Significant A deficiency in the design or operation of an internal control procedure(s) which Deficiency adversely affects an operating unit s ability to safeguard assets, comply with laws and regulations, and ensure transactions are properly executed and reported. This deficiency is less severe than a material weakness, yet important enough to merit Material Weakness attention by management. A deficiency in the design or operation of an internal control procedure(s) which may result in a material misstatement of the Commission s financial statements or material impact to the Commission. 1 Government Auditing Standards, Section 3.96 External Peer Review states The audit organization should obtain an external peer review at least once every 3 years The Office of Internal Audit s last peer review was completed on July 1, 2010 and covered the period March 31, 2009 April 1, Due to the change in OIA management, the next peer review will not be completed until summer of 2014 and will cover a period of July 1, 2013 June 30,

8 Detailed Commentary and Recommendations 1. Ensure Employees Sign Time Cards Issue: For the pay period ending October 19, 2013 we reviewed 634 manual and paper time cards. We identified 18 time cards without employee signatures. This represents 3% of the total sample reviewed. The deficiencies occurred at three of the ten facilities reviewed. Criteria/Risk: The Commission s Practice No. 3-40, Preparing Time Cards, requires employee s to provide their full signature (not initials) on all time cards. By signing the time card, the employee is attesting to the hours submitted for payment. Failing to acquire employees attestation of their hours worked increases the Commission s risk of inaccurate payrolls, fraudulent time charges and loss of funds. Recommendation: We recommend supervisors fully enforce Commission Practice No. 3-40, Preparing Time Cards by holding employees accountable and ensure all time cards are signed by employees, prior to forwarding to payroll for processing. For incidences where an employee is not able to sign their time card due to unplanned leave (e.g. family medical leave, unscheduled sick time) the approving supervisor should include an explanation on the time card as why the employee s signature was not obtained. Issue Risk: High Management Response: Management concurs with the audit finding and recommendation. Departments will have Division Chiefs disseminate reminders to all personnel for providing increased awareness of the Commission s existing policies and practices for reporting and approving payroll information. Expected Completion Date: June 30, 2014 Follow-Up Date: July

9 2. Ensure Supervisors Sign Time Cards Issue: For the pay period ending October 19, 2013 we identified 189 time cards without the supervisor s signature. The time cards only included the supervisor s initials. The deficiencies occurred at one of the ten facilities reviewed. In addition, four facilities do not provide a specific designated space (imprinted, typed or stamped) on their time cards for the required signatures (i.e. employee, immediate supervisor and reviewing supervisor). Criteria/Risk: Commission s Practice No. 3-40, Preparing Time Cards, requires supervisors to provide their full signatures (not initials) on all time cards. Obtaining the immediate supervisor s signature on the time card is a strong internal control, as the immediate supervisor should have direct knowledge of the hours worked. Failing to acquire a supervisor s attestation of their review and approval of an employee s time card increases the Commission s risk of inaccurate payrolls, fraudulent time charges and loss of funds. A full signature reduces opportunities for forgery and provides additional assurances to the reviewing supervisor that the time recorded is accurate. Also, providing a designated space on the time card for attestation by the employee, supervisor and reviewing supervisor helps ensure all required signatures are obtained. Recommendation: We recommend facility directors fully enforce Commission Practice No. 3-40, Preparing Time Cards, by holding supervisors accountable and ensure supervisors provide their full signatures on all time cards, prior to forwarding to Department of Finance for processing. Issue Risk: Medium Management Response: Management concurs with the audit finding and recommendation. Departments will have Division Chiefs disseminate reminders to all personnel for providing increased awareness of the Commission s existing policies and practices for reporting and approving payroll information. Expected Completion Date: June 30, 2014 Follow-Up Date: July

10 3. Enforce Use of Time Clocks Issue: During our review, at a facility equipped with a time clock, we identified three paper time cards that were completed, approved and submitted to Department of Finance without any written explanations provided as to why they were used. Criteria/Risk: The Commission s Practice No. 3-40, Preparing Time Cards, requires employee s to use time clocks where facilities are equipped with them; otherwise a written explanation is required on the time card explaining why the time clock was not used. Failing to acquire explanations as to why time clocks are not used increases the Commission s risk of inaccurate payrolls, fraudulent time charges and loss of funds. Recommendation: We recommend immediate supervisors and facility directors fully enforce Commission Practice No. 3-40, Preparing Time Cards, by ensuring valid and well documented explanations are provided on time cards when employees do not use a time clock at a facility equipped with one. We also recommend immediate supervisors provide a signature alongside of the explanation attesting that the reason has been reviewed and approved. Issue Risk: Medium Management Response: Management concurs with the audit finding and recommendation. Departments will have Division Chiefs disseminate reminders to all personnel for providing increased awareness of the Commission s existing policies and practices for reporting and approving payroll information. Expected Completion Date: June 30, 2014 Follow-Up Date: July

11 4. Authorize Changes on Time Cards Issue: Our review of time cards from our sampled facilities disclosed 18 time cards with crossed out times or written over and changed times without any explanation or supervisory approval signatures. This represents 3% of the total sample reviewed and occurred at 6 of the 10 facilities reviewed. Criteria/Risk: A strong internal control procedure for manual time cards requires well documented explanations and supervisory approval signatures when times are crossed out or written over on time cards. Failing to provide explanations for changes to times along with approval signatures of the supervisors next to the changes increases the Commission s risk of inaccurate payrolls, fraudulent time charges and loss of funds. Recommendation: We recommend facility directors institute an internal control procedure that requires supervisors to provide an explanation and approval signature next to each time that is crossed out or written over on time cards prior to forwarding to payroll for processing. Issue Risk: Medium Management Response: Management concurs with the audit finding and recommendation. Departments will have Division Chiefs disseminate reminders to all personnel for providing increased awareness of the Commission s existing policies and practices for reporting and approving payroll information. Expected Completion Date: June 30, 2014 Follow-Up Date: July

12 5. Strengthen Payroll Monitoring Processes Issue: Our discussions with directors and office representatives at the 10 sampled facilities disclosed that 7 facilities do not have adequate processes in place to ensure bi-weekly payrolls are accurate and only legitimate employees are being paid. Criteria/Risk: Failure to implement procedures to review bi-weekly payrolls may result in employees being paid at incorrect rates or for inflated hours. Monitoring of payroll expenses also reduces the risk of ghost (non-existent) employees. Recommendation: We recommend facility directors strengthen monitoring processes to include a documented comparison of their approved time cards to the payroll expense distribution reports. It is the opinion of the Office of Internal Audit that this a strong internal control, however, if management determines the review and comparison of the expense distribution report is not efficient, other processes may be identified and implemented (e.g. comparison of actual payroll expenditures to budgeted expenditures.) Issue Risk: Medium Management Response: Management concurs with the audit finding and recommendation. Department of Human Resources and Management (DHRM) will collaborate with Commission Departments to discuss various potential processes. Expected Completion Date: June 30, 2014 Follow-Up Date: July

13 6. Standardize Rules for Meal Times Issue: Requirements for the deduction of meal breaks for intermittent employees not expected or required to complete their job duties during their meal period is not consistent throughout the Commission. Some of these employees are required to deduct meal time, while others are paid for their meal breaks. Note: It is understood that some employees (e.g. camp counselors, front desk personnel, etc.) are expected to complete duties during their meal break. These employees should not be required to deduct their meal period from their time card. Criteria/Risk: An employee s time card should reflect actual time worked. Failing to accurately record meal breaks increases overall payroll costs to the Commission. The Commission s Merit System Rules and Regulations, Chapter 800, states Employees shall be allowed a meal period, the length of which will be determined by the Department Head and the minimum of which shall be one-half (1/2) hour. Meal periods during normal work schedules may not be included in any computations used to determine the amount of regular pay, leave, or overtime due an employee. Recommendation: Intermittent employees not expected or required to complete their job duties during their meal period should deduct their meal period on their time card. Issue Risk Medium Management Response: Management concurs with the audit finding and recommendation. DHRM will ensure that all Commission requirements regarding the reporting of breaks and meal times are consistent with the Fair Labor Standards Act (FLSA). Expected Completion Date: June 30, 2014 Follow-Up Date: July

14 7. Document Procedures for Manual Time Cards Issue: Internal procedures, at the facility level, are not consistently documented for manual time card completion, review, or submission to the Department of Finance. Our review disclosed 9 of the 10 facilities had inadequate documented internal procedures or none at all. Criteria/Risk: Lack of documented internal control procedures for manual time cards increases the Commission s risk of fraudulent time charges and loss of funds. Recommendation: We recommend facility directors institute a well-documented comprehensive uniform set of internal control procedures for manual time cards that specifically include: instructions for employees to complete their time cards; responsibilities of immediate supervisors for reviewing and approving employee time cards; responsibilities of administrative personnel in collecting, checking and handling employee time cards; and Monitoring processes (e.g. comparisons of approved time cards to payroll expense distribution reports, budget reviews, etc.). Issue Risk: Low Management Response: Management concurs with the audit finding and recommendation. Departments will develop instructions and disseminate to Divisions. Expected Completion Date: June 30, 2014 Follow-Up Date: July

15 8. Require Consistent Signatures on Manual Time Cards Issue: As the Commission is unable to standardize the type of time clock used at the various facilities, the Commission must accept a wide variety of time cards. Not all time cards have a designated space for employee, immediate supervisor and reviewing supervisor signatures. Signatures and/or initials are written all over the time cards. Signatures and initials are often not legible and it is difficult to determine who actually reviewed and approved the time card. Criteria/Risk: Good internal control procedures for manual time cards necessitate consistent requirements for signatures on all manual time cards. This includes designated spaces for employee, immediate supervisor and reviewing supervisor signatures. Failing to provide designated spaces for signatures on time cards increases the Commission s risk of experiencing fraudulent time charges. Recommendation: If the time card being used does not have a designated space for the employee, immediate supervisor and reviewing supervisor signatures, we recommend facility directors obtain a stamp to be used on each manual time card for signatures. Issue Risk: Low Management Response: Management concurs with the audit finding and recommendation. Departments will have Division Chiefs disseminate reminders to all personnel for providing increased awareness of the Commission s existing policies and practices for reporting and approving payroll information however an update of Commission Practice No by DHRM may be necessary. Expected Completion Date: June 30, 2014 Follow-Up Date: July

16 Exhibit A Summary of Findings by Location Locations Sports Health & Wellness Division: Sports &Learning Complex (295 time cards reviewed) Fairland Sports & Aquatics Complex (189 time cards reviewed) Theresa Banks Memorial Aquatics Ctr. (32 time cards reviewed) Employee signatures on time card* No, 13 time cards without any signatures Supervisor signatures on time card* Written explanation provided when written/paper time card used at facility where time clocks are utilized* Times are crossed out and changed without explanation and/or supervisor s signature Designated spaces on time cards for employee, immediate supervisor and approving supervisor signatures Documented internal control procedures for manual time cards Documented work schedules for employees Comparison of Payroll Expense Distribution reports to approved time cards Meal times are being accounted for Yes Yes Yes No Yes Yes Yes Yes No, 425 instances No, initials Non-applicable No No Yes, but Yes Yes, but No, 86 instances only on 189 inadequate inadequate time cards No, 4 time cards without any signatures Yes No, 3 written time cards used Yes, 2 time cards No Yes, but inadequate Yes No No, 61 instances Arts & Cultural Heritage Division: Montpelier Cultural Arts Ctr. (13 time cards reviewed) No, 1 time card without a signature Yes Non-applicable Yes, 2 time cards Yes No Yes No Yes Northern Area Operations: Berwyn Heights Community Ctr. (11 time cards reviewed) College Park Community Ctr. (20 time cards reviewed) Yes Yes Non-applicable No Yes Yes, but inadequate Yes Yes No, 1 instance Yes Yes Non-applicable Yes, 3 time cards Yes No Yes No Yes

17 Locations Central Area Operations: Bowie Community Ctr. (10 time cards reviewed) Kettering/Largo Community Ctr. (20 time cards reviewed) Southern Area Operations: Temple Hills Community Ctr. (27 time cards reviewed) Upper Marlboro Community Ctr. (17 time cards reviewed) Employee signatures on time card* Supervisor signatures on time card* Written explanation provided when written/paper time card used at facility where time clocks are utilized* Times are crossed out and changed without explanation and/or supervisor s signature Designated spaces on time cards for employee, immediate supervisor and approving supervisor signatures Documented internal control procedures for manual time cards Documented work schedules for employees Comparison of Payroll Expense Distribution reports to approved time cards Meal times are being accounted for Yes Yes Non-applicable No No Yes, but Yes No No, 14 instances inadequate Yes Yes Non-applicable Yes, 4 time cards No No No No No, 32 instances Yes Yes Non-applicable Yes, 5 time cards Yes Yes, but inadequate Not for all employees No No, 28 instances Yes Yes Non-applicable Yes, 2 time cards Yes No Yes Yes No, 29 instances Conclusions for each Column: Total of 634 time cards reviewed 18 time cards without employee signatures from 3 of the 10 Facilities 189 time cards without supervisory signature from 1 of the 10 Facilities 3 written time cards used without an explanation from 1 of the 10 Facilities 18 time cards with times changed, crossed out or written over without any explanation or supervisory approval signature from 6 of the 10 Facilities 4 of the sampled facilities do not have designated spaces for the signatures of employee, immediate supervisor or reviewing supervisor 9 of the sampled facilities have either inadequate or no documented internal control procedures for manual time cards 2 of the sampled facilities did not have work schedules for all employees 7 of the sampled facilities have inadequate or no documentation supporting the comparison 8 of the sampled facilities do not account for meals on time cards * No denotes violation of M-NCPPC Practice No. 3-40, Preparing Time Cards