FLSA Audit Program

8/13/2019 FLSA Audit Program

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CHESTERFIELD COUNTY

INTERNAL AUDIT W/P NO B-11

AUDIT PROGRAM AUDITOR Sarah Simmons

DATE 3/21/2001

DEPARTMENT: Accounting/HRM AUDIT PERIOD: CY2000 APP BY/DATE

EXAMINATION OF: Payroll and Benefits PAGE 1 OF 4

DESCRIPTION DATE W/P AUDITOR

REF INITIAL

D. TEST OF REGULAR PAYROLL TRANSACTIONS

Objective: To test processed payroll transactions for accuracy.

1. Complete section summary.

2. Select a haphazard sample of employees with the following designations:(Fire (2), Police (2), HD, CE, PT, CO (2), Sheriff) extract pay transactions

from audit transaction files using Easytrieve or ACL. Include 3 new hires.

a. Re-compute the gross pay based on source documents to include time sheets

and salary data in the employees personnel file.

b. Re-compute the net pay based on voluntary & non-voluntary deductions.

Trace non-voluntary deductions to W-4's and VA-4's and voluntary

deductions to supporting documentation in the employees' personnel file.

E. TEST OF PAYROLL PERSONNEL'S TRANSACTIONS

Objective: To test processed payroll transactions for accuracy.


2. Determine social security numbers of employees with system access or

payroll clerks. Determine individuals with the following:

a Overtime greater than $1,500

Trace the hours worked and gross pay to authorized source data.

b Ytd sick leave less than 24 hours

Trace leave data to leave slips.

c Ytd annual leave less than 40 hours

Review time sheets for approval.

d Ytd bonuses greater than $1,000

Review Bonus docuentation.

F. TEST OF MASTER FILE CRITICAL DATA & DATA INTEGRITY

Objective: Determine that Master File changes are authorized and data is valid.


2. Verify that no duplicate Social Security Numbers exist on the payroll master.Also research duplicate direct deposit accounts, names and addresses.

3. Test Master File to determine if there are excess files that should be deleted.

(Ex. - employees who have not worked in months/years have been deleted).


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CHESTERFIELD COUNTY



DATE 3/21/2001




REF INITIAL

F. MASTERFILE (CONT.)

4. Select from the Master File a list of employees with overtime in excess of $2,500

in CY00. From this list, sample some payrolls source data for these employees

to ensure proper support for overtime paid. Recalculate Police and Sheriff to determine

if straight OT time was paid. Report on all positions where OT earnings

exceeded 25% of base pay.

5. Select all transactions where the gross pay exceeded $5,000-

sample the results and test the payments for validity.

6. Test master file to determine if all active workers salaries are in the

correct range for their grade.

7. Select a sample of employees with more than one job with the County. Review

documentation to determine how the position was obtained, if the positions

was properly approved, and if the payroll is being processed properly

(to include testing of VRS contribution).

8. Test Master File to determine if exempt positions earned overtime pay.

9. Determine all individuals with take home vehicles are taxed in compliance with

applicable laws. Confirm that VRS and supplemental retirements are

calculated on proper base pay.

10. Extract all full-time employees that earned over $15,000. Review list of individuals

with no annual or sick leave usage. Follow up with Dept. Director/Supervisor

for reasonableness.

11. Determine number of employees with retroactive pay increases due to late

performance evaluations.

12. Review compliance with comp time procedures for a sample of departments.

13. Extract employees with overtime and bonus in same period to determine OT was

correctly calculated.

14. Extract departments with non standard work weeks and determine if they are:

a Posting 12 hours to holiday instead of 8.

b Working greater than 16 hours in a 24 hour period.

15. Confirm all departments that agreed to perform payroll payouts have observed a payout.


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CHESTERFIELD COUNTY



DATE 3/21/2001




REF INITIAL

F. MASTERFILE (CONT.)

16. Select a sample of employees earning comp time and confirm that the amount

is being properly calculated and the hours are being used or paid out within the time allotted

by policy.

17. Extract active employees who have not received a paycheck in the past 3 months

Select a sample and perform follow-up to determine reason(s) for inactivity.

18. Extract a sample of employees who received bonuses and confirm approval

19. Extract a sample of employees with a Health Insurance Opt out payment of $400

and confirm VRS payment was calculated correctly

20. Perform other data integrity tests as deemed necessary.

G. TEST OF EMPLOYEE TERMINATIONS AND NEW HIRES

Objective: Determine that employees that left County employment were paid

properly and removed from the systems active pay status.


2. Select a sample of employees who terminated and test for the following:

a Prompt removal from active pay status.

b Accurate payment of sick or annual leave balances.

c Correct payment for employees last pay check.

d Paychecks not issued promptly after termination.

e Benefits were terminated.

3. Identify retired employees who died in CY00 and determine if benefits were terminated timely.

4. Extract all new hires in the Departments requiring background checks and verify a

criminal background check was completed by the State Police and the FBI.

H. PAYROLL SYSTEM AND INTERNAL CONTROLS

Objective: Determine that the Payroll System and related processing are done

efficiently with sound internal controls.


2. Verify that system access is on a need to know basis and that only

valid employees have access.


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CHESTERFIELD COUNTY



DATE 3/21/2001




REF INITIAL

H. PAYROLL SYSTEM AND INTERNAL CONTROLS (cont)

3. Review the processing of payroll and identify duplication of efforts or inefficiencies.

Include a review of the policies and procedures, physical security of the payroll area,

remittance of taxes to the Federal and State governments, and the handling, control

and disposition of unclaimed payroll checks and W-2s.

4. Document and evaluate the payroll account funding and reconciliation processes

for proper controls and efficiency. Document procedures for outstanding checks.

5. Review reconciliations for completeness, correctness, and timeliness for the following:

a Insurance.

b VRS.

c Flexible Spending Accounts.

6. Review the upload to the Integral system and subsequent download to the

Time and Attendance module to ensure completeness, timeliness and correctness of data

Test control logs and edit logs for review and sign off.

7. Test payroll distributions for proper separation of duties.

8. Sample departments and review payroll process, including check pick up and disbursement.

9. With proper approvals obtained beforehand, document a fraudulent employee, bonus

and merit increase and process through system. Document if data is processed without question.

I. PRIOR AUDIT FOLLOW UP

Objective: To follow up on prior audit findings.

1. Document Section Summary.

2. Determine open audit comments from prior audits.

3. Document current efforts to close open audit findings.

FLSA Audit Program

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