CHESTERFIELD COUNTY INTERNAL AUDIT AUDIT PROGRAM DEPARTMENT: Accounting/HRM AUDIT PERIOD: CY2000 EXAMINATION OF: Payroll and

Benefits W/P NO B-11 AUDITOR Sarah Simmons DATE 3/21/2001 APP BY/DATE PAGE 1 OF 4

DESCRIPTION

DATE

W/P REF

AUDITOR 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. 1. Complete section summary. 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. 1. Complete section summary. 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).

CHESTERFIELD COUNTY INTERNAL AUDIT AUDIT PROGRAM DEPARTMENT: Accounting/HRM EXAMINATION OF: Payroll and Benefits AUDIT PERIOD: CY2000 W/P NO B-11 AUDITOR Sarah Simmons DATE 3/21/2001 APP BY/DATE PAGE 2 OF 4

DESCRIPTION

DATE

W/P REF

AUDITOR INITIAL

F. 4.

MASTERFILE (CONT.) 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. Select all transactions where the gross pay exceeded $5,000sample the results and test the payments for validity. Test master file to determine if all active workers salaries are in the correct range for their grade. 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). Test Master File to determine if exempt positions earned overtime pay. 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. 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. Determine number of employees with retroactive pay increases due to late performance evaluations. Review compliance with comp time procedures for a sample of departments. Extract employees with overtime and bonus in same period to determine OT was correctly calculated. 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. Confirm all departments that agreed to perform payroll payouts have observed a payout.

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CHESTERFIELD COUNTY INTERNAL AUDIT AUDIT PROGRAM DEPARTMENT: Accounting/HRM EXAMINATION OF: Payroll and Benefits AUDIT PERIOD: CY2000 W/P NO B-11 AUDITOR Sarah Simmons DATE 3/21/2001 APP BY/DATE PAGE 3 OF 4

DESCRIPTION

DATE

W/P REF

AUDITOR INITIAL

F. 16.

MASTERFILE (CONT.) 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. 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. Extract a sample of employees who received bonuses and confirm approval Extract a sample of employees with a Health Insurance Opt out payment of $400 and confirm VRS payment was calculated correctly Perform other data integrity tests as deemed necessary.

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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. 1. 2. Complete section summary. 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. 4. Identify retired employees who died in CY00 and determine if benefits were terminated timely. 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. 1. 2. Complete section summary. Verify that system access is on a need to know basis and that only valid employees have access.

CHESTERFIELD COUNTY INTERNAL AUDIT AUDIT PROGRAM DEPARTMENT: Accounting/HRM EXAMINATION OF: Payroll and Benefits AUDIT PERIOD: CY2000 W/P NO B-11 AUDITOR Sarah Simmons DATE 3/21/2001 APP BY/DATE PAGE 4 OF 4

DESCRIPTION

DATE

W/P REF

AUDITOR 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. Document and evaluate the payroll account funding and reconciliation processes for proper controls and efficiency. Document procedures for outstanding checks. Review reconciliations for completeness, correctness, and timeliness for the following: a.Insurance. b VRS. c Flexible Spending Accounts. 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. Test payroll distributions for proper separation of duties. Sample departments and review payroll process, including check pick up and disbursement. With proper approvals obtained beforehand, document a fraudulent employee, bonus and merit increase and process through system. Document if data is processed without question.

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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.