Financial Management:

Control Weaknesses Increase Risk of Improper Navy Civilian Payroll Payments

AIMD-95-73: Published: May 8, 1995. Publicly Released: May 8, 1995.

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GAO reviewed the Navy's civilian payroll operations, focusing on the: (1) propriety and accuracy of payments made to civilian personnel; and (2) vulnerability of the internal control system to prevent fraud and abuse.

GAO found that: (1) 134 of 225,000 Navy civilians were overpaid a total of at least $62,500 in 1 year; (2) these overpayments were due to the Defense Finance and Accounting Service's (DFAS) failure to determine if individual civilian employees were paid from multiple databases for the same time period and infrequent reconciliations between civilian payroll and personnel systems; (3) the Navy's civilian payroll operations are susceptible to additional improper payments as a result of many personnel having unrestricted access to payroll data, DFAS inability to identify database changes, and DFAS maintenance of inactive payroll accounts on the active payroll database; and (4) the rapid consolidation of civilian payroll accounts into the Defense Civilian Payroll System could exacerbate control weaknesses if vulnerabilities are not adequately addressed.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DFAS and Navy Personnel officials have completed a review to determine the full extent of overpayments, and have substantially completed actions to collect amounts owed. As of April 30, 1996, DFAS reported that $81,287 in identified overpayments had been collected. DFAS also reported that all overpayments will be resolved in accordance with standard debt collection procedures, and that the outstanding debts of $12,687 have been scheduled to be repaid within 2 years, except for one to be repaid in 3 1/2 years.

    Recommendation: The Assistant Secretary of the Navy for Manpower and Reserve Affairs and the Director, DFAS, should direct appropriate officials to complete follow up on the 134 overpaid employees GAO identified and referred to DFAS and Navy Personnel officials to determine the full extent of overpayment, collect amounts due, and identify and correct systemic causes of the overpayments.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

  2. Status: Closed - Implemented

    Comments: DFAS and Navy Personnel officials have completed a review to determine the full extent of overpayments, and have substantially completed actions to collect amounts owed. As of April 30, 1996, DFAS reported that $81,287 in identified overpayments had been collected. DFAS also reported that all overpayments will be resolved in accordance with standard debt collection procedures, and that the outstanding debts of $12,687 have been scheduled to be repaid within 2 years, except for one to be repaid in 3 1/2 years.

    Recommendation: The Assistant Secretary of the Navy for Manpower and Reserve Affairs and the Director, DFAS, should direct appropriate officials to complete follow up on the 134 overpaid employees GAO identified and referred to DFAS and Navy Personnel officials to determine the full extent of overpayment, collect amounts due, and identify and correct systemic causes of the overpayments.

    Agency Affected: Department of Defense: Department of the Navy: Office of the Assistant Secretary of the Navy (Manpower, Reserve Affairs, and Logistics)

  3. Status: Closed - Implemented

    Comments: DFAS and Navy Personnel have performed the required reconciliation every 4 months. In addition, actions have been taken to ensure that records have been corrected once discrepancies have been identified, and DCPS has been enhanced to provide automatic daily returns to Navy Personnel officials of any transactions that do not pass DCPS edits for research, correction, cancellation, or subsequent return.

    Recommendation: The Assistant Secretary of the Navy for Manpower and Reserve Affairs and the Director, DFAS, should direct appropriate officials to conduct payroll/personnel reconciliations every 4 months, as called for by the Defense Civilian Personnel Data System/Defense Civilian Pay System (DCPDS/DCPS) Payroll Handbook, and establish a requirement for timely systematic follow up, including research, correction, and documentation of all discrepancies.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

  4. Status: Closed - Implemented

    Comments: DFAS and Navy Personnel have performed the required reconciliation every 4 months. In addition, actions have been taken to ensure that records have been corrected once discrepancies have been identified, and DCPS has been enhanced to provide automatic daily returns to Navy Personnel officials of any transactions that do not pass DCPS edits for research, correction, cancellation, or subsequent return.

    Recommendation: The Assistant Secretary of the Navy for Manpower and Reserve Affairs and the Director, DFAS, should direct appropriate officials to conduct payroll/personnel reconciliations every 4 months, as called for by the Defense Civilian Personnel Data System/Defense Civilian Pay System (DCPDS/DCPS) Payroll Handbook, and establish a requirement for timely systematic follow up, including research, correction, and documentation of all discrepancies.

    Agency Affected: Department of Defense: Department of the Navy: Office of the Assistant Secretary of the Navy (Manpower, Reserve Affairs, and Logistics)

  5. Status: Closed - Implemented

    Comments: A SCR has been written and approved to compare all databases for multiple appearances of the same social security number. When implemented in the future, the system revision will be included in the DCPS Users Manual. In the interim, procedures have been put in place to process a standard data query each pay period to identify and report any employees receiving disbursement from more than one DCPS database. Using this report, each payroll office has developed criteria to determine the propriety of those payments, and take any necessary research and corrective actions.

    Recommendation: The Director, DFAS, should establish and implement automated procedures documented in the DCPS Users Manual to detect and correct any unauthorized multiple payments to a single social security number.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

  6. Status: Closed - Implemented

    Comments: As DCPS accounts have been transferred to a few locations, payroll offices have been able to cut back on the number of payroll personnel granted supervisory access. DFAS officials stated that this is expected to continue throughout the consolidation effort, which is scheduled to be completed in March 1997. When the planned consolidations are completed, and payroll operations are therefore stabilized, DFAS officials plan to further reduce the number of payroll personnel with supervisory access.

    Recommendation: The Director, DFAS, should assess, on a case-by-case basis, the extent to which nonsupervisory payroll technicians need supervisory level access, and, if so, grant such access for as limited length of time as possible.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

  7. Status: Closed - Implemented

    Comments: A System Change Request was installed at all DCPS production sites as of January 1997 to add data on user identification, date, and time to each journal file created in DCPS, and to extend the journal file retention period to 1 year.

    Recommendation: The Director, DFAS, should require the DCPS Central Design Activity to develop an audit trail in DCPS that marks all transactions with a user identification that cannot be overwritten.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

  8. Status: Closed - Implemented

    Comments: All inactive employees with no current year totals-to-date records were purged from all DCPS databases in December 1995. In addition, access to inactive records has been restricted to payroll office personnel with supervisory access.

    Recommendation: The Director, DFAS, should remove current inactive payroll records from the active payroll system and place these records in a separate database, with restricted access.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

  9. Status: Closed - Implemented

    Comments: DFAS has put in place a policy requiring that all inactive employee records with no current year totals-to-date records be purged at the end of the third quarter each year.

    Recommendation: The Director, DFAS, should establish and implement detailed written procedures to remove all future inactive payroll accounts from the active payroll system, and place these records in a separate database with restricted access.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

 

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