HEW's Centralized Payroll System
FGMSD-76-68: Published: Aug 24, 1976. Publicly Released: Aug 24, 1976.
- Full Report:
In a series of reviews of the Department of Health, Education, and Welfare's (HEW) centralized payroll system, GAO examined the HEW procedures and practices for processing undeliverable payroll checks returned to the Department of the Treasury for cancellation, remailing, or reissuance.
Hundreds of Wage and Tax Statements and pay records for 1974 were erroneous because adjustments for canceled checks were not recorded in the proper year or were recorded twice. W-2 tax forms were also found to be erroneous because pay records were incorrect. Because of needed revisions to computer programs for processing, canceled check adjustments were not made for about 7 months. As a result, HEW made no canceled check adjustments from December 1974 to July 1975.
Recommendation for Executive Action
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Recommendation: To furnish accurate W-2 forms to employees and accurate reports to the Civil Service Commission and Internal Revenue Service, it is recommended that the Secretary, HEW, instruct the Director, Division of Central Payroll, to: (1) record canceled check adjustments on pay records for the year in which the check was issued and provide employees with corrected W-2 forms where appropriate; (2) identify erroneous W-2 forms issued for 1974 and 1975 and meet with IRS officials to determine what action, if any, should be taken; and (3) give high priority to making revisions, when necessary, to the computer program used to process canceled check adjustments to prevent delays in adjusting pay records. HEW should improve its procedures and practices to minimize the possibility of errors and irregularities involving undeliverable payroll checks. Also, HEW should comply with its procedures regarding the return of undeliverable payroll checks to the Treasury. The designated agents should be instructed to: (1) return all undeliverable checks directly to the Treasury, obtain receipts for them, and notify the Division of Central Payroll; and (2) compare receipts obtained from the Treasury with records showing which checks were sent to the Treasury and investigate the differences for further action. The Director of the Division of Central Payroll should be instructed to: (1) compare notifications received from designated agents with returned check notices received from the Treasury and investigate the differences for further action; and (2) adequately control and safeguard payroll checks when designated agents return them to the Division of Central Payroll and remind designated agents that undeliverable checks should be returned directly to the Treasury. The Assistant Secretary for Administration and Management should be instructed to: (1) take action to stop designated agents from returning undeliverable payroll checks to the Division of Central Payroll; and (2) monitor the implementation of the above recommendations.