Seattle School District No.

General
Code: Name: Group: Type: Location: Scope:
03Seattle-AC12-SA12 Seattle School District No. 1 Central King County 03-School District King Accountability, Financial, SA

Team
Lead: Manager:
Ryan Donnell Tony Martinez

Procedures
D.3.PRG - Payroll

Procedure Step: Prepared By: Reviewed By:

Record of Work Done:

HR Master Data System RRD, 5/14/2013 TAM, 6/12/2013

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From Accountability Planning Steps: We learned the Indian Education Program Manager is paid according to the Principals Association of Seattle Schools (PASS) Collective Bargaining Agreements. The identified risk for this observation is the District is paying classified staff according to a union contract for principals. Not only is the District potentially overpaying administrators, but this could result in a legal compliance issue as well. We later learned that the Indian Education Program Manager's increase in pay resulted from an undocumented salary override. In this ROWD, we will gain an understanding of internal controls and perform substantive tests related to salary overrides and JSCEE administrators paid according to PASS CBA. Salary Overrides: During the planning of the FY12 Accountability audit, we learned that Arlan received a $20k pay increase in 2012. This was unusual to us because we told management last year that in order to really change the culture at the District (have meaningful, impactful change), the District must begin to hold staff accountable for their actions. We were expecting to see a written reprimand in the employee's personnel file for his continued noncompliance with federal requirements related to the Indian Education federal grant, and for backdating time and effort documentation making it appear as if they were in compliance for the time-period under audit, instead of receiving a significant pay increase. We met with Duggan Harman, Assistant Superintendent of Business and Finance, on 1/10/2013 to discuss the risks of potential fraud, noncompliance etc, and asked him why Arlan received a $20k pay increase. He was unsure and indicated that he will look into the pay increase and get back to us. Because of our inquiry into Arlan's pay increase, on 1/31/13, the District's Accounting Manager, Kathie Technow, reported a suspected loss to the SAO. She stated that Arlan Neskahi was overpaid $20,233.56. She also stated that a pay rate override was used since 9/1/11, but no documentation exists to support this rate override, and that the employee is in negotiations with the District to repay the overpayment. We will gain an understanding of internal controls surrounding salary override procedures, and test other employees to see if salary overrides are unsupported. Understanding of Internal Controls over Salary Overrides: We met with Elaine Williams, HR Manager (she was the former Compensation Manager until July 2012) on 2/19/13, and Laurel Moody, HR Supervisor, on 2/25/13 to discuss procedures over salary overrides.

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Elaine defined a salary override as paying someone outside the salary range for the person's job title/position. She indicated that all of the District's principals are in an override situation because the Collective Bargaining Agreement includes a performance bonus, in addition to their base pay. She said the more common salary override is "Redlining", which is a term used by the HR department. Redlining is when an employee's job title/position is downgraded as a result of reclassification or reorganization (the new position itself is a reduction in salary grade) . Instead of reducing the employee's salary, the employee continues to receive their current salary even if their new position's salary range is lower than what the person was making under the old job title; thus making the employee's salary whole (avoiding a paycut). The redline salary continues until salary increases (e.g. step increases) in the employee's appropriate salary range equals or exceeds the redline amount. At that time, the employee reverts to the applicable step in his or her salary range. Elaine's rationale for redlining an employee's salary is that "you do not want to penalize them because of demotion, decreased work responsibilities, or a reclassification or reorganization"; she stated that it was good for retention purposes. We asked her how the approval process is initiated. She said that the department supervisor and/or director would have to approve to redline the employee and route this request to the Compensation Manager. Along with the request for approval, they would also need to attach a job description for the new position. Per Elaine, this request for approval was usually an email. There is no request for approval form etc. The Compensation Manager reviews the new job position form, and if the new position merits a downgrade in pay either due to a change in responsibilities or a demotion, the employee is redlined. The Compensation Manager then completes the Salary Placement Worksheet. This document includes the employee's name, ID #, effective date, job code #, job title, salary grade, annual salary and hourly rate. Elaine prints the salary placement worksheet, and delivers the document to an employment analyst or directly to Laurel Moody for data entry into the SAP system. For a redline, she gives it directly to Laurel. Laurel stated that there are two methods for changing personnel information in the HR Master Data module. 1. Module called "Maintain Personnel Actions - PA40". Laurel indicated that this method is commonly used for changing personnel information in the HR Master Data module. In order to make changes to the employee's pay, she enters the effective date for the action. Then she clicks on pay rate change and this brings up a box of different action codes from one to eight. Reasons for actions include annual step increase, market adjustment/grade step, out of class etc. After selecting the action type for salary overrides, she inputs 999 (override code) into the PS Type and PS group. She also performs calculation to determine the employee's monthly salary. In order to calculate the monthly salary, she performs a calculation based on the hourly and annual salary rates from the salary placement worksheet. She said she would not have done an override if she did not have a salary placement worksheet (in reference to Arlan's salary override) because it requires a multi-step process, and she would not have known what to input for the monthly salary. She does not recall changing Arlan's rate of pay to off-schedule.

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2. Module called "Maintain HR Master data - PA30". Laurel indicated that she rarely uses this method for making changes to the HR Master data. There are no action codes and no trail of changes. We recommended that they lock down Info Type 8 (basic pay) in this module since changes are not tracked. After Laurel enters the information into the SAP system, she places the salary placement worksheet in the employee's personnel file. Letters were not sent to the employees in the event of promotions, demotions, or salary overrides indicating changes to their basic pay. The Internal Auditor issued an internal audit report that included information showing that every member in the HR department and Payroll department has access to the change personnel information in the HR Master Data module. The District responded to the internal audit by limiting this access to approximately 6 employees in the HR department. This has been in place since late 2012. We asked if somebody requested a report from the Technology department (DOTS) showing all changes to personnel information by username for preceding periods, in an attempt to identify unauthorized changes to personnel information. We were told that nobody has performed such review. We asked Elaine and Laurel if somebody reviews changes to employee information in the HR Master Data System. Elaine said that Laurel audits salaries every now and then, and that staffers in her department can make adjustments to pay. Laurel said that she runs an audit report showing HR Master Data changes by action code. However, she said there are no formal procedures, and she does not maintain the report after she reviews it. In addition, we asked her if the audit report would capture changes to the HR Master Data if no action codes were used, and she responded "No". She said changes made in the module "Maintain HR Master Data - PA30" leave no audit trail. Moreover, this review should be performed by an employee who does not have the ability to change information in the HR Master Data Modules. Based on her review process, this control is ineffective and does not verify that all changes to the personnel information are supported by appropriate forms and approvals. Considering every member of the HR and Payroll teams had the ability to change personnel information in the HR master data system and employees can make changes in the HR master data module without leaving an audit trail, we would not be able to establish responsibility for any unauthorized increases in pay. Julie Davidson provided a report showing all changes to Info Type 8 (basic pay record), see D.3.7. We attempted to determine if the users were authorized to make changes to an employee's salary but were unable to perform this test because the report does not identify what changed to Info Type 8. We asked Julie questions about the report and she responded: Q: Can the IP address be identified for master data changes? A: No, we do not have that functionality activated. We can come close on current activity, meaning technology does have the ability to look at who is logged into what workstation (computer name, not specifically the IP address) at the current moment and time. However we cannot look back historically to see where a change was made from, only the user name that made the change. Q: Can we tell if the changes made to IT0008, as reported on the document I provided, were made from Actions or directly updating the IT

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A: No. We can run a list of Actions and cross reference it, but from the query designed to do a mass pull of all changes that impacted IT0008 we cannot distinguish the function of how that change was made. Q: Can changes be made to the annual salary without changing the Grade/Step? A: No. One cannot make an edit that would change the annual salary and leave grade/step intact. For example: Grade 20, Step 4 with annual salary of $50,000 cannot be edited to read Grade 20, Step 4, annual salary $51,000. These fields are connected via a table in the background and do not function independently. The only way to circumvent a salary placement would be to use a salary override of 999. Auditor Note: We spoke to Laurel Moody about this and you can make changes to hourly rate thereby increasing annual salary without making changes to the grade/step.

We asked Elaine for a Salary Placement Worksheet so we could understand what the form looks like. She provided us with Janet Chin's Salary Placement Worksheet. Elaine mentioned that this salary override was authorized by the former Superintendent Maria Goodloe-Johnson. We asked her for documentation pertaining to Janet's salary override, evidencing that the salary override was authorized and approved. She said that this approval came personally from the Superintendent and was made verbally. We then asked follow-up questions about the lack of documentation regarding the approval process. She stated that the approvals were usually a conversation. She suggested that the Budget department would need to approve the override also because it would have to be built into the budget. She even suggested that there should be email documentation of this approval process. We asked Duggan if it was his understanding if the budget department was involved in the approval process, and he said no. However, he did say that there should be a Personnel Change Request (PCR) for every employee who receives a promotion etc. We asked if there was a PCR for Arlan's override and he said no. In our view, the District's budget department should be reviewing changes in increased pay to ensure there are adequate funds in the budget to cover additional payroll expenses. We asked Elaine who contacted her asking to change Arlan's rate of pay to off-schedule, and she said that one day in passing, Arlan approached Elaine and expressed his displeasure in his salary placement and said "teachers make more money than I do." Elaine said she passed Arlan's comment to Cathy Thompson and told her that he was disgruntled. Elaine said this conversation took place informally and in a hallway. She said she does not recall a formal request from Cathy to request a salary override for Arlan. She also stated that she did not complete a salary placement worksheet for Arlan. Duggan Harman told us that he contacted Cathy Thompson and asked her if she authorized Arlan's salary override. Per Duggan, Cathy responded "why would I give him a pay increase if I had him on a performance improvement plan." Elaine said that the Classification and Compensation Oversight Committee was responsible for determining raises and handing out raises. The committee excluded initial placement and did not review position description for new jobs to ensure there was a need, and that the salary range for position was reasonable. She said that this committee was established late 2010 and that the committee was originally comprised of the following individuals: Don Kennedy, Duggan Harman, Ann Chan, Noel Treat, and Cathy Thompson. She said that during 2012, the Operations Cabinet assumed responsibility for the function of the Classification and Compensation Oversight Committee. She said that she presented a spreadsheet to the committee listing employees whose rate of pay increased as a result of promotion or salary override etc. We had her pull the September 2011 spreadsheet (the date a change was made to Arlan's rate of pay), and noted that his name was not on the spreadsheet. Elaine's

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spreadsheet was not complete. We asked Duggan if he felt that 100 percent of the entire population of employees who received a promotion, salary override, skipped multiple step increases etc. were presented to the committee and he said intent was there but he could not be certain that all employees were presented. He also said the committee would need to approve the changes and that this was done verbally. We met with Arlan Neskahi, Indian Education Program Manager, on 2/27/13 to discuss the $20k overpayment. He stated that he learned his salary increased two or three months after the salary override was effective. He stated that he uses direct deposit and did not immediately notice the pay increase. After learning that his pay increased, he reviewed his pay stubs and noticed that his salary grade/step had changed to a 999 number. Not knowing what the 999 number was, Arlan went to the District's website and accessed the salary schedule to determine what the number means, but did not see anything that matched. He said that nobody talked to him (HR representative or Supervisor) regarding his salary increase. He also did not ask questions about why his salary grade/step changed to 999, even though he did not understand what it stood for. He said that he will repay the $20k, and that he elected to make his first of 16 payments beginning March 1, 2013. He also said that his pay was reduced to reflect his correct rate of pay for a person in his position. Internal Controls weaknesses identified during our understanding of the salary override process: There are no written policies or procedures for authorizing manual adjustments, or formal procedures for adjusting employee information in the HR Master Data system. There is no formal process for reviewing changes made to employee information in the HR Master Data system. We expect this review to take place before changes go live. Moreover this review should be performed by an employee who does not have the ability to change information in the HR Master Data Modules. An internal audit reported that the all Payroll Department and Human Resource Department employees had the ability to change employee information in the HR Master Data system, regardless of their respective Payroll or HR function. The District responded in the latter part of 2012 by restricting access to this function to six employees in the Human Resource Department. However, a review was not performed to determine if unauthorized or inappropriate adjustments were made when numerous personnel had complete access to the system. There is no formal procedure for sending notification to employees if a promotion, demotion, or salary override takes place. The HR Master Data system allows manual changes to employee information within two different modules, one of which does not have a way of tracking changes made to an employee's information in the system. The budget department is not involved in the approval process; thus, no one is verifying there are enough funds remaining in the budget to cover additional payroll expenditures. Though the HR Master Data system will not allow a change to be made to an annual salary without changing the grade or step of the employee, the hourly rate may be changed, which would increase the annual salary without making changes to the grade or step. There is no documentation (e.g. approval form) of the approval process.

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Duggan told us that he wanted to freeze all class and comp salary increases. His reasoning for freezing class and comp increases was driven by (1) lack of internal controls over increases in pay and (2) in attempt to control costs. Duggan's recommendation to freeze class and comp increases was rejected by Jose Banda, Bob Boesche, and Paul Apostle. Duggan said their reasoning was there were a number of reorganization moves pending and it was felt that this would be inequitable. Based on our inquiries and work performed, we do not consider the $20K overpayment to Arlen a loss or fraud. Testing of Salary Overrides: Arlan Neskahi was hired on 11/12/2009 as the District's Indian Education Program Manager. From 11/12/09 thru 8/31/11, he was paid at the rate of $74,628 (grade 28, step 7). From 9/1/2011 thru 12/31/2012, he was paid using the override pay rate (999) of $92,412. The attachment (see D.3.1) shows what the 'master data' read for Arlie's basic pay record, and the actual gross payments made to Arlie each pay period. This evidences the annual equivalent that he was paid. Julie provided us with an SAP screenshot showing the change to Arlan's pay was made to the master data on 9/23/11 by user LWMOODY, changing pay scale group from 028 to 999 (override). See D.3.3. Because of our inquiry, the District notified Arlan that he has been overpaid, and that he needs to repay the District for the overpayment amount. Julie Davidson provided us with an email communication confirming that this took place, see D.3.4. We also verified that his pay was changed to reflect his correct rate of pay with no override in place, see D.3.5. We requested a list of JSCEE administrators who are paid off-schedule, see D.3.2. Pay rate overrides are part of master data and entered into the employee's record by the Human Resources department. We identified four JSCEE administrators whose rate of pay is off-schedule. They are Philip Jerzak, Janet Chin, Richard Anzai, and Jose Banda. We excluded Jose Banda, Superintendent, because his salary override is supported by the employment contract between the Superintendent and the School Board. We requested supporting documentation authorizing the salary overrides, changing the employee's rate of pay to pay scale group 999 (override) for the remaining three employees and learned there was no documentation authorizing the salary overrides. We were provided with verbal explanations. For Janet and Richard we were told they were redlined and Philip is entitled to a $2 premium because he is a general foreperson. We are unable to corroborate these responses because there is no documentation to support these explanations. The District does not consider them overpayments. But we will include these three positions in our issue at ISS.13 Additionally there are employees who get Temporary Upgrades; they are not on a pay override but Payroll has received authorization to enter a supplement payment, each pay period, to increase their pay to another level. This is for individuals that are temporarily performing additional duties or have increased responsibilities. Employees currently getting a temporary upgrade are: Michael Tolley Current Grade & Step: 40/13

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Temp Upgrade Grade & Step: 44/4 Reason: Acting as interim Executive Director of Curriculum & Instruction until position is filled Ronald English Current Grade & Step: 36/13 Temp Upgrade Grade & Step: 44/07 Reason: Temporarily filling in for vacant General Counsel until position is filled

These temporary upgrades are communicated to Payroll from HR with a paper document signed by the Initiator, Assistant Superintendent of Business and Finance, and Compensation and Benefit Manager. Payroll makes the monthly entries. They are reviewed for validity each pay period (for example, if/when the General Counsel position is filled the temp upgrade for Ron English will cease). We reviewed the most recent ORG chart and confirmed that Michael Tolley and Ron English are currently in those interim positions. Based on our confirmation, it appears reasonable that these two individuals receive supplemental payments for their increased responsibilities. Testing of Increases to Employee Pay Based on our understanding of internal controls surrounding changing employee information in the HR Master Data modules, we decided to test employees whose salaries increased significantly over the previous year. We are not concerned about increases resulting from the annual step increase. We used the payroll analytical to identify employees selected for testing. We judgmentally selected 37 employees from B.1.14. We tested employees at D.3.9. We obtained the employee's personnel file to determine if the documentation supports the rate of pay per the HR Master Data Module. In addition, we reviewed the Position Description Form and Salary Schedule to ensure the employee is paid according to the salary schedule and the amount is within the range listed in the position description form. We obtained a listing of job title descriptions (showing pay range). The listing is located on the District's website under Job Opportunities / Job Descriptions. We obtained the District's salary schedules. The salary schedules are located on the District's website under Careers/Compensation & Benefits/ Salary Schedules. Based on our testing, we found: When the District creates a new position that is advertised and open to the public, a Personnel Change Request (PCR) is initiated by someone with delegated authority, and then approved by a Manager. Our testing revealed that two employees approved the PCR for their own position.

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For promotions and new positions not open to the public, the District was unable to demonstrate who authorized the promotion or new position in the 10 positions we reviewed. In addition, there are no approvals from the Budget Office evidencing they checked to see if there are enough funds to cover the additional payroll expenditures for all 10 positions. There is no formal procedure for notifying employees when change in pay occurs. The position description forms salary range did not always correspond to the District's salary schedule. We noted several instances where the salary schedule was higher than the salary range listed on the position description form. Some Collective Bargaining Agreements (CBAs) allow a temporary salary upgrade for working swing shifts, performing additional duties or increased responsibilities. Because upgrades are manually entered each month, there is potential risk of human error or the entry of inappropriate salary upgrades. There was one employee whose rate of pay was not supported by documentation in the employee's personnel file. A Human Resource Manager performed a market analysis of HR positions in February 2010 for all HR managers. This resulted in the managers receiving a pay increase from pay grade 30 to pay grade 32. There is no evidence the market analysis was reviewed or authorized.

All issues described in the understanding of internal controls and testing are documented at ISS.13

D.3.PRG - Payroll

Procedure Step: Prepared By: Reviewed By:

Record of Work Done:

Controls over decentralized SAP procedures RMW, 5/15/2013 RRD, 6/7/2013

We performed a review of controls over changing employee information in the Human Resource (HR) master data system for salary overrides and promotions within the Central HR department at D.3.PRG and found that Central HR lacked adequate controls over manual adjustments made to employee information in the system.

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Based upon our knowledge of District activities, the District's Nutrition Department and Facility Operations Department both perform HR functions in the HR Master Data system for staff working in their departments. We will gain an understanding of the processes performed in these departments for changing employee information in the HR Master Data System. Nutrition Department's HR functions performed: On April 25, 2013 we met with Teresa Fields, Nutrition Department Operations Manager, to discuss her responsibilities associated with entering employee information into the HR Master Data section of the SAP system. Teresa is responsible for hiring kitchen staff workers. As her duties consist of entering information for the new employee into the District's Human Resource system, she has access to the HR Master Data Section of SAP. Teresa is the only employee in the Nutrition Department who has access to the personnel function in the HR system. During our conversations with Teresa, the "personnel actions" she performs are the addition of (or changes made to) job positions, pay scale, changing of addresses, etc. These changes are made in the "Maintain Personnel Actions -PA40" SAP module or the "Maintain HR Master data PA30" module. Teresa stated she is aware that only changes made in the PA40 module can be seen by HR and that changes she makes in the PA30 module will not be seen by others. During our review we note that she has access to make changes in both PA40 and PA30 modules. She remarked that the action changes she makes are not override "999" functions. Teresa commented that she does not process HR entries for Nutrition Management staff, Office Administrators or Supervisors but when we reviewed her access functions in the system, we found she does have access to make HR changes to all District employees including management/office staff and she has the ability to perform the "999" override function. In speaking with Teresa, she expressed that other than her initial training when taking the Administrative position, she has received no other form of training regarding HR functions. She expressed concern that she is not timely made aware (or not made aware at all) of new processes and/or procedures performed in the HR Department that affect the work she does with Nutrition staff. In speaking with Wendy Weyer, Nutrition Services Director, there is no formal review at the Nutrition Departmental level of HR changes made by Teresa in the Master Data system. Facility Operations Department's HR functions performed: We met with Helen Jones, Supervisor Facilities Operations Administration, on April 26, 2013 to discuss her responsibilities associated with entering employee information into the HR Master Data section of the SAP system. Both Helen and Harjinder Kaur, Facilities Operations Payroll Specialist, have access to make changes in the HR Master Data system. (Harjinder's main function is to perform adjustments to payroll as discussed below). Helen enters HR data for facilities employees (the majority of which are union employees) but commented that she does not perform HR data input for Management staff or Supervisors (Bruce Skowyra, Director of Facilities Operations also stated this). However, during a review of changes made to employee's basic pay at D.3.7 it was noted that Helen made changes to Facilities and Maintenance Managers and Supervisors.

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We questioned Helen as to why she made these changes as she stated it was not a function she performed. She remarked that she did input Management and Supervisor information into the HR system in the past (2012). She commented that in the 2013 year she starting withholding from this activity and sending the change requests to HR to perform (she stated this was a personal decision because she do not feel it was right to change information for management staff). She expressed that she still will make an HR change for Management staff at the request of her supervisor. Via the Collective Bargaining Agreement, union employees have the opportunity to receive a Temporary Upgrade in Pay for increased duties, swing shift work or if the employee fills in for another employee that normally receives a higher pay. The agreement also allows for those who are general or senior forepersons to receive a premium in addition to their regular hourly rate. The change is made by calculation and entered into the system by Harjinder. She explained that the change is not an override "999" entry, but a change to the employees information in the system. During a review performed at D.3.9 it was noted that a sheet metal worker received the foreperson rate increase which was put in the system via override "999" input by Helen. In speaking to Helen, these adjustments used to be performed as an override for these employees but the Human Resource Department changed this process. This one employee had been missed by the HR Department when they changed the process and he still shows in the system as receiving a salary override. In speaking to both Helen and Harjinder, they do not receive ongoing training from the Human Resource department relating to the HR work they do. As with Teresa in the Nutrition Department, they expressed concern that new processes and/or procedures performed in the HR Department are not communicated to them. In speaking with Bruce Skowyra, Director of Facilities Operations, there is no formal review performed at the Facilities Departmental level of HR changes made by Helen or Harjinder in the HR Master Data system. Controls weaknesses identified regarding HR Master Data entry functions: Neither Department has a review process in place at their level to review changes made in the HR Master Data system. Both Departments have the ability to change employee information in the HR Master Data module for all District employees though it is not their job duty to perform HR functions for these employees. Both Departments have the ability to perform the "999" override function. Both Departments have the ability to access the PA30 module where changes to the HR Master Data can be made but are not supported by action codes and changes cannot be tracked. Both Departments expressed concern that they do not receive adequate ongoing training relating to the HR activities they perform.

We have documented these at ISS.13 Facility Operations Department's payroll functions performed:

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During the 2010-11 Accountability audit, Helen Jones (Facilities) told us that the Facilities processes payroll for their department staff, not the Payroll Department. There are numerous complex manual adjustments that need to be made for these staff, thus creating potential for human error and creating overpayments/underpayments that end up being detected the next time around. During our inquiry we noted there's risk associated with "one-time adjustments", and we need to determine if someone is reviewing these adjustments. If nobody is reviewing these adjustments then it increases the risk of human error or fraud. In speaking with Helen Jones, the majority of payroll adjustments made in the department are performed by Harjinder Kaur, Facilities Operations Payroll Specialist. We met with Harjinder to discuss what manual adjustments she makes in the HR system for Facility employees. Each pay period, Harjinder makes manual adjustments for numerous Facilities employees. The Department has approximately 132 full time employees and any number of them could require one if not multiple adjustments to their pay during the period. The main adjustments made are additional pay for overtime worked, leave taken, employee salary temporary upgrades and calculations for employee's union dues. Because job salary schedules are set in SAP based upon job code, upgrades in pay (or dues deductions) must be manually calculated and entered by Harjinder. In the PA30 module of SAP there are selections to make changes for wage types that include swing shift, temp upgrade and dues. Pay for overtime worked and leave taken is done in the CATS 2 (Time Sheet Maintain Times) module. When an employee works overtime, they submit a hardcopy form to Harjinder at the end of each day stating the extra hours they worked and the reasoning why. Harjinder must enter the CATS 2 module of SAP and perform a time sheet data entry to add the extra time. (job codes in SAP have set hours associated with the job so additional hours need to be added manually) Harjinder adds the additional hours worked under the overtime code and the system calculates the additional pay due. Maintenance staff do not enter their hours into the SAP system. As employees are salary based and tied to a job code that shows set hours, they only enter their hours into School Dude which will assign the hours they have worked to a specific project. Because they do not enter their hours into SAP, Harjinder must manually enter hours for any leave taken by an employee. Employees submit a hardcopy timesheet to Harjinder with the leave hours. She will perform a time sheet data entry in the CATS 2 module to enter the leave. Employees receive a temporary upgrade in pay based upon factors such as working swing shift hours and performing additional responsibilities. When an employee is to receive a temporary upgrade in pay, the employee's shop manager turns in a "Temporary Upgrade Authorization" form to Harjinder. This form shows the reason for the upgrade and the dates the upgrade is to be in effect. Harjinder will only perform an upgrade to salary if she receives the form and it is approved by a manager. A "2nd Shift" form is turned in by managers for those employees who worked swing shift hours during the period. When she receives the forms, Harjinder pulls up a "Temporary Upgrade Spreadsheet" she has created as a way to track these employees. The spreadsheet is updated on a monthly basis. Harjinder's spreadsheet is separated out by the categories in which pay is temporarily upgraded:

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Shift Premium Pay (swing shift personnel) Long Term Upgrades (for those who have special certifications or are general forepersons) Temp Monthly Upgrades (those performing added responsibilities such as filling in for supervisor) Carpenters lead pay Heavy Equipment upgrade

In her spreadsheet, she documents the additional pay amount due and performs a calculation to show the extra amount the employee is to receive. Using this spreadsheet, she transfers the additional amount calculated to the PA30 module. If an employee who receives a temporary upgrade in pay works overtime hours during the upgrade, Harjinder performs an additional procedure when entering the overtime pay into CATS 2. When she performs the data entry to record the additional hours worked she must also include the increased pay amount in a "value basis" column of the data entry sheet. This is so when the system calculates the overtime, it will use the value basis pay rate rather that the amount attached to the job's regular salary schedule. For those employees who receive Long Term Upgrades (those who have special certifications or are general forepersons), Harjinder must enter an adjustment adding the pay upgrade when these employees take leave. This adjustment is made as a time sheet data entry in CATS 2. The upgrade in pay is noted in the value basis column of the leave line. As other employees who are receiving pay upgrades receive the amount for their time performing the extra duty, no additional amount is added to their vacation pay. Harjinder also performs adjusting entries for employee's union dues that are paid out each month. Each "trade" type of union worker has a different way that their union dues are calculated. Some unions have a fixed amount of dues removed each month. Harjinder is able to enter the fixed amount into the PA30 module and the dues are automatically removed. Other union dues amounts are based upon calculations. Some are paid on how many hours the employee worked in the month and some are paid off of the amount earned by the employee during the period. These are calculations that will change each month. Harjinder created a "Union Dues" spreadsheet to monitor the amount due by employees. Her spreadsheet has tabs for each union trade. Each sheet is formatted to calculate the amount due based upon the union's requirements. Using this spreadsheet, she transfers the calculated amount due to the PA30 module. Harjinder commented that she performs a review of the adjustments she has made each month prior to the final payroll. We met with Helen Jones, Harjinder's supervisor, to discuss her review process of Harjinder's work. Helen commented that there is no official monthly review of the manual payroll adjustments made by Harjinder. Helen will only review the entries if a question arises or an issue has been expressed. We identify a control weakness in that there is no formal review process of manual adjustments made by someone other than the person creating the adjustments to ensure the entries are accurate and allowable. We have documented this weakness at

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ISS.13