The Form FMC-109 and OPM Form 71 together document, for the timekeeper, the hours
worked or leave used. The timekeeper, based on this documentation, enters the time and
attendance information into STAR. Once entered, an individual STAR report is generated for
each employee for that pay period. The timekeeper, employee and the supervisor all must certify
to the report’s accuracy, and that leave used was in keeping with federal laws and regulations.
Therefore, it is critical that the reports be accurate and supported by detailed records.

The BOE has one primary and one alternate timekeeper. The primary time keeper is
responsible for entering all T&A information for seven BOE employees into STAR. The BOE
alternate timekeeper enters T&A information for the BOE director, deputy director and herself.

Objectives, Scope and Methodology

The objective of this review was to assess whether BOE complied with agency policies
and government regulations concerning employee time and attendance. We judgmentally
selected four employees in BOE for detailed review of their respective leave slips, STAR reports,
work schedule requests and employee maintenance data sheets. The review scope included all
pay periods in calendar year 2007.

We began the review by gaining an understanding of T&A practices used in the bureau
and compared practices with OPM and FMC timekeeping rules and regulations. For each
employee in our sample we reviewed STAR reports and reconciled leave taken with leave
request forms (OPM Form 71) and verified that each STAR report contained required
certifications (timekeeper, employee and supervisor). We reviewed employee requests for leave
to determine whether leave was requested and approved in advance of the leave taken. We also
tied leave requests back to the STAR system to verify that leave requested matched leave
recorded and inspected each form for Personally Identifiable Information (PII). Finally, we
reviewed forms FMC-109 and FMC-110 to determine whether they were completed accurately
and, when applicable, evidenced supervisory approval.

We conducted the audit in October and November, 2008, in accordance with generally
accepted government auditing standards. Those standards require that we plan and perform the
audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on these objectives.

Audit Findings

The OIG found weaknesses in internal control that lead to errors or omissions in the
recording of T&A data. For example, we found a lack of separation of duties that enabled both
the primary and alternate timekeepers to record their leave in the payroll system in violation of
FMC payroll and Government Accountability Office (GAO), internal control standards. This
practice provides an unscrupulous employee the opportunity to enter fewer leave hours than were
actually used, with little fear of detection.


Missing Leave Slips for Leave Used

Adding to our concerns regarding the discrepancies between the leave slips and the
STAR reports were missing leave slips. The OIG identified 11 instances, totaling 265 hours of
leave, where no documentation was provided for leave used. We could not determine whether
the employee was approved for leave taken or whether the amount of leave entered in the system
reconciled to the leave used. Leave taken without prior approval can result in absence without
leave (AWOL). CO 64 defines AWOL as a non-pay status resulting from a supervisor’s decision
that no leave will be authorized for an absence that was not approved in advance.

The Standard Form 71, Request for Leave or Approved Absence, was provided to federal
employees through OPM in December 1997 until OPM re-issued an updated OPM Form 71 in
June 2001. The revised OPM Form 71 requires an employee who requests sick leave to indicate
the purpose for the leave, when applicable. The purposes are (i) il/ness/injury/incapacitation of
requesting employee and (ii) care of family member with a serious health condition. These
additional purposes are used to provide the supervisor with more information relating to the use
of sick leave. OPM requires that all leave requests be made on the revised OPM Form 71.

Three of the four BOE employees used the discontinued version of the form on numerous
occasions even though the updated form is provided to FMC employees on the intranet and as an
appendix in the SOP for timekeepers. In total, we identified 76 requests for leave on the
discontinued leave slip, compared to 21 requests on the revised form. We also noted that BOE
timekeepers used the discontinued form on 54 percent of the leave slips we reviewed.

Social Security Numbers on Leave Slips

The social security number (SSN) is a unique identifier issued to U.S. citizens, permanent
and temporary residents. But, with growing instances of identity theft and the need to protect
personally identifiable information (PII), the collection of SSNs for routine uses has been
questioned. PII is defined as any piece of information which can potentially be used to uniquely
identify, contact, or locate a single person.

In September 2006, the agency issued guidance to staff regarding the use of PII. The
guidance stated that the SSN was no longer required on leave requests and other agency-used
forms. Further, the agency disabled the SSN field on the electronic leave request form.
Notwithstanding the OIG identified SSN usage on one BOE employee’s leave slip. In 2007, the
employee requested leave on 18 leave slips approved by his supervisor. The employee entered
his SSN on 7 of the 18 leave slips (38 percent).

Recommendation 3. We recommend that BOE supervisors require that all staff-leave
requests, including changes to approved leave requests, be made on OPM Form 71. Further,
timekeepers should remind employees of agency policy regarding the use of SSN’s on leave
request forms.


In BOE, the primary and alternate timekeepers certify each others’ timesheets (i.e., the
printouts from STAR). However, this responsibility should reside with the individual who enters
the time in STAR. Since the individuals are self-entering T&A information, the certification
provides no assurances that the time entered is accurate.

Recommendation 1. We recommend the BOE follow FMC procedures and require that
the alternate T&A clerk prepare the primary time clerk's time card (i.e., enter information into
STAR) and that the primary timekeeper enter the alternate timekeeper’s time and attendance
information into STAR.

Finding 2. Adherence to Agency Policies

The Commission establishes policies and procedures for staff (employees, timekeepers
and supervisors) to follow to ensure compliance with government-wide regulations. Review of
timekeeping practices used by the employees in our sample revealed inconsistent compliance
with agency guidelines in the following areas.

Employee Request for Work/Telework Schedule

CO 92 states that supervisors are responsible for providing each employee with a copy of
Form FMC-110, Employee Request for Work/Telework Schedule. This enables supervisors to
monitor employee arrival and departures. Employees are responsible for completing Form
FMC-110 and submitting it to the supervisor for approval. This form can be found on the
agency’s intranet. Once the form is approved or disapproved by the supervisor a copy is
provided to the employee and the timekeeper.

We found one of the four employees worked an alternative work schedule and provided
the Form FMC-110 to the supervisor. The supervisor approved an alternate work schedule for
the employee in January 2007, as instructed by the agency’s policy. The OIG noted that the
employee did not use the updated form dated December 2001, that the agency provides to its
employees on the intranet and in CO 92. The updated Form FMC-110 provides the employee an
option of selecting a telework schedule or an episodic telework schedule.

The remaining 3 of the 4 employees did not have a Form FMC-110 on file until we
requested the documentation during our review. All were signed by the employee and approved

by the supervisor in October 2008 (after the commencement of our audit).

Employee Arrival and Departure Record

CO 92 requires employees on compressed work schedules (a.k.a. alternative work
schedule or AWS) to submit a written record of arrival and departure times on Form FMC-109 at
the end of each pay period. The form is to be certified by the employee before it is submitted to
the timekeeper. Employees working a “regular” work schedule (eight hours per day) are also
encouraged to use the form to document hours worked and leave used. When signed by the
employee, it provides an audit trail which can be used to validate the accuracy of the T&A.


Further, the payroll file lacked required documentation to identify work schedules,
including “telework” approvals (Form FMC-110), employee arrival and departure records for
employees on alternative work schedules (Form FMC-109), and employee requests for leave
(OPM Form-71). We identified 265 hours of leave used by the four employees in our sample
without the leave request documented in the file.

When leave was requested in advance, we identified several instances where the amount
of leave approved exceeded the leave documented in the payroll system. One explanation for
this observation is that the leave used was less than originally requested. Another explanation is
leave abuse — leave taken but not recorded. We could not determine the reason for the
discrepancies in large part due to the breakdown in internal control.

The OIG also identified processing errors and procedural oversights, which we discuss
below.

Finding 1. BOE Timekeepers Enter Their Own T&A Information into STAR

Bureaw/Office heads submit Form FMC-81, Designation of Authorized Representative, to
the Office of Human Resources (OHR), through OFM, to identify the payroll certifier and the
primary and alternate timekeepers. Timekeepers are assigned user codes and passwords to
access the system. In BOE, the primary timekeeper is responsible for entering time and
attendance information for seven staff, including herself. The alternate timekeeper is assigned
three staff, including herself.

According to GAO’s Standards for Internal Control, key duties and responsibilities
should be divided or segregated among different people to reduce the risk of error or fraud.
Further, the agency’s T&A procedures state that alternate T&A clerks are responsible for
preparing the primary time clerk’s time card.

The OIG noted that both the primary and alternate timekeepers enter their own time and
attendance data into the STAR system. This process enables either timekeeper to modify their
own T&A records with little fear of detection. When T&A information is entered into the
system, timekeepers print each employee’s attendance record for the pay period. The record is
signed by (1) the timekeeper, (2) the employee, and (3) the supervisor. The timekeeper who self
enters his/her own time can change information in STAR (before transmission) to decrease the
amount of leave used, effectively increasing the leave balance.

For example, the primary timekeeper could request and use 15 hours of annual leave in a
pay period. S/he could then enter the leave into STAR, print a copy for supervisor certification
and file the certification with payroll documents for that pay period. However, she could then
reenter STAR and reduce the number of hours of leave used in the system. Requiring the
alternate T&A clerk to enter the primary clerk’s time greatly reduces the likelihood of this
occurrence.


The documentation practices used by two of four employees in our sample raised serious
concerns about the accuracy of leave entered into STAR. We noted several discrepancies
between payroll documentation and the STAR entries. Specifically, the number of leave hours
requested and approved did not always match leave entered by the alternate timekeeper for
herself and one other employee.

The OIG identified nine leave slips that exhibited discrepancies with the STAR reports
for the same pay period, as illustrated below:

Table 1. Leave Discrepancies

Pay Alternate Leave Leave Leave
Period Timekeeper/ Type Approved | Charged
Employee

4 Employee | Annual 12 20
9 Alternate Sick 18 16
13 Alternate Annual 9 8
14 Alternate Annual 1 0
16 Alternate Sick 8 16
18 Employee _| Annual 16 0
18 Alternate Sick 9 8
19 Employee Sick 3 0
20 Employee Sick 8 0

In all but two instances the amount of leave approved by the supervisor was greater than
the leave entered into STAR. Due to the absence of compensating controls (see below), the OIG
could not determine whether (i) the employees used less leave than requested, (ii) the timekeeper
incorrectly (and unintentionally) entered T&A information into STAR, or (iii) the timekeeper
intentionally entered less leave than used.

We also noted that the alternate timekeeper works an AWS schedule: eight-nine hour
days, one 8 hour day and one day off in a pay period. We found that the alternate timekeeper
was approved consecutive days of sick leave for 18 hours (two 9-hour days), however; only 16
hours (two 8-hour days) of sick leave were recorded in STAR. This recordation (16 hours) was
inconsistent with her nine-hour work schedule. It could also be an indication that the timekeeper
is intentionally under-reporting leave.

Similarly, we note that in two instances, more leave was entered in STAR than requested.
If additional leave was taken, a new leave slip should be submitted or changes should be initialed
by the employee on the approved leave slip. This process assists the timekeeper with reconciling
leave slips with time charged in the STAR.


FEDERAL MARITIME COMMISSION
Office of Inspector General
Washington, DC 20573-0001

February 6, 2009

Office of Inspector General

TO: Vern W. Hill
Director, yy of 1 of Enforcement

A
FROM: \o-v Srl nt

Inspector General

SUBJECT: Review of Bureau of Enforcement Time and Attendance Practices

The Office of Inspector General (OIG) conducted a review of the Bureau of
Enforcement’s (BOE) Time and Attendance (T&A) practices as part of the agency’s annual
financial statement audit. The objectives were to assess whether BOE complied with agency
policies and government regulations concerning T&A.

The OIG selected T&A records for four employees to test payroll procedures and
processes used in the bureau. Two of the employees selected have T&A processing
responsibilities. All records pertained to CY 2007 leave year.

The OIG found weaknesses in internal control that lead to errors or omissions in the
recording of T&A data. For example, we found a lack of separation of duties that enabled both
the primary and alternate timekeepers to record their leave in the payroll system in violation of
FMC payroll processing procedures and Government Accountability Office internal control
standards. An unscrupulous employee could enter fewer leave hours than were actually used
with little fear of detection.

Further, the payroll file repeatedly lacked required documentation to enable us to identify
work schedules, including “telework” approvals (Form FMC-110), employee arrival and
departure records for employees on alternative work schedules (Form FMC-109), and employee
requests for leave (OPM Form-71). We identified 265 hours of leave used by the four
employees in our sample without the leave request documented in the file.

When leave was requested in advance, we identified several instances where the amount
of leave approved exceeded the leave documented in the payroll system. For example in four
instances, the payroll system recorded less leave used for the alternate timekeeper than she


Table. 2 Leave Audit Results

Alternate

Timekeeper | Employee
Annual Leave - STAR 236 36
Annual Leave — Leave Audit 242 20
Difference 6 (16)
Sick Leave — STAR 110 121
Sick Leave — Leave Audit 108 106
Difference (2) (15)

The GAO Standards for Internal Controls states transactions should be promptly
recorded to maintain their relevance and value to management in controlling operations and
making decisions. The CO 64, also states timekeepers will keep accurate records and
supervisors will carefully monitor the use of advance annual leave. With incorrect leave
balances, employees may be using leave that they are not entitled too.

Recommendation 5. We recommend that the timekeepers perform leave audits,

reconciling leave slips and STAR reports, to ascertain the correct leave balances for its
employees.


Extended Sick Leave

Federal employees annually accumulate 104 hours of sick leave regardless of the number
of years of service with the federal government. The Code of Federal Regulations (CFR)
630.401 states that sick leave is granted when an employee (1) receives medical, dental, or
optical examination or treatment; (2) is incapacitated for the performance of duties by physical or
mental illness, injury, pregnancy, or childbirth; (3) provides care for a family member who is
incapacitated by a medical or mental condition, etc.; (4) makes arrangements necessitated by the
death of a family member or attends the funeral of a family member; (5) jeopardizes the health of
others by his or her presence on the job because of exposure to a communicable diseases; or (6)
requires absence from duty for purposes relating to the adoption of a child.

5 CFR 630.403 states that an agency may grant sick leave only when supported by
administratively acceptable evidence. The agency may require a medical certificate or other
administratively acceptable evidence identifying the reason for an absence for any of the
purposes described above when the absence exceeds three workdays, or for a lesser period when
determined necessary. The agency’s CO 64 states that when absence due to illness exceeds three
consecutive work days, it must be supported by a medical certificate provided to the employee’s
supervisor or a statement signed by the employee explaining why he or she did not see a health
care provider.

Our review of the four employee’s sick leave usage identified one employee that used 80
and 42 hours of sick leave in pay periods 10 and 18, respectively, without a medical certificate or
an approved OPM Form 71.

Recommendation 4. We recommend the employee obtain supporting documents (medical
certificates) for more than three consecutive work days for the sick leave charged.

Finding 4. BOE has not Performed Required Leave Audits

The OIG performed a leave audit for the four employees in our sample using balances
carried over from the last pay period in calendar year (CY) 2006, leave slips and hours charged
on STAR.> Two employee leave balances reconciled. However, the remaining two employee
(alternate timekeeper and staff) leave balances did not reconcile by the end of CY 2007. We
found discrepancies in the balances of each employee’s annual and sick leave, affecting the
opening balances for CY 2008.

* A leave audit reconciles opening leave balances, leave earnings and usage, with closing leave balances for
a predetermined time period.


Only one of four employees whose time records we reviewed participated in the AWS
program. This employee did not post his daily arrival and departure times, as required.
Although not required to, the remaining three employees also did not use Form FMC-109 to
record their daily arrival and departures. Notwithstanding its redundancy with leave requests
forms, Form FMC-109 helps to eliminate errors and omissions by employees as it encourages
daily upkeep when knowledge of leave used is fresh in the employee’s mind.

Recommendation 2. We recommend the BOE supervisors enforce CO 92 and require all
staff on AWS to record its daily arrivals and departures on Form FMC-109. We also
recommend that BOE consider requiring all staff to submit biweekly leave and attendance hours
to the timekeeper on Form FMC-109.

Finding 3. Leave Slips were not Routinely Used to Request Leave or Completed in
Accordance with OPM and FMC Regulations

The Federal Government requires employees to request annual and sick leave,
compensatory time off, leave without pay, family and medical leave, and other paid absences, on
OPM Form 71, Request for Leave or Approved Absence. These requests are initiated by the
employee and approved (or disapproved) by the employee’s supervisor and, except in
extenuating circumstances, are to be submitted in advance of leave used. The form is given to
the timekeeper (i) to validate that leave taken in a given pay period was approved and (ii) to
identify the number of leave hours used in the pay period for entry into STAR.

The GAO Standards for Internal Control state that all transactions and other significant
events are to be clearly documented and the documentation should be readily available for
examination.

We reviewed leave request forms for the four employees in our sample for each pay
period in 2007 (26 pay periods). Specifically, we reviewed whether leave (i) was requested in
advance using required leave request forms, (ii) reconciled to the STAR reports, and (iii)
complied with agency policies on collection of PII.

Approved Leave Not Charged

According to CO 64, management is responsible for scheduling and approving leave,
ensuring absences are documented according to regulation. OPM Form 71, Request for Leave or
Approved Absence serves as an important control over time and attendance abuse. It documents
the employee leave request(s) and supervisory approval, and is the source document for leave
entered into STAR by timekeepers. As agency timekeepers record time and attendance data for
several employees, it is difficult, if not impossible, for timekeepers to remember each hour of
leave used by every employee in the office. In BOE, one timekeeper is responsible for entering
T&A information for seven employees. Further it is often difficult for staff to recall small
increments of leave without the use of documentation.


Review of Bureau of Enforcement
Time and Attendance Practices

The Office of Inspector General (OIG) completed a review of the Federal Maritime
Commission (FMC), Bureau of Enforcement’s (BOE), Time and Attendance (T&A) practices.
The audit objectives were to assess whether BOE complies with agency policies and government
regulations concerning T&A reporting.

Background

The Federal Maritime Commission (FMC) has a Service Level Agreement with the
Department of Agriculture, National Finance Center (NFC), to process its time and attendance
records: The NFC supports a web-based application, System for Time and Attendance Reporting
(STAR), for use by timekeepers in the preparation and transmission of attendance reports to the
NFC as a first step in pay and leave administration. Each bureau/office is assigned one or more
timekeepers to administer the T&A process. Employees are responsible for accurately recording
their time and attendance, and certifying the accuracy of their T&A records. Supervisors are
responsible for approving work schedules, leave requests, and certifying T&A biweekly
submissions.

The FMC’s Office of Financial Management (OFM) issued Standard Operating
Procedures (SOP) for T&A in July 2007 and again in April 2008. The SOP identifies procedures
and responsibilities relating to the documentation and transmission of the Commission’s T&A
records and processes. The Commission also provides guidance to agency employees in
Commission Order (CO) 64, Employee Absence and Leave (December 3, 2004), and CO 92,
Work Schedules, (December 15, 2003). CO 92 requires employees to document their work
schedules on Form FMC-110, Employee Request for Work/Telework Schedule and the actual
hours worked on Form FMC-109, Employee Arrival and Departure Record.' CO 92 addresses
regular and compressed work schedules and CO 64 reiterates supervisor and employee
responsibilities.

Employee requests for leave (sick, annual or other) are to be made to the supervisor on
Office of Personnel Management (OPM) Form 71, Request for Leave or Approved Absence (i.¢.,
leave slip), in advance of the proposed leave. The supervisor can approve, disapprove or modify
the request. The employee’s signature on the leave request form is a strong control over leave
abuse, as it certifies that the eave/absence requested is for the purpose(s) indicated... and that
falsification of information on the form may be grounds for disciplinary action, including
removal.

' Employees on compressed work schedules are required to complete FMC-109, however the agency
recommends that all employees use the form to document time and attendance.
* See OPM Form 71.


Office of Inspector General

Review of Bureau of
Enforcement Time and
Attendance Practices

February 2009

FEDERAL MARITIME COMMISSION



requested on the leave request form. In another instance, one employee was approved for 27
hours of sick and annual leave but no hours were charged to leave in the payroll system. One
explanation for this observation is that the leave used was less than originally requested.
Another explanation is leave abuse — leave taken but not recorded. We could not determine the
reason for the discrepancies in large part due to the breakdown in internal control. The OIG also
identified processing errors and procedural oversights which we discuss in the attached report.
Because of the lack of leave documentation and controls over T&A processing, the OIG cannot
provide assurances that staff are not abusing leave privileges.

BOE Management has reviewed the final report and concurs with the findings and
recommendations. Management chose not to provide written comments, but told the OIG that all
recommendations have been implemented.

ce: Director, Operations
Deputy Director, Administration