Office of the Chief Financial Officer
Executive Summary for In Progress Reports
As of May 7, 2014
Report OIO No. 14-02-04 UMC: Audit of Internal Controls over the Payroll System at the Not-For-Profit Hospital Corporation (United Medical Center- UMC), dated May 7, 2014.
Chief Risk Officer’s Risk Assessment
The Inherent Risk associated with the payroll process is classified as High Risk as the OCFO recognizes the importance of paying its employees timely and accurately. It also recognizes that overtime, if not monitored, can cause budget pressures. In response, UMC has agreed to implement all five OIO recommendations.
OIO provided five recommendations, and three have been implemented in an effort to strengthen internal controls:
- Overtime Approval Forms now must be signed and approved before staff works overtime. Departments submit signed and approved Overtime Form to OCFO-Payroll for review and validation. OCFO-Payroll will process for payment only those overtime amounts that have been approved on the Overtime Approval Form. In addition, management developed a Weekly Overtime Report which is distributed to department heads and executive management for monitoring.
- OCFO-Payroll routinely reviews and recalculates bonus calculations prepared by the Nursing Department to ensure compliance with the Nurses’ Union Contract. Also, an additional review, implemented in April 2014, is performed at the end of each pay period.
- Human Resources (HR) will provide copies of pay rate changes to OCFO-Payroll. OCFO-Payroll will confirm changes via the payroll system to ensure employee record and pay rates are updated accurately and timely.
Two recommendations are still In Progress:
- HR will compile a listing of all inactive employees for management review. Going forward, HR will routinely generate each month a listing for review, updating and approval. IT will be notified to deactivate employees deemed to be inactive and IT will suspend access. HR currently sends a monthly termination listing that includes part-time employees.
- The Information Technology Department will develop a KRONOS report on on-call hours utilized by departments during the pay period. OCFO-Payroll will obtain each medical departments policy for emergency coverage. OCFO-Payroll will conduct a review on on-call hours utilized during the pay period against each medical department policy.
To view the full report, go to: Audit of Internal Controls over the Payroll System at the Not-For-Profit Hospital Corporation (United Medical Center- UMC).