Finding 1146291 (2024-002)

Criteria: The Organization uses a form to request overtime hours. This form is supposed to be approved before the employee works the extra hours. The Organization has established internal control policies and procedures requiring that all employee timesheets be signed by the employee and approved by the immediate supervisor. Approved timesheets must then be submitted to the Accounts Payable Clerk – Payroll, who is responsible for verifying the hours worked against internal records. The Organization's policy further requires that payroll authorizations be properly documented and retained in each employee’s personnel file. Condition: The Organization’s policies do not address approval of overtime, which person should approve overtime, when it should be approved, and who can approve if the designated person is on leave. During our testing of payroll transactions, we noted the following exceptions: • For 9 out of 40 items tested (23%), the overtime forms were approved by the Executive Director after the employee already worked the extra hours. • For 3 out of 40 items tested (8%), the overtime forms lacked documentation of approval. Cause: Personnel responsible for monitoring and reviewing payroll timesheets and supporting documentation did not adequately ensure that all overtime forms were properly reviewed and approved prior to payroll processing. Effect: The Organization did not comply with its internal control requirements regarding payroll processing. The absence of proper and timely approvals increases the risk of processing unauthorized or inaccurate payroll disbursements.