State Of Connecticut Accountability Directive Number 1 (Revised) State Agency Internal Control Questionnaire - Employee Compensation (Payroll & Personnel)
YES NO N/A Notes
Reference
PART A: This section to be completed by all applicable agencies.
EMPLOYEE COMPENSATION (Payroll & Personnel) Statutory References - CGS Sections 3-119, 5-257a, 5-257 and 5-259, 5-250-1, 2-254, 5-247(a), 5-253 Federal Public Law 99-272, Public Law 1012-508
Segregation of Duties
1. Are the responsibilities for the supervision and time-keeping functions segregated from those for personnel, payroll processing, check distribution, and general ledger functions? ______ ______ ______ ______
2. a. Are the responsibilities for preparing the payroll separate from other payroll duties (e.g., time keeping, distribution of checks)? ______ ______ ______ ______
b. Do individuals preparing payroll have no access to other payroll records or cash? ______ ______ ______ ______
3. Are the responsibilities for the payroll processing function segregated from those for the general ledger function? ______ ______ ______ ______
4. Are the responsibilities for initiating payments under employee benefit plans separate from those for accounting and general ledger functions? ______ ______ ______ ______
5. Are requests for new personnel originated only by department heads or other responsible officials? ______ ______ ______ ______
Personnel Procedures
6. Does the Personnel Office screen potential new employees and require an employment application? (Screening should include checking employee's background, former employers, and references.) ______ ______ ______ ______
7. Do written personnel policies exist? ______ ______ ______ ______
8. Are payroll and personnel policies governing compensation in accordance with the State requirements or grant agreements? ______ ______ ______ ______
9. Are all changes in employment (additions and terminations), salary and wage rates, and payroll deductions properly authorized, approved and documented? ______ ______ ______ ______
10.a. Are personnel files maintained? ______ ______ ______ ______
b. Do these files contain at least information on: employment application and new employee screenings, date employed, pay rates, changes in pay rates and position, authorizations for payroll deductions, earnings records, W-4 form, specimen signatures, and termination data where appropriate? ______ ______ ______ ______
c. Are written termination notices required properly document reasons for termination and do these notices require the approval of an appropriate agency official? ______ ______ ______ ______
d. Do physical controls exist over personnel records to prevent their loss or use by unauthorized personnel? ______ ______ ______ ______
11. Are notices of additions, separations, changes in salaries, wages, and deductions promptly reported to the payroll processing function? ______ ______ ______ ______
12. Do procedures exist for authorizing, approving, and recording vacations, holidays, and sick leave and for approving and controlling compensatory time? ______ ______ ______ ______
13. Are terminated employees interviewed as a check on departure and as a final review of any termination settlement by the personnel department? ______ ______ ______ ______
Supervision/Timekeeping
14.For payroll preparation and time keeping:
a. Time keeping and attendance sheets:
1) Are formal attendance records used? ______ ______ ______ ______
2) Is approval of department head or supervisor required on time sheets or other attendance record prior to preparing payroll? ______ ______ ______ ______
3) Are changes on time sheets initiated/approved by a department head or supervisor? ______ ______ ______ ______
15. Is the time clock placed in a position where it can be observed by a supervisor.? ______ ______ ______ ______
16. Are time cards, if used, only punched by the employees to whom they are issued? ______ ______ ______ ______
17. Are controls established to ensure that payroll costs charged to grants are done properly and in compliance with these grant agreements? ______ ______ ______ ______
Payroll Processing
18. For preparing the payroll:
a. Are time sheets/attendance records checked for computations of payroll period hours. ______ ______ ______ ______
b. Are time sheets reviewed for specified overtime approval as well as approvals of department heads, etc.? ______ ______ ______ ______
c. Are overtime hours, rates, and computations checked for accuracy? ______ ______ ______ ______
d. Are time sheets reviewed for unapproved erasures and alterations? ______ ______ ______ ______
e. Are pay rates verified? ______ ______ ______ ______
19. Are documents supporting employee benefit payments (such as accumulated vacation or sick leave) reviewed before disbursements are made? ______ ______ ______ ______
20. Are gross pay amounts of current period compared to prior period payrolls and reviewed for reasonableness by a knowledgeable person not otherwise involved in payroll processing? ______ ______ ______ ______
21. Is the payroll review (i.e., the examination of authorizations for changes noted on the reconciliations) performed by an employee not involved in its preparation? ______ ______ ______ ______
22. Are the distribution of dollars and hours or gross pay balanced with payroll registers and reviewed by someone independent but knowledgeable of this area.? ______ ______ ______ ______
23. Is there a comparison of payrolls to appropriated and budgeted amounts? ______ ______ ______ ______
24 .Are payroll advances to employees prohibited or subject to appropriate review? ______ ______ ______ ______
25. Are appropriate payroll records maintained for accumulated employee benefits (e.g., vacation, sick leave, pension information, etc.)? ______ ______ ______ ______
26. Does an adequate system exist for distributing payroll to the proper appropriation accounts? ______ ______ ______ ______
27. For unclaimed pay checks:
a. Are checks returned to an employee who is not associated with the payroll function? ______ ______ ______ ______
b. Are checks released only after presentation of proper identification by employee and with preparation of a signed receipt? ______ ______ ______ ______
EMPLOYEE COMPENSATION PART B: This section is to be completed by agencies that process their own payroll (e.g., for students, patients or inmates, etc.) and by the Office of the State Comptroller Central Payroll Division.
Segregation of Duties
1. Is supervision of payroll distribution done by employees:
a. Who are not responsible for hiring or firing employees? ______ ______ ______ ______
b. Who do not approve time reports? ______ ______ ______ ______
c. Who take no part in preparing payroll, checks, or envelopes? ______ ______ ______ ______
2. Is the reconciliation of the payroll bank account done by employees who are independent of all other payroll transaction processing activities? ______ ______ ______ ______
3. If EDP is used, is the principle of segregation of duties in processing activities maintained? ______ ______ ______ ______
Procedural Controls
4.Are wages monitored to determine they are at or above the federal minimum wage? ______ ______ ______ ______
Payroll Processing
5.. Are changes to the EDP master payroll file approved and documented? ______ ______ ______ ______
6. Is access to the EDP master payroll file limited to employees who are authorized to make changes? ______ ______ ______ ______
7. Are completed payroll registers reviewed and approved before disbursements are made by someone independent of payroll preparation and time keeping? ______ ______ ______ ______
8. Are payroll checks drawn on a separate account operated on an imprest system? ______ ______ ______ ______
9. If checks are machine-signed, is there adequate control over the use of the signature plate, and are procedures the same as for accounts payable checks? ______ ______ ______ ______
10. Are payroll checks:
a. Prenumbered, blank stock controlled, used in numerical sequence? ______ ______ ______ ______
b. Accounted for in numerical sequence and reconciled to payroll check register? ______ ______ ______ ______
11.. Are all voided/spoiled checks properly mutilated and retained? ______ ______ ______ ______
12. Do checks contain detail of gross pay and deductions? ______ ______ ______ ______
13. For unclaimed pay checks: Is a continuing record maintained of all unclaimed wages? ______ ______ ______ ______
14. Monthly, quarterly, or annually, is there a reconciliation of gross and net pay amounts as shown on tax returns to total payroll on the payroll register and general ledger? ______ ______ ______ ______
DO NOT WRITE IN THIS BOX --AUDITORS USE ONLY
Preliminary opinion on the above Internal Control matters:
Employee Compensation - Payroll and Personnel
Good Fair Poor

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