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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Compliance with the law
Management Alert:
Controls Failed to Prevent
Employee From Receiving
Payment in Excess of
Statutory Limit
Report No. 17-P-0410	September 27, 2017
$23,413
overpayment

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Report Contributors:
John Trefry
Jean Bloom
Philip Cleveland
Abbreviations
CFR
Code of Federal Regulations
EPA
U.S. Environmental Protection Agency
GAO
U.S. Government Accountability Office
GS
General Schedule
IBC
Interior Business Center (Department of the Interior)
LEAP
Law Enforcement Availability Pay
OCEFT
Office of Criminal Enforcement, Forensics and Training
OCFO
Office of the Chief Financial Officer
OECA
Office of Enforcement and Compliance Assurance
OIG
Office of Inspector General
OTS
Office of Technology Solutions
PSD
Protective Service Detail
U.S.C.
United States Code
Cover image: Image depicting overpayment, prepared by EPA OIG.
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*. U.S. Environmental Protection Agency	17-P-0410
\ Office of Inspector General	September 27,2017
. .. At a Glance
Why We Did This Audit
The U.S. Environmental
Protection Agency (EPA),
Office of Inspector General
(OIG), received a hotline
complaint and initiated an audit
to determine whether the
agency's Protective Service
Detail (PSD) has adequate
controls for the scheduling,
approving and monitoring of
employees' time.
PSD agents provide physical
protection services for the EPA
Administrator. As law
enforcement officers,
PSD agents may receive
adjustments over their regular
salary, including overtime,
night-differential and law
enforcement availability pay.
However, PSD salaries are
subject to both biweekly and
annual pay caps, regardless of
the hours worked.
The purpose of this
management alert is to notify
the agency of a finding—a
control weakness that resulted
in an unauthorized payment—
while our audit continues.
Management Alert: Controls Failed to Prevent Employee
From Receiving Payment in Excess of Statutory Limit
Our audit identified an
unauthorized pay
adjustment of $23,413
for a PSD agent.
What We Found
Internal controls failed to prevent an unauthorized
overpayment to a PSD agent, causing the agent's
2016 salary to exceed the annual statutory pay cap.
The agent's biweekly pay for the period ending
January 7, 2017, included an adjustment of $23,413.
According to the agent, the additional payment was for work hours not
compensated in 2016. The agent believed that payment for these hours was not
issued in 2016 because of the biweekly pay cap. However, starting in May 2016,
the EPA authorized a series of waivers that lifted the biweekly caps, including
one waiver that retroactively applied to the pay periods from September 6, 2015,
through April 30, 2016.
On January 18, 2017, the agent informed staff in the Office of Criminal
Enforcement, Forensics and Training of this payment, expressing concern that
the annual pay cap may be exceeded. The staff notified the Office of the Chief
Financial Officer's Human Resources and Payroll Customer Service Help Desk,
which subsequently referred the issue to the EPA's payroll provider, the
Department of the Interior's Interior Business Center (IBC).
Neither the EPA nor the IBC could provide the OIG with an explanation for this
unauthorized payment until July 2017. In July 2017, the IBC told us that the
$23,413 payment was for hours that were worked by the agent in 2016 but that
could not be paid in 2016. The IBC could not process these hours until January
2017, when the EPA submitted an amended time-and-attendance file. As a
result, because the payment was not processed until the next calendar year, the
IBC's payroll system did not detect that the agent exceeded the 2016 annual pay
cap. If not for the actions of the agent, this overpayment may have remained
undetected.
This report addresses the
following:
• Compliance with the law.
According to the IBC, this payment was unauthorized and a debt collection notice
was issued to the agent on July 14, 2017.
Recommendations and Planned Agency Corrective Actions
Send all inquiries to our public
affairs office at (202) 566-2391
or visit www.epa.aov/oia.
We recommend that the EPA's Chief Financial Officer design and implement new
controls to prevent the reoccurrence of unauthorized payments. We also
recommend that the Chief Financial Officer determine whether similar
unauthorized payments have been made to other EPA employees and recover
any overpayments. The agency did not provide any proposed corrective actions;
therefore, all recommendations are unresolved.
Listing of OIG reports.

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
September 27, 2017
MEMORANDUM
SUBJECT: Management Alert: Controls Failed to Prevent Employee From Receiving
Payment in Excess of Statutory Limit
Report No. 17-P-041A
FROM: Arthur A. Elkins Jr.
TO:
David Bloom, Acting Chief Financial Officer
This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA). The project number for this audit was OA-FY16-0265.
This report contains findings that describe the problems the OIG has identified and corrective actions the
OIG recommends. This report represents the opinion of the OIG and does not necessarily represent the
final EPA position. Final determination on matters in this report will be made by EPA management in
accordance with established audit resolution procedures.
Action Required
The agency did not provide any corrective actions for our recommendations; therefore, the
recommendations are unresolved. In accordance with EPA Manual 2750, the resolution process begins
immediately with the issuance of this report. We are requesting a meeting within 30 days between the
acting Chief Financial Officer and the OIG's Assistant Inspector General for Audit. If resolution is still
not reached, the acting Chief Financial Officer is required to complete and submit a dispute resolution
request to the Deputy Administrator for decision.
We will post this report to our website at www.epa.gov/oig.

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Management Alert: Controls Failed to	17-P-0410
Prevent Employee From Receiving
Payment in Excess of Statutory Limit
	Table of Contents	
Purpose		1
Background		1
Responsible Offices		2
Scope and Methodology		2
Results of Audit		3
Conclusion		5
Recommendations		6
Agency Response and OIG Comments		6
Status of Recommendations and Potential Monetary Benefits		7
Appendix
A Distribution	 8

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Purpose
As a result of a hotline complaint, the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA) is conducting an audit of the EPA
Administrator's Protective Service Detail (PSD). The objective of the audit is to
determine whether PSD has adequate controls for the scheduling, approving and
monitoring of employees' time. This management alert is being issued to notify
the agency that an internal control weakness resulted in an unauthorized payment
of $23,413 to a PSD agent on January 17, 2017. Our overall audit of the PSD
controls that was initiated as a result of the hotline complaint continues.
Background
PSD, within the Office of Criminal Enforcement, Forensics and Training
(OCEFT), provides physical protection and protective escorts to the EPA
Administrator. As law enforcement officers, PSD agents may receive adjustments
over their regular salary, including overtime, night-differential and law
enforcement availability pay (LEAP). However, PSD salaries are subject to both
biweekly and annual pay caps, regardless of the hours worked.
Regulatory and Policy Requirements
Federal statutes at 5 U.S.C. § 5547, Limitation on Premium Pay, identify a
biweekly pay cap for General Schedule (GS) employees. The biweekly basic pay
cap may be waived for some GS employees who receive premium pay while
performing work designated as emergency or mission critical.
Per 5 U.S.C. § 5547(a), employees may be paid premium pay, but this section
also limits basic pay plus premium pay for any pay period to the greater of the
maximum rate of pay for a GS-15 Step 10 employee or the rate payable for
Level V of the Executive Schedule.
In addition, 5 U.S.C. § 5547(b) identifies an annual statutory pay limit for
employees performing the work noted above. Under this section, employees may
receive certain types of premium pay to the extent that the employees' basic and
premium pay for the calendar year do not exceed the greater of the annualized rate
payable at the end of calendar year for GS-15 Step 10 or Level V of the Executive
Schedule.
Furthermore, 5 U.S.C. § 5547(b)(3) allows the head of each agency to determine
whether to apply subsection (a) to an employee who is paid premium pay to
perform work that is critical to the mission of the agency.
17-P-0410
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Agency Timekeeping Practices and Payroll Processing
Employees are responsible for accurately entering hours worked or leave taken on
a biweekly basis into an electronic timesheet within PeoplePlus, which is the
agency's time-and-attendance system. Employees must also attest to the accuracy
of the data entered. Timekeepers then monitor and review the data entered by
employees for accuracy and completeness. Approving officials review and certify
the time-and-attendance data entered in PeoplePlus for the employees under their
supervision. The certified data is sent to Office of Technology Solutions (OTS),
within the Office of the Chief Financial Officer (OCFO), for processing and
transmittal to the agency's payroll provider.
The Department of the Interior's Interior Business Center (IBC) has been the
EPA's payroll provider since June 2014. The IBC is responsible for processing
the agency's payroll data in the Federal Personnel and Payroll System and
notifying the agency of any errors or discrepancies needing correction and
resubmission. The IBC computes payment amounts based on information such as
hours worked and time codes from each employee's payroll data, classification,
status, hourly rates and pay requirements. The IBC then issues the payment to the
employee. Figure 1 summarizes the payroll process.
Figure 1: Overview of payroll process
Hours Recorded File Processed Payroll Processed Payment Made
Employee
Source: OIG-generated image.
Responsible Offices
Within the Office of Enforcement and Compliance Assurance (OECA), OCEFT
managers are responsible for ensuring the accuracy of timekeeping data entered
by PSD employees. OCFO maintains a Human Resources and Payroll Customer
Service Help Desk that provides assistance with human resources, payroll, and
time-and-attendance issues. OCFO's OTS manages the operation of the EPA's
time-and-attendance system.
Scope and Methodology
We conducted this audit from September 2016 to August 2017, in accordance
with generally accepted government auditing standards issued by the Comptroller
General of the United States. 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
17-P-0410
2

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the evidence obtained to date provides a reasonable basis for our findings and
conclusions presented in this document.
To determine whether PSD has adequate controls for the scheduling, approving
and monitoring of employees' time, we performed the following tasks:
•	Obtained an understanding of internal controls for PSD time and
attendance.
•	Reviewed PSD employees' 2016 salaries to determine whether they
exceeded biweekly or annual pay caps.
•	Reviewed information (email correspondence, pay statements and
supporting labor charges recorded in PeoplePlus) associated with a
payment made to an agent on January 17, 2017.
•	Interviewed the PSD agent, OCEFT management, personnel in OCFO and
OTS, and IBC representatives to obtain information on the payment.
•	Analyzed the hours entered into PeoplePlus for the agent who received the
payment, and compared these hours, on a test basis, to the hours worked
and the hours paid through the Federal Personnel and Payroll System.
Results of Audit
It was brought to our attention that a PSD agent received a payment adjustment
for $23,413 in the second pay period of calendar year 2017, which encompassed
the period ending January 7, 2017. The payment, which was issued on January 17,
2017, contained an adjustment for hours that were recorded by the agent in
PeoplePlus in calendar year 2016 but that were not paid in 2016. The payment
was delayed because of issues associated with the processing of biweekly pay cap
waivers. Even with biweekly pay cap waivers in place, however, the annual pay
cap requirement was still in effect. Therefore, according to the IBC, the $23,413
payment adjustment was unauthorized because it caused the agent to exceed the
annual pay cap for 2016.
The EPA submitted an amended time-and-attendance file to the IBC in
December 2016 to process. However, the file was missing some information
necessary for processing. The corrected file was not submitted to the IBC for
processing until January 2017. Since the file was provided and processed in 2017,
the IBC's payroll system did not recognize that the employee exceeded the 2016
annual pay cap. Consequently, the unauthorized payment was issued. A debt
collection notice was issued to the agent on July 14, 2017.
The U.S. Government Accountability Office (GAO), in its Standards for Internal
Controls in the Federal Government (GAO-14-704G), sets internal control
17-P-0410
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standards for federal entities. It also notes that federal entities are responsible for
understanding controls governing external service organizations, such as payroll
providers. Office of Management and Budget Circular No. A-123, Management's
Responsibility for Enterprise Risk Management and Internal Controls, references
the GAO standards and emphasizes each agency's responsibility to understand the
controls used by its service organizations in Section III, Bl:
Agencies are ultimately responsible for the services and processes
provided by third party service organizations as they relate to the
Agency's ability to maintain internal control over operations,
reporting, and compliance with laws and regulations.
Neither the EPA's nor the IBC's internal controls prevented or detected this
unauthorized payment.
Within the EPA, OCFO's OTS has standard operating procedures that govern its
time-and-attendance process with the IBC. The procedures define the roles and
responsibilities for processing payroll and handling issues detected during
processing.
PeoplePlus has controls to prevent and detect unauthorized payments to
employees. For example, the time-and-attendance data recorded in PeoplePlus are
reviewed and certified by approving officials, who confirm that the hours
recorded by each employee are authorized, accurate and complete. PeoplePlus has
no control to detect biweekly or annual pay caps.
According to IBC management, there are controls within its payroll system to
prevent an employee from exceeding the statutory annual and biweekly pay cap
limits. These controls prevent payments above the biweekly limit unless a
biweekly pay cap wavier has been authorized, entered into the system by the
EPA, and transmitted to the IBC. In addition, these controls prevent employees
from exceeding the annual statutory pay cap by comparing the cumulative
amounts paid to the limits in the annual and aggregate pay tables.
For the PSD agent at the center of this discussion, we noted that the Earnings and
Leave Statement for the pay period ending January 7, 2017, included not only
regular and LEAP pay but also multiple pay adjustments. These adjustments
addressed regular, overtime, LEAP, holiday and night-differential hours worked
during previous pay periods. This significantly increased the agent's pay for that
period, as shown by Table 1.
Table 1: Payment summary for biweekly period ending January 7, 2017
Regular arid LEAP pay
$6,145
Adjusted pay
23,413
Total gross pay
$29,558
Source: PSD agent's Earnings and Leave Statement.
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According to the PSD agent, the adjusted pay amount was for 347 overtime hours
and 195 night-differential hours worked in 2016. The agent believed that the IBC
did not issue payment for these hours in 2016 because of the biweekly pay cap.
OCEFT representatives stated that they believed the agent's adjusted pay was
issued in 2017 because the OECA Assistant Administrator retroactively lifted the
biweekly pay cap for PSD agents. Starting in May 2016, the OECA Assistant
Administrator authorized a series of biweekly pay cap waivers that covered the
period through early February 2017. On October 7, 2016, the OECA Assistant
Administrator issued a memorandum that also retroactively waived the biweekly
pay cap from September 6, 2015, through April 30, 2016. However, even though
the biweekly pay caps were lifted, the cumulative effect of the pay adjustments
were still limited by the annual pay cap.
Based on our calculations, the 2016 annual statutory pay cap limit for this PSD
agent was $ 159,76s.1 On January 18, 2017, the agent informed OCEFT staff of
the potential overpayment, expressing concern that the payment may have
exceeded the annual pay cap. OCEFT staff notified OCFO's Human Resources
and Payroll Customer Service Help Desk, which subsequently referred the issue
to the IBC.
Neither the EPA nor the IBC was able to provide the OIG with an explanation
regarding this overpayment. However, when we contacted the IBC in June 2017
to obtain information on the payment, the IBC confirmed that the payment made
on January 17, 2017, was for payroll adjustments related to the EPA's retroactive
biweekly pay cap waivers
In July 2017, the IBC finally explained to the OIG how the unauthorized payment
was made. According to the IBC, if the payroll adjustments had been processed in
2016, no overpayments would have been made to the employee. The system
would have determined that the adjusted amounts would have exceeded the 2016
annual pay cap. However, since the adjustments were processed in 2017, the
system could not detect that the 2016 annual pay cap was exceeded. The system
therefore allowed the payment.
Conclusion
Internal controls did not prevent an unauthorized payment to a PSD agent, which
caused the agent's annual 2016 salary to exceed the statutory pay cap. According
to the IBC, this payment was unauthorized, and a debt collection notice was
issued to the agent on July 14, 2017.
1 In accordance with 5 CFR § 550.106(d), the hourly pay rate is computed by dividing the annual salaiy published
by the Office of Personnel Management by 2,087 hours and rounding to the nearest cent. The biweekly rate is then
computed by multiplying the rounded hourly rate by 80 hours. The annual rate is then computed by multiplying the
biweekly rate by the number of pay periods in the agency's payroll cycle.
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Recommendations
We recommend that the Chief Financial Officer:
1.	Design and implement new controls to prevent the reoccurrence of
unauthorized payments that will put an employee above the annual
statutory pay cap.
2.	Determine whether similar unauthorized payments above the annual
statutory pay cap have been made to other EPA employees.
3.	Recover any overpayments above the annual statutory pay cap.
Agency Response and OIG Comments
We provided a discussion document to the agency for comment on August 25,
2017, and received verbal comments from OCFO's Office of the Controller and
OTS on September 5, 2017. OCEFT emailed comments on September 8, 2017.
OCFO agreed that an overpayment occurred. Further, OCFO recognized that the
IBC's system controls and the manual adjustment process between the EPA and the
IBC did not prevent the payment from occurring. According to OTS, the manual
adjustment process has stopped. OCFO also stated that it generates and transmits
quarterly reports to the Office of Administration and Resources Management for
use in monitoring statutory biweekly pay limits. However, based on our review of
these reports, no cumulative pay information for monitoring annual statutory pay
limits is included within the reports.
We contacted the Office of Administration and Resources Management's Office of
Human Resources personnel and were told that they do not monitor annual
statutory pay limits. However, the Office of Human Resources' Shared Service
Centers have responsibility for any biweekly pay cap exceptions. We contacted the
Cincinnati Shared Service Center to determine what type of review is conducted,
and we were informed that its personnel check for a biweekly pay cap wavier if an
employee exceeds the biweekly pay cap limit.
OCEFT suggested some edits for report clarification, and we adjusted the reported
accordingly. No corrective actions were provided, and all recommendations are
unresolved.
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
Rec.
No.
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
Potential
Monetary
Benefits
(in $000s)
1
6
Design and implement new controls to prevent the reoccurrence
of unauthorized payments that will put an employee above the
annual statutory pay cap.
U
Chief Financial Officer


2
6
Deteimine whether similar unauthorized payments above the
annual statutory pay cap have been made to other EPA
employees.
U
Chief Financial Officer


3 6 Recover any overpayments above the annual statutory pay cap. U Chief Financial Officer
1 C = Corrective action completed.
R = Recommendation resolved with corrective action pending.
U = Recommendation unresolved with resolution efforts in progress.
17-P-0410
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Appendix A
Distribution
The Administrator
Chief of Staff
Chief of Staff for Operations
Deputy Chief of Staff for Operations
Chief Financial Officer
Assistant Administrator for Administration and Resources Management
Assistant Administrator for Enforcement and Compliance Assurance
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Associate Chief Financial Officer
Deputy Assistant Administrator for Administration and Resources Management
Principal Deputy Assistant Administrator for Enforcement and Compliance Assurance
Director, Office of Technology Solutions, Office of the Chief Financial Officer
Director, Office of Human Resources, Office of Administration and Resources Management
Director, Office of Criminal Enforcement, Forensics and Training, Office of Enforcement and
Compliance Assurance
Audit Follow-Up Coordinator, Office of the Administrator
Audit Follow-Up Coordinator, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of Administration and Resources Management
Audit Follow-Up Coordinator, Office of Enforcement and Compliance Assurance
Audit Follow-Up Coordinator, Office of Technology Solutions, Office of the Chief
Financial Officer
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