Overview
The MBTA does not reconcile its payroll records to its general ledger. We identified a discrepancy of $349,523 in the AFC 2.0 project between the Human Resources Compensation Management System (HR/CMS) used by the MBTA for payroll and the MBTA’s Financial Management Information System (FMIS) used by the MBTA for its general ledger. Additional payroll reconciliation discrepancies could exist in other areas of MBTA operations that were not subject to this audit.
If the MBTA does not reconcile payroll records to its general ledger, then payroll could be misstated and project costs attributed to the AFC 2.0 project and other MBTA projects and services could be inaccurate, making it difficult or impossible to determine the cost and cost effectiveness of different services offered to the public. Additionally, it is possible that MBTA employees could have been overpaid or underpaid if payroll records are inaccurate.
Authoritative Guidance
The Office of the Comptroller of the Commonwealth has issued payroll job aids and best practices to guide agencies through the appropriate biweekly reconciliation of payroll records to the general ledger system.
Reasons for Not Reconciling Payroll
The MBTA did not provide a reason as to why it did not reconcile its payroll records in HR/CMS to its general ledger in FMIS.
Recommendations
- The MBTA should investigate and resolve the $349,523 variance noted between HR/CMS and FMIS with regard to the AFC 2.0 project payroll expenses.
- The MBTA should create policies and procedures to perform biweekly reconciliations for payroll records to its general ledger to ensure accurate accounting for all project costs.
- The MBTA should ensure that payroll codes are appropriately applied to projects.
Auditee’s Response
The data from the HRCMS that was provided to the [Office of the State Auditor (SAO)] was the raw timesheet data submitted by employees and was never meant to tie out with final financial cost entries that exist in the reporting from the MBTA’s Financial & Materials Information System (FMIS). There are necessary adjustments made to this data to ensure accurate reporting prior to the closing of financial records in FMIS. Furthermore, the data from HRCMS initially included data from beyond the audit period. The AFC 2.0 system project payroll aligns with the general ledger of the MBTA. The MBTA agrees that improvements can be made to future communications around time reporting out of the MBTA’s various systems.
Auditor’s Reply
The MBTA states that the data from HR/CMS was never meant to tie to the data from FMIS. However, when asked why the variance of $349,523 exists, the MBTA could not provide an explanation for the variance. The MBTA did not inform us that this data was “raw timesheet data” and therefore may be unreliable and seemingly did not know this itself when asked. Performing a routine reconciliation of these two datasets (which is the focus of our recommendations above) will help ensure the accuracy of MBTA payroll and will further help ensure that project costs attributed to the AFC 2.0 project (and other MBTA projects and services) are accurate. Given these reasons, we urge the MBTA to adopt our recommendations in this area.
| Date published: | January 16, 2025 |
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