ChathamCountyInternalAudit

P.O.BOX8161,124BullStreetSte340
Savannah,GA31412
9126527942

Report Date: 3/24/2017

Prepared for: Robert Drewry, Public Works Director
Audit of: Payroll - Public Works
Objective and Review the department payroll for July 2014- July 2016 for compliance with FLSA
Scope: and agreement of subsidiary timekeeping records.

Conclusion:
In our opinion, many controls and operating procedures evaluated did not provide
reasonable assurance that risks were being effectively mitigated within an
4 acceptable tolerance level. Trends were not favorable for achieving objectives.
Prior Rating: NA

Background: In 2015, it was reported to HR by some Public Works employees that discrepancies
existed between the compensatory time balances maintained by the Payroll system
and the timekeeping system (TimeForce) used in Public Works. Until late in 2015,
Public Works had maintained a separate compensatory time leave record (off-book)
from the official payroll system. The two records were not reconcilied and over time
the variance became significant. The off-book record was not compliant with FLSA
limitation on the maximum accrual of 240 hours of compensatory time and some
employees had accrued significantly higher balances.

Summary of Control Deficiencies

Significant Deficiency(s)
1. Control Objective
Department performs a review (reconciliation) of employee leave (sick, vacation, compensatory time)
earned, taken, and balances every six months.

Condition, Cause, and Impact

Compensatory time balances were incorrect. Human Resources carried leave balances which varied from
departmental records. Employees accrued compensatory leave balances greater than 240 hours, in
violation of FLSA. Public Works used an off-book record of compensatory time balances to award the leave
without being submitted to Payroll. This condition was a result of a control deficiency in monitoring of
employee leave earned and taken in compliance with FLSA. Employee leave balances were transmitted to
Human Resources incorrectly.
Management Corrective Action
With assistance from Human Resources, Management will increase its efforts to adhere to FLSA
 AuditofPayrollPublicWorks

requirements by retraining payroll liaisons, Field Supervisors, Superintendents, and Managers as it relates
to Compensatory Time. Included in the training will be: who can earn compensatory time, the way it is
calculated, applied, and how much can be accrued. Public Works has posted all compensatory balances to
TimeForce and has reconciled TimeForce balances to Munis. In addition, administrative staff will perform
a reconciliation of employee leave balances at least every 6 months or less to the Human Resources system.
Management will periodically monitor employee compensatory time usage and balances.

2. Control Objective
Human Resources has provided FLSA compliance training to departmental payroll liaisons regarding
employment classifications, who can or cannot receive compensatory time and/or overtime, and the
definition of what constitutes work time.

Condition, Cause, and Impact

Public Works employees had been compensated on manually calculated timesheets for working overtime
and/or awarded compensatory time when it had not been earned. Departmental practices were not in
compliance with applicable sections of the Fair Labor Standards Act (FLSA). Human Resources had not
provided training to departmental payroll liaisons regarding the application and interpretation of the Fair
Labor Standards Act and the importance of compliance and possible consequences of non-compliance.
This condition put the County at risk of non-compliance with federal labor laws which could result in fines
and penalties.
Management Corrective Action
Public Works management has adopted and implemented procedures to be compliant with FLSA. Public
Works management continues to seek assistance from Human Resources for FLSA training. Training was
scheduled but interrupted due to Hurricane Matthew. As of the date of this report, Human Resources has
not rescheduled FLSA training with departmental payroll liaisons and its application to departmental
policies and procedures.

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 AuditofPayrollPublicWorks

Significant Deficiency(s)
3. Control Objective
The automated system captures all time worked for the purpose of calculating payroll overtime and leave.
The administrative staff records employee time using an automated system and/or manual records. Once
approved by supervisor(s), a departmental copy of each timesheet is placed into each employee's
departmental payroll file.

Condition, Cause, and Impact

Timekeeping documentation (TimeForce reports and manual timesheets) did not agree with the online
payroll time record (FMIS/MUNIS). Although Public Works management signed off on the individual
employee timesheets, management was not approving/reviewing the Payroll Summaries. The
administrative staff inconsistently interpreted hours worked when transferring those hours to the payroll
summaries submitted to Payroll. This practice created the following deficiencies: 1) Overpayments totaled
$17,468.27 for 32% (36 of 110) of employees; 2) Underpayments totaled $9,854.39 for 33% (37 of 110) of
employees; 3) 66% (73 of 110) of employees had compensatory time and/or overtime calculated
incorrectly; 4) 55% (5 of 9) of exempt employees were granted/received compensatory time.
Management Corrective Action
Management has implemented a multi-level control to review the departmental payroll summaries.
Administrative payroll assignments and staffing have been re-aligned to take the lone task off one payroll
liaison. Internal Audit approved timesheets are directly exported into MUNIS automatically. Exceptions
to the Departmental Payroll Summaries are reviewed by internal payroll administrator, division
administrative manager, and director/deputy director.

A follow-up request for the status of corrective actions will be made on or about: 7/22/2017

Audit Methodology:
Our internal audit activities conform with the International Standards for the Professional Practice of
Internal Auditing. These activities are designed to provide an independent, objective assurance of
the reliability and integrity of financial reporting; effectiveness and efficiency of operations to achieve
objectives; safeguarding of assets; and compliance with laws, regulations, contracts, policies and
procedures.

Jeannie Alday, CIA, CISA, CFE, CPCU, CRMA, CFSA

Director of Internal Audit

cc: Lee Smith, County Manager

Linda Cramer, Assistant County Manager
Michael Kaigler, Assistant County Manager
Carolyn Smalls, Human Resources Director
Virginia Lamb, Support Services Division Administrator

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