Agenda 07/10/2018 Item #16J507/10/2018
EXECUTIVE SUMMARY
To provide the Board of County Commissioners the Clerk of the Circuit Court’s Internal Audit
Report 2018-4 Payroll Audit Pelican Bay Services Division, issued on, July 3, 2018.
OBJECTIVE: To provide the Board of County Commissioners (Board) the issued Audit Report 2018-4
Payroll Audit Pelican Bay Services Division.
Internal Audit delivered the Audit Report to the Board on Tuesday, July 3, 2018. It is available
electronically on the Clerk of Courts website.
The Clerk’s website for published Internal Audit Reports, once they are no longer confidential:
https://www.collierclerk.com/finance/internal-audit/published-reports
Internal Audits do not become public record until the Clerk’s office issues them to the Board.
GROWTH MANAGEMENT IMPACT: None
FISCAL IMPACT: None
RECOMMENDATION: That the Clerk’s Audit Report 2018-4 Payroll Audit Pelican Bay Services
Division be entered into the record.
Prepared by: Gabriela Molina, Internal Auditor
Office of the Clerk of the Circuit Court
ATTACHMENT(S)
1. 2018-4 Payroll Audit Pelican Bay Services Division-Final (PDF)
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07/10/2018
COLLIER COUNTY
Board of County Commissioners
Item Number: 16.J.5
Doc ID: 6104
Item Summary: To provide the Board of County Commissioners the Clerk of the Circuit Court’s
Internal Audit Report 2018-4 Payroll Audit Pelican Bay Services Division, issued on, July 3, 2018.
Meeting Date: 07/10/2018
Prepared by:
Title: Senior Staff Assistant – Clerk of the Circuit Court
Name: Jennifer Milum
07/03/2018 10:34 AM
Submitted by:
Title: Senior Staff Assistant – Clerk of the Circuit Court
Name: Jennifer Milum
07/03/2018 10:34 AM
Approved By:
Review:
Clerk of the Circuit Court Derek Johnssen Additional Reviewer Completed 07/03/2018 10:57 AM
Office of Management and Budget Valerie Fleming Level 3 OMB Gatekeeper Review Completed 07/03/2018 11:02 AM
Budget and Management Office MaryJo Brock Additional Reviewer Skipped 07/03/2018 11:02 AM
County Attorney's Office MaryJo Brock Level 3 County Attorney's Office Review Skipped 07/03/2018 11:11 AM
County Manager's Office Leo E. Ochs Level 4 County Manager Review Completed 07/03/2018 11:12 AM
Board of County Commissioners MaryJo Brock Meeting Pending 07/10/2018 9:00 AM
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Internal Audit Department
Audit Report 2018-4
Payroll Audit
Pelican Bay Services
Division
Crystal K. Kinzel
Clerk of the Circuit Court
and Comptroller
3299 Tamiami Trail East
Suite #402
Naples, FL 34112-5746
www.collierclerk.com
Issued: July 3, 2018
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Prepared by: Gabriela Molina, Internal Auditor
Timothy Lo, Internal Auditor
William D. Courtney, Internal Auditor
James D. Molenaar, Internal Audit Manager
Report Distribution: Board of County Commissioners
Leo Ochs, Jr., County Manager
Jeff Klatzkow, County Attorney
Nick Casalanguida, Deputy County Manager
Cc: Crystal K. Kinzel, Clerk of the Circuit Court and Comptroller
Timothy Durham, Executive Director
TABLE OF CONTENTS
OBJECTIVE ..........................................................................................................................................2
SUMMARY ...........................................................................................................................................2
MANAGEMENT RESPONSE ..............................................................................................................2
SCOPE ...................................................................................................................................................4
BACKGROUND ...................................................................................................................................5
OBSERVATIONS .................................................................................................................................7
CONCLUSION ....................................................................................................................................33
The files and draft versions of audit reports are confidential and exempt from public records requests during an active audit under
Nicolai v. Baldwin (Aug. 28, 1998 DCA of FL, 5th District) and Section 119.0713, Florida Statutes. Workpapers supporting the
observations in this report become public record and will be made available upon request once the final audit report has been issued.
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Internal Audit provided a draft of this report to the Pelican Bay Services Division for management response on
June 5, 2018. County management provided that response on June 19, 2018.
Objective
The objectives of this engagement were to evaluate Pelican Bay Services Division’s (PBSD) internal controls
over the payroll process, timekeeping practices, and the Division’s compliance with Florida Statutes, County
Ordinances and CMAs (County Practices and Procedures) associated with payroll processes.
Summary
The following audit observations were generated during the review:
1. Failure to report leave hours by County staff within Systems, Applications & Products in Data
Processing (“SAP” or “financial system”) payroll financial system (SAP) may indicate potential
fraudulent activities;
2. Lack of PBSD Management oversight regarding payroll time entries and the payroll/time and
attendance approval process;
3. Failure to implement internal control segregation of duties (“SoD”) for payroll/time and attendance
(“T&A”) reporting entries and the management approval process of these T&A systems;
4. Lack of clearly defined supervisory roles, responsibilities, and processes may provide the basis for
illicit practices and structural conflicts of interest;
5. Employee earned and used compensatory time was not consistently approved by PBSD Management
and/or recorded in SAP;
6. Original T&A entry documents were altered and changes were not properly approved by employees,
thereby decreasing the likelihood that accurate T&A information is recorded and reported in SAP
for the purposes of computing pay and leave time;
7. Employees failed to consistently complete and/or sign timecards, requests for leave and/or overtime
pay requests;
8. T&A Data are Not Complete and Accurate: employee time entries on payroll forms do not reconcile
to SAP for multiple payroll periods;
9. The timekeeper provided altered payroll records to Internal Audit in response to a request for
supporting documentation; and
10. County staff did not complete Performance Evaluations for PBSD assigned staff for calendar years
2015 and 2016.
PBSD Management Response Summary: Internal Audit 2018-4 correctly identifies numerous
deficiencies in the processing and validation of timesheets, leave requests and comp time logs. Key staff
was either unaware or did not understand the importance of adhering to proper procedures and took
unacceptable shortcuts in support of day-to-day operations. Obviously, training is desperately needed
and roles and responsibilities of staff must be clearly delineated and understood by all concerned. Any
improperly validated comp time or accumulation of leave will be zeroed out.
Corporate Compliance and Internal Review has already been engaged, as has Human Resources, to assist
in addressing the aforementioned deficiencies and in implementing best practices. Follow-up for
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compliance will occur at 30, 60 and 90-day intervals. The PBSD Administrator will create and enforce
BAPs (Behavior Action Plans) for the Operations Manager and the Operations Analyst, at a minimum.
The Office of Corporate Compliance and Internal Review recommendations:
In response to those deficiencies noted/acknowledged, PBSD Management met with the County
Manager's Office of Corporate Compliance to identify and implement the following payroll process
improvements and its status as of June 15, 2018.
1. Develop and implement a formal written
payroll practice and procedure within 14
days.
STATUS -Done
2. Formalize the hours of operations for
all employees of the Pelican Bay
Services Division. The Director issue a
procedure memorandum in this
regard (CMA 5345 Work Hours)
STATUS - Done
3. Conduct a staff meeting to review the
practice and procedure and CMA
5360 Leave of Absence. All staff must
acknowledge their responsibilities by
signing the attendance log within 30
days of the issuance of this
recommendation.
STATUS - Done
4. Require staff to badge in/out of the
Pelican Bay Services Division
workshop daily. The Director will
request a badge access report from
Facilities Management Division
on a bi-weekly basis. The
Operations Manager will confirm
the accuracy of the leave requests
and timecards with the Badge
Access Report to confirm staff
h
STATUS- Done
5. Ensure managerial oversight and
segregation of duties of the payroll,
leave request, pre-approval of
Overtime and Compensatory Leave
process by requiring the employee,
supervisor, manager, and Director
signatures on all payroll forms on
a bi-weekly basis.
STATUS- Done
6. Require staff to completely fill out
required information in their
individual timesheets, sign and
submit to the manager by the end
of business each Friday.
STATUS- Done
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7. Create a Pelican Bay Services Division
payroll folder on the shared drive.
Scan all applicable time cards and
leave documentation from each pay
period into the individual weekly
folders for tracking and accountability
purposes.
STATUS- Done
8. Install a security camera and
badge access at the Pelican Bay
Services Division Main Office.
STATUS-Requested
9. Add Neil Dorrill, Pelican Bay
Services Director, to the SAP
payroll approval workflow.
STATUS- Done
10. Schedule supplemental SAP
payroll entry training with
Tracey Payne, SAP Trainer with
the Clerk of Courts.
STATUS-Requested
Scope
This engagement consisted of, but was not limited to, the following:
Fair Labor Standards Act (“FLSA”);
Florida Statute 119 and Florida Statute 286; Florida Statute 125; Florida Omnibus Theft Statue;
Review of Collier County Ordinances 2002-27, 2006-05, 2009-05, 2013-19, and 2013-61 as amended;
Review of applicable Board of County Commissioners (BCC) agenda items and meeting minutes;
Review of applicable Collier County CMA’s;
Review of applicable County Agreements;
Visiting PBSD and interviewing its staff and management;
Observing and documenting the timekeeping and payroll process;
Examining payroll and personnel records of PBSD assigned staff;
Review of Timecards, Overtime and Request for Leave Forms for Fiscal Years 2015 through 2018;
Validation and tracing of timecard, overtime and request for leave information;
Comparison of hours worked (from payroll documents) with entries in the Payroll System (SAP
records);
Interviews with Clerk’s Payroll staff; and
Interviews with County’s Human Resources (HR) and Operations staff.
Scope Limitations:
The scope of the audit was limited to all payroll documentation with dates corresponding to payroll periods
from Fiscal Year 2015 through Fiscal Year (FY) 2018 (3/30/18), which consisted of 1,400 records. Testing
for purposes of the audit relied on timecards, overtime and request for leave forms that should have been
attested by the employee and supervisor.
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Background
Pursuant to Chapter 125, Florida Statutes, and Collier County Ordinance No. 88-23, the Pelican Bay
Municipal Service Taxing and Benefit Unit (MSTBU) was created to provide the community of Pelican
Bay (Community) services directly from the County. The County services include, but are not limited to:
street lighting, water management, law enforcement, streetscape beautification and mangrove maintenance.
A comprehensive list of services is described in County Ordinance 2002-27. The purpose of the PBSD,
along with the Pelican Bay MSTBU is to advise the Board of County Commissioners (BCC) on issues that
pertain to Pelican Bay residents. Pelican Bay property owners (both residential and commercial) tax and
assess themselves each year to pay for the services and amenities provided by the PBSD. The County
collects the funds, and the PBSD’s manager oversees the administration of the funds within the MSTBU.
The BCC approved the hiring of a contract professional manager for the PBSD to manage funds, services,
programs and the day-to-day operational activities of the MSTBU. At the recommendation of the PBSD
Board, the BCC awarded the current contract to Dorrill Management Group, LLC (“Consultant”) through
Agreement #14-6230 “Management Services for Pelican Bay Services Division” (“Agreement”), which was
executed on 5/13/14, effective 7/1/14. The Agreement was for a one (1) year period, and by mutual
agreement of the parties may be renewed for three (3) additional one year periods. The final renewal term
is in effect from 7/1/17 to 6/30/18.
The Agreement’s scope of services includes, but is not limited to, the supervision of BCC staff assigned to
PBSD, coordination of activities and implementation of policies. The payroll process and related activities
are an integral part of the day-to-day operations, therefore an understanding and review of these activities
are an essential aspect of the audit of PBSD.
See partial first page (1 of 13) and partial “Exhibit A-Scope of Services” of the Agreement for “Management
Services for Pelican Services Division” below and on the next page:
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Timekeeping and Payroll Process Observations:
Internal Audit met with the Operations Analyst assigned to PBSD to discuss and observe the payroll process
for payroll period ending 11/10/17. The payroll period is bi-weekly and starts on a Saturday and ends on a
Friday, with payment made on Friday two weeks from the end of the pay period. As of 11/06/17, Pelican
Bay Services Division has 16 hourly employees (non-exempt) and 3 salary (exempt) employees. Hourly
employees submit Timecards, Overtime Forms and Request for Leave Forms. Salary employees submit
Request for Leave Forms and compensatory time logs.
The payroll process begins at PBSD. The hourly employees complete a “Weekly Time Card” (“timecard”)
for the time worked and an “Overtime Approval Form,” if the hourly employee has worked more than 40
hours per week. All employees are required to complete a “Request for Leave” form (“RFLF”), if applicable
for the pay period. The timecard and other payroll forms are to be signed by the employee to certify hours
worked and leave requested. Two employees are responsible for the payroll process: (1) Operations Analyst,
as SAP timekeeper, enters information in the payroll system, and (2) Operations Manager, as SAP
approver, reviews and approves time entries in the SAP payroll system. Procedurally, the Operations
Manager collects, reviews and signs timecards and payroll forms for all employees with the exception of
the Administrative Assistant (subordinate to the Operations Analyst). Additionally the Operations Analyst,
who is a subordinate to the Operations Manager collects, reviews and approves the Operations Manager’s
requests for leave.
Upon the approval of the timecards and payroll forms by the direct supervisor, they are turned over to the
timekeeper (Operations Analyst). The timecards and payroll forms are to be reviewed by the timekeeper for
accuracy, and subsequently, entered in the SAP payroll system.
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After the timecard information is entered into SAP, the timekeeper sends an email to the Operations
Manager (authorized approver in SAP) to review and approve information entered in the payroll system,
after review time entries are approved in SAP. If there are any timecard issues, the authorized approver must
resolve them with the employee prior to resubmission in SAP. Timecards and all supporting documentation
are then stored at the PBSD Office.
Once time entries are approved by the PBSD approver, the Clerk’s Finance Department (Payroll) conducts
a time entry audit by cost center (location), utilizing the information provided by PBSD assigned staff.
Finance completes a time entry audit for all adjustments to prior period entries. If irregularities are noted,
Payroll notifies the County’s Human Resources Department (“HR”) of issues and/or concerns. The County’s
Human Resources will contact the PBSD to review and/or correct entries. Payroll completes the time entry
audit after Payroll has received a notification—typically by email, from Human Resources noting that
corrections have been made to SAP entries. Payroll initiates the “Time Transfer” process in SAP workflow
to complete the payroll process for the period.
The County’s Human Resources Department and Clerk’s payroll staff do not receive timecards and/or other
payroll forms. It is the responsibility of PBSD payroll assigned staff to review data input, reconcile physical
payroll forms to SAP entries, and ensure the accuracy of time entered into SAP. Finally, the physical
documents are stored at the PBSD Office and are to be retained according to State of Florida general records
schedules.
Observations
1) Failure to report leave hours by County staff within Systems, Applications & Products in Data
Processing (“SAP” or “financial system”) payroll financial system (SAP) may indicate
potential fraudulent activities.
Several County ordinances and procedures outline the code of ethics and standard of conduct to ensure
employees conduct their “employment duties in a manner that is free from conflicts of interest.” CMA #5311
Code of Ethics and Anti-Fraud defines one category of fraud as, “(i) the intentional misstatement of financial
information….” and defines the term fraud as, “h) Misrepresentation of information on documents (employment
history, timesheets, leave records, travel reimbursement requests, financial records, etc.) to cover missed time,
or attain unearned income….”
According to County policies and procedures, the misrepresentation of time on leave records, which includes
but is not limited to sick, vacation and personal time, fits into the definition of fraud. Internal Audit inspected
PBSD payroll forms for FY15 through FY18 and found that the Operations Analyst (timekeeper for PBSD)
failed to record a combined 208 hours of sick, vacation and personal time in the payroll system (SAP). A
comparison of “Request for Leave” forms to records entered in SAP demonstrate the Operations Analyst
(timekeeper) misrepresented information on leave records (which were not approved by a supervisor), and
subsequently recorded different hourly amounts in the payroll system, potentially to cover missed time. For a
time span of 3 ½ years the failure to record leave hours occurred in 14 different instances with the majority
happening in FY17 (10 times)—this occurred in 8 pay periods out of 26 pay periods or 31% for FY17.
The following chart summarizes a count of sick, vacation and personal leave hours self-reported and self-
recorded by the timekeeper for payroll periods from FY16 through FY18. As a result of the Operations Analyst’s
actions, the potential financial impact to the County and PBSD is $6,036 (see data on next page):
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The payroll records below pertain to pay period ending on 2/17/2017, highlighted in yellow (schedule in
previous page), for Operations Analyst (SAP#6455) in FY17:
Operations Analyst’s Request
for Leave:
Employee/Timekeeper
requested 40 hours of
vacation. Time requested was
not approved by PBSD
Pay Period 02/04/2017 to
02/17/2017.
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The timekeeper—as will be described further in Observation #2 and #3 of this report—has the opportunity to
enter her own time information in SAP, without prior inspection and/or approval from management. This lack
of oversight is exacerbated by the absence of proper review from the authorized approver (Operations Manager).
The timekeeper is in a position of trust, which requires the ability to safeguard the financial interests of the
County and not to use them for personal gain. Failure to record leave hours in SAP results in leave balances not
being reduced. The County pays out to the employee the remaining vacation balance upon retirement or
termination. Internal Audit noted that on 4/26/18, the timekeeper’s vacation balance was 438 hours. The County
allows employees to accrue and potentially cash out up to 440 hours of vacation. Every hour over 440 hours is
converted to sick leave, which does not have a cash value. Consequently, there is a potential incentive for any
employee to keep the vacation balance as close to 440 hours as possible to avoid losing cash out value.
Lack of management oversight and the failure to follow established segregation of duties may create the
opportunity for waste, fraud and/or abuse. This oversight was not provided by PBSD management staff. When
management and/or supervisors do not properly comply with policies and procedures, it creates internal control
weaknesses that may lead to concealing potential fraud. Furthermore, inaccurate leave records may impact the
integrity of the financial records reported by the County to external entities.
Timekeeper recorded only 16 hours (2 days) of Vacation in SAP Payroll System, but the Request for
Leave (previous page) reports a total of 40 hours vacation for pay period ending 2/17/2017. “Overview of
Absences” below does not show requested dates (2/6/17-2/10/17) as “Paid Vacation.”
Dates not recorded, as
“Paid Vacation” in SAP,
2/6/17 to 2/10/17
(40hrs).
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Recommendations:
The County Manager should review audit findings and take corrective action.
Approval of leave time should be made by the employee’s supervisor before the leave is taken. If leave
is not approved in advance, it should be reviewed for approval or disapproval as soon as reasonably
possible after leave is taken.
The misstated time should be corrected by BCC staff and rejected in SAP to ensure proper T&A
balances/records.
Management should complete a review of internal controls at PBSD.
Management should implement and adhere to strong internal controls with routine ongoing monitoring
to avoid any future misstatements and to detect fraudulent activities.
Management should review and approve payroll time records prior to entering data into the SAP payroll
system and validate time after information has been entered.
PBSD Management Response: Number 1) Failure to report leave hours
The County will investigate the failure to report leave hours by the PBSD timekeeper, and take corrective
action if there is evidence of intentional misrepresentation of leave hours. The FY 2018 county payroll of
PBSD is $1,483,000 for the 18 full-time employees. In addition, the Division coordinates payroll submitted
for 17 contracted day- labor positions totaling $552,150 or a combined payroll of $2,035,150.
Lack of necessary management oversight and consistency in the review and approval of biweekly payroll
and leave forms required immediate corrections. Misstated sick/annual leave has been corrected within
the SAP system to reflect actual balances.
2) Lack of PBSD Management oversight regarding payroll time entries and the payroll/time and
attendance approval process.
The Agreement between Dorrill Management Group, LLC, and the County identifies an “Administrator” whose
duties and responsibilities include supervising “the personnel employed by the PBSD in accordance with all
Federal, State and County laws, rules and regulations where applicable.” Additionally, the Agreement, also
requires the Administrator to “have an understanding of Florida County Government operations, good
management principles and skills…”
Internal Audit obtained document, “PBSD Organizational Chart FY 2016 (provided 4/11/18)”, from PBSD
Administrative Assistant that shows Neil Dorrill as the PBSD Administrator; below the Administrator’s line of
authority is the Operations Manager, who has a supervisory role over all employees at PBSD according to the
Organizational Chart and the County’s Human Resources Job Description.
Currently, PBSD does not have detailed written procedures, policy is dictated by the CMAs, regarding the T&A
entry and approval of the payroll process and payroll forms. Payroll forms (timecards, overtime and request for
leave forms) issued by the County have a signature block designated for the supervisor’s approval. Time entry
guidelines found in the County’s Human Resources SharePoint site instruct employees to [s]ubmit [payroll
documents] to their supervisor for review and approval.” Internal Audit interviewed the Human Resources
Director and verified that there is an expectation from County Management that all payroll documents require
review and approval by the employee’s supervisor in the corresponding signature block.
Internal Audit inspected and analyzed payroll the documents provided to verify review and approval by BCC
management of T&A entry records, overtime and request for leave forms of PBSD assigned employees. The
payroll documents consisted of all pay periods in Fiscal Years 2015 to 2017 and 14 payroll periods in 2018;
representing a total of 1,400 documents (payroll population).
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Of the 1,400 documents (payroll population) completed by employees over a 3 ½ year period, 77% were not
approved by a supervisor. In addition, the data revealed that out of the payroll population, 43% had not been
properly signed or attested to by the employee, and that 34% were not dated by the employee. Internal Audit
analyzed the payroll population data, in more detail. First by segregating the documents by fiscal year (FY),
and then by whether the records were completed prior to or after the start of this announced audit.
The following payroll records are demonstrative of the deficiencies discovered by Internal Audit for
99.7% of records inspected for FY17:
PBSD Timecard does not have
approval on “Supervisory signature”
block and is missing the following:
•Cost Center
•Division
•Department
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PBSD Overtime Approval Form does
not have approval on “Approved by:”
signature block. The Pay Period is also
incomplete.
PBSD Overtime Approval
Form: Pay period incomplete.
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PBSD Request for Leave form is
missing the following:
•Request Date
•Department
•Position
•Employee signature
•Approval on “Authorization”
signature blocks.
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The following graph depicts the payroll population analysis findings:
It is relevant to point out that the percentage of unapproved payroll documents was 60.3% in FY 2015. At this
time both the Operations Manager and Division Director had been in supervisory roles at PBSD for over a year.
The percentage of unapproved records sharply increased to 100% by November of 2017(FY18), just prior to
the start of this announced audit. However, once PBSD assigned staff were notified that Internal Audit would
be performing an observation and documentation of their payroll process, the percentage of records without
signatures decreased sharply (86.5%). In fact, only 13.5% of records did not have evidence of approval in the
subsequent pay periods. None of the records inspected had the required Administrator’s signature, not even the
Operations Manager’s payroll documents, despite the fact the Division Administrator is their direct supervisor,
according to the PBSD organizational chart.
Additionally, the Clerk of the Circuit Court and Comptroller’s (“Clerk”) analysis identified two additional
deficiencies depicted in the graph above. A large percentage of documents were neither 1) signed; nor 2) dated
by PBSD employees. The percentage of unsigned and undated documents by the employees remained greater
than 28% for the entire review period. Since the percentage of unapproved payroll documents decreased sharply
after the audit started, the expectation by Internal Audit was that the incidence of these two issues (unsigned
and undated documents) would also decline, however this was not what the data showed. The percentage of
unsigned and undated documents remained at about 30% after the audit began, and it's indicative that the
supervisor may be approving the payroll forms more frequently, but not necessarily reviewing the information.
Documentation contained in the Operations Manager personnel file indicates that he completed the “SAP Time-
Keeper/Approver Training Request Form” on 9/5/14. The Human Resources Director (HR Director) explained
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to Internal Audit that the training involves an instruction on procedures and responsibilities involved in the
review and approval of time in the payroll system (SAP), which includes reconciling information between
physical payroll forms and time entered by the timekeeper (Operations Analyst).
During interviews with PBSD assigned personnel, Internal Audit inquired how often the Administrator comes
to the office, where payroll records are stored. County staff i ndicated that they “rarely ever see the Administrator
in the office.” There is specific language in the Agreement that compels the Administrator to “supervise the
personnel [PBSD assigned staff]…according to County laws, rules [CMAs] and regulations.” Given that the
documentation to supervise personnel—related to payroll—is stored at PBSD’s Administrative Office (Office)
the Administrator’s failure to routinely be present in the Office hinders his ability to review and approve payroll
documents. Additionally, the Administrator’s lack of presence, in the Office, has other potential negative
repercussion to the Division, which may include not detecting conflicting information, inaccurate entries, or
fraud.
Recommendations:
County management should establish policies and procedures necessary to appropriately review and
approve the T&A entry process; and create a policy and procedure for signing, reviewing, and assigning
accountability for recording and maintaining T&A data. Moreover, the person recording the T&A data
should be required to acknowledge responsibility for the accuracy of the recorded data.
If the Administrator cannot or will not allot time to review and approve payroll forms the County
Manager should establish a designee that will fulfill this role.
PBSD Management should ensure the person recording the T&A data be required to acknowledge
responsibility for the accuracy of the recorded data.
PBSD Management Response: Number 2-5) Lack of Consistency in Management oversight regarding
payroll entries and leave approval.
As previously noted PBSD has developed a formal payroll practices procedure which outlines all required
employee, supervisor and manager required signatures. Since 1988 PBSD has had 3 part- time contract
Administrators who oversee the Division within the County Managers Department. Historically, the
Administrator has not reviewed or approved biweekly payroll as part of the scope of services. Effective
June 2018 the current Administrator, Neil Dorrill will now review and approve final payroll as an
additional safeguard.
Additionally, one deficiency noted on page 17 that Lisa Jacob was not the appropriate supervisor who
authorized a Request for Leave form is incorrect. On July 16, 2014, Ms. Jacob was the "Acting
Operations Manager" upon the retirement of the former employee and was the appropriate Supervisor.
Upon a request senior staff met on approximately Aug. 1, 2017 to review and outline the eligibility and
accounting of compensatory time. Compensatory logs of accrual and usage were kept electronically but
not with the SAP payroll module and approved. Changes as previously noted have been incorporated
within the SAP system.
Internal Audit Response to PBSD Management Response:
The payroll documents should have been reviewed and approved by a Supervisor or their designee,
however the majority of payroll documents inspected by Internal Audit showed no evidence of approval
by a Supervisor nor their designee.
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Additionally, the County’s Contracted Administrator is responsible for supervision of employees,
pursuant to Agreement #14-6230 “Management Services for Pelican Bay Services Division-Exhibit A
Scope of Services.”
Internal Audit requested evidence of approval of earned compensatory time from the Operations
Manager e.g. email, meeting request or any other evidence that the compensatory time was approved
prior to employees using compensatory time instead of other types of leave. The Operations Manager did
not provide any such evidence, but reiterated several times that the compensatory time was approved
verbally by the Division Administrator.
3) Failure to implement internal control segregation of duties (“SoD”) for payroll/time and
attendance (“T&A”) reporting entries and the management approval process of these T&A
systems.
Organizations should strive to have effective internal controls, a key aspect is the proper segregation of duties
(“SoD”). Segregation of duties commonly means that a process (e.g. payroll process) is divided among several
people in order to reduce the risk of errors and inappropriate or fraudulent actions, i.e. to prevent any one person
from using the organization’s resources for their own personal gain. SoD is a basic building block of sustainable
risk management and internal controls for a business unit.
It appears PBSD is not following proper segregation of duties to prevent, detect, and control errors and
inappropriate or fraudulent actions. According to actions observed by Internal Audit during the documentation
of the payroll process, the timekeeper (PBSD Operation Analyst) reviews “completed” employee payroll forms
and enters the requisite data into SAP. Subsequently, the authorized approver in SAP (PBSD Operations
Manager) receives an email from the timekeeper that “payroll is ready for approval.” In discussions between
Internal Audit, the timekeeper and approver it appears that the authorized approver (Operations Manager) does
not observe and validate the physical payroll forms when reviewing, approving, and releasing the time entered
in SAP, therefore he does not have the information required to test and/or corroborate information entered by
the timekeeper (see also Observation #2 for lack of evidence of approval).
When proper SoD are not followed, a single individual has the opportunity to execute end-to-end processing of
a transaction—payroll and T&A, this indicates complete control over the multiple steps within a single business
process. As a result, the timekeeper can complete the whole process – from initiation and authorization to
approval and execution – without any checks or balances. This type of systemic problem can occur in lean
workforces or departments where job responsibilities are shared (i.e., anyone can serve as a backup for anyone
else). Consequently, it appears the only person in actual control of the PBSD payroll process is the timekeeper.
Internal Audit determined that in FY 2107, 99.7% of the payroll population lacked evidence of supervisor
approval. When compounded with the lack of proper review of physical payroll forms, which may that there
are no actual segregation of duties being implemented within the Division’s payroll process. Additionally,
discussions with the backup/alternate payroll staff (Administrative Assistant) revealed that during the time she
has been the payroll backup person (about 2 ½ years), she has “only entered payroll twice even when [the
timekeeper] is on vacation.” The Administrative Assistant has extensive experience with payroll; having worked
with the County since 2005 and completed timekeeper training procedures.
The internal controls relating to the segregation of duties, with regards to the timekeeping and payroll process,
are not being followed by PBSD assigned staff. This is potentially due to lack of oversight by PBSD
Management and failure to document and enforce proper procedures. The current approach to the time entry
and approval process may lead to errors and may prevent detection of fraudulent activity.
Recommendations:
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The Division should adhere to a policy of segregation of duties for the T&A entries, review and approval
processes.
The payroll alternate/ backup timekeeper (PBSD assigned staff member) could be routinely included in
the T&A process, to strengthen control activities, therefore enhancing the segregation of duties for the
payroll process.
4) Lack of clearly defined supervisory roles, responsibilities, and processes may provide the
basis for illicit practices and structural conflicts of interest.
Pursuant to the Agreement, and as described in Observation #2 of this report, the Administrator is the supervisor
of PBSD assigned staff. Accordingly he may delegate responsibilities to the PBSD assigned staff if appropriate.
According to the PBSD Operations Manager’s written position description maintained by the County, the
essential functions of this position include: “[s]upervises, directs, and evaluates assigned staff…,” therefore the
Administrator may delegate the responsibility to supervise assigned employees to this job classification. On the
other hand, the Operation Analyst’s position is described as a “supporting role in the management of a
division…but without supervisory or managerial roles.”
The 2016 PBSD Organizational Chart (“org chart”) illustrates the internal structure of the PBSD organization.
The org chart depicts the BCC oversight of the PBSD Board and the County Manager, who is the direct
supervisor of Neil Dorrill-PBSD’s Division Administrator. Following the organizational structure, below the
Division Administrator is the Operations Manager and the employees he oversees. Moreover, PBSD’s org chart
identifies the Operations Manager as the supervisor of the Project Manager Associate “Project Manager”,
Operations Analyst, and Field Supervisors. The Operations Analyst is identified only as a supervisor of the
Administrative Assistant.
During Internal Audit’s interview with PBSD assigned staff the Operations Analyst and Operations Manager
described their roles in the payroll process. Operations Analyst stated, “I review and approve Barbara’s
[Administrative Assistant] timecards and requests for leave, and Marion [Operations Manager] reviews and
approves the rest of the employees.” Internal Audit specifically inquired about who approves requests for leave
for the Operations Manager and she answered, “I approve Marion’s request for leave and he approves mine”.
A subordinate approving a supervisor’s payroll forms prompted internal Audit to inspect other payroll
documents for evidence of lack of clearly defined supervisory roles.
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Internal Audit obtained an understanding of the PBSD staff roles (org chart above) and inspected payroll
documents to verify payroll information is reviewed and approved by the County’s designated supervisors.
Internal Audit noted the following inconsistencies:
Operations Analyst approved Project Manager’s request for leave (they are both at the same level in
the org chart);
Operations Analyst approved Administrative Assistant’s timecard and request for leave (Operations
Analyst job description does not specify supervisory roles);
Project Manager approved Field Employee’s request for leave (Project Manager is not a supervisor
according to the Org. Chart);
Operations Manager did not approve Project Manager’s and/or Operations Analyst’s request for leave
or compensatory time (Operations Manager is the direct supervisor according to the Org. Chart);
Division Director did not approve Operations Manager’s request for leave and/or compensatory
time (Division Director is the direct supervisor according to the Org. Chart);
Division Director did not approve any PBSD employee request for leave and/or compensatory time
(Division Director supervises all employees according to Org. Chart and Agreement).
Based on the documents inspected and statements obtained from PBSD, the Division is not following
supervision guidelines per the Agreement or their own Organizational Chart. This is evident by the statements
by both Operations Analyst and Operations Manager that they review and approve each other’s leave requests.
In addition, Internal Audit inspected documents showing both the Operations Analyst and Project Manager
approving leave requests for employees not under their supervision. Finally, the Operations Analyst is
authorized to approve payroll documents for the Operations Manager even though she is his subordinate.
The payroll records below pertain to pay period ending on 11/10/2017 (FY18-Before Audit started):
PBSD Project Manager
PBSD Administrative Assistant
PBSD Operations Analyst
PBSD Operations Analyst
PBSD Request for Leave: Operations
Analyst approving request slip for
PBSD Request for Leave: Operations Analyst
approving request slip for Project Manager
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The official public records above show PBSD management is not clearly defining roles and responsibilities.
Lack of clearly defined roles may provide the basis for illicit practices and structural conflicts of interest e.g.
performing the duties of a “supervisor” (Operations Analyst) for a supervisor (Operations Manager). This lapse
in following the organizational structure of PBSD Division may further result in situations where individuals
are not held accountable, if it is unclear who is mandated to evaluate and/or impose sanctions.
Recommendations:
Management should define supervisory roles according to County classifications and functions.
PBSD and the County Manager director should provide oversight and guidance to employees
regarding County practices and procedures.
PBSD Request for Leave Forms: Document A shows Operations Manager approving request slip for Field
employee, demonstrating an appropriate supervisory role for his position. However, Document B shows
Project Manager approving a request slip for a Field employee demonstrating a supervisory role that is not
represented in the PBSD org chart. Additionally, the forms are missing the following items: Request Date,
Pay Period, employee signature, Date, Authorization Date.
PBSD Operations
Manager‘s signature PBSD Project Manager’s
signature
Document A Document B
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5) Employee earned and used compensatory time was not consistently approved by PBSD
Management and/or recorded in SAP.
County policies and procedures (CMA #5360-Leaves of Absence and CMA #5341-Compensation
Administration) provide that for exempt employees (non-hourly), compensatory time may be given in place of
overtime “with the approval [in advance] of the Department Director and the Division Administrator.”
Although, County guidance does not specify any particular method for tracking compensatory time “comp time”
balances for exempt employees, the payroll system is able to track earned and used compensatory time, and
there is a “Board of County Commissioners Compensatory Record” form in the Human Resources intranet
available for employees to download.
Internal Audit inquired about the procedure at PBSD for granting, approving and tracking comp time. The two
County PBSD assigned staff that regularly accumulate comp time are the Operations Manager and the Project
Manager. The Project Manager completed the “Board of County Commissioners Compensatory Time Record”
form to record time comp earned and used in FY16 and FY17, this information was entered in SAP payroll
system by the timekeeper. In contrast, the Operations Manager self-tracked comp time in an Excel spreadsheet,
and it was not recorded in SAP payroll system by the timekeeper. Regarding the approval process, the
Operations Manager disclosed to Internal Audit that he had received a verbal approval by the PBSD
Administrator on the 179 hours (approx. 22 days) of comp time recorded in his Excel spreadsheet for FY17;
there was no evidence of this approval (e.g. signature, emails) in the documentation provided to Internal Audit.
Likewise, for the Project Manager, the approval on the comp time record form was noticeable absent.
Project Manager Page 1 of FY17 comp time record. The record shows employee tracking
“Comp Hours Used” and “Comp Time Balance”. However, the record was not approved
by a Supervisor.
Approval
Noticeably absent
Purpose of compensatory time
requested.
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Internal Audit requested an updated comp time tracking tool from PBSD Operations Manager to verify and
recalculate the comp time earned and used as of 5/16/18. The Operations Manager provided a spreadsheet with
a comp time balance of 113 hours. CMA 5360, clearly states that “[a]ny unused compensatory time balances
will not be carried forward if not used by the end of the calendar year.” Recalculation by Internal Audit of the
comp time hours earned and used, using the County’s guidelines and procedures, yielded a balance of 2 hours
as of 5/16/18. Therefore, failure to reset the balance to zero hours at the beginning of calendar years 2017 and
2018 results in an overstatement of the Operations Manager comp time earned/used balance (see results below).
Operations Manager comp time spreadsheet (partial view of page 1 out of 5 pages). The
spreadsheet does not identify the purpose of the hours worked, and there is no evidence
of supervisor approval.
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Additionally, CMA 5360 states that “[r]equests for compensatory time must be submitted in writing on the
request for leave form and must be approved by the Department Director and/or Division Administrator.” The
fact that neither the compensatory time earned and/or used is approved shows a failure of oversight by PBSD
Division Director. This lack of management oversight, which is discussed in Observation #2, compounded with
the failure to record comp time creates inconsistent and even more problematic inaccurate tracking of eligible
comp time among County staff. This practice may lead to unapproved leave and comp time taken in lieu of
vacation, which results in vacation balances not being appropriately reduced. Vacation time balances are owed
as a financial payout to employees upon retirement or termination of employment, therefore it is an expense
that should be accurately tracked and maintained by the County.
Recommendations:
Employees should accurately record compensatory time and follow County practices.
Management should use and approve compensatory time forms.
County Management should provide oversight to ensure uniform recording of compensatory time.
PBSD should record balances and track compensatory time in the SAP payroll system.
6) Original T&A entry documents were altered and changes were not properly approved by
employees, thereby decreasing the likelihood that accurate T&A information is recorded and
reported in SAP for the purposes of computing pay and leave time.
County’s Human Resources Department (“HR”) timekeeping instructions state that “[a]ll hourly (non-exempt)
employees need to complete a timecard and leave slips on their own every pay period and submit to their
supervisor for review and approval.” Furthermore, under the Fair Labor Standards Act (FLSA) covered
employers must keep certain records for nonexempt employees, including hours worked each day and total
hours worked each workweek. Under the FLSA, however, employers—not the employees—have the ultimate
responsibility to maintain these records. For this reason, employers have the ability to change employee time
records but must ensure that the records accurately reflect time actually worked.
Records inspected, as part of the payroll population analysis described in Observation #2, indicate that PBSD
assigned staff routinely modify documentation for PBSD field employees. The modifications include, but are
not limited to, modifying hours worked, crossing out information and adding dates to payroll documents
(timecards, RFLF etc.). There is no evidence in the payroll documents of employees’ review or approval.
Internal Audit discussions with the Operations Analyst (timekeeper and reviewer) confirmed that she added
dates/pay periods and made modifications to original employee payroll documents. The modifications were not
initialed by the employee to accept any changes made to their payroll forms. Furthermore, for other payroll
documents it could not be determined who altered the documents or the reason for the alteration because the
employee and/or the supervisor did not initial the changes.
When timecards are altered without proper approval or authority, the integrity of the timecard/payroll forms
and its information is compromised. Unauthorized alterations circumvent the controls in place that ensure the
accuracy and legitimacy of reported time. This may cause misrepresented time within the payroll system, the
under/over payment to an employee, and/or discrepancies in the submitted timecards and payroll forms.
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Payroll records were altered and not initialed by an employee and/or supervisor:
Recommendations:
Policies and procedures must be consistently followed by supervisor and employees.
Supervisors should review all timecard changes with the employee and the employee should initial all
changes.
When changes are made to a T&A record, PBSD Management must keep the original record, line
through the error on the original time record, make the correction, and have both BCC management and
county staff sign and date. Documentation should be established to note the reason for any changes.
Timecards with changes and without the employee's initials should not be entered in the payroll system
until employee has reviewed/initialed the changes.
To minimize liability, T&A records should be maintained in such a way that a third party, such as an
auditor from the Department of Labor, can tell that the records, including any changes, are genuine and
reflect the time actually worked.
PBSD Management Response: Numbers 6-9) Time sheet notations or corrections by the Operations
Analyst to clarify daily time or dates to minimize delays in payroll processing have been changed as
recommended by the Office of Corporate Compliance and Internal Review. Additional training and
consistency in daily accounting and employee signatures by Groundskeepers will be implemented. The
Operations Analyst will initial any changes or corrections to identify the source of the change.
The red ink handwriting
is not the same as the
blue ink used by the
employee in the payroll
documents
PBSD Timecard missing the following: Cost Center,
Division, Department, Employee signature sand
Supervisor signature.
PBSD Overtime Approval is missing the
following: Pay Period, Employee signature sand
Supervisor signature.
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7) Employees failed to consistently complete and/or sign timecards, requests for leave and/or
overtime pay requests.
As discussed in Observation #6, timekeeping instructions provide that employees should complete a timecard
and leave slips (if requesting leave for the period), and submit to management for review and approval.
Internal Audit inspected payroll documents (timecards, request for leave and overtime forms) to assess whether
employees follow timekeeping instructions and procedures. The payroll documents inspected contained the
following omitted/incomplete information on PBSD employee payroll documents:
1. Missing date or date without a corresponding year;
2. Missing pay period information;
3. Cost center and/or Division;
4. Missing employee signature or name;
5. Missing approval by supervisor and/or other authorizers;
6. Missing employee SAP ID/Last SSN;
7. Pay period or date information completed by someone other than the employee;
8. Missing signature or initials acknowledging changes in the documents; and
9. Request for leave hours that do not match timesheet information.
The following examples represent observations mentioned above and numbered accordingly:
(2)
(1)
(2)(4)
(1)
(6)
(5)
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As documented in Observation #2, lack of management review and approval may be a contributing factor to
omitted/incomplete information. When management does not review information, it’s not able to issue
corrective actions to employees upon submittal of their payroll documents. Proper training on how to properly
complete payroll forms is crucial for accurate and complete payroll records that reflect employee time worked
and leave requested. Best practices dictate that employees should declare, through an attestation statement, that
they have accurately recorded hours worked, meals and rest periods taken and that corrections are made before
the employee signs the attestation.
Additionally, omitted and/or incomplete information submitted to the timekeeper may create discrepancies
between payroll records and SAP payroll system resulting in under or overpayment of hours, leave not entered
on the dates requested and unattested information entered into the SAP payroll system. Furthermore, accurate
and complete payroll records are essential for reporting information to taxing authorities and demonstrating
statutory and regulatory compliance.
Recommendations:
All non-exempt employees should timely and accurately complete timesheets and payroll records in
their entirety.
Training should be provided to all employees on how to properly complete payroll and T&A documents.
Corrective action, including progressive discipline and/or termination should be considered for
(3) (6)
(5)
(5)
(7)
(2)
(5) (1)
(9)
(9) (8)
An employee recorded 10 hours of work on their timecard but requested 2 ½ hours of Personal Time (See #9
below), therefore he only worked 7 ½ hours. The timekeeper corrected the hours without the employee
acknowledging the change (see #8 below).
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employees that do not adhere to time recording procedures.
Mandate that all PBSD assigned staff complete a T&A attestation. This attestation should include
language that the employee affirms that the T&A data is true, correct and accurate. This attestation
should be verified by the timekeeper or supervisor, that the recorded information is true, correct, and
accurate to the best of her knowledge. Final approval should be noted by PBSD Management ratifying,
or concurrence to actual T&D data. This approving official will acknowledge awareness and
understanding of his/her responsibility when approving T&A data.
8) T&A Data are Not Complete and Accurate: employee time entries on payroll forms do not
reconcile to SAP payroll for multiple payroll periods.
The County provides training to staff that participate in the payroll process and enter information in SAP Payroll
System. Training materials are located in the County’s intranet and specify the responsibilities and tasks to be
performed by SAP timekeepers, SAP approvers, managers/supervisors and HR Department staff. The
timekeeping and approval guidelines have segregated the “tasks” of the timekeeper and managers/supervisors
(approver) in order to minimize error and ensure that time entered is representative of the work performed by
County employees.
Internal Audit requested documentation from the HR Director to ensure that the PBSD timekeepers and
approvers had completed SAP Time-Keeper/Approver training. According to the documentation obtained, the
Operations Manager completed the SAP approver training on 9/5/14. On the other hand, the Operations Analyst
did not have such documentation in her personnel file. The Operations Analyst assured Internal Audit that she
has been trained by the previous PBSD Operations Manager, in addition there was an email from an HR
representative on 10/10/14 stating that the Operations Analyst is “the primary approver” at PBSD. Internal
Audit was not able to corroborate if the timekeeper had completed the SAP Time-Keeper training.
Internal Audit examined and compared 1,400 payroll documents, provided to us by PBSD assigned staff, to
time entered in the payroll system by PBSD assigned staff to verify the consistency and accuracy between the
information on payroll documents and information recorded in the SAP payroll system. Internal Audit found
numerous inconsistencies across multiple payroll periods. The analysis identified 37 inconsistencies between
payroll records and SAP payroll entries. The percentage of discrepancies per employee are shown below:
PBSD Discrepancy Percentages between Payroll Documents and SAP Payroll
System
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The analysis shows that the Operations Analyst’s payroll discrepancies account for 41% of all discrepancies
found, and that the Sr. Field Supervisor is second with 19%. Inconsistencies involved 27 instances of request
for leave hours that were not entered into SAP. The other 10 inconsistencies involved Request for Leave forms
and timecards with hours that did not reconcile to entries in SAP, e.g. documents that appeared altered, missing
payroll forms, discrepancy between request for leave and timecards hours etc. The risks to the County are that
leave hours taken and not recorded in SAP results in the overstatement of leave balances. Additionally, non-
reconciling documentation affects the completeness and accuracy of the financial records.
Internal Audit notes that the rate of inconsistencies overall was only 3% (out of 1,400 documents), so it is
significant that one employee (Operation Analyst/timekeeper), who has the ability to enter and record her own
time, had discrepancies 41% of the time (out of 37 discrepancies). Based on the proportion of errors with regard
to the Operations Analyst’s time and the findings in Observation #1, there is a high probability that the
discrepancies are indicative of potential fraud and not simple keying errors. The vacation balance is accrued
and paid to the employee upon retirement or termination.
Recommendations:
Review and correct leave balances for all employees affected by the errors.
Strengthen internal controls and procedures regarding payroll process.
9) The timekeeper provided altered payroll records to Internal Audit in response to a request
for supporting documentation.
During fieldwork visits to the PBSD Office, Internal Audit scanned all payroll documents present at the Office
in two separate occasions, 12/8/17 and 4/5/18. However, during the data analysis of these records, which were
discussed in Observation 8, Internal Audit noted hours recorded in SAP payroll system, for some PBSD
assigned staff, did not have corresponding physical payroll records. On 4/19/18 Internal Audit requested these
missing payroll records from the Operations Analyst (PBSD timekeeper). Internal Audit received a response,
on 4/23/18, from the Operations Analyst regarding the missing records, which included three different
attachments for three different PBSD assigned staff. Upon Internal review of the documents, Internal Audit
noted inconsistencies (e.g. different handwriting on documents, typed documents without signatures) on the
physical payroll records. Consequently, Internal Audit requested a meeting with the Operations Analyst to
clarify these inconsistencies.
The following describes the various inconsistencies identified on the physical payroll documents and the
responses provided by the Operations Analyst (responses highlighted in blue).
Employee #4739: Name, leave dates, hours requested and notes on Request for Leave form (RFLF)
exhibited a different handwriting and color ink than the employee’s signature and date. Operations
Analyst admitted to adding notes and hours requested, but did not know who wrote the employee
name and/or leave dates on the form. See Documents 1 and 2 on the next page.
Employee SAP#1518: Timecard, Overtime Approval Form and RFLF were typed except for employee
signature and pay period information. Operations Analyst admitted to adding pay period
information, but did not know why the forms were typed instead of handwritten. See Documents
3 and 4 on the next page.
Employee SAP#1518: RFLF had format inconsistencies, and did not appear to be an approved RFLF
from the Human Resources intranet site. Operations Analyst stated that the employees provide her
with the forms already completed because “employees have access to two computers in the Field
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Office so the origin of the request for leave form is unknown [Operations Analyst].” See Documents
5 and 6 on the next page.
A more detailed description of the discrepancies encountered in the physical payroll documents provided
by PBSD Operations Analyst follows:
Document 1 and 2 were received by Internal Audit on 4/19/18. Operations Analyst stated that she had filled
in notes and hours requested (purples boxes). Moreover, Operations Analyst recognized the PBSD assigned
staff handwriting on Document 1 and 2 (red boxes). However, on Document 2 only the signature and date
was filled by this employee (red boxes). The other areas in the form were filled by the Operations Analyst
(timekeeper) and someone else that could not be identified. Additionally, Document 1 and 2 have missing
items including the supervisor approval and requested date, pay period etc., blue boxes below.
Document 1 Document 2
Operations Analyst handwriting, as validated
by PBSD Operations Analyst
PBSD staff handwriting, as validated
by PBSD Operations Analyst Unidentified staff handwriting
Unidentified staff handwriting
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Document 3 and 4 were received by Internal Audit on 4/19/18. On Document 3, Operations Analyst filled
in “Period Ending” information for PBSD Field employee, and other than the employee signature the
timecard was typed and not filled in by hand as has been more commonly observed in the majority of payroll
documents. Document 4 is completely typed and without an employee signature, therefore it’s not possible
to discern whether the documents were completed and attested by Mr. Montero or another staff member.
Like previous documents, Document 3 and 4 have missing items including the supervisor approval and
other items e.g. requested date, pay period red boxes below.
Document 5 (Request for Leave Form “RFLF”) received by Internal Audit on 4/19/18 did not conform to the
same format as the majority of the RFLFs inspected by Internal Audit during this pay period (Pay Period Ending
“PPE” 9/2/16). In order to have a larger sample group to compare the RFLF received (Document 5) to other
RFLFs, Internal Audit inspected RFLFs from the prior and subsequent pay periods. In PPE 8/19/16, sixteen
(16) RFLFs had an approved format revised by the County (Document 6) and one (1) did not. In the subsequent
pay period (PPE 9/16/16) all RFLFs (15) had the format approved and revised by the County. Operations
Analyst stated that PBSD field staff have access to two computers and turn in RFLF themselves. Operations
Analyst (timekeeper) does not verify that they are the County approved and revised RFLFs. Additionally,
Document 5 and 6 have missing items including the supervisor approval and other items e.g. requested date,
pay period (see red boxes below).
Document 3 Document 4
No employee or
supervisor signature.
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Internal Audit observed that documentation that is required to maintain accurate and complete payroll records
is not consistent and may indicate that the records received on 4/19/18 were not appropriately and/or timely
filled by the employees and/or even filled by the employees themselves. Internal Audit cannot determine the
authenticity of records provided by PBSD assigned staff. The County designs payroll forms in order to obtain
relevant information required to fulfill County policies and procedures and State and Federal laws and
regulations.
Consequently, failure to provide the most current payroll forms and to review that the employees complete them
may lead to incomplete information, and in the worst case to fabrication of documents by County staff.
Furthermore, the responsibility to ensure that employees are provided with the training necessary to follow
County policies and procedures rests on PBSD management.
Recommendation:
PBSD Management should ensure that PBSD assigned staff utilize the County’s Human Resources
approved and revised payroll forms as they should contain the required information, vetted by Human
Resources, to ensure completeness according to county policies and procedures.
PBSD assigned staff should complete their own payroll forms and approve changes to the information
provided to the timekeeper.
PBSD Management should provide training to employees that underscore the importance of filling out
payroll documents accurately, and require attestation statements for the hours worked and hours
requested for leave.
Document 6Document 5
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10) County staff did not complete Performance Evaluations for PBSD assigned staff for calendar years
2015 and 2016.
According to CMA 5319, it is the policy of the County to regularly assess and monitor employee performance.
Moreover, annual evaluations (12 months from a review date) are the primary basis for merit increases for all
employees in the County.
There are several “activities” involved in the County’s performance evaluation process. First, the HR
Department is responsible for initiating the notification process for all annual performance evaluations. Second,
the Supervisor is in charge of implementing the action plan and monitoring and assessing each employee’s
performance. Third, “[t]he Division Administrator’s office is responsible for forwarding the completed
performance evaluations to the HR Department.” Finally, upon receipt of the completed evaluations the Human
Resources representative signs the performance evaluation, and incorporates it in the employee personnel file.
During the performance of the scope of our audit it came to Internal Audit’s attention that PBSD assigned staff
was not completing performance evaluations (PEs) in a timely manner. The HR Department provided Internal
Audit with all PBSD assigned personnel files for inspection. Internal Audit noticed that the majority of PBSD
assigned staff personnel files did not have performance evaluations for worked performed in 2015, 2016 and
2017. Contrary to guidance established in CMA 5319, the HR Director and HR Employment Operations
Manager stated that “the evaluations could be at the Division’s Office, and that there isn’t a requirement that
they turn in the completed PEs to the HR Department to incorporate in the employees’ personnel files.”
Thus, Internal Audit contacted PBSD Operations Manager and Operations Analyst to request all PBSD assigned
staff PEs for 2015, 2016 and 2017. Internal Audit received zero (0) evaluations for 2015 and 2016. However,
the Operations Manager provided thirteen (13) 2017 PEs in various stages of completion, and stated “that the
other evaluations are still being completed by the employees and reviewed by Neil [PBSD’s Division
Administrator]” as of 5/10/18.
Internal Audit inspected the PEs documentation (provided by HR and PBSD) and employee start and
termination records in SAP. The analysis indicates that for 2015 only one (1) or 7% of PBSD assigned had
completed a PE—completed by the County’s Public Services Department, the department from which the PBSD
assigned staff had transferred from in late 2015. In 2016, 0% of PBSD assigned staff completed PEs. Lastly, in
2017 thirteen (13) PEs had been completed by PBSD assigned staff and the remaining PEs were in various
stages of completion e.g. to be completed by employee, reviewed by supervisor and/or Division Administrator.
See results of PEs analysis below:
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This information taken together with the documentation obtained during our HR fieldwork demonstrates that in
2015 and 2016 PBSD management did not properly monitored and assessed employee performance.
Furthermore, for PEs related to calendar year 2017, the HR Department had sent a notification to the PBSD
Operations Manager with the following message (supervisor according to Org chart): “Completed TDPR
[Talent Development Plan Review] documents are due to HR (hard copy and e-mail) no later than September
1, 2017.” Consequently, Supervisors and the Division Administrator did not follow proper procedures to ensure
evaluations were completed on time, and routed through the chain of command to be incorporated in employees’
personnel files.
Internal Audit noted that the new “performance evaluation” format for 2017 is called Talent Development Plan
Review Form or TDPR. This term, TDPR, does not appear in CMA 5319 “Performance Evaluations”. This
discrepancy regarding terminology used to describe performance evaluations may lead to departments, in the
County, not understanding that the completion of TDPRs follow the guidelines specified in CMA 5319.
Performance evaluations are an important component of the County’s commitment to regularly assess and
communicate performance expectations to County employees. Furthermore, without employee performance
feedback, the County may be exposed to potential legal liability from employee termination.
Recommendations:
PBSD management should follow County policies and procedures related to PEs completion for each
calendar year.
Include completion of performance in the supervisors’ performance expectations and/or Division
Director’s scope of work in future County agreements.
Ensure there is consistent language used to describe performance evaluation throughout county policies,
procedures and/or other documentation.
Specify in County policies and procedures a reasonable time period for PEs to be completed and define
what constitutes a reasonable time period.
The County’s HR Department should periodically review department statistics to identify departments
that have a low completion rate of PEs and recommend corrective actions.
PBSD Management Response: Number 10)
The County revised its merit based pay system in 2015 to reflect general cost-of-living adjustments. In
2017, the County conducted a major overhaul of its evaluation process to a new computerized platform.
All staff evaluations are now complete.
Internal Audit Response to PBSD Management Response:
Internal Audit agrees that all 2017 performance evaluations should be completed for all PBSD assigned
staff, however the 2015 and 2016 performance evaluations were not completed by PBSD management,
according to policy. The County revised pay in 2015 is not relevant to the finding regarding failure to
complete performance evaluations for 2015 and 2016.
Addendum: Failure to change leave hours within SAP, according to recommendations made by
the County’s Corporate Compliance & Internal Review staff, may lead to errors and/or
misstatements presently and in the future.
On June 15, 2018 W. Neil Dorrill, PBSD Administrator issued a “Memorandum”, to the County Manager, in
response to the observations and findings in Draft Report 2018-4 Payroll Audit Pelican Bay Services Division
to be issue on 7/10/18 (“Audit Report”).
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The response stated that “Internal Audit 2018-4 correctly identifies numerous deficiencies in the processing and
validation of timesheets, leave requests….” and that “[m]isstated sick/annual leave has been corrected within
SAP system to reflect actual balances.” Additionally the response asserts that the County’s Corporate
Compliance & Internal Review and HR had been engaged “to assist in addressing the aforementioned
deficiencies.”
Internal Audit inspected the changes made in SAP payroll system by the PBSD timekeeper (Operations
Analyst), and subsequently approved by the Operations Manager on 6/18/18. The changes appeared to have
been made to remedy the deficiencies identified in the Audit Report. As of 6/25/18, there were several changed
SAP entries with an inappropriate code (Holiday code instead of Sick/Vacation code) and two SAP entries were
not changed and/or “corrected”.
The following dates had an inappropriate code or were not “corrected” in SAP. SAP #6455 is assigned to the
Operations Analyst.
Internal Audit noted that according to the PBSD management response, “Behavior Action Plans” have been
created for the Operations Analyst and the Operations Manager, and that there is an ongoing investigation as to
the intentionality of the “misstated sick/annual leave” entries within SAP. Therefore, the Operations Analyst
and Operations Manager changing and approving their “misstated” SAP entries without the completion of
“supplemental training” or approval in SAP from the PBSD Administrator may lead to more errors and/or
misstatements within SAP payroll system, presently and in the future.
Addendum Response from Management:
Management has been made aware of the above-described discrepancies and will take appropriate action.
Conclusion
Observations and the review of PBSD payroll documentation indicate a systematic lack of supervisory and
management oversight over the payroll process and related documentation. Without review of T&A documents,
the County is exposed to potential errors, fraud, abuse, loss, liability and possible wage and hour lawsuits.
Immediate action is needed to protect County resources and correct the time entry and submission process.
An Audit does not relieve management of their responsibilities. It is the ultimate responsibility of County
Management to understand and implement the proper processes and proper controls to comply with County
Florida Statutes, County CMAs, and Division Policies to limit the risk of fraud, error and misappropriation of
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County assets. The Clerk may suggest recommendations in audit reports, but it is the responsibility of
management to formulate and implement sufficient internal controls.
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