By LEVI PASCHER
Fulton County Express
JOHNSTOWN – A recent state comptroller’s audit of the city addressed payroll problems related to insufficient timekeeping records and lack of oversight from management positions.
The audit states the common council’s lack of comprehensive written policies and procedures for payroll processing has resulted in the lack of proper management oversight and insufficient timekeeping records.
The audit conducted by Comptroller Thomas P. DiNapoli’s office states although testing did not reveal any material discrepancies, “inadequate internal controls increase the risk of the city making unauthorized payments or employees receiving pay for unauthorized time not worked.”
The state audit examined the city payroll process from Jan. 1, 2014, through Jan. 31, 2015, and was conducted to determine if adequate internal controls were maintained through payroll procedures.
The audit noted issues with the payroll process and lack of oversight from Mayor Michael Julius.
“Key controls were not appropriately designed and operating effectively,” the audit states. “Although the city had properly segregated payroll duties, management oversight was lacking.”
The audit found city officials did not compare processed payroll registers to the approved time records. Auditors also found that time records for department heads were not reviewed or approved by the mayor before being submitted to the treasurer.
The audit also noted the departmental timekeeping processes used during that period were not consistent.
An example of this was in the Department of Public Works, where the audit found employees used a time clock and completed manual time sheets, while Fire Department time sheets were prepared by the shift supervisor and Chief Bruce Heberer.
The audit also found only some department heads signed employee time records to document their approval.
The comptroller’s office tested payroll records for 60 employees with gross pay totaling $103,650 across four pay periods. The audit found records for 55 employees required to maintain time records did not contain adequate documentation to support the payments made.
The audit noted 10 payroll records related to gross pay didn’t include the times when city employees logged in and out of work, while 17 payroll records contained only the total amount of hours worked and leave time used during the pay period.
According to the audit, a total of 47 payroll records for gross pay totaling $77,708 did not contain supervisory approval.
The audit said the council and city officials should establish “comprehensive written policies and procedures” for payroll and time records, while department heads and supervisors should document their approval of time records.
The audit also recommended the city keep detailed time records that can be supported with maintained documentation.
The audit said the city treasurer should “compare processed payroll to payroll source documents to maintain management oversight of payroll processing.”
In a response letter dated July 2, Julius, city treasurer Michael Gifford and 2nd Ward Councilwoman Kathi Iannotti said they agree with the audit findings and would draft a corrective action plan to remedy the issues identified.
“It is our understanding the examination did not reveal material discrepancies in the payroll system, but we understand the need for better documentation to minimize risk within the system,” city officials wrote. “Implementing your recommendations will assist the city of Johnstown in minimizing risk. Therefore, the corrective action plan will reflect establishing written policies and procedures, requiring management’s documentation of approval of time records, maintaining detailed time records with adequate supporting documentation, and establishing an internal audit function for comparing processed payroll to source documents.”
The mayor said on Monday he believes the audit was beneficial to the city’s payroll system and the city will take action to meet the state’s requirements to improve the process.
“I think the audit went well and those things are going to be addressed so we can meet the standards that the state is looking for,” Julius said. “There were only a few problems but we will be addressing them to make sure we minimize the risk.”