OFFICE OF THE AUDITOR

Transcription

1 OFFICE OF THE AUDITOR TIME ACCOUNTING SYSTEMS AND PRACTICES PERFORMANCE AUDIT APRIL 2008 Dennis J. Gallagher Auditor

2 Dennis J. Gallagher Auditor City and County of Denver 201 West Colfax Ave., Dept. 705 Denver, Colorado , FAX April 17, 2008 Gerald Whitman, Chief of Police Denver Police Department City and County of Denver Dear Chief Whitman: Attached is the Auditor s Office Audit Services Division s performance audit report examining the Denver Police Department s (the Department) time accounting systems and practices. The audit period was for June 1, 2005 through June 17, The purpose of the audit was to determine whether the Denver Police Department utilized accurate, effective and consistent time accounting systems and practices and to assess whether internal controls in place were adequate. The audit identified significant internal control weaknesses in the time accounting systems and related procedures used by the Denver Police Department. These limitations, disclosed herein, hindered the Department s ability to detect non-compliance with departmental rules and regulations. During the course of the audit, the Department has taken commendable actions to strengthen controls over time accounting processes. Specifically, the Department has implemented a new timekeeping system (TeleStaff). One of the goals of the audit was to assist the Department to identify and address system and procedural limitations noted as it implements TeleStaff and other continuous improvement activities. As the system implementation was still ongoing at the conclusion of fieldwork, the audit does not include an assessment as to whether Telestaff addresses identified time accounting findings and recommendations cited herein. We conducted our audit in accordance with generally accepted government auditing standards (GAGAS). Those standards establish a foundation for credibility of auditors work and emphasize the independence of the audit organization and its individual auditors. When audits are conducted according to GAGAS, the standards require that the audit report refer to such compliance, and disclose when specific applicable requirements were not followed. One key GAGAS standard concerns auditor independence. Auditors and audit organizations must maintain sufficient independence so that their opinions, findings, conclusions, judgments, and recommendations will be viewed as impartial. Consequently, we are disclosing an external impairment to our independence related to our inability to independently access and review DPD time accounting records. As a result, we need to qualify our audit findings accordingly. These limitations are discussed in more detail in the Audit Services Report starting on page 4. The prudent stewardship of Denver s finances, resources and financial records! We are also committed to improving accountability, efficiency, effectiveness and performance in city government. We will scrupulously protect the taxpayer s interests and work collaboratively with all concerned to improve our city and its government 1

3 Chief Whitman April 17, 2008 Page Two If you have any questions, please call Kip Memmott, Director of Audit Services, at Sincerely, DJG/kh Dennis J. Gallagher Auditor cc: Honorable John Hickenlooper, Mayor Honorable Members of City Council Members of Audit Committee Ms. Kelly Brough, Chief of Staff Mr. Claude Pumilia, Chief Financial Officer Mr. Chris Henderson, Chief Operating Officer Mr. David Fine, City Attorney Ms. Lauri Dannemiller, City Council Executive Staff Director Ms. Beth Machann, Controller Mr. Alvin LaCabe, Manager of Safety 2

4 TABLE OF CONTENTS Transmittal Letter 1 Table of Contents 3 Audit Services Report 4 Executive Summary 6 Background, Scope, Objective, and Methodology 8 Findings and Recommendations 11 Appendix A Illustration of Attendance Record 32 Appendix B Time Compilation for Sample Officer 33 Appendix C Compensatory Time Can Compound 34 Appendix D The Effect of the Definition of Overtime 35 Exhibit A Denver Police Department Response 36 3

5 Dennis J. Gallagher Auditor City and County of Denver 201 West Colfax Ave., Dept. 705 Denver, Colorado , FAX AUDIT SERVICES REPORT We have completed a performance audit of the Denver Police Department s (the Department s) time accounting systems and procedures. The purpose of the audit was to determine whether the Denver Police Department utilized accurate, effective and consistent time accounting systems and practices and to assess whether internal controls in place were adequate. Additionally, audit procedures were designed to evaluate the effectiveness of the Department s timekeeping systems, procedures and related practices. This audit was included in the Auditor s Office Audit Services Division s 2006 and 2007 Annual Audit Plan and is authorized pursuant to the City and County of Denver Charter, Article V, Part 2, Section 1, General Powers and Duties of Auditor. The audit revealed significant limitations with the Department s time accounting systems and practices that inhibited adequate monitoring of officers work and leave times. Consequently, Department management did not appear to have effective tools for overseeing and managing officer time and related costs as well as for ensuring compliance with time accounting related legal requirements and internal policies. We commend the Department for taking actions to strengthen time accounting controls and processes. For example, in 2000, the Department hired a contractor to develop a new timekeeping system called OSL. However, the system was never implemented. For the past two years, the Department has been working on establishing a new timekeeping system called TeleStaff. As the system implementation was still ongoing at the conclusion of fieldwork, the audit does not include an assessment as to whether Telestaff addresses identified time accounting findings and recommendations cited herein. We conducted this performance audit in accordance with generally accepted government auditing standards (GAGAS). When audits are conducted according to generally accepted government auditing standards, those standards require that the audit report disclose when specific applicable requirements were not followed. In accordance with GAGAS, we are disclosing non-compliance with two standards for this audit. The first standard involves timeliness of communications. While standards do not specifically quantify timeliness, we believe that, owing to record access limitations and to delays and changes in internal work priorities, this report did not meet the intent of timely reporting standards and guidelines. However, these timeliness issues did not have an effect on the audit objectives. The prudent stewardship of Denver s finances, resources and financial records! We are also committed to improving accountability, efficiency, effectiveness and performance in city government. We will scrupulously protect the taxpayer s interests and work collaboratively with all concerned to improve our city and its government. 4

6 Page 2 April 17, 2008 Additionally, we are disclosing a limitation to our independence. As defined by standards, the limitation concerns externally imposed restriction on access to records, government officials, or other individuals needed to conduct the audit. Specifically, at the formal request of the Department, the Auditor s Office entered into a Memorandum of Understanding (MOU) regarding access to Department records. The MOU represents a limitation to our independence because the document identifies the specific documents DPD allowed the auditors to access and review, meaning documents not explicitly identified were excluded from our review. As a result, we were restricted in our ability to review additional documentation to more fully substantiate audit work. For example, while the MOU allowed us to review selected source documents, such as the Department s Attendance Records and Overtime Authorization slips, the MOU prevented us from further corroborating this data to individual officer activity data that may have better identified whether officers were actually working overlapping shifts or whether data indicating the occurrence of overlapping shifts was erroneous. Such information may have been available on documents, such as the Daily Activity Logs, Officer s Daily Performance Records, and Monthly Performance Summaries. As a result of these limitations, we need to qualify our audit findings accordingly. However, we believe that the evidence obtained provides a reasonable basis for our findings and conclusions as stated herein based on our audit objectives. It should be noted that under revised City Charter and related ordinance provisions, effective January 1, 2008, the Auditor s Office has clear authority to access all City records. Specifically, per City Charter 5.2.1, Sub-Section (C), The Auditor shall have access at all times to all of the books, accounts, reports, vouchers, or other records or information maintained by the Manager of Finance or by any other department or agency of the City and County. We extend our appreciation to the personnel who assisted and cooperated with us during the audit. Audit Services Division Staff: Dick Wibbens, CPA, Audit Manager Nancy Howe, Audit Supervisor Anita Thompson, CICA, Lead Auditor Jane Harlow, CICA, Senior Auditor Mary Mutchler, Staff Auditor Kip R. Memmott, CGAP, CICA Director of Audit Services 5

7 EXECUTIVE SUMMARY FOR THE PERIOD JUNE 1, 2005 THROUGH JUNE 17, 2006 This summary highlights the findings of our performance audit of the Denver Police Department s (the Department s) time accounting systems, procedures and practices, which are more fully described in the Findings and Recommendations section beginning on page 11. The Department s response to our findings is included in Exhibit A on page 36 of this report. 1. Time Accounting System Limitations Audit work identified limitations with the Denver Police Department s system for recording and tracking officer time. Specifically, during the audit period, time was recorded and maintained in a complex combination of five stand-alone systems that were mostly manual and paper-based and were not integrated. The systems that were computerized did not contain sufficient automated controls to ensure the accuracy of data. Additionally, audit work indicated that time recording practices were not consistently applied across units within the Department and that time accounting systems contained redundant data and were not routinely reconciled to ensure consistency and accuracy. The combination of these limitations resulted in inefficiencies and inhibited management s ability to effectively track and account for officers work time. 2. Possible Non-Compliance with Collective Bargaining Agreement and Department Policies Audit analysis of officer time records identified possible instances of non-compliance with time accounting requirements found in the Department s Collective Bargaining Agreement and Operations Manual. For example, audit work found instances where recorded times for different types of time overlapped, and where officers were scheduled to work secondary employment when they were on sick leave, on limited duty status, and when they no longer worked for the City. Audit work also determined that some officers did not appear to consistently work the required 160 hours each work period, and/or appeared to exceed the maximum number of hours they are allowed to work in a day or week. Additionally, audit work found that in some cases officers compensatory time bank balances appeared to exceed allowed limits. Finally, audit work identified instances where overtime was incorrectly rounded. These issues can potentially result in officers being paid incorrectly (including being paid more than once for the same time worked) and in potential increased costs and legal risks for the City. 3. Opportunities to Enhance Secondary Employment Administration Audit work identified opportunities for the Department to enhance the administration of officer secondary employment activities. Issues and inconsistencies identified include insufficient controls over pay and scheduling practices. In addition, audit work found that required documentation amending actual shift times is not consistently submitted. Finally, auditors determined that secondary employment agreements between the officer and the employer were not always executed before the officer worked the secondary employment shift and secondary employment shifts were not always properly approved. Current practices may increase the City s 6

8 EXECUTIVE SUMMARY liability as well as the potential for inequitable treatment of citizens seeking the services of offduty officers. 4. Issues with Department Time Accounting Policies Audit work identified areas where Department time accounting policies could be modified or clarified to better administer officer time resulting in possible cost savings. For example, audit work identified areas where comp time policy changes might result in lower overtime costs. Additionally, the Department s definition of secondary employment does not adequately distinguish between off-duty work for the Department (that otherwise could be perceived as overtime ), off-duty work for City agencies, and off-duty work for private employers. Finally, audit work found areas where Department practices are not captured in policy. 5. Other Pertinent Information Definition of Officer Overtime Audit analysis determined that how overtime is defined and applied impacts overtime costs, and that the Department could potentially reduce overtime costs by applying a different definition. However, overtime is defined in the Collective Bargaining Agreement (CBA) between the City and the police union, which is in effect until Consequently, the Department cannot pursue any possible changes until it negotiates a new CBA. 7

9 BACKGROUND, SCOPE, OBJECTIVE, AND METHODOLOGY FOR THE PERIOD JUNE 1, 2005 THROUGH JUNE 17, 2006 Background Police officer work and leave time is governed by a number of rules and regulations, including those found in the Federal Fair Labor Standards Act (FLSA), the Denver Revised Municipal Code, the Collective Bargaining Agreement (CBA) 1 between the City and County of Denver and the Denver Police Protective Association, and the Denver Police Department s Operations Manual (Ops Manual). 2 These rules and regulations apply to various types of time and leave, such as regular duty work hours, types of leave granted to officers, and conditions of overtime and off-duty work (secondary employment). During the audit period, the Denver Police Department (the Department) accounted for officers work and leave times through a combination of five manual and computerized systems. The following is a brief overview of each system: Attendance Records Each unit 3 in the Department manually records daily shift and leave information for each officer in the unit. The Attendance Record generally indicates only whether an officer was present for duty, off-duty, or on leave. The shift time for all the officers in the unit is recorded at the top of the Attendance Record, but an individual officer s shift time is not recorded when it varies from the time recorded for the rest of the unit. Unlike the City s Career Service Authority employees who generally utilize a 40-hour work week, police officers utilize a 28-day (equal to four weeks) work period. At the end of each 28-day period, every unit sends the completed Attendance Record to the Department s Human Resources Division for archiving (See Appendix A on page 32 for an example of a completed Attendance Record). Overtime When officers work overtime they complete an Officer s Overtime Authorization slip with various information, including the date and time that the overtime was worked. Supervisors must sign and approve these documents. The overtime slips are forwarded to the Department s Human Resources Division where personnel enter the information into the Department s computerized exception pay system (which Department personnel refer to as OSI, for Office of Safety Information). The data subsequently is loaded into PeopleSoft, the City s payroll system. 1 Unless otherwise noted, all references are to the Collective Bargaining Agreement. 2 Audit report statements are in reference to the 2006 Operations Manual that was in effect during the audit period. 3 Organizationally, the Denver Police Department is separated into districts, units and bureaus. The Department s Operations Manual defines a district as a geographical area designated for administrative purposes; a unit as any number of officers grouped together to accomplish a policing purpose; and a bureau as a unit having jurisdictionwide authority for the accomplishment of specific responsibilities. Each district has multiple bureaus and/or units. The term unit is used in this report to designate sub-levels at the Department and refers to non-centralized functions. 8

10 BACKGROUND, SCOPE, OBJECTIVE, AND METHODOLOGY Compensatory Time When an officer is assigned to work overtime the officer may elect to be compensated in cash payment or compensatory (comp) time. Each unit maintains a computerized comp time banking system for officers assigned to the unit. The comp time system is generally used to record and track overtime for which officers have elected time off rather than payment. Secondary Employment The Department maintains a computerized, department-wide secondary employment database to track officers times for the following off-duty work: work time paid through the Department, referred to as DPD-paid overtime (e.g., traffic control for sporting events), work time paid by other City agencies, and work time paid by private businesses. Officers must obtain formal approval before working a secondary employment shift by completing a Request for Secondary Employment Approval slip and obtaining a supervisory approval signature. The secondary employment database is one of two systems utilized by the Department where beginning and ending shift times are recorded. Leave System Officers leave time is maintained and tracked in PeopleSoft and includes the following six primary types of paid leave: vacation leave, sick leave, saved vacation leave, accumulated sick leave, saved holidays, 4 and birthday holidays. Audit work included compiling work and leave time for the audit period using data provided by the Department. Table 1 provides a summary of officers recorded time for the audit period, based on the various types of time: Table 1 Summary of Officer Time in the Audit Period All Officers Sample of 15 Officers* Total Hours Average Hours/Wee k Total Hours Average Hours/Wee k Regular Duty Not Not Not Available Available Available 26, OT for Pay 266, , OT for Comp Time 66, Secondary Employment 212, * See the Methodology section below for a description of the sampling methodology utilized to select and analyze time accounting data related to these 15 officers. 4 For four City holidays, officers who work on these days may choose to place a substitute day into a Saved Holiday bank. These holidays are Martin Luther King Day, Presidents Day, Cesar Chavez Day, and Veterans Day. 9

11 BACKGROUND, SCOPE, OBJECTIVE, AND METHODOLOGY Scope The audit focused on the Police Department s time accountability systems and practices. The audit period was from June 1, 2005 through June 17, Objective The objectives of our audit were to determine whether the Denver Police Department s time accounting systems and practices were adequate to detect and deter non-compliance with departmental rules, CBA requirements and legal regulations, and whether internal controls in place related to recording and managing officer time were sufficient and effective. Additionally, audit procedures were designed to evaluate the effectiveness of the Department s timekeeping systems, procedures and related practices. Methodology To meet audit objectives, we utilized several methodologies. These evidence gathering and analysis techniques included but were not limited to: Interviewing Department management and personnel in the Human Resources and Finance Divisions; Examining the reliability of the data in the various time accounting systems; Evaluating internal controls established for the various systems; Compiling and analyzing daily work and leave times for a sample of officers (discussed further below); Tracing system records to source documentation and vice versa, where possible; Verifying compliance with applicable rules and regulations; and Reviewing other cities policies, procedures, and practices regarding time accountability, particularly regarding secondary employment activities. Because of disparate time systems at the Department, auditors manually compiled officers work times for the audit period in order to conduct most of the audit testing. Due to the complexity of creating one time sheet that included all of an officer s time, the audit sample was limited to 15 officers and is not intended to be a representative sample. Auditors used three different methods to select the sample. First, we created a list of the top 50 earners by hours in the categories of overtime, secondary employment and comp time, and included officers who were on more than one of the three lists (a total of five officers). Secondly, we listed all officers who worked overtime and secondary employment by total number of hours worked, and chose two officers for our sample from the top third, two from the middle third and two from the bottom third of each list (a total of six officers). The remaining four officers were judgmentally selected to ensure that the sample included various ranks and newer officers. 10

12 FINDINGS AND RECOMMENDATIONS FOR THE PERIOD JUNE 1, 2005 THROUGH JUNE 17, Time Accounting System Limitations Audit work determined that the Denver Police Department (the Department) did not have a cohesive, comprehensive system for recording and tracking officer time. Specifically, officer time was recorded in five stand-alone systems with the following limitations: The time recording systems had limitations and were not integrated; Data between systems was inconsistent and differences existed with the manner in which various units recorded time information; Several systems contained redundant data; The systems lacked automated controls; and Data in the systems were not reconciled to ensure consistency, accuracy, and reliability. The following elaborates on issues identified by audit work in each of these areas. Timekeeping issues discussed and examples provided in the following sections, which are based upon audit analysis of various data as well as information compiled for a sample of officers, are provided in the context of demonstrating potential and actual systemic weaknesses with Department time accounting systems and practices. Because of the lack of comprehensive Department management reports or other data designed to monitor officer time and owing to the difficulty of manually compiling officer work time to generate this type of information, audit work was unable to determine the extent and commonality of various issues and examples discussed. However, cumulatively, these issues and examples indicate that Department management did not appear to have effective tools for overseeing and managing officer time and related costs as well as for ensuring compliance with time accounting related legal requirements and internal policies. In addition to audit evidence and analysis, we believe that the commendable actions taken by the Department to develop two new time accounting systems over the past several years, including the recent implementation of the Telestaff system, 5 confirm the existence and severity of the systemic issues identified by audit work. Limitations Within and Lack of Integration Between Time Accounting Systems Examination of the Department s systems for recording officer work and leave times revealed a complex system consisting of a combination of manual and computerized processes maintained at various levels of the organization. The following is a brief description of identified limitations in the four time accounting systems maintained by the Department: 6 5 TeleStaff is labor-scheduling software which integrates into the City s PeopleSoft payroll system. 6 The fifth time accounting system is PeopleSoft. Audit work utilized data from this system as a method of comparative analysis to other Department time accounting records. However, the system was not tested for errors as part of audit work. 11

13 FINDINGS AND RECOMMENDATIONS Attendance Records Recorded at the Department unit level, the Attendance Record has limited capacity to reflect information other than officers presence or absence from duty. For example, the Attendance Record allows for only one code for each work day, meaning the record does not account for work time in increments of less than a full shift. Further, although these records record the shift time at the top of the sheet, they do not identify the actual shift times for individual officers, limiting management s ability to track officers actual regular shift hours when they vary from the unit s regularly scheduled shift. Additionally, the Attendance Record is the only document utilized by the Department where some types of time are recorded, such as excused days (See Appendix A on page 32 for an example of an Attendance Record). Compensatory Time Database(s) This system was created in 1989 using software that, according to Department personnel, was the best available at the time and was suited for the intended purpose. However, it now has significant capacity limitations for handling the thousands of comp time transactions generated annually by officers. Therefore, data must be periodically purged from the system and archived in its raw form. The archival process increases the risk of introducing errors into officers comp time bank balances. Further, auditors were unable to verify and reconcile comp time information retained in this system for the audit period because the Department only maintains supporting comp time source records for six months. Secondary Employment Database As discussed in Finding 3 of this report, the secondary employment system, as it currently functions, only reflects the hours officers are scheduled to work secondary employment jobs and may not accurately reflect the actual hours worked. Additionally, the database fields provided to auditors by the Department did not clearly and consistently distinguish between off-duty jobs that are paid by the Department or other City agencies and off-duty jobs that are paid by private employers. Office of Safety Information (OSI) System For OSI, an automated system maintained by the City s Technology Services division, Department personnel must manually enter premium pay types, such as overtime or shift differentials. Audit work comparing the Department s overtime pay records to the PeopleSoft payroll records and overtime slips indicated that the information in OSI adequately reflects the information from these two sources. Inconsistent Time Accounting Documentation Practices Among Divisions Audit work revealed inconsistent documentation practices, particularly with regard to the two time accountings systems maintained at the unit level the Attendance Records and the comp time databases. Specifically, audit work identified several inconsistencies in attendance codes used by different units in the Department. For example, the code E was used to record an excused day on the Attendance Records for several types of leave, such as officers birthdays, bereavement leave, and jury duty. Further, two units used a code ( F ) that was not identified on the Attendance Record key or in the Ops Manual. Other documentation inconsistencies noted on the Attendance Records included: 12

14 FINDINGS AND RECOMMENDATIONS Some units recorded additional time details on the Attendance Record related to the use of a particular code for an officer, such as special assignment. Other units did not make distinguishable notations; and Some Attendance Records denoted one shift time for all officers of the unit. Other records indicated more than one shift time but did not identify the specific officers assigned to the alternate schedule. Additionally, the Department s comp time system contains a description field that allows freeform entries. The Department does not provide guidelines or coding conventions that might better facilitate time analysis and ensure the consistency of documentation between units. Audit work also determined that some units used the comp time banks to track officers overtime, regardless of whether the overtime was paid or added to the officers comp time bank, while other units did not. Additionally, some comp time histories for officers included entries for paid holidays, such as birthday and other saved holidays specified by the Department, while the histories of other officers did not. Redundancies Between Systems Audit work revealed that accounting for officer work time required input into more than one of the Department s systems, yet no single system served as a repository for compilation and analysis of total officer time. Table 2 demonstrates that five of eight types of Department work time were recorded in more than one system. Table 2 Duplication Within the Department s Time Accounting Systems Time Activity Tracked Police Department s Time Accounting Systems Comp Secondary OSI Time Employment System System Attendance Record * 5 City s Leave System Attendance Duty Overtime (For Pay) Off-Duty Work for the Department (for Pay) Duty Overtime (for Comp Time) Off-Duty Work for the Department (for Comp Time) Comp Time Taken Off Leave, Sick Leave, Etc.) Off-Duty Work Other Leave Types (Vacation (for Outside Employers) * The Attendance Record documents only attendance and leave for full, not partial, shifts. 13

15 FINDINGS AND RECOMMENDATIONS Lack of Automated Controls within Systems Audit work revealed inherent control limitations within two of the Department s time accounting systems, in particular, that did not prevent computational errors and unreasonable data entries. Errors in the comp time and secondary employment systems included: The comp time system contained unreasonable data entries, such as comp time earned for the years 1918 and 2009; Seven comp time records showed officers worked more than 24 hours on a single date, ranging from 25 to 342 hours; One comp time record had the same badge number for the officer requesting the overtime and the officer approving the overtime; One comp time record had no approving officer badge number; and The secondary employment database did not consistently calculate the difference between beginning and ending times of secondary employment activities correctly. Time Accounting Data Not Reconciled Between Systems Audit work determined that the Department did not always reconcile the data maintained in the different systems. Specifically, audit work identified the following reconciliation issues between systems: Attendance Records and Comp Time Database Records Audit work identified instances of discrepancies between officers comp time taken, as reported on attendance records, versus that reported in the officer s comp time bank. Attendance Records and Leave History Records Audit work identified some inconsistencies between officers Attendance Records and officers leave records. For example, in one case, the Attendance Record reported that the officer worked, yet sick time was deducted from the officer s leave bank. For another officer, saved vacation was reported on the Attendance Record and standard vacation was deducted from the leave bank. Comp Time Database Records and OSI Overtime Payment Records Audit work identified some comp time banks that contained numerous null entries, indicating the officers had been paid for overtime. However, in some cases, the corresponding entries/payments were either not documented in OSI or the recorded hours in the two systems did not agree. Specifically, audit work identified two records that made it appear that officers had both been paid through OSI and also had hours added to their comp time bank. In contrast, audit work also identified 17 other instances where a review of records indicated that officers overtime shifts were not paid through OSI or added to the officers comp time bank. Multiple Comp Time Banks Department personnel reported that, in some cases, when an officer transferred to a different unit a new comp time bank was established at the new unit, which was not reconciled to the officer s comp time bank from their old unit. As a result, audit work identified 82 officers with two comp time banks and four officers with three comp time banks. 14

16 FINDINGS AND RECOMMENDATIONS Secondary Employment/Overtime Request Slips and Attendance Records An examination of a sample of secondary employment approval slips and overtime approval slips determined that the regular shift time recorded by the officer on the slips did not consistently agree with the times recorded on the Attendance Record. 7 More specifically, audit work identified inconsistent time accounting on 8.6% of the tested secondary employment approval slips and 2.1% of the overtime approval slips. Secondary Employment Records and OSI Records Audit work identified the following reconciliation issues related to Department secondary employment records versus OSI records: o 54 of the 867 records (6.2%) specifically classified as DPD Paid Overtime in the secondary employment system were not recorded as paid in OSI; and o 126 of 928 records (13.6%) documented in both the secondary employment database and OSI had differences greater than one-half hour in the total time worked (records with differences less than one-half hour were not reviewed). Besides indicating that officers may not be submitting schedule changes to the Secondary Employment Office, the above issues may further indicate occurrences of possible overpayments or underpayments to officers. Time Accounting Process Limitations Have Significant Impacts Department personnel reported that the development of the Department s time accounting systems evolved over time as resources became available and were not based on a holistic, strategic time management approach. Comprehensively, these systems served as the Department s official record of officer work and leave time. However, the information within these systems generally was not integrated or reconciled, and the reliability of some of the data was questionable. Additionally, several of these issues were allowed under Department policies. Consequently, Department management did not appear to have effective tools to oversee and manage officer time and related costs. Limitations with the Department s time accounting systems have several other potential or actual significant impacts, including: Inefficiencies The manual and duplicative nature of several systems and related processes resulted in inefficiencies, which were exacerbated by the significant amount of activities and paperwork involved. For example, the Department s Human Resources Division processed approximately 7,000 secondary employment approval slips and 5,000 overtime approval slips monthly. The largest category of secondary employment is DPD-Paid Overtime. Because officers must complete a secondary employment request slip and an overtime request slip, each officer requesting this type of overtime completes two slips for the same request, supervisory personnel must review and sign approval for both slips, and administrative personnel must process and enter data from both slips into two separate systems. 7 Auditors tested secondary employment request slips with 373 records and tested 387 overtime request slips. 15

17 FINDINGS AND RECOMMENDATIONS Possible Non-Compliance with Policies and Legal Requirements When time data is inconsistently recorded, maintained in separate systems, and potentially unreliable, management s ability to ensure officers are in compliance with the Department s policies is significantly limited. Further, time accounting limitations also increase the Department s risk of not complying with federal regulations related to time accounting. For example, the Federal Fair Labor Standards Act (FLSA) allows time for fixed schedules to be recorded on an attendance record using only a notation that the time was worked. However, the regulations also state that in weeks in which more or less than the scheduled hours are worked, [the Attendance Record must show the] exact number of hours worked each day and each week. 8 In addition, it appears the Department may not be in compliance with the FLSA, which requires that supplementary time records be maintained for a minimum of two years. 9 Potential Underpayment or Overpayment of Officers If management cannot consistently ensure that work times are accurate, there is an increased potential for officers being underpaid or overpaid. In addition to being a fairness issue, the FLSA requires that non-exempt employees (officers up to and including the rank of Lieutenant are classified as non-exempt by the Department) be compensated at time-and-one-half for overtime worked. 10 Time must be accurately calculated for non-exempt officers to be paid correctly; and Possible Inequity Between Officers Decentralized and inconsistent time accounting enforcement and documentation practices increase the potential for inequitable treatment of officers. An effective time accounting system can provide management with a means of accounting for monitoring, tracking, and analyzing officer time, which can be used to further Departmental goals and strategies, such as assessing staffing needs and effectively managing payroll and overtime costs. For example, referring to managing overtime, a National Institute of Justice study states that the management of overtime comes in two forms: creating an infrastructure for recording and analyzing the use of overtime and making policies about overtime based on an understanding of what is happening. 11 Recommendation 1 We recommend the Department continue commendable efforts to improve time recording practices to ensure that officers time data is consistently complete, accurate, and reliable and to enhance the effectiveness and efficiency of timekeeping practices. The Department should keep these goals in mind as it implements and utilizes the TeleStaff system. The following are 8 Fair Labor Standards Act, 516.2(c)(2). 9 Fair Labor Standards Act, Fair Labor Standard Act, 7(a)(1) 11 Taken from a May 1998 National Institute of Justice Research in Brief article titled Police Overtime: An Examination of Key Issues. This article can be found through the National Criminal Justice Reference Service at 16

18 FINDINGS AND RECOMMENDATIONS specific recommendations that should help the Department improve and enhance timekeeping practices and ensure the reliability of the data within the TeleStaff system. 1A. The Department should develop and/or revise time accounting processes and related policies and procedures to include controls in Telestaff, such as: Recording officers time in partial days to improve accountability and accuracy for work time and leave time and properly accounting for any compensatory time used; Using universal time codes within TeleStaff to improve consistency (for example, using B for birthday leave day, and ensuring that only one B can be used each year); Establishing field delimiters that prohibit certain entries, such as self-approval of time, blank fields, fields with unreasonable dates or codes, or extraordinary time spans; Allowing each officer only one bank for each type of leave (for example, compensatory time); and Developing automated controls to ensure that calculations are consistently accurate (such as for overtime) and time accounting data is reliable. 1B. In order to reduce duplication of effort and to enhance management s ability to analyze officer time, all types of time should be included in the TeleStaff system, if possible. This time would include regular shifts, overtime, court time, training, special assignments, compensatory time, secondary employment and all types of paid leave. Any time accounting data not recorded in TeleStaff should be reconciled to time data within the system, and maintained for a minimum of two years. In addition, time accounting management reports should be designed and utilized to allow Department management to regularly review and analyze where and how much officers are actually working and to assess related costs. Auditee Response (see Exhibit A) 2. Possible Non-Compliance with Collective Bargaining Agreement and Department Policies An analysis of officer time records identified possible instances of non-compliance with the Police Department s Collective Bargaining Agreement (CBA) and Operations Manual (Ops Manual). The following summarizes specific examples of possible non-compliance. The examples provided are based on recorded time information contained in various Department systems. Owing to limitations on our ability to corroborate this data to individual officer activity data, we were unable to ascertain whether the issues identified in the examples actually occurred or whether the recorded time data was erroneous. Reported Time Indicates Overlapping Shifts A review of officers time documentation revealed that shifts with overlapping times were recorded for 10 of 15 officers (67%) in the 17

19 FINDINGS AND RECOMMENDATIONS sample, meaning they potentially may have been paid more than once for the reported work times that overlap. Working Secondary Employment While on Sick Leave or Limited Duty Status Audit work determined that two of 15 officers in the sample were scheduled to work secondary employment shifts on four days when they used sick leave for their regularly scheduled shifts. We also tested the reported time of 44 officers on limited duty status 12 and found that three officers were scheduled to work a total of 14 secondary employment shifts. In one of these cases, sick leave was also reported as used by an officer on the same day. The Department s Ops Manual prohibits officers from working secondary employment when they are off-duty due to illness or on limited duty status. 13 Former Officers Scheduled for Secondary Employment When No Longer Employed by the City Audit work identified three officers in the secondary employment database that were scheduled to work secondary employment after leaving employment with the City. According to Department officials, this issue resulted from data entry errors. Work Period Hour Requirements Not Met or Exceeded Auditors compiled time for a sample of officers and found that, according to recorded Department time accounting data, the officers did not appear to consistently work 160 hours each work period. According to the CBA and the Ops Manual, During each twenty-eight (28) day work period, the normal work cycle shall be one hundred sixty (160) hours, inclusive of authorized leave time. Generally, police officers work hour days with 12 off days or 20 eight-hour days with eight off days, for a total of 160 hours. Using Attendance Records, we reviewed 13 work periods 14 for each of the 15 officers in our sample, for a total of 195 work periods. We found that, per these records, 10 of the 15 officers (67%) did not consistently work 160 hours per period in 13 (6.7%) of the 195 periods reviewed. More specifically, officers worked more than 160 hours in two instances and less than 160 hours in 13 instances, as detailed below. Working more than 160 hours may result in officers being underpaid and working less than 160 hours may result in overpayment. Examples of work periods with more than 160 hours: In one instance, an officer used four hours of comp time on a day when the officer was usually off duty, meaning 164 hours were recorded for the officer when only 160 hours 12 The Department s Operations Manual (1)a. states: An officer who becomes sick or injured will be transferred to the Limited Duty Section if that officer is expected to be off duty and/or on limited duty in excess of thirty (30) days. DPD Operations Manual (1)d further specifies: No officer assigned to the Limited Duty Section and on limited duty status will perform either Secondary Employment Police Work or Non-Police Work unless authorized to do so by the Chief of Police. 13 The Department s Operations Manual (3)d. states: officers off duty due to illness, injury or on limited duty status will not be permitted to perform secondary employment police work. 14 The Department s work year consists of day/160-hour work periods. The audit period included 13 full 28- day periods from June 2005 June

20 FINDINGS AND RECOMMENDATIONS were needed in the work period because authorized leave time is included in the 160 hour minimum hour requirement; and In the other instance, a comp day was deducted from an officer s comp time bank that was not recorded on the attendance record, meaning that the officer recorded more than 160 hours and was apparently charged a comp day for a day when the officer worked a regular shift. Examples of periods with less than 160 hours: Officers are paid eight hours for holidays or saved holidays. Officers who regularly work a 10-hour shift must take other leave time (e.g. comp time) for the two hours beyond the eight hours of holiday leave. In two instances, officers recorded leave time was insufficient, meaning there was no documentation verifying that adequate leave had been taken for these holidays; In eight instances, attendance records indicated that a comp day was taken by an officer; however, no comp time was deducted from the officer s comp bank; In three instances, officers attendance record had extra O s, meaning the officer was apparently off extra days during the period without an accompanying explanation or documentation; and In periods when 160 hours were not worked, all except one of the officers reviewed received overtime pay. For example, a backfill shift 15 was recorded for one officer in place of their regularly scheduled shift during a period when less than 160 hours were recorded for the officer on time records. As a result, it appears the officer should have been working a regular shift instead of working backfill and receiving overtime pay. Daily and Weekly Hour Limits Exceeded Audit work showed that, based on Department time accounting records, 14 of 15 officers (93%) in our sample exceeded the maximum hour limitations per day and per week set forth in the Department s policies on at least one occasion. The Department s Ops Manual limits the total of on-duty hours and off-duty Secondary Employment hours, including Department Administered Overtime Assignments to 64 hours in a calendar week. 16 Additionally, officers are not allowed to work more than 16 hours in a 24-hour period. 17 Per the Ops Manual, court time is the only time that is specifically excluded from counting toward these limits. 18 The Chief of Police may grant exemptions to these hour limits but Department personnel reported that even when exemptions are granted, officers are not allowed to work more than 32 hours beyond their regular scheduled shift (for a total of 72 hours in a week). Audit testing identified 97 weeks in which the weekly hour limits were apparently exceeded without the required approved exemption. Additionally, audit testing revealed that even when 15 Backfill is when an officer works a shift in place of another officer who is on leave or absent, typically to prevent staffing shortages. 16 DPD Operations Manual, (3)f. 17 DPD Operations Manual, (3)f1. 18 DPD Operations Manual, (3)f. 19

21 FINDINGS AND RECOMMENDATIONS exemptions were granted allowing officers to work up to 72 hours in the week, recorded work time for six officers exceeded 72 hours in 12 instances. Lack of Effective Controls to Prevent Officers From Exceeding Maximum Hour Limits Audit work determined that the Department uses the secondary employment database as an internal control to identify when officers exceed maximum hour limits. As the only control in place for this purpose, Department management is significantly limited in their ability to detect and prevent officers from exceeding these limits. Specifically, the system only identifies when an officer s total secondary employment hours will result in excess hours. The system does not take regular duty and/or other overtime worked into account. For example, the system will not identify requested secondary employment hours as exceeding maximum allowances if the officer works a regular 40-hour week plus 10 hours of overtime and requests 20 hours of secondary employment in one week, even though the officer would work 70 hours during the week. Case Examples Table 3 contains the hours recorded for an actual officer in one week. The table illustrates that while the officer s reported hours exceeded the weekly and daily maximum hour thresholds established in Department policy, the secondary employment database did not detect that these hours surpassed allowable limits because the officer recorded fewer than 16 hours per day and 24 hours of secondary employment per week. The shaded cells in the table show that the officer s reported work hours totaled 72.3 in the week (exceeding the 64 hours per week limit by 8.3 hours), and 20.8 hours on November 29 (exceeding the 16 hours per day limit by 4.8 hours). Table 3 Hour Limits Exceeded by One Officer in One Week Date Regular Shift Overtime Secondary Employment Total Hours Worked per Day 11/27/ /28/ /29/ /30/ /1/ /2/ /3/ Total Hours Worked by Type of Time Appendix B (page 33) shows the actual recorded time for a 28-day period for one of the officers in the sample whose regular work shift is 8am-4pm, Monday through Friday. Auditors compiled data for the three different categories of time from three separate Department systems. When all of the officer s time is accumulated and compiled, a more complete picture of where and when time records show the officer working emerges. The table in the appendix shows that hours recorded by the officer exceeded the 24-hour 20