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HomeMy WebLinkAbout2425-5 Follow-up Overtime and Compensatory Time (Final 10-31-24) Audit Follow-up Report Overtime and Compensatory Time To request this information in an alternate format, please call (541) 330-4674 or send email to internal.audit@Deschutes.org Overtime and Compensatory Time Follow-up 24/25-5 October 2024 Deschutes County Office of the Internal Auditor Table of Contents: 1. Introduction ....................................................................................... 1 Background on the Original Audit ................................................................................ 1 2. Follow-up Results .............................................................................. 2 3. Appendix A: Updated workplan (status as of October 2024) ....... 3 4. Appendix B: Objective, Scope, and Methodology .......................... 5 Objective and Scope ....................................................................................................... 5 Methodology ................................................................................................................... 5 Overtime and Compensatory Time Follow-up 24/25-5 October 2024 Deschutes County Office of the Internal Auditor Page 1 of 5 1. Introduction The Deschutes County Audit Committee has suggested that follow-ups occur within nine months of the report. The Audit Committee would like to make sure departments satisfactorily address recommendations. Background on the Original Audit Due to time constraints during the Vacation and Sick Leave audit, a comprehensive review of compensatory time was deferred. Given its direct association with compensatory time, the decision to include overtime into the overall review was apparent. Deschutes County overtime expenses surged over 30% in Fiscal Year 2023 outpacing increases in overall personnel costs. As the County increasingly depends on overtime to maintain the delivery of quality services, the need for a strong control foundation becomes more crucial. The review focused on systemic and policy-related controls for both overtime and compensatory time. The following areas were identified for further improvement: Overtime reporting. The Board receives monthly financial reports updating them on the current state of major County funds. Emphasizing vacancy savings is common in personnel cost discussions; however, incorporating overtime expenses into the conversation would provide greater transparency and accountability. Overtime documentation practices. For over a decade, employees who are typically exempt from overtime have been receiving overtime compensation. Centralizing the documentation supporting these decisions would optimize their accessibility. County policy. The County policy on overtime and compensatory time includes a 180-day compensatory time mandate that is not enforced. Furthermore, including compensatory time in the calculation of regular hours in an employee's workweek creates opportunities for limited exploitation of the overtime system. Revisions are needed to clarify expectations for both management and employees. Overtime and Compensatory Time Follow-up 24/25-5 October 2024 Deschutes County Office of the Internal Auditor Page 2 of 5 System management. County timekeeping system controls and security measures can be improved to ensure intended functionality. 2. Follow-up Results The follow-up included eight outstanding recommendations agreed to by the Finance and Human Resources Departments. Figure I provides an overview of the resolution status of the recommendations. Figure I: How were recommendations implemented? With this follow-up, fifty percent (50%) of the outstanding recommendations have been fully addressed. As indicated in the provided responses, Finance has begun reporting overtime regularly to the Board and improved system management. Human Resources has been working on centralizing overtime documentation and refining policies. The details of the follow-up are included at the end of the report in Appendix A. In interpreting the status, Internal Audit may sometimes raise or lower the status provided by the department based on communication received from the department. Overtime and Compensatory Time Follow-up 24/25-5 October 2024 Deschutes County Office of the Internal Auditor Page 3 of 5 3. Appendix A: Updated workplan (status as of October 2024) Recommendation Status Date Completed Updated Comment The Finance Department monthly financial reports should include overtime expenses for major funds when the projected personnel services requirements exceed budgeted levels. Completed Feb 2024 Beginning in February 2024, an overtime report was included in the monthly financials prepared for the Board. The County should establish a centralized documentation repository for all payroll decisions that grant overtime compensation to exempt status employees. Underway HR has created the centralized list document for entry of all instances outside of Collective Bargaining Agreements and County Policies when authority has been granted to provide overtime compensation, or premium compensation related to extra hours worked, to exempt status employees. This list is available to payroll staff. HR is currently working with departments and offices to populate this centralized list, and we anticipate that work concluding by November 30, 2024. The County should determine if the 180-day mandate is still relevant and adjust practices/revise policy based upon the determination. Underway Work is underway to review the current policy and come to a final determination if the 180-day mandate should be maintained or eliminated, which will be shared with County leadership. This recommendation will be brought to the Policy Advisory Committee for further review and discussion. Overtime and Compensatory Time Follow-up 24/25-5 October 2024 Deschutes County Office of the Internal Auditor Page 4 of 5 Recommendation Status Date Completed Updated Comment The County should incorporate policies which include payouts for comp leave balances in cases of departmental transfer or promotion to exempt status. Underway Work is underway to review the current policy and come to a final recommendation for rules regarding payouts of accrued compensatory time that can be shared with County leadership. This recommendation will be brought to the Policy Advisory Committee for further review and discussion. The County should establish and document comprehensive leave options and procedures specifically tailored to part- time employees. Underway Work is underway to review current practices and applicable policies to come to a recommendation that can be shared with County leadership. This recommendation will be brought to the Policy Advisory Committee for further review and discussion. The Finance Department should develop stronger controls around negative comp time leave balances. Completed Dec 2023 Finance has added a negative leave balance report to its monthly payroll procedures beginning in December 2023. The Finance Department should assign individual user accounts for each Human Resources staff member needing access to the NOVAtime system. Completed Jan 2024 Human Resources were assigned individual accounts, and the generic accounts were removed. The Finance Department should remove supervisor- level access for all noted former employees. Completed Jan 2024 Finance removed all termed employees from the system identified during the audit. Overtime and Compensatory Time Follow-up 24/25-5 October 2024 Deschutes County Office of the Internal Auditor Page 5 of 5 4. Appendix B: Objective, Scope, and Methodology Objective and Scope Objective: The objective was to follow up on recommendations from the original audit. Scope and timing: The follow-up included eight recommendations from the internal audit report for Overtime and Compensatory Time 23/24-6 issued in January 2024. The original internal audit report should be referenced for the full text of the recommendations and associated discussion. The follow-up reflects the status as of October 2024. Methodology The follow-up report was developed from information provided by Robert Tintle, CFO, and Jason Bavuso, Interim HR Director. Follow-ups are, by nature, subjective. In determining the status of recommendations that were followed up, we relied on assertions provided by those involved and did not attempt to independently verify those assertions. The updates received were included in Appendix A. Since no substantive audit work was performed, Government Auditing Standards issued by the Comptroller General of the United States were not followed. “Audit objectives” define the goals of the audit. Overtime and Compensatory Time Follow-up 24/25-5 October 2024 Deschutes County Office of the Internal Auditor The mission of the Office of Internal Audit is to improve the performance of Deschutes County government and to provide accountability to residents. We examine and evaluate the effectiveness, efficiency, and equity of operations through an objective, disciplined, and systematic approach. The Office of Internal Audit: Audit committee: Elizabeth Pape – County Internal Auditor Daryl Parrish, Chair - Public member Aaron Kay – Performance Auditor Phil Anderson – Public member Jodi Burch – Public member Phone: 541-330-4674 Joe Healy - Public member Email: internal.audit@deschutes.org Summer Sears – Public member Web: www.deschutes.org/auditor Kristin Toney - Public member Patti Adair, County Commissioner Charles Fadeley, Justice of the Peace Lee Randall, Facilities Director If you would like to receive future reports and information from Internal Audit or know someone else who might like to receive our updates, sign up at http://bit.ly/DCInternalAudit.