Annual Auditor’s Report on Philadelphia City Departments Fiscal Year 2017


March 20, 2018
Financial Rebecca Rhynhart Departmental Grants Internal Controls Revenue Treasurer

Description


City Council is the legislative body of the Philadelphia city government responsible for legislating all municipal matters. It executes the legislative function by enacting and amending ordinances. Council enacts ordinances dealing with a wide scope of city matters, such as public health, public safety, zoning, budgeting, building and housing, and the regulation of business, trades, and professions. To aid in the performance of its legislative functions, Council conducts investigations and inquiries into those matters requiring its attention. These investigations are authorized by resolutions. Council’s investigatory power is important since it is the principal means for the legislative body to check on the administrative operations. Council has 17 seats. Ten members are elected from each of the city’s 10 Council districts and seven members are elected from the city at large. Council members serve a four-year term concurrent with the Mayor’s. The Council elects a president from among its members. Council employees, with the exception of the Chief Clerk (who is selected by the entire Council) and the staff of the individual council members, are appointed by the Council President.


Executive Summary


Why The Controller’s Office Conducted The Examination

Pursuant to the requirements of Section 6-400 (c) of the Philadelphia Home Rule Charter, we examined the financial affairs of Philadelphia’s city departments as part of our audit of the City of Philadelphia’s basic financial statements. The focus of our examination was to determine if management of each department had suitably designed and placed in operation internal controls to ensure accurate financial information and compliance with any laws and regulations related to revenue and expenditure activities.

What the Controller’s Office Found

The Controller’s Office again noted widespread deficiencies involving internal controls over payroll and other expenditure activities that the Office of the Finance Director needs to address with department heads (see Appendix I). Highlights of the deficiencies include:

  • Employee overtime was not properly authorized in twelve departments. Especially notable is a payroll clerk in the Division of Aviation, who in a seven-month period, was paid 197 days of overtime totaling more than $42,000 and 32 compensatory days. There was no documentation to support the excessive overtime hours worked. When this matter was brought to the department’s attention, the employee was subsequently terminated.
  • The city’s sick leave policy was still not enforced in 35% of the city departments, particularly in departments where exempt employees are not subject to the same sick abuse sanctions as their civil service counterparts. Three City Council employees used in excess of twenty undocumented sick days, totaling over $20,000 in paid sick leave. Three District Attorney’s Office employees used in excess of twenty undocumented sick days, totaling over $16,000 in paid sick leave. Lastly, four Law Department employees used in excess of twenty undocumented sick days, totaling over $10,000 in paid sick leave.
  • Payment vouchers were approved without the appropriate management level of authorization. The Office of Finance (Finance) approved ten payment vouchers in excess of $500,000, totaling $102 million, that were not properly approved. According to Finance’s standard accounting procedures, documents other than payroll, with a transaction value in excess of $500,000, require the signature of a commissioner, director, board chairman, or properly authorized deputy.

A number of city departments took corrective action on some of the prior year conditions. Noteworthy of mentioning is the Mayor’s Office of Community Empowerment and Opportunity, Procurement, and the City Planning Commission, all of whom implemented our prior recommendations.

What the Controller’s Office Recommends

The Controller’s Office has developed a number of recommendations to address these findings. The recommendations can be found in the body of the report.