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.