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‘Add pay’ audit findings inconclusive

By Staff | Aug 27, 2011

An audit was unable to confirm if police and fire employees are being paid correctly for “add pays” and in accordance with the language in the collective bargaining agreements.

On Tuesday, the city auditor released the findings of the audit, which cost $16,000 and was conducted by Telluric Current Consulting. The city manager had called for a review of the city’s add pay system last year after learning that a Cape Coral police officer was paid for unearned academic incentives.

Employees can earn add pays, or additional payments to one’s base salary, for things like obtaining certain certifications and educational diplomas.

According to city documents, a survey of police, fire and public works employees was conducted in September. It identified a higher incidence of “perceived payroll problems” – nearly 4 to 1 – among police and fire.

Twenty percent of the fire and 29 percent of police responded to the survey. In both departments, 9.2 percent of the respondents indicated an overpayment or underpayment discrepancy within the last four months.

“The city decided that it wanted to focus on police and fire,” Joseph Johnston, the principal at Telluric Current Consulting, said Friday.

So, the company focused on the public safety departments and their interactions with the human resources and financial services divisions. A sample of employees – 10 from fire and seven in police – were used.

A summary of the audit explained that the findings were inconclusive because of several issues, including discrepancies between the written criteria for earning individual add pays and how they were actually being credited, and an overly complex process using incompatible software.

“The results of this audit could not provide assurance to the city manager that payments being made to employees were in compliance with the provisions set forth in the collective bargaining agreements and/or reflect the amount of pay an individual employee should have been paid,” it states.

The audit, however, did find inconsistencies between how individual add pays were being applied and what was actually required by an employee to qualify for the add pays as written in the union’s collective bargaining agreement.

For example, the fire union’s contract states that the city will pay $35 bi-weekly to any employee holding any three certifications out of a list of eight. Human resources said their practice was to pay $35 for each certification.

During fiscal year 2010, the city paid $211,750 to 155 fire employees.

In another example, the contract states that each employee is eligible to receive one of four rescue pays. Some were paid for more than one.

The city overpaid five firefighters $3,445 during the last fiscal year.

According to the audit, the city paid up to 150 employees more than $80,000 in add pays during fiscal year 2010 and the payments were not consistent with the language in the collective bargaining agreements.

City management responded, noting that a review of the practices found that an historical context exists for the current pay practices. Language does need to be clarified though and pay practices aligned accordingly, it added.

As for the language in the police union’s contract and the city’s payment practices, the audit found payroll inconsistencies related to data codes.

During the last fiscal year, the city paid out more than $10,000 to police employees using pay categories that were not found in the contract.

Management responded by explaining that the police department has implemented an internal policy of requiring bi-annual audits of all add pays and compensation rates with changes to be sent to human resources.

“The financial services director will schedule a meeting between payroll and compensation to ensure codes are built properly to align pay practices with contract provisions,” city officials added.

The audit also found that there was an “inadequate” level of management controls in place in regard to changes to the payroll system. In one instance, changes were made to the automated system without the required request.

This affected overtime pay for fire and produced an overpayment of roughly $18,000 over a two-year time frame, before the changes were detected.

Management responded, noting that the city’s finance department would review and implement improved controls related to the process.

The audit found that the city’s approach to managing the payroll processes involves four departments and two automated, non-integrated systems.

This creates the need for “significant cross-departmental coordination, synchronization, communications, training and execution to ensure error-free processing,” the documents state.

Management responded by pointing out that the recent reorganization affecting human resources and finance should result in improvements between the entities, and that the two systems are a necessity as is.

Other issues identified by the audit are a lack of feedback to employees and management, and file and record inconsistencies between city departments.