Auditing Police Overtime: City of Seattle Case Study

Transcription

1 Auditing Police Overtime: City of Seattle Case Study OFFICE OF CITY AUDITOR NOVEMBER 1, 2016

2 OPENING REMARKS Moderator Kinney Poynter Executive Director NASACT Auditor-in-Charge Robin Howe Manager, Internal Controls Benchmarking Lead Virginia Garcia Assistant City Auditor Data Analysis Lead Megumi Sumitani Assistant City Auditor Data Analysis Specialist Cindy Drake Deputy City Auditor 2

3 WEBINAR OBJECTIVES Learn about City of Seattle s recent police overtime audit Audit Methodology Audit Results Get ideas for how to conduct a police overtime audit for your agency 3

4 IN THIS PRESENTATION Why we did this audit Impact Scope Methodology Audit Results Police Environment 4

5 WHY WE DID THIS AUDIT Extreme Over-Budget Conditions - $8 Million or 58% 5

6 AUDIT IMPACT 30 findings and recommendations SPD agreed with all 30 recommendations City Council passed a resolution requiring SPD to report quarterly on status of implementation of audit recommendations 6

7 AUDIT IMPACT Lots of positive media coverage Audit: SPD overtime expenditures almost doubled in 10 years Overtime is out-of-control at Seattle Police Department Audit: SPD exceeds overtime budget by millions King 5 News CrossCut Seattle P. I. Seattle Council approves police overtime recommendations KOMO News 7

8 AUDIT SCOPE Department-wide controls for overtime functions including: Budgeting Operational Controls Day to day overtime functions Management Controls Reporting and monitoring Special Events Off-Duty Work (related area) 8

9 POLLING QUESTION #1 For individuals: Please be sure to answer the polling questions as they are also your attendance checks for today s webinar. For groups: Please answer in a way that reflects the consensus of the group. Attendance for groups is still monitored via the sign-in sheet. Don t forget to send in your questions! 9

10 AUDIT METHODOLOGY Review of P & P s and other documents Interviews of sworn and civilian police personnel Benchmarking with other police departments Payroll data analysis on overtime 2 ½ years Audit test work of transactions Observation of overtime functions The variety of audit methods used improved the quality of the audit results, and increased stakeholder confidence in the results. 10

11 INTERVIEWS AND DOCUMENT REVIEW Document Review Policies and Procedures governing overtime SPD, City HR and Payroll Collective Bargaining Requirements Interviews Interviews of SPD management were critical to this audit 18 sworn leaders of 8 sections with high overtime Civilian leaders section leaders with high overtime or key role in overtime functions 11

12 Why Benchmark? Selecting Comparable Jurisdictions Developing and Testing Questions Finding the Right People and Getting Answers BENCHMARKING 12

13 WHY BENCHMARK? Advantages Identify issues unique to your agency Ranks your agency Find nuggets of gold Satisfies data junkie Best practice may not be available Challenges Time Consuming Find the right people and answers Address differences (fiscal year vs annual budgets, service delivery, laws, contracts) 13

14 SELECTING COMPARABLE JURISDICTIONS Benchmark agencies should be recognized as comparable Consider agency size, geography, population and demographics, and values Confirm comparability 14

15 DEVELOP AND TEST QUESTIONS Quantifiable and Qualitative Information Tested questions internally Send question in advance, requested responses in writing and followed-up 15

16 FINDING THE RIGHT PEOPLE AND GETTING ANSWERS Know who to ask Use all connections Persistence pays Promise a copy of report 16

17 OVERTIME - ACTUAL VS BUDGET Agency 2014 General Fund Police Budget 2014 OT Budget 2014 OT Actual OT Budgeted vs OT Actual (Over Budget) Actual OT as % of Total Budget Actual OT as % of OT Budget Sacramento $120,954,913 $2,100,000 $4,700,000 ($2,600,000) 4% 224% Oakland $179,148,647 $14,337,189 $24,727,146 ($10,389,957) 14% 172% Seattle $288,667,732 $15,526,280 $23,625,263 ($8,098,983) 8% 152% Bellevue $43,479,370 $1,094,458 $1,661,959 ($567,501) 4% 152% San Diego $418,542,912 $11,811,076 $17,761,956 ($5,950,880) 4% 150% San Jose $306,848,315 $16,028,257 $23,537,738 ($7,509,481) 8% 147% Long Beach $190,481,977 $10,920,865 $14,417,774 ($3,496,909) 8% 132% San Francisco $461,690,894 $9,638,898 $10,735,647 ($1,096,749) 2% 111% Portland $169,779,755 $7,900,000 $6,790,000 $1,110,000 4% 86% Tacoma $143,428,570 $2,100,000 $1,800,000 $300,000 1% 86% Everett $31,839,259 $882,465 $753,496 $ 128,969 2% 85% Source: Office of City Auditor benchmarking results. Note: If an agency s fiscal year differed from the calendar year, we used data from the 2013/2014 fiscal year. 17

18 POLLING QUESTION #2 For individuals: Please be sure to answer the polling questions as they are also your attendance checks for today s webinar. For groups: Please answer in a way that reflects the consensus of the group. Attendance for groups is still monitored via the sign-in sheet. Don t forget to send in your questions! 18

19 PAYROLL DATA ANALYSIS METHODOLOGY Obtained SPD payroll data between January 2013 and June 2015 Used ACL to extract OT codes Used Excel to perform pivot table analysis Combined with personnel data to determine employee age, sex, race, and years of service Used Access to perform duplicate payment analysis 19

20 FIVE THINGS WE LEARNED FROM PAYROLL ANALYSIS 1. Lots of incomplete data entry, e.g., missing OT approval and reasons why the OT was worked (42% blank) 2. Saturdays had the highest hours, followed by Sundays and Fridays 3. Highest compensation for OT in 2013 and 2014 was around $100,000 over base salary 4. Highest OT day was May Day 2015 ($432,166) 5. Highest OT earners have the highest number of service years 20

21 DUPLICATE OVERTIME PAYMENTS Using a find duplicates query in Access, we searched for: The same individual was paid overtime for the same number of hours. for the same activity on the same work date. 21

22 AUDIT TEST WORK OF TRANSACTIONS Sampled Four Pay Periods Two with high overtime (July), two with low (October) Reviewed all overtime documents handled by Payroll Reviewed Payroll s overtime audits, queries, and adjustments Did not trace overtime paid back to supporting documents Reviewed Delinquent Accounts Reimbursable overtime accounts (for example, sporting events, film shoots) 22

23 OBSERVATION OF OT FUNCTIONS We also observed the entire 2-day payroll and overtime processing cycle with the police Payroll unit, including their regular review for certain kinds of potential exceptions. 23

24 AUDIT RESULTS 6 BUCKETS, 30 FINDINGS & RECOMMENDATIONS 1. Overtime P&P s 2. Budgeting for Overtime 3. Operational Controls 4. Management Controls 5. Special Events Overtime 6. Off-Duty Work 24

25 AUDIT RESULTS - HIGHLIGHTS 1. Overtime Policies and Procedures No Overtime Usage policy 2. Overtime Budgeting Lack of realistic budget Supplemental budget $ s were regularly provided at year-end for whatever was spent, so no incentive for section leaders to stay within budget 25

26 AUDIT RESULTS - HIGHLIGHTS 3. Operational Controls Lack of automated controls to identify errors Duplicate payments for same overtime hours Payment for more than 24 hours in 24-hour period Use of sworn personnel for some functions that civilians could handle 4. Management Controls Inadequate monitoring by section leaders Inadequate independent monitoring for trends and abuse 26

27 AUDIT RESULTS - HIGHLIGHTS 5. Special Events Overtime Highest single usage of SPD overtime (38%) Seattle had low/no fees for policing many events Events increased significantly, along with police overtime costs Seattle is reimbursed for policing costs for some special events, but not for many Our office is currently working on an audit of SPD Special Events Staffing and Controls to delve into this area, including cost recovery. 27

28 AUDIT RESULTS - HIGHLIGHTS 6. Off-Duty Work Off-duty work is work that police officers do for other companies/agencies who hire them, usually for security purposes (e.g., construction sites, retail store security) SPD had no control or even visibility of the off-duty hours worked by its officers Off-duty work can impact work absences, work performance, and cause officers to be non-compliant with maximum work hour requirements 28

29 AUDITING WITHIN A POLICE ENVIRONMENT Collective Bargaining Agreements Paramilitary Organization Hierarchy, Command Structure Sworn vs. Civilian Personnel 29

30 QUESTION AND ANSWER SESSION Moderator Kinney Poynter Executive Director NASACT Auditor-in-Charge Robin Howe Manager, Internal Controls Benchmarking Lead Virginia Garcia Assistant City Auditor Data Analysis Lead Megumi Sumitani Assistant City Auditor Data Analysis Specialist Cindy Drake Deputy City Auditor 30