State Audit Finds Flaws with Peekskill Leave Time Accounting

The New York State Comptroller’s office audited the leave accrual system and found that the city did not have comprehensive written policies and procedures for leave time. The audit, released Feb. 28, reports that employees used leave time that they had not been entitled to, had negative leave time balances and that employees who left the city’s employ were not deactivated in the payroll system.

City officials responded to the findings and said they disagreed with certain aspects but that they planned to implement some of the state’s recommendations. 

The audit looked at leave accruals for the period between Jan. 1, 2010 and June 3, 2011. The audit states that as a result of the deficiencies they found, the city could lose money if employees use or get paid for leave time that they do not have, and there is an increased risk that employees will not receive the leave time benefits to which they are entitled.

The audit reads:

“As a result (of inadequate written policies), 12 employees had negative leave time balances, two employees used leave time to which they were not entitled, and seven employees earned leave time that was not added to their balances. In addition, 33 employees who left the City were not deactivated in the payroll system, increasing the risk they could receive payments for leave time they are not entitled to.”

The audit explained that the city’s system for monitoring leave time does not check for accuracy and does not involve cross comparisons between the date entry clerk’s information and the information provided by department heads to the Human Resources department. The clerk told the auditors that she was never trained on how to set up leave time accruals. City officials had the software vendor update their system to prevent the clerk from entering leave time usage when employees do not have adequate balances, once the auditors brought the deficiencies to the city’s attention.

The audit found that 12 of 275 employees had negative leave time balances. They also selected another random 15 employees to see if their leave time was properly handled and found that two employees used 24.8 hours of leave time valued at $1,2000 to which they were not entitled. Also, seven employees earned 61.3 hours of leave time, valued at $2,400, that were not added to their balances.

The state auditors also found 33 employees  who were not deactivated in the payroll system even though they were no longer employed by the City. Although they did not receive payments for the remainder of our audit period, they should be deactivated to ensure this could not occur.

The auditor recommended:

“1. The City should develop comprehensive policies and procedures for leave accrual balances and appoint someone independent of the maintenance of leave time records to periodically review the accrual records and balances for accuracy.

2. The clerk should correct the leave accrual records for the employees identified in this report.

3. The clerk should ensure that all individuals that are no longer employed by the City are deactivated from the payroll system.”

In the city’s response to the audit, City Comptroller Charles Emberger wrote that the city finds parts of the audit report “inaccurate,” and provided explanations for how vacation and sick time is handled. He also wrote: the city has “checks and balances in place so employees are not overpaid.” He said the city has made software changes “to address the deactivation of employees and tighten up controls on submitting time sheets to payroll.”  

Emberger ended his response by explaining the city has “reconciled all accruals on an annual basis and will step it up to a quarterly basis.”

The Council has the responsibility to initiate a written corrective action and send it to the state auditor’s office within 90 days. 

Read the full audit and city's response in the PDF attached to this article.