Audits of Local Governments and School Districts
Town of Erwin – Internal Controls Over Payroll (2012M-47)
Released: October 12, 2012 -- [read complete report - pdf]
Purpose of Audit
The purpose of our audit was to examine the Town’s internal controls over payroll processing for the period January 1, 2009, to March 4, 2011.
The Town of Erwin is located in Steuben County. The Town is governed by a Town Board that consists of the Town Supervisor and four Board members. The Town’s budgeted appropriations for 2011 were $7.2 million, which were funded primarily by real property taxes, sales tax, and State aid.
- The Board failed to provide proper oversight of the Town’s payroll process and delegated responsibilities to the Town Manager without providing adequate oversight of the duties that she performed.
- Five Town employees were misclassified as employees of the Community Development Agency (CDA), which the Board was aware of, but did nothing to remedy.
- The Town lacked written policies and procedures for managing the payroll process, and the current employee payroll policy is incomplete and inconclusive. These missing and confusing policies allowed three employees to receive $25,594 in pay raises without Board approval, three managers to be paid $15,000 in improper bonuses, and the Town Clerk to receive improper payments totaling $1,000.
- We identified a number of errors relating to leave accruals and compensatory time balances.
- Adequately oversee the Manager’s work by periodically reviewing salaries to ensure that they match Board-approved amounts.
- Ensure all Town employees are accounted for within the Town’s financial operations.
- Establish written policies and ensure that Town officials develop procedures for the payroll and personnel functions.
- Consult with the Town attorney about possible recovery of unauthorized lump-sum payments.
Local Government and School Accountability Contact Information:
Phone: (518) 474-4037; Email: email@example.com
Address: Office of the State Comptroller, Division of Local Government and School Accountability
110 State Street, 12th Floor; Albany, NY 12236