2. Follow-Up Review of Police Overtime Audit (Oct. 2021) 0"
CIT Office of the City Auditor
OF
DENTON Accountability • Transparency • Integrity • Quality
The Police Department has improved
n its policies and procedures, ensuring
that employees' overtime hours are
appropriately approved and
� reconciled.
An overtime policy containing the
overtime procedures and practices
and the limits on employees' overtime
hours has been implemented.
POLKL
Audit of Police Overtime
Follow-Up Review
Audit Team
City Auditor
Madison Rorschach, CIA, CGAP
Audit Staff
Neeraj Sama, MBA, MS
215 E. McKinney St., Denton, TX 76201 • (940) 349-7228
Audit of Police Overtime: Follow-Up Review October 2021
Table of Contents
Follow-Up at a Glance .................................................................................................3
Introduction ...................................................................................................................4
Management Responsibility .......................................................................................4
Audit Objectives, Scope, and Methodology ...........................................................4
Recommendation Status Update ................................................................................ 6
Police Payroll Duties Are Not Appropriately Segregated .......................................6
Not All Overtime is Approved Appropriately............................................................6
Police Overtime Policy Changes Should Be Made to Align with Best Practices..8
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Audit of Police Overtime: Follow-Up Review October 2021
Follow-Up at a Glance
Why we did this Follow-Up:
This report is intended to provide information on what changes have been made in
response to the Audit of Police Overtime issued in October 2019. The original audit
evaluated the Denton Police Department's overtime procedures and processes. This
follow-up review was included on the City's fiscal year 2020-21 Annual Internal Audit Plan
as approved by the City Council.
What we Found:
The Police Department has significantly improved overtime practices and has created
policies and procedures for proper segregation of payroll approval and reconciliation-
related activities. Additionally, the Department has developed practices and designed the
Workforce Telestaff system's access rights matrix to ensure that police employees are not
allowed to self-approve their overtime hours. The status of each recommendation is
summarized below:
Recommendation Mgmt. Status
Response
1 . Segregate the duties of preparing and
authorizing the police payroll to reduce the Concurred Implemented
risk of fraud.
2. Prohibit all Police staff from self-approving Concurred Implemented
overtime.
3. Periodically review Police TeleStaff user
access, including override access, to ensure Concurred Implemented
it is appropriate.
4. Update the Police Department's policies and
procedures to reflect current overtime Concurred Implemented
procedures and practices.
5. Codify a maximum number of overtime hours Concurred Implemented
for Police Department employees.
Audit report translations may be requested by emailing InternalAudit@CityofDenton.com.
Audit of Police Overtime: Follow-Up Review October 2021
Introduction
The Internal Audit Department is responsible for providing: (a) an independent
appraisal.' of City operations to ensure policies and procedures are in place
and complied with, inclusive of purchasing and contracting; (b) information that
is accurate and reliable; (c) assurance that assets are properly recorded and
safeguarded; (d) assurance that risks are identified and minimized; and (e)
assurance that resources are used economically and efficiently and that the
City's objectives are being achieved.
The Internal Audit Department has completed a follow-up review of the Audit of
Police Overtime issued in October 2019. We conducted this performance audit
in accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on
our audit objectives.
Management Responsibility
City management is responsible for ensuring that resources are managed
properly and used in compliance with laws and regulations; programs are
achieving their objectives; and services are being provided efficiently,
effectively, and economically.
Audit Objectives, Scope, and Methodology
This report is intended to provide a progress update on recommendations from
the Audit of Police Overtime (October 2019J, which evaluated the Denton
Police Department's overtime procedures and processes.
Audit fieldwork was conducted during October 2021 . The scope of review
varied depending on the procedure being performed. The following list
summarizes major procedures performed during this time:
Reviewed documentation from the issued audit to develop criteria
including industry standards, best practices, policies, and procedures;
Interviewed Police Department Administration Division Staff;
The City of Denton's Internal Audit Department is considered structurally independent as
defined by generally accepted government auditing standard 3.56.
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Audit of Police Overtime: Follow-Up Review October 2021
y Reviewed policies and procedures pertaining to overtime hours approval
and reconciliation;
Reviewed a statistical sample2 of 95 paychecks issued between July 17,
2020, to July 16, 2021 , to verify the overtime hours' approval and ensure
that police employees' overtime hours are not self-approved; and
v Reviewed user access to the Police Department's timekeeping system to
verify that police employees are not granted access rights to self-approve
their overtime hours.
2 This sample size provides with 95 percent confidence that the true population mean is within
±10 percent of the sample estimate.
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Audit of Police Overtime: Follow-Up Review October 2021
Recommendation Status Update
This report summarizes the Audit of Police Overtime's recommendations,
management responses, and the Internal Audit Department's follow-up findings,
which describe to what extent City management has implemented Internal
Audit's recommendations since the publication of the original report in October
2019.
Police Payroll Duties Are Not Appropriately Segregated
1. Segregate the duties of preparing and authorizing the police payroll to
reduce the risk of fraud. If duties cannot be adequately segregated,
compensating controls should be developed.
Management Response: Concur
The Police Department concurs with the recommendation and
is currently working on the implementation of improved internal controls.
Audit Follow-Up Finding: Implemented
According to the adopted General Order 1504 - Overtime
Compensation Policy, - non-exempt policy employees are required to
obtain supervisory approval for overtime hours worked. Additionally, the
Police Department has adopted a standard operating procedure that
contains steps and activities to be performed by the Police Department's
payroll team for payroll processing and reconciliation.
According to this procedure, the Police Department's payroll team
reconciles the Department's payroll for each pay period before it is
processed by the City's Payroll Division. Based on the review of the last six
pay periods' records in the Department's repository, the Police
Department's payroll team regularly reconciles the payroll as required by
the standard operating procedure.
Not All Overtime is Approved Appropriately
2. Prohibit all Police staff from self-approving overtime.
Management Response: Concur
The Police Department concurs with the recommendation and has
begun to address this recommendation throughout the chain of
command.
Audit Follow-Up Finding: Implemented
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Audit of Police Overtime: Follow-Up Review October 2021
The Police Department has created approval procedures to ensure that
supervisors or executive staff approve Police Department employees'
overtime hours.
Based on review of a statistical sample of 95 paychecks, overtime hours
were not self-approved by the Police Department employees in the
timekeeping system between July 2020 and July 2021 . After the
retirement of the Police Administration Supervisor in June 2021, no
overtime hours were approved by the Police Department's administrative
employees of the reviewed sample. Supervisor or executive staff
generally approved employees' overtime hours reviewed.
Additionally, based on the review of the Police Department's
timekeeping system access rights, employees do not have the right to
self-approve their overtime hours.
3. Periodically review Police TeleStaff user access, including override
access, to ensure it is appropriate. Access should be reviewed by an
employee who is not responsible for making access
changes to ensure accuracy.
Management Response: Concur
The Police Department's Administrative Supervisor (Payroll) has reviewed
all TeleStaff users' access and has implemented the recommended
changes; this function will be conducted quarterly.
Audit Follow-Up Finding: Implemented
The Police Department has adopted General Order 1504 - Overtime
Compensation Policy, -which contains the following provision for
periodical review of the timekeeping system:
"The Administrative Services Bureau is responsible for conducting a
quarterly review of Department time keep software user access, including
override access, to ensure it is appropriate. Access should be reviewed
by an employee who is not responsible for making access changes."
Based on the discussion with Police Department staff, they are planning
to create an automated reporting system to review timekeeping access
rights and authority by Administrative Services Bureau staff beginning next
quarter.
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Audit of Police Overtime: Follow-Up Review October 2021
Police Overtime Policy Changes Should Be Made to Align with Best
Practices
4. Update the Police Department's policies and procedures to reflect current
overtime procedures and practices. Consider incorporating the best
practices, including codifying some current procedures, described in the
previous section to facilitate productivity and mitigate the risk of
waste and abuse.
Management Response: Concur
The Police Department has begun notifying personnel of current overtime
procedures and practices while an updated policy manual is being
completed. The changes will be reflected in the new policy.
Audit Follow-Up Finding: Implemented
The Police Department has implemented General Order 1504- Overtime
Compensation Policy that formally adopts and codifies the current
overtime practices and procedures. The policy also outlines the
comprehensive procedure for request and approval of overtime hours
that would help mitigate risk and waste.
The Chief of Police, or authorized designee, is responsible for monitoring
Department overtime. Based on the information received, an overtime
report is presented to the Police Department Executive Team consisting
of the Chief of Police, Assistant Chief, and Deputy Chiefs quarterly for
their review.
5. Codify a maximum number of overtime hours for Police Department
employees. This overtime cap may be set up by any period the Police
Department deems appropriate and should be incorporated
into front-line, supervisory, monitoring procedures.
Management Response: Concur
The Police Department concurs with the recommendation and has
identified a maximum number of overtime hours (76) of combined regular
duty, department overtime, and
outside overtime per week.
Audit Follow-Up Finding: Implemented
The Police Department has implemented General Order 1504- Overtime
Compensation Policy that prescribes the maximum number of hours to be
performed by the Police Department employees including exceptions.
According to the adopted overtime compensation policy, except under
emergency operations, Police Department employees should not work
more than:
�, 16 hours in a one-day (i.e. 24 hour) period;
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Audit of Police Overtime: Follow-Up Review October 2021
30 hours in any two-day (i.e. 48 hour) period; and
76 hours in any seven-day (i.e. 168 hour) period.
Except in unusual circumstances, employees are required to have a
minimum of eight hours off duty between shifts. Additionally, according to
the policy, supervisors are required to give consideration to reasonable
rest periods and are authorized to deny overtime or relieve any member
who has exceeded the above guidelines to off-duty status.
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