Purpose of Audit

The purpose of our audit was to examine the Town’s internal controls over payroll processing for the period January 1, 2012 through June 30, 2013.

Background

The Town of Charleston is located in Montgomery County and has a population of approximately 1,400 residents. The Town Board comprises an elected Town Supervisor and four other elected members. The Town's budgeted expenditures for the 2013 fiscal year are approximately $1.3 million.

Key Findings

• The Town’s internal controls over payroll processing were not properly designed or operating effectively. Although the Town has a collective bargaining agreement (CBA) with the highway department employees, the Town lacks written policies and procedures to provide guidance to Town officials on how to process and distribute payrolls.
• Although the Supervisor stated that he signs a payroll certification page for each payroll; he does not review the payroll records for any errors. As a result, all six highway department employees received a total of 134.25 hours of leave accrual benefits valued at $2,516 they were not entitled to for the six months of payroll we reviewed. Also, four of the six highway department employees did not receive a total of 37.50 hours of compensatory time valued at $700 they were entitled to for the same period.

Key Recommendations

• Establish a comprehensive written payroll processing policy that incorporates the duties, records, and procedures needed to ensure that the processing of payroll is accurate, efficient and appropriate.
• Review highway department employees’ time cards each pay period for accuracy and completeness. Review benefit time balance reports for all employees to verify accruals have been recorded properly.