Compliance Review of Payroll for the Los Angeles Bureau of Sanitation
DATE: June 26, 2018
TO: Enrique C. Zaldivar, Director Bureau of Sanitation
FROM: Georgia Mattera, Chief Deputy Controller Office of the Controller
SUBJECT: PAYROLL COMPLIANCE REVIEW
The Office of the Controller conducted a payroll compliance review of Bureau of Sanitation (BOS), to ensure that BOS bases payroll expenditures on approved time worked (including overtime), and authorizes and properly supports any supplemental pay (e.g., bonuses, mileage reimbursements, etc.).
Management of each City department must design, implement, and maintain a system that reasonably assures proper authorization and support for payroll expenditures that complies with established policies and regulations. The Office of the Controller assists management by performing periodic assessments of the effectiveness of this departmental system. These assessments complement management’s assurance responsibilities.
After considering City and BOS policies and procedures, justifications for authorizing supplemental payments, and related supporting documentation, we conclude for the sample of employees and timeframe reviewed, that BOS followed applicable policies and procedures.
Payroll is the single largest cost of the City of Los Angeles (City). Department management is responsible for ensuring employee pay is accurate and supported by appropriate authorization and eligibility for overtime, bonuses and other supplemental payments. With the exception of the Department of Water and Power, the Office of the Controller processes payroll transactions for all City departments, and periodically conducts payroll compliance reviews to assess how well departments are following through on their responsibilities.
FACT #1: BOS functions include collecting and disposing of household refuse; collecting and processing recyclables, and controlling the discharge of wastewater, industrial waste and storm water into sewers, storm drains, open channels and navigable waters.
FACT #2: BOS employs approximately 2,800 individuals whose diverse jobs include craft positions, professionals, collection truck and other equipment operators and maintenance workers. BOS has over 750 collection vehicles, operates four water reclamation plants, and maintains 6,700 miles of sewer lines and 49 pumping plants.
FACT #3: BOS’ fiscal year (FY) 2018 budget was $273 million, with $256 million and $8 million dedicated to salaries and overtime respectively. BOS’ main programs are Clean Water, Watershed Protection, and Solid Resources.
FACT #4: In FY 2017, BOS incurred $14 million in overtime costs, nearly double its $8 million overtime budget. BOS ranked 5th among City departments in overtime payments.
Compliance Review Results
We completed a review of BOS’ payroll processes, including management’s practices for authorizing, approving, and documenting supplemental pay (i.e., bonuses, allowances, overtime and mileage reimbursements). Our review focused on a sample of employees selected from the four divisions accounting for the highest amounts of overtime expenditures and mileage reimbursements.
After considering City and BOS policies and procedures, justification for authorizing supplemental payments (i.e., bonuses, overtime, and mileage reimbursements), and related supporting documentation, we conclude for the sample of employees and timeframe reviewed, that BOS followed applicable policies and procedures.
BOS spends substantial sums on supplemental employee pay. BOS needs to continue adhering to established guidelines, and monitor overtime costs to ensure efficiency of program operations, and when necessary to hire new employees and fill vacant positions.