Audit Objective
Did Village of Herkimer (Village) officials pay salaries, wages and separation payments as authorized and ensure adequate employee time records were maintained?
Audit Period
June 1, 2022 – December 20, 2024
Understanding the Program
Employee compensation, including regular salaries and wages, overtime and payments to employees for unused leave accruals or other benefits upon separation from service, represent significant costs for the Village. For the 2024-25 fiscal year, the Village’s budgeted appropriations totaled $9.5 million, with employees’ salaries, wages and benefits accounting for $7.0 million (74 percent) of the total.
To properly control and account for these costs, Village officials must ensure employees only receive the compensation approved by the Village Board (Board) to which they are entitled, and time records adequately support and document employees’ hours worked.
Audit Summary
Village officials paid salaries and wages as authorized, but did not maintain adequate employee time records or ensure separation payments were accurate or adequately supported. Furthermore, employees were paid for overtime that, in some instances, was not adequately documented or consistent with language in their applicable collective bargaining agreement (CBA). Direct supervisors also did not review or certify payroll registers, a detailed record of all payroll information for a specific pay period, including employee names, hours worked, gross pay, deductions, and net pay, before officials and employees were paid, as required by New York State Village Law (Village Law) Section 5-524.
We reviewed the gross payments and time records for 15 employees1 that were paid a total of $260,030 for six pay periods. In general, salaries and wages were paid as authorized and employees’ hours were correctly entered into the payroll system. However, time records were not always:
- Prepared by the employees,
- Certified (signed) by the employees,
- Completed properly to include the employees’ beginning and ending times, or
- Reviewed by a supervisor.
We also identified three employees who retired from the Village and received separation payments and other separation-from-service benefits totaling $128,254. While calculations were available for the three employees to substantiate the cash payments and benefits each received upon separation, these calculations were not always consistent with the language in the applicable CBA or there was no individual employment agreement (employment contract) or local enactment to authorize and support the amounts paid. As a result, these employees received either questionable or unsupported separation payments and benefits or did not receive certain benefits to which they were entitled, totaling $73,877.
The Board did not develop or adopt any written policies or procedures for overtime, and instead relied on each Village department to complete this task. While both the Police and Fire Departments developed adequate written procedures for overtime, no written policies or procedures were developed by the Department for Public Works (DPW) or Water and Sewer Department. Therefore, we reviewed the time records for five employees from these two departments to determine whether overtime was adequately documented. In total, these five employees were paid $67,727 for 1,974 hours of overtime that was either not adequately documented or, in some instances, consistent with language in their applicable CBA.
In addition, although payroll registers were reviewed by either the Clerk-Treasurer or Deputy Treasurer during payroll processing, they were not provided to direct supervisors for review or certification as required by Village Law Section 5-524.
When adequate employee time records are not maintained, and separation payments and overtime are not adequately documented or supported, there is an increased risk the Village may provide compensation to employees that they are not entitled to receive.
The report includes 14 recommendations that, when implemented, will improve the Village’s payroll process. Village officials agreed with our recommendations and have initiated or indicated they plan to initiate corrective action. Appendix C includes our comments on issues raised in the Village’s response.
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the State Comptroller’s authority as set forth in Article 3 of the New York State General Municipal Law. Our methodology and standards are included in Appendix D.
The Board has the responsibility to initiate corrective action. A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and provided to our office within 90 days, pursuant to Section 35 of the New York State General Municipal Law. For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report. We encourage the Board to make the CAP available for public review in the Clerk-Treasurer’s office.
1 Refer to Appendix D for further information on our sample selection.