Audit Objective
Did Village of Walden (Village) officials ensure that employees’ payroll payments and leave accruals were accurate, approved and supported?
Audit Period
June 1, 2021 – May 31, 2023. We extended our audit period forward to August 29, 2023, to review direct deposits and February 15, 2024, to review separation payments.
Understanding the Audit Area
Village officials should ensure that employee payroll payments and leave accruals are accurate, authorized and properly supported because payroll is often the largest operating expenditure for a village. Accurate payroll processing helps a village board ensure that employees are compensated only for authorized salaries, wages, overtime and leave benefits and helps ensure that these benefits are earned according to employment agreements, board authorizations and policies. When a village board properly approves wages, salaries and employee benefits, and ensures that these benefits have adequate supporting documentation, this helps prevent errors, unauthorized payments, excessive leave accruals, fraud and disputes regarding compensation or benefit balances.
Maintaining accurate payroll and leave records promotes accountability, strengthens internal controls and provides officials with reliable financial information for budgeting, collective bargaining, workforce planning and financial reporting purposes. In addition, properly supported payroll transactions help demonstrate compliance with legal requirements, employment contracts and village policies, while also helping to protect taxpayer funds and avoid unnecessary financial costs.
The Village paid a total of $9.2 million to 203 employees during the audit period.
Audit Summary
Village officials did not consistently ensure that employee payroll payments and leave accruals were accurate, properly approved and adequately supported. Weaknesses in payroll oversight and internal controls reduced accountability and transparency, contributed to at least $144,767 in unsupported, unauthorized, inaccurate and/or inadequately documented payroll payments, leave accruals and employee benefits. As a result, Village officials cannot ensure that payroll compensation and leave benefits were administered in accordance with Village policies and collective bargaining agreements (CBAs), which increased the risk that taxpayer funds could be misused.
We reviewed regular payroll payments for 25 employees totaling $575,036, and 12 separation payments totaling $97,640 during the audit period, and identified significant deficiencies in payroll and leave administration, which included:
- Time worked totaling $87,265 without adequate supporting documentation.
- Separation payment errors totaling $28,218.
- Unsupported or unauthorized overtime totaling $17,854.
- Unauthorized leave accruals totaling $7,857.
- Payroll payment errors totaling $3,573
We also identified the following:
- 617 instances in which employees changed their scheduled work shifts without documented authorization or justification.
- 289 instances in which employees charged leave time without supervisory or Village management approval.
- 24 instances in which employees’ leave accrual charges exceeded their accrued benefits.
The report includes 14 recommendations that, if implemented, will strengthen payroll and leave administration, improve accountability, enhance oversight and help Village officials ensure that employee compensation and leave benefits are accurate, authorized, properly supported and administered in accordance with Village polices and CBAs and that taxpayer funds are safeguarded. Village officials generally agreed with our recommendations and have initiated or indicated they planned to initiate corrective action.
This audit was conducted pursuant to Article V, Section 1 of the State Constitution and the Office of the New York State Comptroller’s (OSC’s) authority as set forth in Article 3 of the New York State General Municipal Law (GML). The audit’s methodology and standards are included in Appendix C.
The Village Board (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 OSC within 90 days, pursuant to GML Section 35. For more information on preparing and filing the CAP, please refer to the OSC brochure, Responding to an OSC Audit Report, which was provided with the draft audit report. The Board is encouraged to make the CAP available for public review in the Village Clerk’s office.