Why The Controller’s Office Conducted The Examination
Pursuant to the requirements of Section 6-400 (c) of the Philadelphia Home Rule Charter, we examined the financial affairs of Philadelphia’s city agencies as part of our audit of the City of Philadelphia’s basic financial statements. The focus of our examination was to determine if management of each agency had suitably designed and placed in operation internal controls to ensure accurate financial information and compliance with any laws and regulations related to revenue and expenditure activities.
What The Controller’s Office Found
The Controller’s Office noted widespread deficiencies involving internal controls over petty cash and payroll expenditure activities that the Office of the Finance Director needs to address with agency heads (see Appendix I for a summary). Highlights of the deficiencies include:
- Over thirty-three percent of all city agencies did not perform their petty cash bank and fund reconciliations in a timely manner. Some of the same agencies neglected to transfer long outstanding checks into the City of Philadelphia’s Unclaimed Monies Fund increasing the risk that unclaimed property would not be forwarded timely to the state in accordance with the Commonwealth’s Unclaimed Property Law. Most notably the Health Department’s bank reconciliations included checks dated between October 2005 and January 2014 totaling $10,779.
- The Office of Fleet Management circumvented the $500 petty cash spending limit by splitting payments to replenish their EZ Pass account held with the Delaware River Port Authority. In addition, the agency was unable to provide support for the Mayor’s Office and Police Department’s EZ Pass usage, which account for close to twenty percent of the total usage. A total of $8,000 was paid to replenish the EZ Pass account during fiscal year 2015.
- The city was unable to recover a total of $4,705 from two former employees of the Department of Streets and the Board of Revision of Taxes who continued to be paid after their termination dates. These situations occurred because the two agencies were still not always reviewing the payroll system to ensure separated employees became removed from active status in the system.
- The city’s sick leave policy was still not enforced in over forty percent of all city agencies. In many cases, agencies were not imposing established penalties and continued to pay employees for sick time taken after placement on the excessive use of sick leave list.
A number of city agencies took corrective action on some of the prior year conditions. Noteworthy of mentioning is the Mayor’s Office of Community Empowerment and Opportunity, Water Department, Revenue Department, Register of Wills, Sheriff’s Office, and First Judicial District all of whom implemented all of our prior recommendations.
What The Controller’s Office Recommends
The Controller’s Office has developed a number of recommendations to address these findings. The recommendations can be found in the body of the report.Download Full Audit