Follow-up Audit on the Personnel, Payroll and Timekeeping Practices of the New York City Tax Commission

This is a follow-up audit to determine whether the New York City Tax Commission (Commission) implemented the recommendations made in a previous audit, Personnel, Payroll, and Timekeeping Practices of the New York City Tax Commission, issued May 2, 2001. In this report, we discuss the five recommendations from the prior audit in detail, as well as the current status of each recommendation.

In Fiscal Year 2001, our office conducted an audit to determine whether the Commission was in compliance with applicable personnel, payroll, and timekeeping procedures, as set forth in the Comptroller’s Directive No. 13, Payroll Procedures; the City’s Leave Regulations for Management Employees and Leave Regulations for Employees Who Are Under the Career and Salary Plan; and the 1995-2001 Citywide Agreement between the City and its employee unions. That audit found a number of weaknesses in regard to segregation of duties, timekeeping and leave use, and annual leave accrual. In addition, the audit found that the Commission did not make a lump-sum payment to a former employee who resigned and left City employment.

Audit Findings and Conclusions

Of the five recommendations made in the previous audit, the Commission implemented three, partially implemented one, and didnot implement one.

In this follow-up audit, we found that the Commission has improved its compliance with applicable personnel, payroll, and timekeeping procedures. The Commission now maintains the required timekeeping records for all of its nonmanagerial employees. The Commission also requires authorization for employees to maintain annual leave balances in excess of the City’s maximum allowable limit. Further, there was an improvement with regard to the number of instances employees obtained approval to use their annual leave.

However, there are areas that still need improvement. The Commission does not segregate duties concerning its payroll process. One individual still carries out the four primary payroll functions. In addition, annual and sick leave use was not always approved. The failure to submit leave request forms increases the risk of inaccuracies in leave balances and may allow employees to take leave without supervisory approval.

In addition, we found that the agency incorrectly maintained on the City Payroll Management System (PMS) the annual leave balance of an employee that had left City employment. This increases the risk that this employee may erroneously be paid for the accrued leave in the future. We also noted in this audit that the Commission has no employee policy and procedure manual. The lack of a manual may have contributed to the incomplete implementation of some of our prior report’s recommendations, even though the agency agreed with them in their response to that audit.

To address the issues noted in this report, the Commission should implement the recommendations of the previous audit that were not fully addressed. These recommendations are repeated below, somewhat revised according to the findings of this report. The Commission should:

• Segregate duties concerning payroll, personnel, and timekeeping among the agency’s administrative staff.
• Require employees to obtain supervisory approval when using annual and sick leave.

In addition, to address the issues noted in this report that were not noted in the previous report, the Commission should:

• Adjust the annual leave on the PMS Leave Balance Report for all employees who are no longer employed to accurately reflect the Commission’s liability.
• Develop an employee manual to address personnel, timekeeping, and payroll policies and procedures and distribute this manual to all staff.