Yorba Linda council conducts 'deep dive' audits on employee overtime pay, contract management

Special “deep dive” audits focusing on overtime pay for Yorba Linda city employees and procedures for managing city contracts returned findings of “no exceptions,” so recommendations for changes in operations weren't provided in either area.

The overtime audit showed no employee received added pay in excess of 25% of annual salary and overtime was approved by authorized managers, with pay at 1.5 times the hourly rate for more than 40 hours in a week or two times the hourly rate for Sundays and holidays.

The contracts management audit reviewed expenditures detail and proofs of payments made to contractors to verify that total payments agreed with the original contract and amendments.

The “no exceptions” findings were based on a sample consisting of the five employees with the largest number of overtime hours and a sample of three professional services contracts and the two largest construction contracts for each of the 2016, 2017 and 2018 fiscal years.

The “deep dive” audits – known as “agreed-upon procedures engagements” by auditors – cost $10,000 and were conducted by Macias Gini & O'Connell, the firm handling the city's regular annual audits.

The primary difference between the special audits and the city's regular yearly financial audit, according to Finance Director Scott Catlett, “is the level of focus and detail the audits involve.”

In his recent report to City Council members, Catlett added, “The city's annual financial audit documents that the city's financial statements fairly present the financial condition of the city,” while a special audit “focuses on specific areas for further scrutiny.”

The “deep dive” audits were included in a package of recommendations adopted by the council in February 2017 to match “best practices” found at public agencies “with strong internal controls and financial management practices,” Catlett stated.

In addition to reviewing results of the overtime pay and contract management audits, the council approved two new “deep dive” audits for the just-completed fiscal year: handling cash and the related controls at remote city facilities and at the Black Gold Golf Club.

“Unlike at City Hall where there is centralized cashiering..., remote city facilities” – the library, community center, golf course, Lasorda field house and Travis Ranch activity center – “have varying methods of collecting and managing cash and checks,” Catlett stated.

He added that auditors will review the handling of cash and checks by city employees at remote locations and Kemper Sports employees at Black Gold to ensure “best practices” are followed and reports from each facility match the amounts received at City Hall.

Suggestions for future special audits include controls for Black Gold check issuance, city yard fuel tank usage and wire transfers. The first special audits reviewed surplus property disposal and procedures for using city credit cards in 2018.