Compliance Review of Payroll for the Los Angeles Department of Building and Safety
DATE: June 26, 2018
TO: Frank Bush, General Manager Department of Building and Safety
FROM: Georgia Mattera, Chief Deputy Controller Office of the Controller
SUBJECT: PAYROLL COMPLIANCE REVIEW
The Office of the Controller conducted a payroll compliance review of the Department of Building and Safety (LADBS) to ensure that LADBS bases payroll expenditures on approved time worked (including overtime), and authorizes and properly supports any supplemental pay (e.g., bonuses, mileage reimbursements, etc.).
Management of each City department must design, implement, and maintain a system that reasonably assures proper authorization and support for payroll expenditures and that complies with established policies and regulations. The Office of the Controller assists management by performing periodic assessments of the effectiveness of this departmental system. These assessments complement management’s assurance responsibilities.
After considering City and LADBS policies and procedures, justifications for authorizing supplemental payments, and related supporting documentation, we conclude, for the sample of employees and timeframe reviewed, that LADBS followed applicable policies and procedures.
Payroll is the single largest expense of the City of Los Angeles (City). Department management is responsible for ensuring employee pay is accurate and supported by appropriate authorization and eligibility for overtime, bonuses and other supplemental payments. With the exception of the Department of Water and Power, the Office of the Controller processes payroll transactions for all City departments, and periodically conducts payroll compliance reviews to assess how well departments are following through on their responsibilities.
FACT #1: LADBS’ mission is to protect the lives and safety of residents and visitors of the City, and enhance the quality of life, housing, economic prosperity. LADBS advises, guides, and assists customers to achieve compliance with the building, zoning, plumbing, mechanical, electrical, disabled access, energy, and green codes and local and state law to build safe, well, and fast.
FACT #2: LADBS employs more than 900 individuals whose diverse jobs include building, mechanical, heating, and plumbing inspectors, environmental engineers, and other professionals.
FACT #3: LADBS’ fiscal year (FY) 2018 budget was approximately $113 million, with $110 million of its budget dedicated to salaries and overtime. LADBS’ main programs include, commercial inspection and licensing, structural plan checking, and residential construction inspection.
FACT #4: LADBS ranked 8th among City departments in overtime payments.
Compliance Review Results
We completed a review of LADBS’ payroll processes, including management’s practices for authorizing, approving, and documenting supplemental pay (i.e., bonuses, allowances, overtime and mileage reimbursements). Our review focused on a sample of employees selected from the divisions with the highest amounts of overtime and mileage pay.
After considering City and LADBS policies and procedures, justification for authorizing the supplemental payments (i.e., bonuses, allowances, overtime, and mileage reimbursements), and related supporting documentation, we conclude for the sample of employees and timeframe reviewed, that LADBS followed applicable policies and procedures.
LADBS spends substantial sums on supplemental employee pay. LADBS needs to continue adhering to established guidelines, and monitor overtime costs to ensure efficiency of program operations, and when necessary to hire new employees and fill vacant positions.