State auditors are critical of the way Whidbey General Hospital officials handle the payroll system.
In a report released Tuesday, auditors said hospital officials “did not have adequate controls over payroll process to safeguard public resources.”
Because of this problem, Whidbey General Hospital made $183,211 in overpayments to hospital employees and staff accrued 22.73 hours in unearned time off, according to the report.
Whidbey General Hospital officials were contacted for comment, but said they would not be able to provide comment as of press time Tuesday.
Whidbey General Hospital employs around 700 people and has a payroll expenditure of approximately $48 million. The audit covers Jan. 1, 2012 through Dec. 1, 2012.
Hourly employees are paid based on time cards supported by an employee badge, which is scanned into an automated system while salaried employees complete monthly time sheets that record and track paid time off. Employees and supervisors are expected to review and approve these records for accuracy, according to the report.
State auditors in the report noted several weaknesses when they review the district’s internal controls:
• A lack of segregation of duties within the departments of payroll and benefits.
• No comparison of paid time off was claimed in time
records to the amount earned before it is paid.
• Payroll manager manually enters leave accruals for staff with contracts that have collective bargaining agreements. There is no secondary review to ensure the entries are accurate.
• Supervisors don’t have adequate knowledge regarding use of the automated system and employee contracts.
“The district has not made it a priority to assess the risk associated with its payroll process,” the report states. “It also has not documented the required procedures for the process nor provided adequate training for the employees and supervisors. As a result, any intended controls are either unknown or not being followed.”
In addition to the overpayment of wages, auditors noted one employee received an additional five hours of pay because a supervisor edited the time sheet based on an incorrect understanding of a union contract. The error should’ve been caught during a review and both parties failed to approve the timesheet before processing, the report stated.
During a review of time sheets covering three pay periods, auditors said that 20 percent weren’t approved by the employee and 10 percent weren’t approved by the supervisor.
In response to the finding, hospital officials said they reviewed the recommendations and started implementing them as soon as possible. Those comments were included in the report.