Overtime Audit identifies cost savings

November 12, 2013

Blog

The third major audit from our Internal Auditor was released today – the use of overtime.

I introduced the need for this audit in an earlier post, simply called Overtime – https://mayorsblog.guelph.ca/2013/10/23/overtime/

As we should expect, the audit is thorough and pulls no punches.

Going into this, we knew two things – the use of overtime at the City of Guelph is higher than many of our comparator cities and the systems in place to track and report on overtime are insufficient.

These are some highlights from the Internal Auditors report:

* Overtime is a fundamental means to manage fluctuations in workload and staff resources.

* Some service areas manage their overtime costs well while others don’t.

* In some service areas, a culture of entitlement to overtime has developed.

* The language in collective agreements is restrictive; extended leaves, weather-related incidents and legislated minimum service requirements also complicate the management of overtime

* Managers do not have the tools they need to efficiently and effectively manage overtime costs.

* Senior management has not set “the tone from the top” and made the management of overtime costs a priority.

* Overtime costs have increased from 3.52% of base salary & wages in 2009 to 5.1% in 2013 (estimated).

* Total actual overtime cost projected for 2013 is $4.2 million in cash plus banked overtime taken as time off in lieu projected at $850,000 totalling $5 million or 6.1% of base salary & wages.

* A reasonable target for overtime (cash only) would be approximately 2.0 to 2.5% of total base salary & wages.

* The difference between the current level (5.1%) and a maximum target (2.5%) is a cost savings of approximately $3 million.

Putting this saving into context, it represents the equivalent of a 1.5% increase in tax rate (1% increase is $1.865 million). That means approximately $51 to the average homeowner (the $ impact of a 1% tax levy increase on a property with a CVA of $311,136 is $34).

The Internal Auditor calls for a “reset” of culture and management practices. Agreed.

She notes “it must be acknowledged that changes in culture and past practice take time to fully evolve”. I know this to be true. However, I do take some issue with this observation in light of her findings.

When our practices are so out of step with our values – integrity, excellence and wellbeing – there needs to be a real sense of urgency on the part of everyone to change.

There is no integrity in any service area having a culture of entitlement for overtime. There is no excellence in not providing the right tools for management to do their job. And there is no wellness reflected in the high levels of overtime that some employees are doing.

There are two parts to every audit. The first is the report of the findings of the Internal Auditor. This is what I have just described. The second part is the response of management – in this case the response of the CAO on behalf of the Executive Team. There are 39 recommendations that require a response. That is what I will be reading next and looking to see an unqualified commitment to “reset” culture at City Hall and a clear action plan to deliver.

Our Internal Auditor has only found one other Ontario municipality who has conducted an audit of overtime. Consequently, she is receiving a lot of interest from her peers in the province.

With this new resource – internal audit – Council will work through all aspects of city business. And when we are done, we will start over again because practices and tools are always evolving. It is one way we are doing business differently.

You can find information about our Internal Auditor and past audits on guelph.ca on the webpage – Internal Audit – http://guelph.ca/city-hall/city-administrators-office/internal-audit/

I wrote about the first audit conducted. It examined corporate-wide practices to ensure regulatory compliance with Commercial Vehicle Operator Registration legislation. The Internal Auditor made 24 recommendations for change – https://mayorsblog.guelph.ca/2013/04/05/building-public-trust/

The second audit examined our procurement practices. While making some recommendations, our Internal Auditor found that internal controls were strong and their application was consistent.

The work of the Internal Auditor can identify cost savings and opportunities to strengthen management practices as well as confirm that our practices are sound.

About Karen Farbridge

An unwavering change maker seeking a just, democratic and sustainable world.

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3 Comments on “Overtime Audit identifies cost savings”

  1. Leanne Piper Says:

    Our best value for money this term of Council has been hiring an Internal Auditor…

  2. David Storey Says:

    As a specialist in inventory and Purchasing, Procurement practised are a basic fundamental practise in all business were have you been for the last 20 years, shame on you for wasting tax payers monies because you can’t perform the most basic business task. Obviously you don’t have the right people hired in City Hall Managment positions or this would never have happened.

  3. kfarbridge Says:

    You may be interested in the Internal Audit of our Purchasing and Procurement practices – the Internal Auditor found excellent internal controls were in place and compliance was excellent.

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