New Castle County Auditor’s Office

Audit of

The New Castle County (NCCo) Council and Audit Financial Operations

CONTENTS:

REPORT COVER LETTER……………………………………………………………………. 2

COMMENTS and RECOMMENDATIONS

1. COUNTY COUNCIL PERSONNEL COMMITTEE .. ……………………………….. 5

2. COUNCIL ORGANIZATION .…………………………………………………………….. 6

3. REVIEW OF JOB DESCRIPTIONS………………………………………………………. 8

4. REVIEW OF SIGN-IN AND SIGN-OUT LOGS…………………………...……………… 9

5. COMPENSATORY TIME LOG REVIEW ……………………………….………. ……… 13

6. COMPENSATORY TIME AND FLSA EXEMPT-STATUS EMPLOYEES………….. 16

7. COUNCIL GRANTS REVIEW ……………………………………………………………. 17

8. REVIEW OF TRAVEL AND TRAINING EXPENSES, INCLUDING

MILEAGE REIMBURSEMENT …………………………………………………………... 20

9. REVIEW OF OTHER COUNCIL EXPENSES ………………………………………….. 22

10. COUNCIL CONTINGENCY FUND – SPECIAL ELECTION EXPENSE …………….. 24

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OPINION

In our opinion, adequate internal controls exist in all material respects except for weaknesses in the
employee management area. Our audit revealed numerous instances where time and attendance was not
properly recorded. We have worked with management to identify areas where control enhancements can be
made.

Our audit revealed that job descriptions were not kept up to date. Further, our review of the Council
organization changes, (e.g., doubling of the Legislative Aide staff in the late 2004-early 2005 time frame,
and elimination in early 2008 of funding for the Financial Advisor position) suggested perhaps the need for
reorganization, especially in the context of the above findings. We suggest that the Council size and
organization might now justify having a Chief of Staff position.

Our audit also revealed one cost center where it seemed that one or more mileage reimbursement approval
signatures may have been compromised. This issue was addressed separately with the applicable
individual’s supervisor.

OVERVIEW

The New Castle County (NCCo) Council is the legislative and audit branch of the New Castle County
Government. Council is comprised of 19 full-time employees. There are 14 part-time employees, including
12 elected Council Members and the Council President. All employees other than Council Members are
appointed, non-union, and unclassified. Each Member and the President has one Legislative Aide reporting
to him/her. Other staff includes the Clerk of Council, the Deputy Clerk of Council, the County Auditor and
his part-time staff of one, the Policy Director, the Counsel to Council, and the Council Secretary.

The County Council website states that “County Council writes and passes laws and resolutions that
improve the operation and protect the health and welfare of the citizens of New Castle County.”

Council had an annual budget of approximately $3.4 million for Fiscal Year 2014, of which $2.8 million
was salaries and benefits.

BACKGROUND

Certain County Council Members requested an internal audit to ensure Council's (and the Office of the
County Auditor’s) financial operations are being handled in accordance with policies, procedures, and
sound internal control practices.

Since the County Auditor’s Office is part of County Council, it would have been a conflict of interest if the
Office performed the audit; therefore, an independent contractual auditor was hired to perform it.
References to “Audit” below reflect the work of the independent contractual auditor and an Audit
Committee member (who supervised the audit).

There is no documentation evidencing a prior audit of NCCo Council finances or operations.

2
County Council is a separate branch of County government. It has its own policies and procedures as
represented in the NCCo Council Employee Handbook and in the Rules of the County Council of NCCo. It
does rely on NCCo Administration for support in areas such as payroll processing, procurement, and
expense processing.

AUDIT OBJECTIVES

The County Auditor’s Office (using the services of the independent contractor) performed a comprehensive
audit of internal controls over the financial operations of County Council. The overall objectives of the
audit were to provide:
 An evaluation on the controls in place and to make recommendations, if warranted.
 An opinion on the internal controls in Council which help to ensure the following objectives:
o Expenses are properly authorized, are made for legitimate purposes, and are properly accounted for.
o Council maintains adequate records of funds due to third parties and is paying liabilities within a
reasonable time frame.
o Human resources are accounted for optimally in terms of employee attendance, punctuality,
compensatory time, and other leave time.
o Council’s financial policies and procedures are complied with, including policies on Council grants,
travel and other expense approvals.
o Controls around Contingency Fund expenditures are adequate.

AUDIT SCOPE

We conducted our audit in accordance with Generally Accepted Governmental Auditing Standards . Our
audit encompassed evaluation/testing of the following:
 The overall organizational structure of County Council. See page 6.
 Review of key Council job descriptions to ensure that they are current and properly reflect the activities
performed by the person(s) in each respective function. See page 8.
 Employee Sign-In/Out Sheet review, to ensure that employees are properly accounting for their time at
work in the office and outside of the office. See page 9.
 Council employees are accounting for vacation and sick time in accordance with the Council policy.
Council employees are accruing and taking compensatory time in accordance with Council policy and
best practices. See pages 13 and 16.
 Council grants to ensure that grants are approved and distributed in accordance with Council policy as
outlined in the Rules of the County Council policy document. See page 17.
 Travel and Training Expenses, including Mileage Reimbursement. See page 20.
 Other Council Expenses, as outlined in Rule Number 14 in the Rules of the County Council policy
document. See page 22.
 Review of the Council Contingency Fund. See page 24.

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RECOGNITION OF PARTICIPATION AND COOPERATION

We would like to thank County Council and its staff for providing cooperation during the course of the
audit, and in being receptive to constructive comments and recommendations to strengthen the controls over
the financial operations of County Council.

MANAGEMENT’S RESPONSE

We received the following general response to the audit report:

“The President and Members of New Castle County Council appreciate the comprehensive work
done by the County Auditor’s Office in response to their request for an internal audit of Council’s
financial operations which included an evaluation of the controls in place with regard to authorized
expenses, records of funds due to third parties, human resources in terms of employee attendance,
punctuality, compensatory time and other leave times, Council grants, travel, and other expense
approvals, and Contingency Fund expenditures.

The President and Members of County Council also appreciate the recognition given to staff by the
County Auditor’s Office for its complete cooperation and receptiveness to constructive comments
meant to strengthen controls over the financial operations of County Council.

Council’s foremost concern is to balance the delivery of outstanding constituent service through
legislative measures and staff performance with an assurance that taxpayer dollars are expended in
the most efficient way.”

Management’s response to the individual report comments is included after each set of recommendations.
There are certain responses which we believe do not adequately address our recommendations and/or need
additional information. (In these situations, we include a section titled “Audit’s Evaluation of Response”
after Management’s Response.) On June 19, 2014, we formally requested revised responses; however, such
revised responses were never received.

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 COMMENTS AND RECOMMENDATIONS
GENERAL COMMENT
COUNTY COUNCIL PERSONNEL COMMITTEE MEETING

Comment

At the April 6, 2013 Personnel Committee Meeting, there were two items on the agenda which dealt with
County Council’s Employee Handbook.

At this meeting, the Clerk of Council’s Office informed Council that, several years ago:
 An attorney was engaged to help Council prepare the Employee Handbook.
 A great deal of time was spent in preparing the Handbook.
 The Handbook is for the protection of the employer (i.e., County Council).
 Failure to apply the rules equally to all Council staff could result in discrimination claims against
Council.
The Clerk’s Office also informed Council that there have been significant violations of the Handbook rules,
yet Council continues to do little to enforce them. The Clerk’s Office itemized the types of violations, many
of which are mentioned further in this audit report.

Two Council Members stated that Council has put the Clerk’s Office in a no-win, impossible situation
because the Clerk’s Office has tried to enforce the rules but has received little support from Council when
there are rule violations. One Council member stated that, although the rules are reasonable, certain people
continue to break them and there are no consequences.

The Clerk’s Office asked Council for direction on where to go from here, as they can’t continue to try to
enforce the rules if it is Council’s will for them not to do so. Since that meeting, we are unaware of any
specific direction that Council has provided to the Clerk’s Office.

Please note that, during this audit, the Clerk’s Office informed the contractual auditor that, many times, they
have tried to deal with a staff member’s direct supervisor regarding a rules violation but that disciplinary
action is rarely taken. (Note: It has been a longstanding practice for the Legislative Aides to be managed
jointly by the applicable Council Member and the Clerk of Council. Since the Council Member completes
the annual performance evaluation, the term “direct supervisor” refers to the Council Member in the case of
the Legislative Aides.)

Audit Recommendation

We recommend that County Council take action to ensure that the rules in the Employee Handbook are
applied consistently and that there are consequences for rule violations.

Management Response

None received.

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 COMMENTS AND RECOMMENDATIONS
OTHER REPORT COMMENTS
COUNCIL ORGANIZATION

Comment

Certain of the comments in this report are symptomatic of an overall lack of respect for County Council
rules, an overall lack of supervision in the office1, and a general lack of accountability. For instance,
 It appears that time and attendance issues have been an ongoing concern and that the Clerk’s Office has
issued reminders on Council rules, policies, and procedures. Yet these issues continue to exist and the
Clerk’s Office receives little support from County Council in enforcing them.

 The Clerk of Council’s job description states “Manages, supervises, and oversees all of the Council
Support Staff.” (Note: We were informed by the Clerk of Council that the County Auditor, the Policy
Director, and the Counsel to Council do not come under the management and supervision of the Clerk;
this is based upon the job descriptions of those positions.) However, she does not appear to receive the
support from County Council in fulfilling this role. Apparent reasons include: (1) Legislative Aides
report to and are evaluated by their Council Member; this dual reporting relationship inhibits the ability
of the Clerk to require them to adhere to rules, policies, and procedures. (2) Council expanded from 7 to
13 Members in 2004. This resulted in additional Legislative Aides and made it more difficult to directly
manage, supervise, and oversee the larger staff. (3) Council does not necessarily desire the Clerk to
manage, supervise, and oversee these employees.

Given the doubling of Legislative Aides in 2004, the Clerk of Council fulfilling such a role would
appear to be a dauntingly time-consuming supervisory responsibility. (Note: Some of this responsibility
could possibly be delegated to the Deputy Clerk if her job description were to be enhanced.) The Clerk
of Council position also has a list of nonsupervisory duties, which were increased when funding for the
Financial Advisor position was eliminated.

In turn, the Legislative Aide job description states: “The work is performed under the general
supervision of the Clerk of Council and an individual Council Member.” Audit believes that office
efficiency generally is diminished when members of a large group of same-level, same-position,
employees each have two bosses, one of whom may be in the Council offices only one day per week.

 Council, as a whole, does not have a grasp on the number of compensatory hours accrued and utilized
each year to determine if such accrual and usage is beneficial from a fiscal standpoint.

 It appears that no one is responsible for determining whether staff members have sufficient work to
ensure Council as a whole operates effectively and efficiently. Given that the Legislative Branch of
Government is supposed to act as a check and balance on the Executive Branch, we believe it makes
sense to have a management-level position to oversee the distribution of work and to ensure everyone is
managed optimally.

1
Please note that the Clerk of Council, though given supervisory responsibilityfor Council support staff in her job description, in
effect is allowed limited supervisory authority. See General Comment on page 5.
6
Our consultations with other governmental entities revealed that several of them have legislative branches
which are managed by a Chief of Staff. Some of the roles of a Chief of Staff include:
 Oversees the development of a strategic plan and the development of yearly goals and objectives.
 Oversees the daily operations of the staff, manages their interrelations, and ensures Council as a whole is
operating effectively and efficiently.
 Ensures staff members have sufficient workload and monitors staff members’ performance in meeting
target dates for responsibilities/projects.
 Analyzes staff member professional development needs and develops training plan.
 Ensures staff members accrue compensatory time only for legitimate business reasons.
 Builds and motivates the team.
 Conducts staff meetings to keep staff informed and listen to their ideas.

It should also be noted that the NCCo Executive Branch has a Chief of Staff.

Audit Recommendation

Given the greater number of personnel in Council since 2004, with no change in the organization (or the job
descriptions), we recommend that County Council analyze its organization structure and make changes as
necessary to ensure Council operates as a highly effective and efficient body.

Consideration should be given to including in the new organizational structure a Chief of Staff role; this
could be the Clerk of Council or some other person. A Chief of Staff, in his or her role as office manager,
could manage closely the large group of Legislative Aides and other staff, and perhaps identify economies
and/or efficiencies in their work. Further, a Chief of Staff (office manager) could address the findings noted
elsewhere in this audit report regarding (apparent) anomalies with time sheets, sign-ins, compensatory time
and tardiness.

We believe any change in Council’s organization structure should be accomplished without any unnecessary
additions in funding to Council’s budget. In this light, consideration should be given to contracting a
consultant to perform an efficiency review.

Management Response

Members of County Council have consistently tasked themselves with the efficiency of the Council office.
With the expansion of Council and a greater number of Legislative Aides, Council member districts and
offices have become varied in both operation and personnel. Council has recognized that, since the
expansion, consistency with regard to policies and procedures has become a challenge and has worked to
make changes that maintain accountability while taking into account varied districts and the needs therein.
Council is currently considering the organization of staff but is unsure that the Council office would be
better served with Legislative Aides reporting directly to a Chief of Staff, and not their respective Council
member and the Clerk of Council. The function of the Chief of Staff position in this manner works well
within a Caucus environment under which County Council does not operate.

Audit’s Evaluation of Response

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The response only addresses the question of Legislative Aides reporting to a Chief of Staff; it does not
address the question as to whether it would be beneficial to have a Chief of Staff to ensure staff members
have sufficient work to ensure Council as a whole operates effectively and efficiently.

The response says that “Council is considering the organization of staff …” We would like more
information on what this “considering” is going to encompass. For example, will it consist of engaging a
consultant to perform a needs assessment of County Council?

We would like clarification on why a Chief of Staff position only works well in a caucus environment and
why it wouldn’t work well in NCCo Government.

REVIEW OF JOB DESCRIPTIONS

Comment

We reviewed the job descriptions and assessed generally the functions for the following positions: Clerk,
Deputy Clerk, Legislative Aide, and Policy Director. The purpose of the review was to determine that the
descriptions were current and that they properly reflected the functions being performed by the staff. 2

We have the following observations:

 Many of the job descriptions should be revised as they appear to be outdated. For example, the Clerk of
Council position was last revised in 1999 and has had additions since then of a list of other duties
assigned the position. Also, the discontinuance of funding for the Financial Advisor position has caused
some of those duties to be reallocated to the Clerk, the Deputy Clerk, and the Policy Director. In the
NCCo Executive Branch, the Merit System Code states that all job descriptions should be revised at
least every five years.
 The Legislative Aide position was last revised and approved in January 2005 but still reads like a more
outdated document, e.g., “…excellent command of the English language”, “Operates a data processing
terminal”, “Operates duplicating devices”, “performs…clerical work.” (A cursory review of the
recently posted NCCo positions revealed more contemporary job description language.)
 All of the Council staff, regardless of their grade level, work on a 35-hour per week basis. This appears
to be inconsistent with certain equivalent grade levels in the NCCo Executive Branch. Also, responses
to an inquiry of the Association of Local Governmental Auditor’s (ALGA’s) ListServ showed that
employees for all respondents work 40 hours per week. (Council approved a motion in September 22,
2009 approving moving all 40-hour pay plan employees to a 35-hour pay plan.)

Audit Recommendation

Given the above observations, Audit recommends that Council’s Personnel Committee perform a
comprehensive review of all of Council’s job descriptions. Consideration should be given to the following:
 Update all of Council’s job descriptions to reflect the present job responsibilities and job requirements
including an evaluation of the current supervisory responsibilities of the Clerk of Council.

2
Note: Most, if not all, job descriptions contain language to the effect that other duties may be assigned as required; however, we
believe the specific duties in the job description should be as closely aligned with the staff members’ major duties as possible.
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 Recognize the benefits and efficiencies of direct supervision, and all that it traditionally entails, of a
large group of same-level personnel, and assign a supervisor dedicated to supervising the Legislative
Aides (as well as potentially other staff). (See audit report comment “Council Organization.”)
 Revisit the appropriateness of having all of Council staff work 35 hours per week, rather than 40.

Management Response

The current work of the Personnel Subcommittee has addressed, and will continue to address, the review
and update of all Council staff job descriptions, the supervisory responsibilities of the Clerk of Council, as
well as any change to the 35 hour work week. As indicated previously in our response, Council district
needs vary greatly from one Council district to another which would make supervision of all Legislative
Aides by one person problematic. Council gives serious consideration to the very unique nature of the
County Council office. The designation of unclassified, non-union, appointed status of its employees is
monumentally different from Merit System and classified employees of the County in that absolutely no job
security is guaranteed and Council employees are expected to execute their duties in an environment of
multiple elected officials with competing agendas, unlike any other County office.

Audit’s Evaluation of Response

We would like a target date of when the review and update of Council job descriptions will occur.

REVIEW OF SIGN-IN AND SIGN-OUT LOGS

Comment

Section 4.2, Time Records, of the NCCo Council Employee Handbook states:
“Each employee is required to maintain an accurate record of all time worked. Staff should sign in upon arrival each workday at the
receptionist’s desk (with name and time of sign-in). Employees are expected to report to work on time. Any falsification or abuse of
time records…is an act of misconduct and is grounds for disciplinary action. Employees should inform the receptionist when they are
leaving the office and when they expect to return…Any falsification or abuse of time records is grounds for discipline up to, and
including, termination…”

This Time Records policy section covers cursorily the use and completion of the bi-weekly payroll time
sheets and the sign-in logs used in the Council office in the City/County Building. The section provides no
detail on existing sign-out log procedures nor does it address, for example, the need for supervisory
approval and how to account for hours worked outside the office and later taken as compensatory time.
While the Clerk’s Office has indicated that it has sent numerous email communications to Council staff in
the past regarding time sheet and sign-in and sign-out log preparation, it might be more effective to have a
detailed policy outlined in the Employee Handbook. (See Appendix A for a memorandum, titled
“Handbook/Office Policy and Political Prohibition Reminders”, that was issued by the Clerk of Council to
Council staff on August 21, 2012. A similar memo was issued on August 17, 2011.)

Testing of Sign-In and Sign-Out Logs:

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From a random sample of five pay periods from the period January 1, 2011 – June 30, 2012, we performed a
review of the Council staff Sign-in and Sign-out logs and had the following findings, not necessarily in
order of importance:

 There were six instances where (five) different employees did not sign in, (nor sign out), and no
explanations were provided. The payroll time sheets reflected the employees’ working their regular
hours on these days. (Interestingly, these six instances occurred in only two of the five pay periods
tested.)
 There was another instance of a day taken off (apparently) by an employee but not taken as vacation,
compensatory time, etc. It appeared that the employee came in for a Council meeting and claimed three
hours of compensatory time. (The situation is confusing because it appears that the employee signed in
and then deleted her name, effectively not signing in. Also, the sign-out log for this person showed
“11:30” with no further explanation.)
 There were 31 instances where sign-ins were done, or appeared to be done, by another person, based on
the signatures not matching the normal signature.
 There were 55 instances of approximately 327 entries (17%), where the sign-out entries were not
adequately clear. Such descriptions included: “meeting and then in district”; “district afternoon”; “in
district”; “district morning”; and “9-5 in district.” As noted above, the Employee Handbook does not
address completion of the sign-out log that is in place; ideally, the handbook would provide guidelines
on acceptable sign-out reasons. (It should be noted that the sign-out log itself asks employees to be
specific as to their whereabouts. Also, the August 21, 2012 memorandum stated: “All employees must
note their whereabouts in the sign out book if required to leave the office during the work day. Please
follow the instructions in the Sign Out book and note the purpose and location of your meeting, the
approximate time of return, etc.” Similar language has been used in other communications sent by the
Clerk’s Office to Council staff.)
 No Sign In/Out log is maintained by Audit. However, the Senior Staff Auditor did have her own log of
hours worked and the County Auditor implemented a log for the entire department shortly after the audit
began.

Review of Payroll Time Cards:

A quick check of the payroll time cards for the pay period ending June 30, 2012 showed that only two time
cards of 20 examined showed evidence of supervisory approval. While not a requirement per Council policy
at the time of our audit, it is a standard control to have time cards formally reviewed and approved by a
supervisor or manager. Further, we reviewed for proper completion and clarity the payroll time cards for
five sample payroll periods (ending 9/18/11, 11/27/11, 2/19/12, 5/27/12 and 6/24/12). There were numerous
time card submissions that were unclear to an independent reviewer as to the intent of the preparer,
requiring the Deputy Clerk of Council to check on the proper intent. (Some examples include: conflicting
entries for a given day showing regular hours worked and a code in the Leave Time section suggesting time
taken off3; incorrect leave codes used; and one employee frequently had “Please correct if wrong” written

3
For example, an employee for a particular day works 4 regular hours and takes 3 hours vacation. The employee puts all 7 hours
as regular hours although he/she puts a leave code for vacation in the Leave time section of the time sheet. The Clerk’s Office
then has to perform research to determine how many vacation hours the employee actually took that day, and then make the
appropriate change to the time card. The Clerk’s Office informed us that the employee engaging in this practice has been
reminded several times on the proper way to complete the time card in these types of situations, but that the employee continues
to submit time cards not in accordance with policy.
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on the time sheet.) This reinforces the need to have all time cards reviewed and approved by a supervisor or
manager prior to submission to the Deputy Clerk.4

Testing of Employee Punctuality:

We also chose two payroll periods (of the five above) to test the Sign-In logs for employee punctuality, as
follows:
 selected those sign-ins that were more than 30 minutes late, and
 traced these late sign-ins to see if compensatory time was taken or if the lateness was explained as work
related. (The August 17, 2011 memorandum issued by the Clerk’s Office stated: “Any employee who
signs in after his or her starting time must deduct the total of any late time for that pay period. This may
be in the form of comp time, sick time, vacation time, or furlough. Time may not be made up at the end
of the day, as Council does not have a flex time policy.”)

Our findings on the punctuality test were as follows:

 For the pay period 6/11/12 – 6/29/12, there were 19 instances involving eight employees with sign-ins
greater than 30 minutes late which were not explained and were not taken as compensatory time used.
 For the pay period 5/14/12 – 5/28/12, there were three instances involving three employees where sign-
ins greater than 30 minutes late were not explained and were not taken as compensatory time used.

Council Committee Recommendations:

In 2009, a Council committee was formed to address some time and attendance issues. This committee
discussed its work at a September 2009 Executive Committee meeting. Key points made at that meeting
were:
 Council was looking for consistency and accountability among Council employees. Based on our
testing results, this is not always happening.
 Council staff would report to the Clerk of Council for attendance. This does not appear to be
happening as the Clerk of Council does not approve most employee time cards. Nor does she appear to
have the authority to address employee attendance issues and get employee buy-in. Please note that the
Clerk of Council has never had responsibility for the attendance of the County Auditor, Policy Director,
and Counsel to Council.
 The Clerk of Council will try to resolve individual issues with the applicable Council Member. If she
cannot resolve the issue with the Council Member, then she will bring the issue to Council. The Clerk
of Council informed us that, on numerous occasions, she has tried to resolve issues with an individual
Council Member but has rarely been successful. The Clerk of Council mentioned this again in the April
6, 2013 Personnel Committee meeting. (See General Comment on page 5.)
 Council wants a quarterly report on how things are going with time and attendance; Council asked
the Clerk of Council to report back to Council in three months from the September 2009 meeting. We
were informed by the Clerk’s Office that they now provide Council with a quarterly report on
punctuality statistics, but that it hasn’t seemed to have much impact for certain employees. Regarding
the Clerk of Council reporting back to Council three months after the September 2009 meeting, we don’t
know whether this ever happened.

4
Please note that the Clerk’s Office issued a new time card to all Council employees on March 18, 2013. This time card requires
the employee’s supervisor to review and sign the time card prior to its submission to the Clerk’s Office.
11
 A few people continually violate any sense of responsibility in terms of time; Council needs to get rid
of impression of special treatment and abuse of guidelines. This situation appears to still be occurring.

Audit Recommendation

Audit recommends that Council implement greater control over time records, including payroll time cards
as well as the Sign-In and Sign-Out processes to ensure that all employees are accounted for during the
workday, employee time is properly reflected in the payroll time sheets, and employees are punctual. Such
greater control should include:
 Requiring supervisor review and approval of the payroll time cards.5 (We believe this supervisor role
should be that of the Clerk of Council rather than that of the individual Council Members in the case of
the Legislative Aides.)
 Revising the Employee Handbook to provide for greater detail on sign-in and sign-out requirements,
including requiring employees to sign out every day, not just when leaving the office early.
 Revising the Employee Handbook to include more detailed requirements on preparing payroll time
cards.
 Requiring each employee to sign the (revised) Employee Handbook on an annual basis.
 Forbidding one employee signing in for another.
 Clarifying the disciplinary action that will be taken in the event of (first, second, third, etc.) infractions.

Council should give serious consideration to installing a card access reader in the Council office to automate
the tracking of personnel attendance and punctuality. A Council staff of 18 City/County Building
employees, not including Council Members nor the Audit staff in the Gilliam Building, would warrant an
automated card access reader system, in our opinion. Staff attendance per the automated system should be
reconciled to the time sheets and to the compensatory time logs (where applicable). (While in the
City/County Building, we noticed that several City departments utilize such technology to track employee
activity during the work day.)

Audit recommends further that Council take disciplinary action, as provided for in the Handbook, on
habitual incidences of unexplained tardiness, failure to sign in properly, and failure to properly record actual
hours performed on the payroll time cards. (Audit recognizes that this may be taking place on an individual
basis.)

(Two things are noteworthy here as to past attempts to address punctuality issues: First, in response to a
Council Member request sometime in 2008, the Deputy Clerk of Council has been tracking and reporting
punctuality issues on a quarterly basis since then. It appears that little has changed / improved since this
reporting started. Second, it appears that no disciplinary action is taken on the incidences of tardiness or
sign-in problems, based on discussion with the Clerk of Council and Deputy Clerk of Council.)

Management Response

The Clerk of Council in consultation with Counsel to Council recommended and implemented,
approximately six months ago, new time card reporting procedures which require the approval of the
employee’s supervisor on both the time card and the comp time log. Council is currently considering the

5
See footnote #4 on page 10.
12
requirement for employees to note the time of sign-out at the end of the day either via the current sign-out
book or a card system. At the time of the expansion of Council from 7 to 13 members, Council members
took on a more individual view of their greatly varied districts in response to constituent needs and began
directing their Legislative Aides in a more proprietary manner. Although the consistent application of
policies and procedures has become problematic to administer in this environment, the Clerk of Council has
attempted to maintain the rules and procedures to the best of her ability. In considering the audit comments
and recommendations, Council has researched and is aware that most Legislative offices offer much more,
and perhaps much needed, flexibility. Council’s foremost concern is to balance the delivery of outstanding
constituency service with an assurance that taxpayer dollars are expended in the most efficient way. The
Personnel Subcommittee, in conjunction with a labor law attorney, will continue its work to craft policies
and procedures that will balance these priorities.

Audit’s Evaluation of Response

“Council’s foremost concern is to balance the delivery of outstanding constituency service with an
assurance that taxpayer dollars are expended in the most efficient way.” We appreciate Council’s concern;
however, we tested for compliance with the policies and procedures that Council has implemented. We
believe, until such policies and procedures are changed, that Council employees have an obligation to
follow such policies and procedures and for there to be consequences when there is habitual non-
compliance.

COMPENSATORY TIME LOG REVIEW

Comment

Section 4.3, Compensatory Time, of the NCCo Council Employee Handbook stated, at the time of our audit:

“Compensatory time will be earned for attendance at meetings and traveling time to and from such meetings, as well as for specific
projects undertaken for Council outside of normal work hours. Compensatory time is awarded for work time accumulated at the
specific request of and benefit to the supervisor or the Clerk of Council.

County Council staff may accrue compensatory (“comp”) time at the rate of one hour for each hour worked in a work week with a
total of between thirty-five (35) and forty (40) hours. Comp time shall accrue at a rate of 1.5 hours for each hour worked outside of
regular hours from Monday to Friday, within the regular thirty-five (35) hour work week. Comp time shall accrue at the rate of 1.5
hours for every hour worked on Saturdays, and at the rate of two hours for every hour worked on Sundays and holidays. At no time
shall the accrual of compensatory time exceed seventy (70) hours.”

“4.3.2 In order to receive credit for compensatory time, it must be specified and broken down by particular project and hours spent
working on each project. A broad category of work for a large number of hours is not acceptable.”

“4.3.3 Requests to take compensatory time must be approved in advance by the Clerk and the supervising Council Member…”

“4.3.4 Compensatory time records shall be maintained jointly by the employee and the Clerk in the form of an ongoing log of time
worked, time earned, time taken and balance available. Compensatory time logs must be reviewed and signed biweekly by each staff
member’s supervisor. The original signed copy must be forwarded to the Clerk’s Office contemporaneously with payroll time cards.
Since Council recognizes that employees are entitled to an unpaid lunch hour, a requirement by a supervisor to work through the lunch
hour and prior approval of the same will be a rare exception and shall not occur on a routine or frequent basis.”

13
General Findings/Observations:

 The outstanding compensatory time balance for Council as of June 30, 2012 was approximately
$12,500, not a huge amount relative to Council’s salary and benefits budget. To calculate the
compensatory time accrual and usage for the full fiscal year would have been unwieldy due to the
records being maintained manually. However, a quick scan of the compensatory time logs would
suggest that the cost (or value) of the compensatory time benefit is much greater than the fiscal year-end
balance would suggest. Tracking Council’s compensatory time on PeopleSoft would provide
management greater control in terms of monitoring its use and in terms of determining the cost of the
benefit to Council. The Executive Branch of County government tracks its compensatory time on
PeopleSoft.
 The compensatory time policy does not elaborate on “meetings” or “special projects” eligible for
compensatory time. Implicit in 4.3.2 above is that the Clerk, or Council Member, may reject
compensatory time accrued if not adequately explained. It would be beneficial to staff and management
if guidelines were provided in the policy as to what types of meetings and special projects would, and
would not, be eligible for compensatory time. At a minimum, the explanation should be clear to an
independent reader that there is a legitimate business reason for the staff member accruing the
compensatory time.
 It is ironic that the policy requires compensatory time usage to be approved prior to use but accruing
compensatory time does not need to be approved. In terms of improving human resource management,
requiring prior approval from the Clerk of Council, as office manager, might be helpful, especially if
properly evaluated against a revised compensatory time eligibility section.
 Considerable time is accrued by Legislative Aides attending the Council meetings. It appears that the
Aides are rarely called upon in the Council meetings. Alternatively, the meetings could be summarized
or listened to on tape during normal work hours, thus saving considerable hours to the County.
(Anecdotally, we understand that some Council Members forbid their Aides to attend the Council
sessions so as not to incur compensatory time unnecessarily.)

Testing:

We reviewed the compensatory time logs for the month of June 2012 and had the following findings:
 Three employees started with quarter-hour accrual increments, five with half-hour increments. This is
considered trivial and unwieldy, considering the manual tracking that is in place. (See next audit
comment, “Compensatory Time and FLSA Exempt-status Employees.”)
 Seven of 18 compensatory time logs were not approved by management as required, see 4.3.4 above.
(One of the seven had been approved regularly in previous months.)
 Some of the descriptions of compensatory time accrued were vague, e.g., “constituent issue”, “mail.”
 One employee accrued half an hour most days by taking only a half-hour lunch, which is not consistent
with policy. See 4.3.4 above.
 There is no indication that compensatory time taken is pre-approved as required by policy, see 4.3.3
above.

Audit Recommendation

To improve the controls around compensatory time (and work outside the office in general), Audit
recommends the following:

14
 Require Clerk of Council approval for accrual of compensatory time. This could be done by regular
(weekly) calendar updates sent to the Clerk showing the expected or planned absences from the office
and the business reason for such time.6
 Modify the policy to elaborate on, or provide better guidelines on, eligible compensatory time reasons.
Implement the modified policy consistently.
 Better recognize the office manager role of the Clerk of Council per the job description which states
under the Examples of Work/Supervision section: “Manages, supervises and oversees all of the Council
support staff.” (However, see Comment on Council Organization on page 6.)
 As Council already does with tracking of vacation time, sick leave time, and furlough time, tracking of
compensatory time should be done on the PeopleSoft software, making it subject to systematic controls
as opposed to the manual monitoring currently in place. Further, placing compensatory time on
PeopleSoft would provide management with regular reporting to assess the compensatory time benefit.
[An inquiry for feedback from members of the Association for Local Government Auditors (ALGA)
indicated that all respondents tracked their compensatory time on the payroll system.]
 Implement quarterly reporting of the cost of the compensatory time benefit to NCCo Council. Such
reporting should include the outstanding dollar value of accrued compensatory time as of each quarter
end (which could also be reported to NCCo Finance for their more accurate financial reporting), as well
as reporting of the value/cost of the compensatory time taken in the quarter. Council will be better able
then to decide on the merits and the costs of the NCCo Council compensatory time policy.

Management Response

As footnoted in the Audit report, the Clerk’s Office issued a new compensatory time log approximately a
year ago which requires both the employee and the supervisor to sign the log attesting that the specific,
listed projects were undertaken by the employee at the request of the supervisor for the benefit of County
Council and for the benefit of the Council office in furtherance of Council duties. The Clerk of Council has
also provided a draft provision to the Personnel Subcommittee to better delineate appropriate accrual of
compensatory time. The provisions of the Council Employee Handbook with regard to compensatory time
are currently being reviewed by the Personnel Subcommittee with numerous changes being considered that
would (1) most likely reduce the amount of time accrued for Council employees, (2) lessen the need for
tracking in PeopleSoft, and (3) negate the need for quarterly reporting of such. At Council’s most recent
Personnel Subcommittee meeting, a vote was taken which authorized that the accrual of compensatory time
is one hour for one hour.

Audit’s Evaluation of Response

6
Please note that the Clerk’s Office issued a new compensatory time log on March 18, 2013. This log requires both the employee
and his/her supervisor to sign the log attesting:
 Employee: “By my signature above, I affirm that the above-listed specific projects were undertaken by me for the benefit of
County Council at the specific request of and benefit to my direct supervising Council Member or the Clerk of Council as
required by New Castle County Council Handbook 4.3.”
 Supervisor: “By my signature above, I affirm that I requested the above-listed employee to perform the specifically-
enumerated project that I have initialed above outside of normal work hours at my request for the benefit of my office in the
furtherance of Council duties.”

15
“The Clerk of Council has also provided a draft provision to the Personnel Subcommittee to better delineate
appropriate accrual of comp time.” We would like to review this draft provision to see if it addresses our
concerns.

“The provisions of the Council Employee Handbook with regard to compensatory time are currently being
reviewed by the Personnel Subcommittee with numerous changes being considered that would (1) most
likely reduce the amount of time accrued for Council employees, (2) lessen the need for tracking in
PeopleSoft, and (3) negate the need for quarterly reporting of such. At Council’s most recent Personnel
Subcommittee meeting, a vote was taken which authorized that the accrual of comp time is one hour for one
hour.” We still don’t understand why compensatory time would not be tracked in PeopleSoft. This would
greatly enhance transparency. We understand that Council has changed the accrual of compensatory time,
in all situations, to one hour for each hour; however, we believe the amount of compensatory time accrued
and taken is still sufficient enough for it to be tracked in an automated fashion.

COMPENSATORY TIME AND FLSA EXEMPT-STATUS EMPLOYEES:

Comment

None of Council’s employees are covered as to exempt / non-exempt statuses by the Fair Labor Standards
Act (FLSA) as it excludes employees in the Legislative Branch of local governments. (See Section
203(e)(2)(C)(ii)(5) of the FLSA.)

While not covered by the FLSA, Council considers all employees, except for the Council Secretary,
equivalent to FLSA exempt status based on job responsibilities.

With the above background, Audit observed that certain practices by Council employees with regard to
compensatory time are not consistent with traditional FLSA exempt-status employees, in our opinion.
Further, they are not consistent with practices outlined by other local government entities that responded to
an Audit survey at the beginning of the audit.

Audit sent a request on July 31, 2012 to the Association of Local Government Auditors (ALGA) ListServ
for information on other municipalities’ compensatory time policies. Of ten responses received, almost all
of the responses allowed compensatory time to non-exempt employees only; some allowed compensatory
time to exempt-status employees but only on an extraordinary basis.

Audit established further that for FLSA exempt employees in the NCCo Executive Branch “hours in excess
of 40 shall be earned at straight time”, and that FLSA exempt employees in Kent County are not eligible for
compensatory time according to Kent County’s policy.

Council employees, at the time of our audit:

 Accrued compensatory time at a rate of 1½ per 1 hour over 40 hours. Also, compensatory time for work
on a Saturday and Sunday was earned at a rate of 1 ½ and two hours, respectively. (Of the ALGA
responses that allowed compensatory time for exempt positions, none provided for other than a one-for-
one benefit.)

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 Accrued and used compensatory time in ¼- or ½-hour increments (Of the ALGA responses that
allowed compensatory time, some stipulated that compensatory time could only be accrued and used in
one-hour increments.)7
 Used compensatory time as a way to work flexible time. (Of the ALGA responses received, none
indicated that late arrival times could be netted against compensatory time accrued.)

Audit Recommendation

Audit recommends that Council review the current compensatory time policy relative to its peers to
determine if the policy is appropriate. Such a review should be performed in conjunction with other
comments in this report, including the recommendation to track compensatory time on PeopleSoft. Further,
consideration should be given to modify policy to allow only a one-for-one compensatory time earning rate,
regardless of the day of the week earned or of the 40-hour threshold being met.

Audit recommends further that Council consider the policy elements and controls outlined in the NCCo
Executive Branch’s “Compensatory Leave – Earning and Usage” policy document.

Management Response

Council has reviewed policies from other jurisdictions; i.e., Baltimore County, Md.; Lincolnshire County
Council; Oxford City Council, Fairfax County, VA; and has changed its policy to allow only a one for one
compensatory time earning rate. Additionally, Council has authorized a review of the Employee Handbook
by a labor law specialist.

Audit’s Evaluation of Response

We understand that the review by the labor law specialist recently occurred and that he/she issued
recommendations which are currently being analyzed.

COUNCIL GRANTS REVIEW:

Comment

Rule No. 13.1, Council Grants, of the County Council Rules states:

(Note: References to Financial Advisor here now refer to the Clerk of Council.)

13.1.1. Eligibility. To qualify for these funds, an applicant organization must be a nonprofit organization, or under the umbrella of a nonprofit
organization, with goals and/or objectives that advance the health, safety, and/or welfare of New Castle County citizens. No organization shall be
awarded grant(s) more than $2,500 during the County fiscal year. No grants are made to any religious organization if the funds would be used in
whole or in part for religious purposes.

13.1.2. Application. Each request for an appropriation shall require a signed written application (typed or legibly handwritten) stating the reason for
the grant request and contain the following:

7
County Council recently approved Ordinance 13-019 which amends the Merit System to reduce the minimum leave increment
from ½ hour to ¼ hour. The majority of County Council employees are not Merit System employees and are not subject to this
Ordinance.
17
 13.1.2.1. Documentation of the organization’s 501(c) (3) tax exempt status or other non-profit status evidencing there is no distribution of
profits to owners or shareholders, the organization’s non-discrimination policy (or alternatively, the attestation required below) and any
other applicable documentation (i.e., W9 Form, Federal Tax ID, etc.)…

(13.1.2.1. Council modified this section on January 10, 2012 by adding the following: “Council reserves discretion to not
require any element of the above-referenced documentation.”)

13.1.2.2. An attestation that such request benefits the health, safety, and/or welfare of County residents, is not for normal operating
expenses, shall be used only for the purposes indicated in the application, and (in the absence of a written policy) that it does not
discriminate against any employee, prospective employee, vendor, volunteer, or individual seeking service or assistance on the basis of race,
creed, color, sex, or natural origin.

13.1.2.3. An attestation that the organization agrees to submit a one-page report or other documentation to the Financial Advisor sixty (60)
days after the receipt of the funds proving that the funds were expended for the purpose requested, that it has accounting procedures of
sufficient detail to adequately account for all funds collected and expended, that it agrees to adequately account for all funds collected and
expended, that it agrees to cooperate with any future audit performed by Council.

13.1.2.4. Budget information on the organization and its project for which funding is sought including, but not limited to, the purpose for
which the grant will be used, the total cost of the project, percentage of the project’s funds the grant comprises, total amount of funding on
the project received from other sources, and the total of the organization’s operating budget.

13.1.3. It is suggested that Council Members receiving requests from individuals residing in their District, but representing Organizations not located
in their District, confer with the Council Member(s) in whose district the Organization is located and/or is IRS registered.

13.1.4. Validity. Upon receipt, the Council Member’s Legislative Aide shall confirm the application is complete. The Council Member, or his or her
Legislative Aide, shall contact the applicant to discuss the purpose and intent of the grant request and assess its validity. After determining the
worthiness of the grant request, the Council Member shall submit the application to the Financial Advisor.

13.1.5. Submission to Finance Committee. Two (2) working weeks prior to the Finance Committee Meeting during which the grant request shall be
considered, the Financial Advisor shall distribute a Grants Packet and provide all necessary information to the Finance Committee Chairperson for
inclusion of the items on the agenda. The Grants Packet shall identify all grants the organization has received for the most recent three (3) County
fiscal years.

13.1.6. Approval. Council Members may issue grants of $150 or less from their grant allocation, not to exceed $1,000 in the aggregate in any fiscal
year, to eligible organizations without Council approval. The Council Member shall submit written request for payment to the Financial Advisor
accompanied by a copy of the application, request, or ticket. Council shall be notified in writing or verbally at a committee meeting of such grants.

13.1.7. A separate account set in each year’s budget shall be used by the Council President upon approval of Council for the purpose of purchasing
ads for Council in eligible organizations’ event publications and/or tickets. Prior to submission, the Policy Director shall confirm that ads purchased
with Council funds are sponsored by Council as a whole and not by individual Council members.

13.1.8. The Financial Advisor shall provide written monthly and fiscal year-end reports to Council outlining how much funding has been invested to
date in the current fiscal year and how much funding remains. The Financial Advisor shall inform Council of the grant recipient’s compliance with the
requirement to submit a one-page report, or other documentation, sixty (60) days after the grant application is approved proving that the funds were
expended for the purpose requested.

At the time of our audit, a total of $97,500 ($7,500 per Council Member) was budgeted annually for Council
Grants. In the audit period tested, two Members did not award their grant allocation nor did they vote on
other members’ grant awards.

We tested ten grants that were submitted and approved by Council in Fiscal Year 2012.

While overall the grants packages were complete, the following findings were noted:
 Four grant packages did not adequately detail the financials for the project, as required in 13.1.2.4
above. This undermines the validity check outlined in 13.1.4 above.
 One grant package did not provide details on the financials for the organization, as required in 13.1.2.4
above. This undermines the validity check outlined in 13.1.4 above.
 A cursory review on Guidestar.com of grant recipients greater than $1,000 in the fiscal year – there were
35 - showed that three recipients had had their IRS exempt status revoked and that three others were not
recognized as not-for-profit organizations on Guidestar. This is not consistent with 13.1.1 above.
(Note: The three grant recipients not recognized by Guidestar, and the three grant recipients with IRS-

18
 revoked statuses, received their grants after the January 10, 2012 intended rule change no longer
requiring that a recipient necessarily be an IRS recognized not-for-profit. See 13.1.2.1 above.)
 It should be noted that 13.1.1, Eligibility, still requires an organization to be a not-for-profit. Only the
documentation requirement is changed in 13.1.2.1.
 One grant recipient (from the main test of ten), awarded a grant of $1,200 in June 2012 after the rule
change, was not a recognized not-for-profit organization according to Guidestar.com.

Other observations in performing this review are as follows:

 The eligibility requirement language, i.e., “…nonprofit organization with goals…that advance the
health, safety and/or welfare of New Castle County residents” is not adequately detailed, in our opinion,
especially now that Council has eliminated the requirement (or intended to, see above), effective January
10, 2012, to have the organization have a not-for-profit status. Also, eligibility requirements should
perhaps include a “means” element as some organizations appeared to be in a reasonably good financial
state. (If means is not used as a consideration, it is reasonable to question why financial summaries are
being sought as per 13.1.2.4 above.)
 Perhaps, rather than modifying the eligibility requirements, the grants process might be better served if
Council developed a “Grant Purpose” statement, which would include an “equal opportunity” clause,
and add it to the Policy.
 The availability of grants is not advertised to the general public, neither in the Delaware media nor on
the NCCo websites. The eligibility requirements are also not available on the websites.
 All of the grants submitted were approved by Council and all were approved unanimously (not
including the two Council Members who historically had chosen neither to award nor to vote on grants).
We believe that a typical, or traditional, grants process would entail some grant rejections or, at least, a
closer vote on occasion, as well as occasional discussion of the merits of the grant request before being
put to vote. (The New Castle County Council grants process could be considered an unfair incumbent
advantage in County Council elections, especially because the grant eligibility parameters are so general
and because the availability of the grants is not advertised to the public.)

(Note: We inquired on the grants process in place in NCCo Community Services. The process appeared to
be healthy and transparent, in terms of having: a clear and concise mission statement; a “needs table”;
operating procedures; a scoring system; an advertising requirement (in the English and Spanish media); an
established list of not for profits; and a review board approval process. This grants process had an annual
deadline for all applications to be submitted, presumably so that the applications could be prioritized and
scored against each other. While the funds involved in Community Services are much greater, elements of
their grants process are worth emulating, in our opinion.)

Audit Recommendation

To improve the controls over the NCCo Council grant approval process and to ensure that there is a fair and
transparent grant application and approval process, Audit recommends the following:
 Change the grant application packet to include forms for summaries of both the organization’s financials
and the financials for the intended grant project. This should make the Legislative Aides’ application
completion check easier.
 Clarify policy to state that grants are to be used for specific projects, not for covering ongoing operating
costs. (Note: The Clerk of Council informed us that this language is in the grant application. However,
we believe it should be in the policy also.)

19
 Revisit the decision by Council intending to not require that a grant applicant be an IRS recognized not-
for-profit organization. Audit believes that a current IRS tax exempt status should be a minimum
requirement in assessing an organization’s finances and the state of its operation generally.
 Include a review on the Guidestar.com website as to the IRS status of the not-for-profit grant applicant,
and report to Council accordingly as part of the due diligence performed on the application. It would
also be helpful in the review (on Guidestar.com) to verify that the financials reported there were
consistent with the financials reported in the grant application packet.
 Establish more defined Grant Eligibility requirements and/or add a Purpose clause to the Policy.
 Promote the availability of the NCCo Council grants to the general public, including providing
information on the NCCo website as well as an online application.
 In general, consider incorporating elements of the process in place by NCCo Community Services.

When the above recommendations are in place, and presumably more grant applications are submitted,
consider establishing a Council Subcommittee to review the grants received.

Management Response

Council is careful in its review of grant applicants to ensure that the intended purpose is well defined as well
as the cost. After careful consideration, Council removed the 501C3 requirement to allow smaller
community associations and civic association to apply for grants. The Guidestar.com recommendation is a
good resource and has been used by the Clerk of Council in reviewing applications.

Audit’s Evaluation of Response

 The 1st and 2nd bullets in the Audit Recommendation are not addressed in the response.
 4th bullet in Audit Recommendation: Will the use of GuideStar become a part of standard policies and
procedures?
 The last three bullets in the Audit Recommendation are not addressed in the response.

REVIEW OF TRAVEL AND TRAINING EXPENSES, INCLUDING MILEAGE

REIMBURSEMENT:

Comment

For the two fiscal years ending June 30, 2011, we selected 16 monthly activity expenditures (i.e., the total
charged to an account for a given month) to the Travel and Training related accounts within the County
Council cost centers; this resulted in reviewing 25 travel reimbursement requests. Nineteen of the 25 were
strictly mileage reimbursement requests. We selected a test item from each cost center that had (relatively)
material activity expenditures.

General Findings:

 Mileage reimbursement policy (Council Rule 14.1.3.2) calls for reimbursement per “Federal Regulation
IR-2004-139, or its successor.” The rate in effect then for many reimbursement requests should have

20
 been $0.55 per mile. Council was applying the NCCo Administration rate of $0.40 per mile (it was
changed from $0.51 to $0.40, effective July1, 2011), as opposed to the IRS guideline.
 There is not enough detail in the mileage reimbursement policy. The policy should be elaborated on at
least as follows:
o Mileage reimbursement should be to cover only those miles incurred over and above the employee’s
normal commute to his or her place of business. For example, if the normal commuting round trip is
20 miles, and the employee goes on a trip that involves 75 miles, only the incremental 55 miles are
reimbursable. Mileage reimbursement requests should indicate the points of travel and the miles
eligible for reimbursement. This would be consistent with the Executive Branch Policy,
Administrative Policy 1, Guidelines for Reimbursable Expenses, allowing for reimbursement
“excluding normal commuting.”
o When mileage is reimbursable, e.g., addressing an issue specific to the County or the District, and
when not reimbursable, e.g., attending a festival or dinner, which could be construed as being for
campaign purposes.
o Clear explanations as to the purpose and County or District benefit of the mileage reimbursement
event should be required, subject to rejection if not clear.
o Limits should be set for reimbursement, e.g., some claims were later than 90 days after the travel.
o The policy should indicate who should approve the reimbursement request, e.g., the Clerk of Council
if Legislation’s Mileage Reimbursement account is being charged. The policy should indicate if a
particular threshold requires Finance Committee approval.
o The policy should indicate the conditions under which a request may be adjusted, or rejected and
returned, when checked for accuracy before being approved.

Audit Recommendation

We recommend that the mileage reimbursement rate per mile be in accordance with the policy as in place
presently, paying the amount per mile recommended by the IRS. Alternatively, consider changing the
policy to pay the amount that NCCo Administration has established as the County approved guideline.

We recommend that a more detailed mileage reimbursement policy be documented with elements added as
suggested in the above comment. Further, this policy should be made available to Accounts Payable to be
used in the normal Accounts Payable quality checks in determining the proper completion of the
reimbursement requests received.

Management Response

A rule change will be drafted to reflect that Council will pay the amount that New Castle County
Administration has established as the County approved guideline with regard to mileage reimbursement as
well as additional language that clarifies the normal commute portion of a trip. The County approved
guideline coincides with that of the State of Delaware. Council Rule 14.1.3.2. can also be expanded to
clarify the exclusion of normal commuting mileage.

Audit’s Evaluation of Response

 Will Council Rule 14.1.3.2 be expanded to clarify the exclusion of normal commuting mileage?
 Several of the policy issues raised in our comment are not addressed.

21
Comment

Mileage Reimbursement Testing

Of the 19 mileage reimbursement requests tested, the following issues were noted:
 Of the 12 reimbursement requests processed for Legislative Aides and charged to the Legislation cost
center, only one was approved by the Clerk of Council. The other eleven were approved by the
respective Council Member. Both the Clerk of Council, as the office manager and the person responsible
for the Legislation cost center, and the Council Member, as the person authorizing the particular travel
being reimbursed, should approve the Legislative Aides’ mileage reimbursement requests.
(Consideration should be given to not requiring the Council President’s approval for these particular
requests.)
 A series of mileage reimbursements involving a Council Member and his Legislative Aide were
suspicious in that some of the Council Member’s approval signatures did not appear to be his. This was
brought to management’s attention and is being addressed separately from this audit report.
 Of the nineteen reimbursement requests, at least four had Mileage Tracking Form entries that did not
appear to be NCCo business related events. Examples of the entries included: banquet, festival, funeral,
parade, and retirement dinner attendance.

Audit Recommendation

We recommend that all mileage reimbursement requests to be paid to the Legislative Aides be reviewed and
approved by both the Council Member and the Clerk of Council (in her capacity as Office Manager).

We recommend further that guidelines be incorporated into a revised mileage reimbursement policy (see
above) to facilitate a more objective and thorough approval process.

Management Response

Council has discussed and generally agreed that the Clerk of Council will be reviewing and signing the
mileage reimbursements along with the respective Council member instead of the President of Council.
Council has discussed and generally agreed that language prepared by the Clerk of Council with regard to
appropriate and inappropriate accrual of comp time will be added to Compensatory Time provision of the
Handbook.

Audit’s Evaluation of Response

 What does comp. time have to do with our recommendations?

 Our 2nd recommendation is not addressed.

REVIEW OF OTHER COUNCIL EXPENSES – EXPENSE APPROVAL PROCESS:

Comment

22
For the two fiscal years ending June 30, 2012, we selected 9 NCCo monthly activity expenditures to
expenses (other than travel), governed by Council Rule # 14, Reimbursable Expenses, to determine if they
were properly authorized and posted. This resulted in reviewing 13 individual expense postings. The
expense categories ranged from blanket purchase orders to cross charges (expense allocations) to one-off
expenses.

There are instances where the Clerk of Council initiates and approves invoiced expenses, such as the Clerk’s
Council credit card and News Journal expenses. While this is not ideal in terms of meriting strict
segregation of duties, there appear to be adequate compensating controls, such as Accounts Payable’s
monitoring, the Deputy Clerk’s involvement in setting up the payments (in some cases), and the budget
review process. However, it would be a good tracking tool to have the Clerk and the Deputy Clerk maintain
jointly an Excel file to keep track of all expenses from ordering (initiation) through final release (approval)
to pay. This would serve as a valuable tracking tool to support Council expense monitoring and approval
activity, and might serve as a means to track unpaid invoices at year end.

Also, Audit noted that Council Rule # 14.1.1 states:

Assuming sufficient funds exist, the Financial Advisor (now the Clerk of Council) shall approve all expenditures for day-to-day
operations (i.e., reimbursements from petty cash, the purchase of supplies, etc.) and the Council President shall approve all
expenditures up to $1,000 for non-day-to-day expenditures (i.e., travel, service, etc.). Council expenditures $1,000 and over shall be
approved by the Finance Committee. Expenditures for goods not provided for in the operating budget shall be approved by a majority
of members of Council (i.e., specialty goodwill and award items).

We noted that this rule as written is somewhat difficult to interpret and, therefore, someone could allege that
it is not being followed. For example:
 How are “day-to-day expenditures” defined? Although a few examples are given, what is meant by
“service” under “non-day-to-day expenditures”? We believe it would help to provide definitions of
“day-to-day” and “non-day-to-day.”
 The term “i.e.” technically means “that is.” Therefore, as the rule is written now, the two items listed
would be the only day-to-day expenditures. It appears that this should be “e.g.” as in “for example.”
 Does the approval by the Finance Committee of “Council expenditures $1,000 and over” apply to all
expenditures or just “non-day-to-day expenditures”?
 The term “expenditures not provided for in the operating budget” could be interpreted in different ways,
particularly when Council makes numerous budget adjustments each year to move funds from one line
item to another.

Audit Recommendation

Audit recommends that segregation of duties be implemented where possible with regard to NCCo expenses
and the Clerk’s role in approving them. Also, consideration should be given to maintaining an Excel file to
monitor expenses from initiation to final approval to pay. To mitigate the lack of segregation of duties, the
file could be sent to the Council President each month for approval.

Audit recommends further that Council Rule # 14 be revised.

Management Response

23
The Clerk of Council approves financial transactions entered by the Deputy Clerk, Policy Director, and
direct payments set up by purchase order directly entered by Accounts Payable. Both the Deputy Clerk and
Policy Director always advise the Clerk in advance of transactions that would require her approval.

Transaction reports can be generated at any time via KPMG should the Council President or any other
Council member wish to review them. Grant check processing is the only reoccurring transaction that is
done solely by the Clerk and is supported by a copy of Council’s minutes which reflect the vote taken in
Finance Committee.

Audit’s Evaluation of Response

A response to our second recommendation was not received.

COUNCIL CONTINGENCY FUND – SPECIAL ELECTION EXPENSE

Comment

We reviewed the controls around payment of the expense for the Special Election in January 2011 when
NCCo President Paul Clark was appointed (interim) County Executive to replace now U.S. Senator Chris
Coons. The total cost was $497,996.04. (NCCo received a refund check of $2,003.96 from two payments
to the State of Delaware for $200,000 and $300,000.)

Before the election, the New Castle County (NCCo) Department of Elections informed County Council that
the estimated cost to the State of administering the election was approximately $500,000, and the
Department required Council to make two payments before the date of the Special Election – one for
$200,000 and one for $300,000.

In June 2011, the Deputy Director for the NCCo Department of Elections sent a letter to County Council
stating: “The Final cost of that election as reported in the State’s financial system is $497,996.04. Enclosed
is a check to refund the unexpended balance of $2,003.96.” Attached to the letter was an itemized
breakdown of the actual costs, titled “Preliminary Accounting.” Audit has the following comments on this
accounting:

 We did not see any evidence that the bill was reviewed by the Clerk of Council nor any evidence that
any questions were asked of the Department of Elections. Given that almost $500,000 was spent on this
Special Election, we would have expected the Financial Advisor to perform some sort of verification of
various aspects of the accounting. (This one-time expense represents about 15% of the normal NCCo
Council budget.)
 There were five line items on the bill with notes from the Department of Elections indicating “waiting
for bill” or other similar language. This is an indication that the final actual cost may have been
estimated for these items. We did not see any evidence that the Clerk of Council followed up on these
items.
 Council Rule 14 states “Council expenditures $1,000.00 and over shall be approved by the Finance
Committee.” We did not see any evidence that the accounting was presented to the County Council
Finance Committee for its review.
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We realize that the State of Delaware Department of Elections is the only choice for the County to utilize in
holding a special election; however, just because they are the only choice does not mean that the County
can’t scrutinize and question the bill.

As a side note, the cost of the special election to New Castle County was almost $500,000; yet the election
voter turnout was very low, as anticipated. We performed some research and noted the following:
 When a vacancy occurs in the office of a U.S. Senator from Delaware, Delaware State Code Title 15,
Chapter 73 allows the Governor to appoint someone to fill the vacancy until the next general election.
(Note: Delaware State Code requires a special election to be held if the vacancy is in the office of
Delaware’s Representative to Congress.)
 The Delaware State Constitution, in Article III, provides the Governor with the power to “… fill all
vacancies that may happen in elective offices, except in the offices of Lieutenant Governor and the
General Assembly … a person shall be chosen to said office for the full term at the next general election
…” Thus, the Governor may appoint individuals to fill vacancies in State Offices such as Attorney
General, Treasurer, Insurance Commissioner, and Auditor.

Audit Recommendation

Audit recommends that Council ensure a diligent and formal review is performed of all large, non-day-to-
day expenses, such as the Special Elections expense referred to above.

Also, due to the high cost to taxpayers of a special election, we believe that Council should examine
alternatives to a vacancy in the office of Council President being filled by special election. If Council
develops a viable alternative, Council should consider sending a resolution to the State of Delaware General
Assembly asking them to modify the State Code accordingly.

Management Response

Special Election expenses are a rare occurrence. Council worked closely with the State of Delaware
Elections Department who provided itemization of expenditures as well as a refund check to New Castle
County at the close of the process. New Castle County Council must follow the state mandate with regard
to special elections even though some or all of its members may disagree with it.

Audit’s Evaluation of Response

The response does not address our recommendations.

County Government has reached out to State Government in other situations. We believe the majority of
Council Members are displeased with taxpayers having to foot a $500,000 bill for an election that has such a
poor turnout.

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