Sanitation Audit Triggers ‘Concern’ : Payrolls: City controller’s report detailing fraud is under review, department says. Three workers have been fired.

A spokesman for the city Board of Public Works expressed “great concern” Monday about a hard-hitting audit detailing payroll fraud and other mismanagement in its Bureau of Sanitation, the city’s $170-million-a-year trash collection and sewage treatment agency.

Sanitation officials and members of the Board of Public Works, the commission appointed by Mayor Tom Bradley to oversee sanitation and other matters, were reviewing the 33-page audit report and drafting a response, said spokesman Bob Hayes.

“The mood here is one of great concern,” he said. “It is being taken very seriously.”

The audit by City Controller Rick Tuttle found evidence of falsified overtime claims, padding of time sheets, doctoring of payroll records and undocumented sick and vacation days during a three-year period from 1987 to 1990.

Although auditors said it was impossible to quantify the abuse, a sample examination of $687,000 in overtime payments found that 22% were unauthorized or undocumented, according to the audit released Friday.

Tuttle, who has described the abuses and weaknesses in the bureau’s fiscal controls as the most serious detected during his six years as controller, has asked to appear before the board to outline his concerns. Officials expect the meeting to take place within the next week.

“I really want to impress on the board the seriousness of this matter as to how taxpayers’ money is being handled,” Tuttle said. “We think there are very serious deficiencies in the way it is being handled.”

Sanitation and public works officials declined to comment on details of the audit until they have a chance to review it. In a letter last month to Tuttle, however, Sanitation Director Delwin A. Biagi acknowledged some of the problems but blamed the bureau’s expansion in recent years and a lack of funding to hire administrative and accounting staff.

“The audit time period was one of extreme growth for the bureau (the annual budget increased from $130 million to $205 million--57%) and it is common for administrative/management controls to lag behind during periods of such rapid organizational growth,” Biagi wrote.

Biagi said requests for additional staff had either been denied or only partially granted, leaving the bureau “definitely short of staff in many of these important areas.” Biagi assured the auditors that many problems outlined in the report have been corrected, but Tuttle said Monday that the changes have not gone far enough.

Three people were fired as a result of payroll fraud detected in the audit, two were transferred from payroll to warehouse jobs and one retired, according to Board of Public Works records. One of the fired employees, a clerk at the Hyperion Sewage Treatment Plant, was convicted of payroll fraud and served time in jail, officials said.

Police Sgt. Jerry Swick said a case against several other employees accused of payroll fraud was forwarded to the district attorney’s office for prosecution, but no charges were filed.

“There was no doubt that money was missing, but it was another question how it was missing and who did it,” said Deputy Dist. Atty. Joseph Shidler, who recommended against prosecution.

No other criminal investigations are under way as a result of the audit, authorities said.

Two of the fired employees, a typist and truck driver, worked at the city’s garbage truck yard in South Los Angeles. They were fired for payroll fraud in June, 1990, about eight months after an early morning fire at the facility destroyed several boxes of records sought by auditors.

Fire Department spokesman Dean Cathey said investigators determined that the blaze, which caused $22,000 in damage, was intentionally set. Several suspects were identified, he said, but no arrests were made.

Tuttle said the fire was set shortly after auditors notified employees that they would be reviewing records at the facility in October, 1989. Auditors were able to gather much of the information from other sources, he said, eventually leading to the dismissal of the two employees.

Stains on the Sanitation Bureau

An audit of the Bureau of Sanitation by City Controller Rick Tuttle found widespread payroll abuses in the $170-million-a-year agency’s various divisions and facilities. Tuttle will present his findings and recommended reforms to the Board of Public Works. The following data reflects the time between July 1, 1987 and April 30, 1990.

Discrepancies* Hyperion Refuse Treatment Collection Plant Padding of time sheets + + Falsifying signature of supervisor + Undocumented authority on time sheets + + Sick/vacation and other paid hours not recorded on time sheet + + Overtime hours used to offset undertime + Supervisor and subordinates approving each other’s time sheets + Overtime requests and supporting documents not properly reviewed + + Supervisors approving own time sheets Payroll records changed without supporting documents Standard written timekeeping procedures not fully enforced + + Timekeeping documents not properly prepared or filed + + Weekly time sheet and daily section report not signed by the preparers +

Discrepancies* Wastewater Collection Padding of time sheets Falsifying signature of supervisor Undocumented authority on time sheets + Sick/vacation and other paid hours not recorded on time sheet Overtime hours used to offset undertime Supervisor and subordinates approving each other’s time sheets Overtime requests and supporting documents not properly reviewed + Supervisors approving own time sheets + Payroll records changed without supporting documents + Standard written timekeeping procedures not fully enforced + Timekeeping documents not properly prepared or filed + Weekly time sheet and daily section report not signed by the preparers

Discrepancies* Industrial Tillman Waste Reclamation Enforcement Plant Undocumented authority on time sheets + + procedures not fully enforced + + Timekeeping documents not properly prepared or filed + +

Discrepancies* Glendale Terminal Lopez Reclamation Island Canyon Plant Plant Landfill Undocumented authority on time sheets + + + Standard written timekeeping procedures not fully enforced + + + Timekeeping documents not properly prepared or filed + + +

* No payroll problems were found in 10 of the bureau’s 18 divisions

SOURCE: City Controller Audit