BALTIMORE, MD –The Department of Audits (DOA) has completed a comprehensive review of the Department of Finance's (DOF) payroll performance for the fiscal years ending on June 30, 2022, and June 30, 2021, focusing on the retroactive payment process for employee earnings in Workday. The goal of the review was to assess the accuracy of withholdings and payments based on employee earnings. 

Findings: 

The review revealed significant errors and inconsistencies in the retroactive payment process, indicating a need for improvement. Three main issues were identified: 

• Significant errors in retro payment calculations: The audit found that there were errors in the calculation of retro payments, leading to inaccurate payments to employees. 
• Insufficient documentation: Some retro payments lacked sufficient documentation, making it difficult to verify the accuracy of the payments. 
• Inconsistencies in pension contributions: There were inconsistencies in deducting pension contributions from employee paychecks for Cost-of-Living Adjustments (COLA), resulting in the City overpaying for missed pension contributions. 

These issues were primarily attributed to vacancies within the Payroll division in the Department of Finance and the transition to using Workday without clear guidance or training. 

Impact: 

The errors in the retroactive payment process have resulted in the City overpaying for missed pension contributions, potentially affecting 12,775 employees. The total amount paid for the missed pension contributions is estimated to be at least $533,550 for ACSCME Locals 2202, 558 and 44 and Council 67 and CUB. 

"The errors revealed in the retroactive payment process are deeply troubling and have had a direct, negative impact on our employees AND the City’s bottom line,” Comptroller Bill Henry said. “This situation could have been avoided by a very tangible solution – effectively training our employees. I hope we don’t have to learn this painful lesson again.” 

Next Steps: 

Audits has recommended two key actions for Payroll: 1. Establish written guidance for retroactive payments; and 2. Establish and implement policies and procedures to conduct analytics in Workday to ensure smooth payment processes. DOF has agreed to the recommendations and has provided an action plan, which can be found in the full audit report. A comprehensive audit explainer is also available from the Comptroller's Office. 

About the Department of Audits: 

DOA is the City's independent auditor, providing various audits, attestation engagements, and assurance services with the overall goal of improving government accountability. In addition to the Biennial Audits, DOA performs the Single Audit, the Annual Comprehensive Financial Report (ACFR), the financial statement audit of the Enoch Pratt free Library, reviews for City contracts prior to BOE consideration, and additional projects as requested by management.