Audit Excerpts: “Overdrawn Cash Balances and Comp Time Violations”

OVERDRAWN CASH BALANCES (City)

The cash balances of the Purchasing Internal Service, Community Dev Block Grant, Emergency
Shelter Grant, and Accounts Receivable Clearing funds were overdrawn at December 31, 2012. A similar
comment appeared in the prior Report B41037.

The cash balance of any fund may not be reduced below zero. Routinely overdrawn funds could be
an indicator of serious financial problems which should be investigated by the governmental unit. (Accounting
and Uniform Compliance Guidelines Manual for Cities and Towns, Chapter 7)

COMPENSATORY TIME IN EXCESS OF FEDERAL MAXIMUM ALLOWED (City)

As of December 31, 2012, 52 of the City’s employees had accrued compensatory leave balances in
excess of the maximum allowed by the Federal Labor Standards Act. Of these employees, 1 person was an
Emergency Management Agency employee, 4 were police officers, and the remaining 47 were firefighters.
The current total liability of compensatory leave in excess of the federal maximum was approximately
$1,100,000 as of December 31, 2012.

The U.S. Department of Labor, Wage and Hour Division, The Fair Labor Standards Act of 1938, As
Amended Sec. 207(o)(3)(A) provides: “If the work of an employee for which compensatory time may be
provided included work in a public safety activity, an emergency response activity, or a seasonal activity, the
employee engaged in such work may accrue not more than 480 hours of compensatory time for hours worked
after April 15, 1986. If such work was any other work, the employee engaged in such work may accrue not
more than 240 hours of compensatory time for hours worked after April 15, 1986. Any such employee who,
after April 15, 1986, has accrued 480 or 240 hours, as the case may be, of compensatory time off shall, for
additional overtime hours of work, be paid overtime compensation.”