In response to a request for review from the Office of the Department Operations and Coordination, we are auditing the Office of Labor Relations (Labor Relations) wage restitution and deposit process. We found Labor Relations has weak internal controls over their Deposit account. Our objective was to gain an understanding of the deposit process and determine whether the controls used to administer and distribute restitution payments were adequate.

We found complete responsibility for managing the deposits, processing payments, and reporting for the deposit account was vested in Labor Relations’ senior policy advisor. Labor Relations’ internal controls were deemed weak because only one person was designated to manage these duties. The result of this lack of segregation of duties heightens the risk of undetected errors and allows opportunities to misappropriate funds or conceal intentional misstatements of wage restitution payments and refunds.

We believe the Director of the Office of Departmental Operations and Coordination needs to immediately segregate the duties for managing the deposit account that are performed by the advisor.

We recommended Office of the Department Operations and Coordination reassign and disperse among the Labor Relations regional offices the duties of tracking the deposit transactions and certifying payment vouchers. Decrease the senior policy advisor’s access to LR2000 to a level lower than that of the system administrator. Ensure that the Director of Labor Relations has final approval authority over all vouchers for payments to workers or refunds to depositors. Also, ensure that the Labor Relations balance for the deposit account is immediately reconciled with the balance reported by the Office of the Chief Financial Officer.