Follow up report: A Review of the Orleans Parish Coroner's Supplemental Payments to Employees and Contractors

OfficeofInspectorGeneralCityofNewOrleans

FollowupReport:AReviewoftheOrleansParishCoronersSupplementalPaymentstoEmployeesandContractors

A&R14FOL001

E.R.QuatrevauxInspectorGeneral

IssuedJanuary21,2015

OfficeofInspectorGeneralOIGAR14FOL001FollowupReport:AReviewoftheOrleansParishCoronersCityofNewOrleans SupplementalPaymentstoEmployeesandContractors Pagei

Followup Report: A Review of the Orleans Parish Coroners Supplemental Payments to Employees andContractors

ExecutiveSummary............................................................................................................iii

I. Objectives,Scope,andMethodology................................................................................1II. Followup:CorrectiveActions............................................................................................2

Followup#1: Thiscorrectiveactionwasnotimplemented.TheCoronersOfficedidnotreceiveformalauthorizationfromtheCityCouncilforthedisbursementofselfgeneratedfunds.

Followup#2:Thiscorrectiveactionwasnotimplemented.TheCoronersOffice

didnottrackthetimespentonworkforotherparishes.Followup#3 Thiscorrectiveactionwasnotimplemented.TheCoronersOffice

didnotcreateaformalpolicyspecifyingtheconditionsthatmustbe met in order for an employee to receive supplementalpayments and did not obtain formal authorization from CityCouncilfordisbursementoftheseselfgeneratedfunds.


didnotcreatea formalpolicy specifyinghow the supplementalpaymentswerecalculated.

Followup#5:This corrective action could not be tested because

documentation maintained by the Coroners Office wasinsufficienttodistinguishreimbursableoperatingexpensesfromsupplementalpayments.

OfficeofInspectorGeneralOIGAR14FOL001FollowupReport:AReviewoftheOrleansParishCoronersCityofNewOrleans SupplementalPaymentstoEmployeesandContractors Pageii

Followup#6:Thiscorrectiveactionwaspartially implemented.TheCoronersOffice discontinued the practice of classifying an employee asboth a contractor and an employee; but the Coroners Officefailed to create a new employment classification for a ChiefForensicPathologistasofthescopeofthisaudit.

Followup#7:Thiscorrectiveactionwasnotimplemented.TheCoroner'sOffice

did not file 1099s for either of the two contractors receivingsupplementalpayments.


didnot fileaW2 forallemployeeswhoreceivedsupplementalpaymentsgreater than$600 in2013.TheCoronersOfficewasstill unable to provide W2s filed on behalf of employeesreceivingpaymentsfrom2006through2011.


did not maintain a written agreement with all contractualemployees.

OfficeofInspectorGeneralOIGAR14FOL001FollowupReport:AReviewoftheOrleansParishCoronersCityofNewOrleans SupplementalPaymentstoEmployeesandContractors Pageiii

EXECUTIVE SUMMARY InMarchof2013theOfficeof InspectorGeneral(OIG)conductedaperformanceaudittitled,A Review of the Orleans Parish Coroners Supplemental Payments to Employees andContractors(the2013Report).ThepurposeoftheauditwastodetermineiftheOrleansParishCoroners Office (the Coroners Office) was in compliance with city policies, and state andfederallawsregardingsupplementalpayments.TheCoronersOfficedidnot implementsevenoftheninecorrectiveactionspromisedbytheCoroners Office in the 2013 Report. One of the nine corrective actions was partiallyimplemented;andoneoftheninecorrectiveactionsfromthe2013Reportcouldnotbetestedduetolackofdocumentation. Thefindingsfromthe2013Reportincludedthefollowing:

1. TheCoronersOfficemadeunauthorizedsupplementalpaymentstoitsemployeesandcontractors.

2. TheCoronersemployees,whowerepaidthroughaCityGeneralfundallocation,workedforotherparishesduringtheirCityfundedworkday.

3. TheCoronersOfficedidnotmaintainawrittenpolicyoutliningwhenemployeesandorcontractorscouldreceivesupplementalpayments.

4. TheCoronerdidnotmaintaindocumentationofthecalculationsusedforthesupplementalpayments.

5. TheCoronersOfficewasinconsistentinthecodingofthesupplementalpaymentsinitsgeneralledger.

6. TheCoronersOfficehadadoctorclassifiedas[both]anemployeeandanindependentcontractorsimultaneously.

7. TheCoronersOfficedidnotissue1099stoitscontractorspaidthroughitsseparatelymaintainedbankaccount.

8. TheCoronersOfficedidnotissueW2stoitsemployeespaidthroughitsseparatelymaintainedbankaccount...

9. [The]CoronersOfficepaidcontractualemployeeswithoutawrittenagreementstatinganamounttobepaidfortheservicestobeperformed.

ThepurposeofthisfollowupreportwastodetermineiftheCoronersOfficeimplementedthecorrectiveactionsidentifiedinthe2013Report.11TheresponsesfromtheCoronersofficenotedinthisreportweresubmittedundertheformerCoronersreign.

OfficeofInspectorGeneralOIGAR14FOL001FollowupReport:AReviewoftheOrleansParishCoronersCityofNewOrleans SupplementalPaymentstoEmployeesandContractors Page1of5

I. OBJECTIVES, SCOPE, AND METHODOLOGY The objective of the followup was to determine if the Coroners Office implemented thecorrectiveactionspromised in its responses to the2013Report.The scopeof the followupreport included active service and maintenance contracts in effect from January 1, 2013throughDecember31,2013.Thefollowingprocedureswereperformedtoaccomplishthefollowupobjectives:

Conductedinterviewswithpersonneltogainanunderstandingofthecurrentprocessesandcontrolsinplace;

Determined whether formal authorization was obtained for disbursement of selfgeneratedfunds;

EvaluatedhowtheCoronersOfficetrackedtimeworkedforoutsideparishes; Determined whether the Coroners Office implemented written policies regarding

supplementalpay; Evaluatedwhethersupplementalpaymentsweredistinguishedfromotherpayments; Evaluatedwhether the CoronersOffice created a new employment classification for

ChiefForensicPathologist; DeterminedwhetheremployeesreceivingsupplementalpaymentswereissuedW2sfor

thosesupplementalpayments; Determinedwhethercontractors receiving supplementalpaymentswere issued1099s

forthosesupplementpayments;and Determined whether the Coroners Office maintained written agreements with

contractualemployees.

ThisfollowupreportwasconductedinaccordancewiththePrinciplesandStandardsforOfficesofInspectorGeneral(theGreenBook).2Computerprocesseddatawasprovidedandreliedupon.Aformalreliabilityassessmentofthecomputerprocesseddatawasnotperformed.Hardcopydocuments reviewedsupported theinformationcontainedinthecomputerprocesseddata.

2AssociationofInspectorsGeneral,2004.


II. FOLLOWUP: CORRECTIVE ACTIONS Recommendation1:TheCoronersuseofpublic fundsshouldcomplywithstate lawandbeauthorizedbystatestatuteortheCityCouncilpriortopayment.Thepaymentofsupplementalpaytoemployeesandindependentcontractorsshouldbediscontinued.3

RecommendationAcceptedbytheCoroner:Thesepaymentswereintendedtorewardcertainemployees,toreimbursethem foranycosts,and,most importantly,toprovideincentiveforallinmyofficetocontinuetoservethepublicwithsuchprofessionalism.Bytheendofthecalendaryear,wehopetoobtainformalauthorizationfromCityCouncilfordisbursementoftheseselfgeneratedfunds"

Finding #1 Corrective Action: This corrective action was not implemented. The CoronersOfficedidnotreceiveformalauthorizationfromtheCityCouncilforthedisbursementofselfgeneratedfunds.Recommendation 2: TheCoronersOffice should keep track of the time spentworking forotherparishessothatOrleansParishreceivestheservicesduetoit.TheallocationprovidedbytheCityfortheCoronersemployeesshouldbeusedstrictlyforservicesprovidedforOrleansParish.TheservicesperformedforotherparishesshouldbepaidfromthefundsearnedfromthoseParishes.

RecommendationAcceptedbytheCoroner:.Inthefuture,wewilltrackthetimespentonsuchoutofparishcases todocumenthow theseservicesdonotaffectourprimaryobligationtothecitizensofOrleansParish.

Finding #2 CorrectiveAction: This corrective actionwas not implemented. The CoronersOfficedidnottrackthetimespentworkingforotherparishes.Recommendation3:ThesupplementalpaymentsmustbepreauthorizedbytheCityCouncilorbystatute,andmustcomplywithconstitutionalrestrictions.Onceauthorized,theCoronersOfficeshouldhaveawrittenpolicyforthesalarysupplementswhichdefineswhenthesalarysupplementcanbereceivedbyanemployeeoracontractor.

3Allsupplementalpaymentsshouldcomplywiththestateconstitution.


RecommendationAcceptedbytheCoroner:Thesepaymentswereintendedtorewardcertainemployees,toreimbursethem foranycosts,and,most importantly,toprovideincentiveforallinmyofficetocontinuetoservethepublicwithsuchprofessionalism.Bytheendofthecalendaryear,wehopetoobtainformalauthorizationfromCityCouncilfordisbursementoftheseselfgeneratedfunds,andwillthencreateformalpoliciesthatspecifyunderwhatconditionssuchmoniescanbepaid.

Finding #3 CorrectiveAction: This corrective actionwas not implemented. The CoronersOfficedidnotcreateaformalpolicyspecifyingtheconditionsthatmustbemetinorderforan employee to receive supplemental payments and did not obtain formal authorizationfromtheCityCouncilfordisbursementoftheseselfgeneratedfunds.Recommendation4:ThesupplementalpaymentsneedtobepreauthorizedbystatuteortheCityCouncil.Onceauthorized,theCoronersOfficeshoulddocumentitspolicyrelatingtosalarysupplementpayments.Thepolicyshouldclearlydefinehowthecalculationwasdetermined.

RecommendationAcceptedbytheCoroner:Thesepaymentswereintendedtorewardcertainemployees,toreimbursethem foranycosts,and,most importantly,toprovideincentiveforallinmyofficetocontinuetoservethepublicwithsuchprofessionalism.Bytheendofthecalendaryear,wehopetoobtainformalauthorizationfromCityCouncilfordisbursementoftheseselfgeneratedfunds,andwillthencreateformalpoliciesthatspecifyunderwhatconditionssuchmoniescanbepaid.

Finding #4 Corrective Action: This corrective action was not implemented. The CoronersOfficedidnotcreateaformalpolicyspecifyinghowthesupplementalpaymentsweretobecalculated.Recommendation 5: If the CoronersOffice is able to institute a salary supplementwhichcomplies with state law, it should record the salary supplement payments to a designatedgeneralledgeraccountinordertodistinguishthesepaymentsfromotheroperatingexpenses.Theconsistency inrecordingthesepaymentsshouldfacilitatethepreparationoftheyearendpayrollreconciliationsandforms.

RecommendationAcceptedby theCoroner:wehavealready corrected these issuesandhaveconsultedwithanaccountantregardingfuturepractices.


Finding#5CorrectiveAction:TheOIGwasunabletodeterminewhetherthiscorrectiveactionwas implemented. Sufficient documentation was not available to distinguish betweenreimbursableoperatingexpensesandsupplementalpaymentsmadetoemployees.Recommendation6:TheCoronersOfficeand itsemployeesmustcomplywiththeLouisianaCode of Governmental Ethics. Further, an employer must make a distinction between anemployee and an independent contractor for federal tax purposes. The employeesclassificationaffectsthewaytheCoronersOfficeshouldpayandfilepayrolltaxreturns.The Coroners Office should discontinue the practice of classifying an employee as both acontractorandanemployee.4

RecommendationAcceptedbytheCoroner:Bytheendofthiscalendaryear,wehopetohavesuccessfullycreatedanewemploymentclassificationwithincitygovernmentofChiefForensicPathologistwithappropriate reimbursement forbothduties.Wearepreparinganordinance to createanewposition inorder to compensateour forensicpathologistforadditionalduties.Therefore,wewillnolongerpay[a]contractualfeeandregularcitycompensation.

Finding#6CorrectiveAction:Thiscorrectiveactionwaspartiallyimplemented.TheCoronersOffice discontinued the practice of classifying an employee as both a contractor and anemployee.However,theCoronersOfficedidnotcreateanewemploymentclassificationforChiefForensicPathologistasofthescopeofthisaudit.5Recommendation7:TheCoronersOfficeshouldrequireall independentcontractorsearningmorethan$600percalendaryeartocompleteaFormW96priortopayment.A1099mustbesent to each independent contractor who received more than $600 in a calendar year byJanuary31ofthefollowingyearinaccordancewithIRSregulations.74IRSpublication:1779.5ThenewadministrationcreatedaproposalforthecreationofaChiefForensicPathologistanditwasintroducedattheCityCouncilmeetingonNovember6,2014.6Ifyouvemadethedeterminationthatthepersonyourepaying isan independentcontractor,thefirststep istohavethecontractorcompleteFormW9,RequestforTaxpayerIdentificationNumberandCertification.ThisformcanbeusedtorequestthecorrectnameandTaxpayer IdentificationNumber,orTIN,of theworker.ATINmaybeeitheraSocialSecurityNumber(SSN),oranEmployerIdentificationNumber(EIN).TheW9shouldbekept inyourfilesforfouryearsforfuturereference incaseofanyquestionsfromtheworkerortheIRS.Website:www.irs.gov/businesses/small/article/0,,id=179114,00.html.7Ifyoupaidsomeonewhoisnotyouremployee,suchasasubcontractor,attorneyoraccountant$600ormoreforservicesprovidedduring theyear,aForm1099MISCneedstobecompleted,andacopyof the1099MISCmustbeprovided to theindependentcontractorby January31of theyear followingpayment.Youmustalsosendacopyof this form to the IRSby



Finding #7 Corrective Action: This corrective action was not implemented. The CoronersOffice did not file 1099s for either of the two8 contractors (100%) receiving supplementalpaymentsgreaterthan$600in2013.Recommendation8:TheCoronersOfficemust issueW2s9 foranyemployee thatreceivedsalarysupplementpayments in2012.TheCoronersOfficeshouldconsultwiththe IRSfortaxguidanceregardingsupplementalpaymentstotheiremployeesduring20062011thatwerenotfiledonaW2form.10


Finding#8CorrectiveAction: This correctiveactionwasnot implemented.W2swerenotfiledforfiveofthe12 (42%)employeeswhoreceivedsupplementalpaymentsgreaterthan$600in2013.Inaddition,theCoronersOfficewasunabletoprovideW2sfiledonbehalfofemployeesreceivingpaymentsfrom2006through2011.Recommendation 9: The Coroners Office should have written agreements with allindependentcontractors specifying the rateofpay for the services tobeperformedprior tomakingpaymentstothecontractor.

Recommendation Accepted by the Coroner: We are entering into a letter ofagreementwithcontractualemployees.andestablishingrateofpay.

Finding #9 Corrective Action: This corrective action was not implemented. The CoronersOffice did not maintain a written agreement with one of the two (50%) contractualemployees.

February28(althoughtheformdoesnothavetobesenttotheIRSuntilMarch31ifthebusinessfilesthe1099selectronically,usingtheFIREsystem).Website:www.irs.gov/businesses/small/article/0,,id=179114,00.html.8TheCoronersOfficehasreducedthenumberofcontractorsfromseveninthe2013ReporttotwoasofDecember31,2013.9CoroneremployeeswhowerepaidbytheCityreceivedW2sfromtheCity.TheCoronersOfficedidnotissueW2sfortheadditionalsupplementalpaymentsissuedtotheseemployees.10TheCoronersOfficemaintaineda separatebankaccount, independent from theCitysGeneralFund, throughwhich thesupplementalpaymentsweremade.

Documents

Follow up report: A Review of the Orleans Parish Coroner's Supplemental Payments to Employees and Contractors