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Auditor General and consultants flag payroll controls problems, council schedules follow-up
Summary
The Office of the Auditor General and audit partner Stout presented a citywide payroll performance audit identifying 23 observations — including manual processes, unsupported transactions and analytic anomalies — and the Finance Committee voted to take the item up again for deeper review in three weeks.
The Detroit City Council Finance Committee heard a detailed presentation of a citywide payroll performance audit on an interim report covering July 2021 through June 2023, and members asked the administration for clearer documentation and next steps.
Auditor General Laura Goodspeed introduced the report and said the work is part of a larger citywide employee-audit project. Ray Roth, director at Stout, the audit partner, said the audit found 23 observations and recommendations focused on manual processes, analytical anomalies and unsupported transactions. "Only 30% of it is working the way it should," Roth said, describing staff comments that frontline teams spend significant time "cleaning up the system." He noted payroll accounts for roughly $1 billion of annual general fund expenditures and warned the city's payroll processing is largely reactive rather than preventive.
The audit highlighted multiple specific issues: manual imports of DPD and DDOT time that introduce error risk; lump-sum payments and retroactive adjustments processed outside the primary payroll system; thousands of transactions where combined regular pay and paid time off exceeded expected thresholds; unsupported shift premiums and some instances of payments after separation. Stout said nearly one-third of tested payroll transactions had one or more elements of unsupported pay and recommended strengthened system controls, clearer documentation of overrides, and better use of ticketing data to drive continuous improvements.
Administration responses from OCFO and HR, as described by the audit team, pushed back on several findings. The OCFO and HR asserted some controls and reporting are already in place and characterized parts of the audit's analytics as explained by retro adjustments or reporting artefacts. Roth said the departments’ written responses covered only six of the 23 recommendations with action plans and that other responses were inconsistent with frontline staff descriptions.
Committee members pressed for more detail on department-level payroll processing and training. Vice Chair Johnson said the mix of decentralized HR units, bargaining agreements and manual processes requires clearer oversight and training to reduce error risk. Member Waters asked whether the audit identified fraud; auditors said they found overpayments and analytical anomalies and that some instances were wasteful or unsupported, but the audit’s scope focused on improvement opportunities rather than quantifying systemic fraud.
After the discussion the committee moved to bring item 5.15 back in three weeks for deeper review with OCFO and HR to follow up on the recommendations and departmental responses. Auditor General Goodspeed said this audit is one piece of a multi-report effort and that a public safety payroll report is forthcoming.
The committee did not take immediate corrective action beyond scheduling the follow-up; members requested clearer, accessible documentation and department responses when the item returns.
Next steps: the Finance Committee will revisit the payroll audit in three weeks, with OCFO and HR expected to present detailed responses to the audit recommendations and provide supporting documentation.
