Port of Seattle
Internal Audit Report
Aviation Division Overtime Performance Audit
Current Practices in 2010
Issue Date: January 11, 2011
Report No.: 2011-04
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Internal Audit Report
Aviation Division Overtime Performance Audit
Audit Period: Current Practices in 2010
Audit Audit
Compliance Audit
Compliance Audit
Table of Contents
Internal Auditor’s Report ............................................................................................................................. 3
Executive Summary....................................................................................................................................... 4
Scope of the Audit ......................................................................................................................................... 7
Audit Approach .............................................................................................................................................. 7
Conclusion ....................................................................................................................................................... 7
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Internal Audit Report
Aviation Division Overtime Performance Audit
Audit Period: Current Practices in 2010
Audit Audit
Compliance Audit
Compliance Audit
Internal Auditor’s Report
We have completed a performance audit of Overtime in the Aviation Division. A total of 27
separate work units in the Aviation Division reported Overtime in 2008 and 2009. The audit
focused on the departments with over 8,000 hours of reported Overtime annually. These
departments were within Facilities and Maintenance, Operations and Customer Service, and
Security & Emergency Preparedness.
The purpose of the audit was to determine whether Port management has effectively
managed Overtime usage in the Aviation Division.
Specifically, whether management:
o Provides adequate oversight to ensure discretionary Overtime is driven by
operational necessity, as opposed to non-value-added or low risk tasks.
o Manages Overtime results with transparency based on achievable and/or realistic
assumptions within established budgetary goals/targets.
o Manages Overtime hours with an emphasis on cost/benefits and an awareness of
risk-based alternatives.
Management has the primary responsibility to establish and implement effective controls
over the use and reporting of Overtime. Our audit objective was to assess, and test those
controls in order to establish whether the controls were adequate and operating effectively.
We conducted the audit using due professional care. We planned and performed the audit
to obtain reasonable assurance that the risks impacting Overtime were sufficiently mitigated.
The Aviation Division has established adequate and effective controls related to Overtime.
There were no significant issues noted during the audit. We however, noted an
opportunities to strengthen the visibility and accountability of Overtime reporting.
We extend our appreciation to management and staff for their assistance and cooperation
during the audit.
Joyce Kirangi, CPA
Director, Internal Audit
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Internal Audit Report
Aviation Division Overtime Performance Audit
Audit Period: Current Practices in 2010
Audit Audit
Compliance Audit
Compliance Audit
Executive Summary
Audit Scope and Objective The purpose of the audit was to determine whether Aviation
Division management has effectively managed Overtime.
Specifically, whether management:
Provides adequate oversight to ensure discretionary overtime is driven by
operational necessity, as opposed to non-value added/low risk tasks.
Manages overtime results based on achievable, realistic estimates and/or
assumptions within established budgetary goals/targets.
Manages overtime hours with an emphasis on costs/benefits with an awareness of
risk-based alternatives.
The scope of the audit included the current Aviation Division overtime practices.
Background A total of 27 separate work units in the Aviation Division reported Overtime
in 2008 and 2009. To ensure smooth 24/7 operation at the Sea-Tac International Airport,
approximately 112,000 in Overtime hours were incurred during the two-year period. These
hours totaled to approximately $2.8 million annually on average in Overtime expense.
The audit included:
Determining who had responsibility for overtime, and assess whether the
arrangement was working effectively;
Identifying the key risks involved with Overtime, and the mitigation strategies and
controls currently in place to manage those risks;
Identifying the extent of Overtime worked and test whether the key controls were
working effectively to manage the identified risks;
Ascertain whether Overtime requirements were being effectively communicated to
managers and staff;
Reviewed whether management regularly received Overtime reports, acted prudently
on the need for Overtime, and periodically examined cost-effective alternatives.
Audit Result Summary The Aviation Division has established adequate and effective
controls related to Overtime. There were no significant issues noted during the audit. We
however, noted an opportunities to strengthen the visibility and accountability of Overtime
reporting. This information was communicated to management in a separate letter.
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Internal Audit Report
Aviation Division Overtime Performance Audit
Audit Period: Current Practices in 2010
Audit Audit
Compliance Audit
Compliance Audit
Background
Financial Information
The following table represents the Port-wide total hours and dollar amounts for regular
wages and Overtime amounts for 2008, 2009 and 2010 (partial). The Aviation Division
accounted for an average of 43% of the Port wide regular wages and Overtime totals. The
Corporate totals include the Police Department which incurs significant Overtime.
(in 000’s)
2008
2009
2010
Type
Division
Hr
$
% of $
Hr
$
% of $
Hr
$
% of $
Reg
Aviation
1,636
52,150
42%
1,568
52,925
41%
1,417
50,317
40%
CDD
408
15,102
12%
413
16,146
13%
395
16,016
13%
Corp
857
34,550
28%
884
39,254
31%
857
39,927
31%
Real E.
295
9,561
8%
280
9,671
8%
301
10,610
8%
Seaport
111
5,092
4%
110
5,331
4%
107
5,410
4%
Reg Sum
3,307
116,453
94%
3,255
123,327
96%
3,077
122,280
96%
OT
Aviation
70
3,421
3%
42
2,208
2%
40
2,279
2%
CDD
10
498
0%
13
632
0%
5
287
0%
Corp
65
3,384
3%
38
2,087
2%
33
2,016
2%
Real E.
10
483
0%
8
412
0%
6
336
0%
Seaport
0
6
0%
0
7
0%
0
6
0%
OT Sum
156
7,791
6%
101
5,347
4%
85
4,924
4%
Grand Total
3,463
124,245
100%
3,356
128,675
100%
3,161
127,204
100%
Source: PeopleSoft (HCM), and does not include benefits
The table below represents total Overtime usage in hours for the top 12 Aviation Division
work units reviewed for the audit in 2008 and 2009, as well as the Furlough initiative hours
in 2009:
Work unit
2008
2009
2009
Furlough
Hours
AV Electrical & Electronic Sys
9,656
6,495
8,935
Fire Department
12,191
9,039
503
AV Mechanical Systems
6,644
5,496
300
Facility, Fleet, Sys & Grounds
12,796
4,127
6,108
Airfield Security
7,647
4,262
5,191
Operations Planning
1,747
3,211
507
Airport Communication Center
1,462
1,876
1,587
Customer Services
3,567
2,112
1,035
Ground Transportation
2,404
1,503
0
Employee Parking
4,876
1,525
0
Airfield Operations
973
795
1,709
Public Parking
3,931
1,138
576
Total
67,895
41,579
26,450
Source: PeopleSoft
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Internal Audit Report
Aviation Division Overtime Performance Audit
Audit Period: Current Practices in 2010
Audit Audit
Compliance Audit
Compliance Audit
Overall, there was a significant declining trend of Overtime usage in 2009. This was
expected as Port leadership has been proactive in reducing costs throughout the Port. In
2008 and 2009, total Aviation Overtime costs were $3,420,941 and $2,208,465,
respectively, which is within the industry standard. This represents 2.75% and 1.72% of
total Aviation Division salaries and wages. Best industry Overtime practices as reported by
the U.S. Bureau of Labor Statistics (which included all compensation including bonuses)
were obtained and based on our review, averaged to 2.8% of total gross earnings after
removing the Financial Services industry which skewed the overall results.
In 2009, most Aviation work units participated in the Port’s Furlough Initiative. The
expectation of Aviation Executive Management was for these work units to not utilize
Overtime as a result of the required Furlough hours. The work units tested met the Division
requirement not to supplement Furlough hours with an increase in Overtime.
The higher Overtime percentage in 2008 can be attributed, in part, to a significant winter
storm that required an increase in approved Overtime to keep the airport operational.
Drivers of Overtime
Based on our audit, the key Overtime drivers in the Aviation work units are:
1. External and Internal Compliance
a. FAA requirements for Fire Department, Communication Center, etc.
b. To provide staffing resources for emergencies, required training, or as
stipulated in the represented labor group agreements.
c. Approximately accounts for 35% of the total Overtime incurred.
2. Staffing level
a. To provide backfill staffing coverage during holidays, illness, vacations, and
other approved leaves.
b. Approximately accounts for 55% of the total Overtime incurred.
3. Discretionary
a. All others, including deadlines and high work load during certain peak times
of the year.
b. To provide staffing resources for lower risk tasks due more to scheduling
considerations rather than due to significant deadlines or operational
requirements.
c. Approximately accounts for less than 10% of the total Overtime incurred.
Aviation management believes that a significant part of Overtime is contributed to Holiday-
related Overtime. Internal Audit confirmed over 30,000 hours of holiday Overtime for 2008,
2009 and 2010 (partial year). Overtime incurred during scheduled holidays artificially
increases the total number of non-discretionary Overtime hours.
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Internal Audit Report
Aviation Division Overtime Performance Audit
Audit Period: Current Practices in 2010
Audit Audit
Compliance Audit
Compliance Audit
Reporting and Managing Overtime
Each department in the Aviation Division is responsible for establishing its Overtime needs,
policies, and reporting requirements. Additionally, labor agreement consideration of
Overtime is also managed at the department level.
There are Overtime data and reports compiled at the Departmental Level which is shared
during regularly scheduled meetings with the AV Senior Managers by their direct reports.
The information filters at the Director levels on an exception basis, and reliance is placed on
the Senior Managers to elevate any significant Overtime issues.
There have also been on-going activities undertaken by managers to assess various
approaches utilized to manage overtime hours with an emphasis on costs/benefits along
with an awareness of risk-based alternatives.
Scope of the Audit
The scope of the audit included current practices in 2010.
Audit Approach
To achieve the audit objectives, we performed the following procedures:
We submitted a SharePoint questionnaire to individual managers of the 12 work
units that we audited. Each of these orgs had more than 1,000 hours of Overtime.
The questionnaire covered the extent of department Overtime policies, determination
of the main triggers of Overtime, process for scheduling/approving Overtime,
concerns regarding Overtime, and the reporting of Overtime.
We conducted follow-up interviews and discussions with department managers and
senior divisional leadership. We specifically inquired about the impact of the 2009
furlough initiative and alternatives that were taken to minimize the use of Overtime.
We obtained and reviewed department Overtime reports, division variance reports,
and quarterly reports used to brief the Commission. We analyzed and evaluated the
extent and appropriateness of the elevation of Overtime issues.
We tested discretionary Overtime, using the lowest source document such as work
orders.
Conclusion
The Aviation Division has established adequate and effective controls for Overtime. There
were no significant issues noted during the audit. We however, noted an opportunities to
strengthen the visibility and accountability of Overtime reporting at the Division level. This
information was communicated to management in a separate letter.
