A Honolulu City Council committee on Wednesday will hear from Fire Chief Manuel Neves and other Hono­lulu Fire Department brass on what progress they’ve made to shore up fiscal policies in response to a report on overtime payments issued in June by the city’s Internal Control Division.

Internal Control, a division of the Department of Budget and Fiscal Services, conducted its review in response to allegations of improperly filed overtime requests and other misuse of city funds tied to HFD’s Charles H. Thurston Training Center.

The report concluded that HFD lacks:

>> Sufficient controls over the administration and use of training-­related overtime.

>> A separation of duties, increasing the potential for error and fraud.

>> Proper oversight of department-­issued pCards, or credit cards used for official purchases.

The investigation included a look into HFD’s overtime policies and procedures, a review of approximately 3,300 time sheets and supporting documents from July 1, 2014 to March 31, 2020, a site visit to the training center and an interview of key personnel.

“The lack of documentation to support overtime entries made it difficult to identify instances of fraud or abuse,” the report said.

In a sample of 45 employees and 390 overtime/compensatory transactions, 128 of the transactions, or about 32.8%, were found to have discrepancies, or missing proper documentation, the report said.

The department lacks a formal overtime use policy, the report said, noting that there were no clear or consistent policies for requesting or recording OT, or even who was to authorize or approve extra hours, the report said.

“We note a lack of accountability with several employees being able to submit their own overtime hours to the HFD Timekeeper without supervisory approval and just prior to the information being uploaded to the Payroll Time and Attendance System,” the review said. Some fire operation employees were able to enter their own OT hours into the system, the report said.

The same sampling of 390 transactions found that 503 OT hours did not have approved time and attendance forms, the report said.

“Supervisors should consistently and formally approve timesheets within HFD, especially due to the large amount of overtime that HFD grants to its employees,” the review said.

The report pointed out that HPD overtime expenditures overall increased 75% from 2015 to 2019.

The Internal Control review pointed out that city rules pertaining to purchase cards (pCards) limit single-­transaction charges to $2,499.99. The review of construction-related expenditures at the training center found one instance where there was evidence of a “split purchase” in order to get around the pCard limit involving the rental of a forklift. Two charges were made within a minute of the other totaling $3,246, the report said.

A response signed by Neves and dated July 24 said HFD accepted the three findings.

A team of top HFD officials was assembled July 6 to develop a corrective action plan to improve internal controls for overtime, the response said. Among the components of the action plan were defining and designating who was authorized to make OT entries and “developing forms to document the purpose and approvals for OT consistent with the city’s Record Retention Policy.”

The plan was to be in place by Sept. 1.

The response said separate plans were established to create a request to purchase form and develop procedures to examine unusual and/or unique purchase requests by Oct. 1, and to develop a formal training program for HFD personnel authorized to make pCard purchases by Nov. 30.

Council Budget Chairman Joey Manahan said there doesn’t appear to be proof of malfeasance or fraud, but that he wants HFD to update his committee on what’s been done since June.

“Definitely, there needs to be a tightening up of internal procedures,” Manahan said. “We’re going to see where Chief Neves and the HFD administration is with that.”

Bobby Lee, Hawaii Fire Fighters Association president, whose union has been in a number of clashes with Neves in recent years, said the chief’s priorities are misplaced. Neves has consistently refused to listen to people, and those in the union in particular, Lee said.