MAYOR JIM GRAY BRUCE SAHLI

DIRECTOR
OFFICE OF INTERNAL AUDIT

INTERNAL AUDIT REPORT

DATE: June 20, 2017

TO: Jim Gray, Mayor

CC: Sally Hamilton, Chief Administrative Officer

Glenn Brown, Deputy Chief Administrative Officer
Aldona Valicenti, Chief Information Officer
William O’Mara, Commissioner of Finance & Administration
Phyllis Cooper, Director of Accounting
Susan Straub, Communications Director
Urban County Council
Internal Audit Board

FROM: Bruce Sahli, CIA, CFE, Director of Internal Audit

Chris Ensslin, CIA, CFE, CGAP, Deputy Director of Internal Audit

RE: Ghost Employee Continuous Monitoring

The Office of Internal Audit developed a test using ACL audit software to detect
possible ghost employees. “Ghost employee” refers to an individual on the payroll
who does not actually work for the LFUCG. Through the falsification of personnel
or payroll records, it is possible within an organization to generate paychecks or ACH
payroll transactions for a ghost employee, with the payments intercepted by the
perpetrator. This test was designed to determine if ghost employees may have been
set up in the PeopleSoft System by detecting duplicate Social Security Numbers.

The Office of Internal Audit is not aware of any specific control weaknesses that
would allow the creation of a ghost employee or that would result in its creation being
undetected. However, if ghost employees did exist, the use of data analytics is often
the best method to initially detect them.

200 East Main St., Lexington, KY 40507 / 859.425.2255 Phone / lexingtonky.gov

 2

This particular test identified zero duplicate Social Security Numbers for employees
for the pay period ending June 11, 2017 (a total of 3,672 employees). The result is
that this test found no evidence of ghost employees. There are no findings or
recommendations.

Reported for your information.

200 East Main St., Lexington, KY 40507 / 859.425.2255 Phone / lexingtonky.gov