A review of payroll systems at Rutland County Council failed to reveal flaws which led to staff being overpaid by £83,000.
A report to the council’s audit and risk committee revealed that the council’s payroll system was subjected to an internal audit in July last year after a staff member raised concerns.
The audit identified “serious weaknesses” in the payroll system and concluded it was ”unsound”.
Steps were taken to resolve the issues but further problems came to light in November when a member of staff noticed that overtime payments were being authorised by mistake.
A report to the committee meeting last month said: “The internal auditors did not unearth some of the problems that led to the payroll errors.
“Given the scope of the audit, it would not be unreasonable to suggest that the auditors should have identified the issues.”
It added: “In summary, the internal audit process was flawed.”
The council has now agreed to commission an independent review of the internal audit function which is expected to conclude in September.
The council has also implemented changes to the computer system which is used by the payroll team to prevent future problems.
Some of the overpayments were caused because the system doesn’t record details of staff contract conditions, such as not being entitled to paid overtime once they reach a certain salary.
As a result of managers authorising such payments, this led to 15 staff being paid overtime when they should have had time off in lieu and 11 staff being mistakenly paid for weekend working.
The system also had Sunday pay enhancements set at double time when some contracts only allow time and a half. This led to 16 people being overpaid.
The Agresso computer system has now been changed to address these issues and managers have attended workshops to make sure they understand what overtime payments their staff are entitled to.
The combination of computer problems and staff misunderstanding the conditions of their contracts meant that 51 staff were overpaid a total of£83,271 during the last four years. During the same time, 58 members of staff were underpaid by a total of £31,877.
In April councillors voted to write-off the overpayments because they felt the money had been claimed in good faith.
The staff who had been underpaid were also paid the money owed to them.