Overview
EDAO should have documented policies and procedures to manage employee separation or settlement agreements, including the use of non-disclosure, non-disparagement, or similarly restrictive clauses. We found that EDAO’s internal settlement policy provided to us was dated July 2024 and, therefore, was not in effect during the period under review. During interviews, EDAO management told us that the agency would not be inclined to use non-disclosure language within the context of employee settlement agreements. The District Attorney and agency counsel would review and approve the terms and language of any employee settlement agreements before execution. However, we found that the internal policy document provided to us did not describe this practice.
If EDAO does not have a documented process by which it handles employee settlement agreements, especially those containing non-disclosure, non-disparagement, or similarly restrictive clauses, then it cannot ensure that employee settlements are handled in an equitable, ethical, legal, and consistent manner.
Authoritative Guidance
The US Government Accountability Office’s Standards for Internal Control in the Federal Government, known as the Green Book, sets internal control standards for federal entities. The Green Book defines internal controls in the following way:
Internal control comprises the plans, methods, policies, and procedures used to fulfill the mission, strategic plan, goals, and objectives of the entity. Internal control serves as the first line of defense in safeguarding assets. In short, internal control helps managers achieve desired results through effective stewardship of public resources. . . . Management should design control activities to achieve objectives and respond to risks. . . . Management should implement control activities through policies.
While EDAO is not required to follow this policy, since it is not a federal entity, we consider it to be a best practice.
Reasons for Issue
EDAO officials could not explain why they did not have documented policies and procedures regarding employee settlement agreements in place during the audit period.
Recommendations
- EDAO should update its “Policies, Procedures, and Guidelines—Settlements and Judgments,” effective July 2024, to include review and approval of agreement terms by the District Attorney and chief legal counsel.
- EDAO should ensure that its “Policies, Procedures, and Guidelines—Settlements and Judgments,” effective July 2024, is formally communicated to all relevant employees and fully integrated into its operations.
Auditee’s Response
During the audit period, the EDAO did not have a documented, internal policy for employee settlement agreements. We relied on the Office of the Comptroller’s (CTR) “Settlements and Judgments Policy,” which was in effect from January 10, 2022, to handle monetary settlements. Your audit found that the EDAO did not enter into any employee settlement agreements during the entire five-year review period from July 1, 2019, through June 30, 2024. Furthermore, no non-disclosure, non-disparagement, or similarly restrictive clauses were used in any settlement agreements during this time.
Just outside the audit period, in July 2024, the EDAO created its own “Policies, Procedures, and Guidelines-Settlements and Judgments”. We have revised this policy to formalize a documented and transparent process for handling any future employee settlements. . . . This will ensure that such matters are handled in a legal, ethical, and consistent manner, with terms and language reviewed and approved by the District Attorney and chief legal counsel.
Auditor’s Reply
Based on its response, EDAO is taking measures to address our concerns regarding this matter. As part of our post-audit review process, we will follow up on this matter in approximately six months.
| Date published: | November 25, 2025 |
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