Layoffs and Furloughs and Their Effect on Internal Controls

Source: Jacob Lenell, CliftonLarsonAllen, State and Local Government, Perspectives, July 23, 2012

Faced with increasing pressure to reduce costs, hold the line on taxes, and balance the budget, local governments are turning to furlough days and layoffs as a way to generate cost savings. While this may be an effective cost-cutting strategy, government officials must also consider the impact it can have on internal control structures.

There are several things to consider when determining if furlough days or layoffs are an appropriate mechanism to achieve savings:
-The impact on the level of services provided by the affected employee group
-The impact on employee morale
-The expected savings from a reduction in workforce