(The Center Square) — Louisiana State University at Shreveport has struggled with bank reconciliations and weak controls over payroll in recent years, according to the Louisiana Legislative Auditor.
Auditor Mike Waguespack issued a procedural report last week that examined the university's controls over financial reporting, compliance with laws and regulations and accountability over public funds that revealed two significant findings.
The first centered on an ongoing issue with LSUS' failure to ensure bank reconciliations are correctly prepared and to accurately and timely record the transactions in its accounting systems.
Auditors explained LSUS uses a Workday system for accounting but a separate Integrow system for bank statement reconciliations “because of the level of detail maintained in the Integrow system.”
“LSUS has a process to ensure transactions initiated in Integrow are properly posted to Workday, but it does not have a process to ensure transactions initiated in Workday are recorded in Integrow,” auditors wrote.
As a result, a review of bank reconciliations for September 2020, January 2021, October 2021, and January 2022 found “there was no evidence of when the bank reconciliations were prepared or reviewed.” Auditors report that prior to July 2020, LSUS did not prepare bank reconciliations at all.
“The reconciliations indirectly identified eight payment transactions totaling $62,078,794 from June 2020 to February 2021, that were recorded in Workday and cleared the bank; however, these transactions had not been recorded in Integrow and were identified as reconciling items for up to 10 months prior to being recorded in Integrow and cleared on the April 2021 reconciliation,” auditors wrote.
“The September 2020 and January 2021 reconciliations had a net unexplained difference of $251,802 and the October 2021 and January 2022 reconciliations had a net unexplained difference of $167,800 between the bank balance and the Integrow cash balance,” the report read.
The other finding centered on a weakness in controls over payroll, which also carried over from a prior audit.
“We sampled 18 separate pay periods from July 2020 through April 2022 for 12 employees and noted one employee received a duplicate payment for additional compensation in the amount of $8,040,” the report read. “The duplicate payment was the result of LSUS human resources personnel mistakenly entering the employee's additional compensation for class overload multiple times into Workday.”
The employee has since returned the funds.
Other issues with payroll involved the lack of supervisor approval regarding time worked for 50 facilities services employees and monthly certification reports for time and attendance between August 2020 and May 2022 that were not properly certified by employees.
“As a result of this analysis, we noted 402 of 5,128 payroll records analyzed were not certified by the employee within 30 days of the day after the payroll period end date,” auditors wrote. The delays involved 253 records certified between 31 and 60 days after, 85 certified 61-90 days after, 60 certified 91-180 days after, and four certified more than 180 days after.
Auditors offered recommendations to rectify the issues, and LSUS officials responded to the report with letters to Waguespack in July and September that mostly concurred with the findings but blamed some of the issues on unavoidable human error and uncooperative employees.
LUSU officials are now developing and implementing written procedures for bank account reconciliations and have taken steps to leverage new timekeeping software to improve controls over payroll, according to the letters.