The Louisiana Legislative Auditor has found issues with bank reconciliations and weak controls over payroll at LSU Shreveport.
Auditor Mike Waguespack issued a procedural report in late August that found an issue with LSUS’ failure to ensure bank reconciliations are correctly prepared and to accurately and timely record the transactions in its accounting systems.
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. 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.
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 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.
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.
“As you can see from our response to the auditors in the Louisiana Legislative Auditor Procedural Report for 2023, LSUS recognizes the issues mentioned. We take these matters very seriously and are working diligently to rectify these,” said Erin Smith, director of media and public relations, said in an emailed response to BIZ. Magazine. “LSUS – along with other LSU system entities – is moving to a more integrated software platform allowing for a better accounting workflow. While we await the software implementation, we are instituting internal controls and workflows to ensure maximum accuracy.”
In the response letters, LSUS said they “will develop and implement written procedures to ensure bank accounts are reconciled, and transactions are accurately and timely posted to our accounting system.” Their response added, “LSUS will develop and implement written procedures to ensure reconciling items identified during the reconciliation process are accurately and timely investigated and corrected.”
In its response to the additional compensation finding, LSUS said, “Thousands of transactions are entered. Because these errors are not systemic in nature and there is no evidence of fraudulent activity, but rather inadvertent mistakes, LSUS is partially concurring with this finding.”
LSUS also responded to the auditor’s finding of “weakness in controls over payroll” that “Human error will occur. There needs to be a check and balance on the front end of the process.”
Lastly, regarding the timesheets finding, LSUS noted that, “LSUS does not feel like there is payroll fraud because these employees did not certify their time and attendance in a punctual fashion. LSUS feels that this is just a lack of concern on the employees’ part.”
— By David Specht, BIZ. Magazine
