School district’s ‘abacus’ of a payroll system due for increased scrutiny

The School District of Manatee County has asked auditors to take a closer look at its payroll system.

At Wednesday’s audit committee meeting, representatives from internal auditors Shinn & Co briefed the committee on the additional hours it planned to spend auditing the school district’s payroll.

“We are still using an abacus to find out people’s paychecks,” said Superintendent Diana Greene.

Chief Financial Officer Rebecca Roberts said she told committee chairman Joseph Blitzko the payroll process needed to be audited because of a number of issues related to the district’s antiquated payroll system.

Roberts said the current system has resulted in late filings to the IRS, requires some manual calculations and gets overloaded by a haphazard payroll schedule dictated by union contracts. The district is in the process of installing a new system with a goal of going live with the new program in February.

Byron Shinn of Shinn & Co. thanked the district for being forthcoming.

“It isn’t like we are catching them and then calling them out,” Shinn said. “They are bringing these issues to us.”

On Dec. 9, when district employees ran the payroll, several paychecks were printed multiple times, a problem Roberts said was likely exacerbated by an overload of year-end data the system was expected to process. A total of 147 employees got two checks, and some of those employees deposited both checks.

“We are working on this, but it is not something that can be fixed overnight,” Roberts said.

Under union contracts between the school district and employees, all paychecks must be cut on the 10th and 25th of each month, and employees are promised a paycheck the final day before a vacation, Greene said. This means rather than cutting paychecks on a regular every-other-Friday schedule, pay periods can vary, requiring the system to process far more information than it would otherwise.

“We have to be systematic, and our contracts are not systematic,” Greene said.

The audit committee recommended approving an increase in 136 hours of payroll auditing by Shinn & Co for a total cost of $23,800. Blitzko will make the recommendation to the board at the April 11 meeting.

The committee also discussed cybersecurity auditing, following a phishing scam in February that resulted in more than 7,700 employees’ W-2 earning statements being handed over to a hacker.

Jerry Oxley, an IT auditor with Shinn’s firm, presented committee members with a plan to audit district cybersecurity systems in two phases.

“Almost all research concludes breaches occur because of failure to implement fundamental best practices,” Oxley said.

Oxley said the audit would begin with an overview of the district’s cybersecurity processes followed by a second phase where the auditors dig into whatever weaknesses they have discovered.

The committee voted to recommend for the school board to approve the first phase.

This story was originally published April 5, 2017 at 6:14 PM with the headline "School district’s ‘abacus’ of a payroll system due for increased scrutiny."