An internal audit of payroll practices in the Fort Worth school district found that some employees are adjusting their own timecards, receiving duplicate pay and racking up thousands in overtime.
The internal audit, which covers July 1, 2012 to June 30, 2013, doesn’t reflect problems as serious as those in a 2009 report that showed the district had made $1.54 million in overpayments to employees. At the time, the district was implementing a new payroll system.
But the new audit is cautionary about an increase in overtime the district incurred from fiscal year 2011 to 2012. About half — $2.2 million — of the district’s total overtime costs were paid to 269 employees. One supervisor was paid more than $55,000 in overtime, the audit says.
District officials agreed with every recommendation in the audit except one to cap overtime at 260 hours per employee per year. In 2012, the audit says, some individual employees were paid more than 500 hours in overtime.
Superintendent Walter Dansby, who asked that questions about the audit be submitted in writing, said via email that the current findings aren’t related to the problems in 2009.
“Internal controls were put in place to prevent issues addressed in the 2009 audit, and those checks and balances are working,” Dansby said.
The new audit identifies “an isolated issue” that is being addressed, he said. “We will continue to examine and improve upon all of our processes.”
Dansby said that the district is going to implement a system that requires supervisors to approve overtime for employees before the work is completed. He also said that if an employee earns more than $2,000 in overtime during a single payroll period, that employee must submit a written explanation to the internal audit department and the payroll department.
“We will continue to request an annual internal audit and address all issues brought forward,’’ Dansby wrote. “Our district has made a commitment to continuous improvement.”
The school district’s audit committee will meet in closed session on Tuesday, before the regular board meeting.
“We have to first look at it and then if there’s a problem, we will address it,” said board President Christene Moss. “We give that to the superintendent and then he will take care of whatever the issues are.”
The audit also identifies 22 elementary school and four middle school secretaries who adjusted their own timecards with no supervisory approval.
Some employees made more than 140 time adjustments out of 169 days worked. Others were paid twice for the same time, the audit reports.
“If daily punch in and out times are not entered in timely, it cannot be determined when the employee arrived, left or whether they were even actually present during the normal work schedule,” the audit says.
The district estimates that it needs to collect overpayments of $3,548.69 from 21 employees, the audit says.
The audit is critical of a situation in which one employee — who received a reprimand in 2009 — continued to misuse payroll records. More than half of the changes to her timecard were made using another employee’s password after that employee had clocked out for the day, the audit says.
The assistant who had an excessive number of time adjustments “may need a stronger level of discipline” than a memorandum of reprimand, Chief Internal Auditor Steve Shepherd writes in the audit.
The audit also notes that the assistant’s office was on the third floor of the administration building and that her supervisor’s office was on the first floor. “The employee may need to be moved to the first floor so she can be observed daily by her supervisor,’’ the audit says.
Asked about the problems with the assistant, Dansby said, “This is a personnel matter, and by policy we don’t discuss personnel matters.”
District administrators responded in the audit that the assistant had already received additional disciplinary action. A conference was conducted with her “to clearly lay out expectations,” the response says. Officials also say her office had already been moved to the first floor.
The district rejected the audit’s recommendation to cap overtime, saying it would interfere with work flow and with work that had to be accomplished within a certain time period.
In 2012, the district paid overtime of $4.79 million compared with $4.697 million in 2011, the audit reports.
Most school districts have to work constantly to tighten up rules on overtime, said David Brewer, a former assistant superintendent for business in the Birdville school district. It is all too common, Brewer said, to depend on supervisors who are too lenient or who may be more apt to bend the rules for some employees.
“Anywhere on that supervisors’ chain [of command], if there is a weak link, there’s a potential for fraud and abuse,” Brewer said.
A local certified public accountant said he was surprised by the high percentage of the auditor’s sampling that showed employees making excessive time adjustments.
“That could mean that you’ve got some serious problems,” said the accountant, Don Anderson.
Auditors took a sampling of 207 employees to determine how many had made repeated time adjustments to their timecards. Auditors found 41 employees had made changes.
Excessive timecard changes by employees opens up the possibility of incorrect or unapproved hours, which could lead to overpayments, Shepherd writes in the audit.
“All hourly employees should correctly punch time in and out daily so that payroll records are accurate,” Shepherd writes.
The auditors reviewed all elementary and middle school financial secretaries and selected elementary office assistants. Four of those employees had more than 140 adjustments out of 169 days worked from Sept. 1, 2012, to May 30, 2013, the audit says. And some employees, including some middle school secretaries, adjusted their own time without electronic supervisory approval.
District officials say in the audit that principals will now have greater control over timekeepers who approve timecards for employees.
But Anderson, who is also a forensic accountant, said it might be a good idea to have an external audit group conduct a more comprehensive look at payroll and purchasing.
“That may be needed to verify that the taxpayer is getting their money’s worth,” Anderson said.
In the audit Shepherd urges the district to get a handle on excessive timecard changes.
The district processes three payrolls a month for 12,560 employees that total $43.2 million.
Yamil Berard, 817-390-7705
MAIN PAYROLL AUDIT FINDINGS
Here are key findings from Payroll Audit Report Audit 1308 prepared by the Internal Audit Department of the Fort Worth school district.
The issue was addressed in a previous audit but has not been satisfactorily implemented. It was concluded that time adjustments were recorded for an administrative assistant 63 days out of 140 days worked (45 percent) from Jan. 2, 2012, through July 25, 2012. The system showed the adjustments were made with the board secretary’s ID, although the board secretary denied making the entries. The former chief of administration had instructed the administrative assistant and the board secretary to share passwords.
Thirty-nine adjustments to the administrative assistant’s time were made using the board secretary’s ID after the board secretary had punched out for the day. The board secretary punched out at 3:42 p.m. on March 27, 2012, yet 12 time-out adjustment entries for dates ranging from Feb. 27 to March 22 were made to the administrative assistant’s time using the board secretary’s ID at 4:30 p.m. or later on March 27.
The audit found time adjustments for 41 employees out of a total of 207 (19.3 percent) reviewed. The audit reviewed all elementary and middle school financial secretaries and selected elementary office assistants. Four of those employees had more than 140 adjustments out of 169 days worked from Sept. 1, 2012, through May 30, 2013. Seven of the employees had between 75 and 115 adjustments, five employees had between 50 and 75 adjustments, and 13 employees had between 25 and 50 adjustments.
Leave time overpayments
Employees are able to record two leave times or record leave time and work time for the same date and be paid for them both, effectively being paid for 16 hours in one day. There were 41 instances of leave time overpayments to 33 employees out of 365 employees (9 percent) in the audit’s sample. There were 16 corrections by the payroll department for 13 employees. But this still resulted in 25 overpayments totaling $3,548.69 to 21 employees. The audit recommended that the district ensure that the electronic payroll system is corrected to preclude these overpayments from occurring in the future.
There were 269 employees who were each paid more than $5,000 overtime in 2012. That was an increase from the 233 employees who were each paid more than $5,000 in overtime in 2011. One employee was paid more than 1,200 hours and $55,700 in overtime — meaning he was paid for an average of almost 64 hours per week.
Seven of the 19 employees who were paid more than 500 hours overtime were bus drivers, one was an administrative associate, one worked for the carpentry shop, five were custodians, and five were general maintenance workers.
Source: Audit 1308 Payroll Department, Fort Worth school district