Along with overpayment of some employees, audit finds Mayville State had other payroll issues
Mayville's interim VP for Business Affairs says it's important to note that the audit covers a two-year period that ended June 30, 2021, and many of the concerns already have been addressed.
BISMARCK — A North Dakota audit found a series of payroll issues at Mayville State University.
Among them, the Auditor’s Office announced in a press release, is that Mayville State “does not have correct training or procedures in place for running payroll for its employees.” Mayville State staff found and reported to the auditor’s office that more than $175,000 was overpaid to 15 employees. Additionally, the auditor’s office found that an additional $10,000 of overpayments were made to seven employees.
The audit report noted that because university employees have varied paychecks depending on special projects, interim assignments, or course overload teaching, employees themselves would not necessarily notice an incorrect amount on their paycheck.
In an email to the Grand Forks Herald late Thursday afternoon, Steve Benson, interim vice president for business affairs at Mayville State, said it's important to note that the audit was for a period that ended June 30, 2021. He said "following the audit period, recommendations made in this audit had already been addressed or are in the process of being addressed. These include ensuring accuracy, documentation and improvement of controls."
In addition to the lack of payroll training, the auditors also found that the human resources department had the ability to manually delete records of additional pay that was given.
The Herald first reported about overpayments and other payroll issues late last year. State Auditor Josh Gallion told the Herald that he wanted to “get to the bottom of” of the issues, but added that situations like this do come up from time to time.
On Thursday, Gallion said the university has “communicated their commitment to addressing these issues, including the repeat findings.”
“Training and processes must be improved at the university to prevent these issues from continuing to happen,” he said.
The audit report also logged other issues beyond the overpayments, including:
- Bank statements not being reconciled. This was something that was identified in a prior audit but the auditor’s office says the university still hasn’t addressed. The audit found that the university did not reconcile bank statements to the general ledger; unreconciled amounts ranged from $975 to $162,690.
- Systems not being reconciled. The report said the university was not documenting who performed reconciliations, or who approved them, for both student finance and payroll. Additionally, the report says university staff are also not reconciling student finance accurately. The unreconciled differences ranged from $150 to $10,100 in the student finance system, the news release said.
- Documentation not being retained for journal entries. The audit reported said Mayville State did not maintain correct journal entries for multiple transactions. Of the 32 entries reviewed by the auditor's office, the following issues were found with journal entries:
- 13% did not have supporting documentation.
- 25% did not have approval from an authorized person.
- 19% were not coded correctly, which defines the type of activity being recorded.
Additionally, the audit identified issues with purchase cards, or credit cards that are used when making financial purchases for organizations. According to the auditor’s office, Mayville State “does not have processes in place to make sure p-card purchases are proper and approved by appropriate individuals.” The audit found that: 13% of purchase card reconciliations reviewed were missing procedures of signing reconciliations by the main cardholder, 13% were not correctly approved by the cardholder’s supervisor and 16% were not in compliance with State Board of Higher Education policies and North Dakota University System procedures.
Finally, the audit noted that because the university did not have procedures in place, tuition waivers may be going to ineligible students, an issue that was also identified in a previous audit. The university was also not awarding waivers based on the criteria listed in those waivers, according to the news release. “If the criteria is not followed when awarding waivers to students, these benefits may be given to students based on preferential treatment, rather than ability or need,” the release said.
In the email to the Herald, Benson said that since July 2021, the university "has established new procedures, educated users, and provided proper oversight for payroll and other audit findings."
In the email, Benson said several recommendations were considered implemented, including review of allowance for doubtful accounts, noncompliance with procurement rules, and improper accounting for loans receivable and allowance for loans.
Also, Benson said, the auditor's review noted one item — noncompliance and lack of approval over student scholarships and waivers — was partially implemented. But, according to the Mayville State email, "student scholarship and waiver recommendations are now implemented."
And another item — inadequate monthly bank reconciliations — was noted by the audit as "not implemented." But "in the time since the audit period that ended June 30, 2021, the reconciliations have been completed. Reconciliations are now completed through June of 2022," according to the email.