The state auditor advised Whidbey General Hospital it needs to improve oversight of the payroll process -— again.
The auditor sent the hospital a Jan. 20 letter advising officials they still need to fix two “deficiencies” with payroll uncovered during a routine audit in 2012.
Most of the issues identified in the earlier audit were fixed and hospital personnel were working cooperatively to fix the problem, said Andy Asbjornsen, an audit manager for the state.
“They were really working hard to try and correct everything identified,” he said.
However, two issues remain. Time cards were processed without always being approved by employees and supervisors. Auditors also found four employees had more access to the payroll and human resource services than were necessary for their jobs.
In the 2012 audit, auditors noted that employees and supervisors not approving time cards led to one overpayment of $173,250 after an employee was mistakenly paid for 250 days of work instead of 2.5 days. The employee returned the money.
The “management letter” was released on the auditor’s website last week along with the most recent accountability audit of the hospital, covering Jan. 1, 2013 through Dec. 31, 2014.
The state’s audit covered the hospital district’s payroll, cash receipting, credit card disbursements and billing adjustments.
It does not cover the hospital’s finances. The hospital opted to hire a private firm to conduct audits. Those audit reports were reviewed by the state.
Local government agencies have been required to file financial reports with the state auditor for more than a century. After the Whidbey hospital district was included in a special report from the auditor’s office last year on government transparency for not filing financial information or filing incomplete information, the hospital submitted those “financials” to the state, Asbjornsen said.
They also filed financials for 2014 — albeit 25 days later than the deadline, which Asbjornsen described as “not too bad.”
Safeguarding public funds is the top priority of the finance department at Whidbey Island Public Hospital District, said Ron Telles, chief financial officer. In response to the 2012 state finding, the district strengthened and enhanced internal payroll department controls.
“While state auditors have pointed out that we still have work to do, we are gratified that they also note our improvements,” he said. “Their most recent audit found no instances of payment inaccuracies.”
To comply with the findings, the hospital has taken steps to redefine and clarify the roles of payroll and human services employees, including clearer delineation of how various payroll processes are initiated, approved, recorded and reconciled. As a safeguard, these functions are either completely separate from each other or have adequate compensating controls, he said.
The hospital also initiated an additional safeguard, creating an audit trail report to identify any instance where proper payroll approval “may be lacking.” If that happens, proper approval is obtained before any money is disbursed, he said.
“Although we are pleased with progress made in implementing payroll safeguards, we must make further improvements,” he said.
“We are always working to strengthen the monitoring and oversight of our financial systems. We are addressing concerns, and have implemented staff training, including additional training for managers on payroll procedures and protections.”
The hospital has hired new management and employees with experience in payroll processing and the hospital plans to upgrade software to more current versions, which should ensure financial control and accuracy, he said.
