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School board discusses state auditor’s report

T-R PHOTO BY ADAM SODDERS - Marshalltown Schools Director of Finance Paulette Newbold, left, and Business Manager Randy Denham review changes made at the business office to prevent issues with payroll that caused an over $640,000 impact for the district.

A State Auditor’s Office report showing a hit of $645,000 to Marshalltown Schools due to a former payroll employee not performing duties in a timely manner was a major topic of discussion at Monday’s school board meeting.

“We have a very long list of things that we have implemented, are working on implementing or want to implement,” said district Director of Finance Paulette Newbold. “We’re building the plane as we’re flying it.”

She and district Business Manager Randy Denham discussed strategies to prevent more issues with payroll. According to district officials and the auditor’s report, former district payroll specialist Allison Meyer failed to process payroll deposits in a timely manner for several months. She was allowed to resign in lieu of termination in June.

Most of the impact comes from $602,000 in penalties paid to the Internal Revenue Service in September and October. The district has been working to get those penalties waived and reimbursed.

“Everything that comes out of payroll comes through one or both of us, and one or both of us is signing off and approving everything,” Denham said. “All the data entry reports do come across my desk, and I usually spend a few days out of the month going through all those.”

Newbold said a monthly file has also been created to help with oversight.

“We always go back through that file to double-check that each of those changes that occurred actually were input correctly and are showing up, calculating correctly and such,” she said.

Newbold said the business office has also worked to get payroll processed earlier to give employees time to review pay stubs for possible issues. She said the office also plans to start sending payroll reports to district department heads so they, too, can review the information to make sure it lines up with their budgets.

The officials said the business office now has multiple contacts at the Internal Revenue Service (IRS), Iowa Public Employees’ Retirement System (IPERS) and other agencies concerning payroll to help reduce the chances of an error going unnoticed.

Newbold and Denham both arrived at the district this year. Newbold was the one who discovered the payroll issue as she reviewed the district’s finances in the spring.

Board members Ross Harris and Mike Miller asked if the district’s normal auditing firm, Nolte, Cornman and Johnson P.C. of Newton, could be accountable for missing the payroll issue in their work. The firm will step aside as the State Auditor’s Office conducts the district’s audit for the current fiscal year.

“How in the world could this have possibly gone unnoticed?” Miller said of the payroll issues, which Newbold previously estimated to have occurred from early 2017 to mid-2018.

Newbold said the state is set to send five employees to do 11 days of field work at the district for the district financial audit. Last year, she said Nolte, Cornman and Johnson sent three employees for three field days.

“We welcome this upcoming audit,” Newbold said. “Our focus right now has been on the payroll cycle, but they will do an audit of the financial statements in whole.”

The next Marshalltown School Board meeting is set for 5 p.m. Jan. 14, 2019 at the Central Administration Office, 1002 S. Third Ave.

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