(The Center Square) – The Louisiana Department of Revenue understated revenues in its 2022 fiscal report by nearly $40 million and failed to maintain controls over payroll processing, the Louisiana Legislative Auditor reports.
LLA Mike Waguespack recently published a financial audit for the Department of Revenue for fiscal year 2022 “to provide assurances on financial information that is significant to the state’s Annual Comprehensive Financial Report; evaluate the effectiveness of LDR’s internal controls over financial reporting and compliance; and determine whether LDR complied with applicable laws and regulations.”
“Sales, corporate, and individual tax modified revenues were understated by $39.5 million, and modified receivables were understated by $32.2 million due to the omission of $7.5 million of hotel/motel tax revenues and $32.2 million of pending sales, corporate, and individual tax receivables,” auditors wrote. “Management did not identify the omissions noted above during the AFR preparation and review process.”
The other finding related to inadequate controls over payroll, which resulted in delays or missing certification of time sheets and approval by supervisors.
“In addition, LDR did not maintain adequate controls over pre-input procedures when making changes to human resources’ master data,” the report read. “Failure to ensure that employees and supervisors are timely certifying and approving time statements and that changes to HR data are correct increases the risk that errors and/or fraud could occur and not be detected in a timely manner.”
A review of 14,116 time statements from July 1, 2021 through May 29, 2022 found 463 were not certified by employees until after the payroll posting date, and another 374 were not certified at all.
Another 1,840 were approved by supervisors after the payroll posting date, while 860 never gained approval.
Four of 22 changes to HR master data included pay changes that were not supported by evidence of review and approval, according to the report.
LDR Secretary Kevin Richard responded to the findings in a series of letters to Waguespack in December that outlined additional measures the department is taking to rectify the issues.
The department assigned a dedicated analytical resource in the Office of Management and Finance to help evaluate all AFR system reports, and vowed to “retest and validate each AFR system report,” he wrote.
For payroll, LDR now requires all timekeepers to send email reminders to employees and supervisors regarding payroll certification and approval deadlines. HR employees are also now running regular reports to identify outstanding certifications and approvals and forwarding the reports to management to remind employees, according to Richard.
