As we all know, change is the only constant! The Ministry of Education’s decision to change the school payroll system has been flagged for some time but the system is now ready to go. From the 20th of August, NOVOPAY is going to manage New Zealand’s biggest payroll of around 110,000 school staff. Are you ready?
The Office of the Auditor General has given appointed auditors a peek at the proposed system. We have provided some feedback, but overall we think the new system looks pretty good. Importantly there seem to be some good checks and balances in the system. Given that we expect most schools to use the on-line process, this should improve efficiency and provide more timely information for you.
What does this new process mean for your school?
First and foremost the new system is going to place greater emphasis on the controls at your school around payroll. While the process is not significantly different from the existing process, it does place the onus on you and your staff to ensure that everyone at your school is correctly paid.
We understand the proposed system has some good controls inherent within it, including:
- Only boards will be able to set up and change user access levels
- An audit log will be available that will allow transactions to be tracked back to individual user IDs
- No user will be able to enter transactions that effect their own pay
- Remuneration rates cannot be changed by school users
- Only payments that comply with Ministry of Education’s approved employment agreements can be made at the school level.
We understand that a transaction report will be available daily, which will list all transactions entered against the employees of your school – listing changes only rather than all payments to staff. This will become a key document in your internal control system. Boards need to consider how this report is checked and who is assigned this responsibility, whilst ensuring that normal segregation of duties applies.
Transaction reports will be in addition to the SUE (Staff Usage Entitlement) report. We suggest that both reports should be:
- Checked by an appropriate person
- Signed or initialled to evidence their approval of the report, and
- Filed so that this is available for future review by your auditors.
You may find it easiest to file the transaction reports and SUE report for each pay run together.
If the transaction report is not thoroughly reviewed, or if the review conducted by someone other than the person inputting the data, there is a greater risk of fraud or error occurring in your payroll. It will be preferable for the person checking the transaction and SUE reports to have “read only” access so they can effectively oversee the payroll process.
Adopting any new process always comes with some risk. Therefore now is the time to ensure that your internal controls are appropriate so that when the system is introduced next month these can be easily implemented. You must continue to be vigilant and ensure your internal controls are appropriate for each of your internal processes.
Another important internal control to consider: Ensure there are several people in your administration team or on your board that know how the process works. This means others can fill in for your key personnel if necessary and enables those in management or on the board to ask sensible and prudent questions about the controls in place and outputs of the system.
There is a useful and informative website that offers useful information, plus access to training materials and newsletters: http://www.novopay.govt.nz/default.aspx