Sadly this is the reason that many schools we have spoken to so far have not had a great start to the year. As your auditors we too have been dealing with the impacts of Novopay already. We have been doing our bit to ensure that the Office of the Auditor-General (OAG) is kept up to date with what we are hearing and seeing at schools as well as liaising with MOE troubleshooting staff.
Firstly, please be aware that we understand your frustrations and you have our sympathies for having to deal with this unfortunate situation that has been forced upon the sector. We recognise it is causing additional work and stress for all involved, and sadly appears may do for some time yet.
Rest assured, as your auditors we will be doing our utmost to add to the stresses at your school.
The position is complex and fluid. The OAG is liaising with the Ministry to achieve a sensible balance between achievement of the statutory deadline of 31 May 2013, audit qualifications, and additional audit fees. However, of those three factors it is likely that achievement of the statutory deadline is the factor most unlikely to be relaxed. School financial statements get consolidated into the Crown financial statements so it is important this is achieved.
What can you do?
The Ministry is preparing guidance to schools on the financial reporting process which should be issued shortly. We anticipate that this will address whether schools should include payroll related figures (including salary and leave accruals) in their draft financial statements.
Until this guidance is released, you should continue preparing your annual financial statements, ignoring all payroll related numbers and disclosures at this stage. If everything else is complete, please send the draft financial statements to us. We can audit these and perform any work required on the payroll system at a later date. The latest we have heard is that payroll summary reports may not be available for several weeks however, this may change depending on the work being done on the Novopay system at the moment.
Concentrate on what’s within your control
One of the best survival tips in any stressful situation is to Control what you can control and focus your efforts on that. Yes, you still need to be aware of what else is happening as that may impact what you can control. However by focusing on what you can control it helps avoiding being overwhelmed by the situation.
Specifically this means ensuring there are adequate systems and internal controls in place at your school over your payroll processing and monitoring including:
- checking of fortnightly SUE reports, checking for errors
- your school’s involvement in processing of payroll changes
- ensure a system is place at the school for identifying and recording errors and their resolution.
- recovery of advances made to employees
The OAG has advised us to continue with the audits of any draft financial statements we receive but not to spend much time on any of the payroll figures at this stage.
In due course it is probable that all audit management letters will contain some reference to Novopay. It is not our role nor in our DNA to criticize unjustly. To help though; if we see areas of potential improvement for your school or issues arising from payroll at your school that the board needs to be aware of we will bring them to your attention.
Our Bottom Line:
Rest assured, the OAG and Hayes Knight Audit as your school auditors are sympathetic to the position of boards and will be as pragmatic as possible within the constraints of legislation, accounting and auditing standards. We are receiving regular updates from the OAG on the situation with Novopay and the likely impact on school financial statements. We will ensure our regular e-casts keep you up to date with any changes that will affect you