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Audit reveals overpayments in UA System: 2 campuses lose thousands after employees leave jobs

by Jaime Adame | May 31, 2022 at 6:48 a.m.
University of Arkansas students are shown on the lawn in front of Old Main on the campus in Fayetteville in this file photo.

Payments to employees after their last day of work have resulted in an apparent loss of $144,749 for the University of Arkansas, Fayetteville, according to a payroll audit.

Auditors with the UA System also found similar overpayments at the University of Arkansas at Little Rock.

"We noted that 14 payments to four UALR employees out of the 180 payments reviewed were overpayments totaling $23,787. UALR has attempted to recover the overpayments to no avail," states a report presented Wednesday to the University of Arkansas board of trustees.

Auditors with the UA System found the UALR overpayments after testing June 2021 payroll data, but the time period for the UA-Fayetteville loss stretches back to 2014, according to UA-Fayetteville spokesman Mark Rushing.

"As the audit report states, the delayed entry of termination dates did create a delay in stopping payroll payments in some cases," Rushing said, calling such overpayments "rare."

Auditors uncovered the apparent losses while examining the payroll operations of the schools in connection with recently adopted information technology known as Workday.

But when examining UA-Fayetteville, auditors also found that 88 employees were overpaid before fiscal year 2021, under a different payroll system.

When Workday was in use, auditors found that 46 UA-Fayetteville employees received overpayments in fiscal year 2021 and nine workers in fiscal year 2022, which ends June 30.

UA-Fayetteville officials "stated the overpayment of terminated employees was not specific to Workday and had also occurred in the previous system," auditors said in their report.

Not all of the overpayments have gone uncollected, but the $144,749 loss total excludes what's been recovered by UA-Fayetteville so far.

Rushing said UA-Fayetteville is "determined to eliminate this type of error moving forward."

The auditor's report included the language used in a message sent in April to various UA-Fayetteville managers, human resource staff members and others.

"It is vital in protecting university assets to process terminations in Workday as soon as the employee terminates employment," the message stated in part.

In their recommendations, auditors called on the universities to report the apparent losses to the Arkansas Legislative Audit, and the universities agreed to do so, according to the reports.

The UA-Fayetteville report included a response from the university to auditors stating that "[h]istorically these amounts have not been considered losses while they are in the active collection process and instead treated as active accounts receivable and included as such in the university's audited financial statements."

Rushing described efforts to recover the overpayments that include working with state tax authorities, if necessary.

"As soon as payroll is notified of an overpayment due to late processing of a termination, payroll calculates the amount due back to the university and a letter is mailed to the employee's home address. The letter gives the employee 10 days to repay the overpayment," Rushing said.

An invoice gets prepared when payments aren't made and then collection letters get sent out, with continued non-payment resulting in accounts being turned over to "external collection agencies," Rushing said.

"Throughout the collection process, the university also uses the Arkansas State Tax Offset process to attempt to collect from the debtor," Rushing said, describing this method as affecting those due a refund on their state income tax.

Print Headline: Audit reveals overpayments in UA System


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