University overpays employees by $572,000

BY BRIAN ALBERT | JULY 14, 2011 7:20 AM

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The University of Iowa incorrectly made 304 payroll overpayments totaling more than $572,000 during the fiscal year that ended June 30, 2010, according to a new report from state officials.

Combined with other overpayments, this brings the outstanding total over $883,000 for fiscal 2010, according to a state audit released Wednesday.

Of that amount, nearly $760,000 has been collected by the UI billing office.

Terry Johnson, UI associate vice president and controller, said payment errors are largely due to typical delays in paperwork.

“As soon as payroll receives information about the change in status of an employee — be it a termination or a change in status or a raise of some sort — records are updated,” Johnson said. “The issue is that this employment information isn’t always passed along as quickly as it could be.”

Dave Vaudt, the Iowa state auditor, echoed Johnson’s words in his report to the UI, saying overpayments generally occur when these forms are not submitted by the employing department to Human Resources on a timely basis.

Overpayments, audit officials said, can be typical for universities.

Johnson said although 2010’s overpayment total is higher than usual, the UI quickly jumped into “collection mode” to rectify the situation, recovering 86 percent of the missing dollars within two months. It’s often a simple matter of contacting the employee, explaining the issue, and waiting for the check to come back, he said.

And because of the UI’s speedy recollection of the majority of cash, Sen. Bob Dvorsky, D-Coralville, and Rep. Mary Mascher, D-Iowa City said there’s probably no reason to suspect any foul play.

“It sounds like they’re mending things pretty quickly,” Mascher said. “I don’t think there’s really anything to worry about.”

Though $883,000 seems like a large error, Johnson said, the average overpayment was less than $2,000.

“That’s not even a full paycheck for most folks,” he said.

Andy Nielson, Iowa’s deputy auditor, said the recovery process has been quick, and the remainder will probably be collected within a few months.

Through a separation of duties and increased communication, officials said they hope to decrease the chances of a similar overpayment in the future.

State audit officials recommends the university keep better records of any payroll-related matters.

“Documentation for informal quotations should include the names of the individuals requesting the quote, and the individuals providing the quote, what was requested, the date and time of the request and receipt of the quote,” according to the audit.

The payroll department was previously tasked with both paying employees and collecting overpayments, Johnson said. He believes moving the collection responsibility into the billing department will smooth things out.

“Everything used to be handled by the payroll department, but its job is to first and foremost make sure people get paid,” Nielson said. “Now, overpayments are turned over to the billing office, which should be a more appropriate fit.”

There are also plans to improve the speed and functionality of both the payroll and billing departments, which officials said should make it easier monitor the status of employees more closely.

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