1. Enterprise Resource Planning It is not the end, it is just the beginning Mary Avery Finance Manager Nebraska Auditor of Public Accounts 2006 Joint NSAA/NASC Middle Management Conference Indianapolis, IN April 11, 2006

2. Nebraska Auditor of Public Accounts Nebraska changed the way we did business in the financial areas in 2003. Nebraska Information System (NIS) was implemented utilizing J.D. Edwards software. J.D. Edwards software was modified to cover various issues that policymakers wanted addressed. NIS continues to be an ongoing learning process.

3. Nebraska Auditor of Public Accounts Payroll module went live January 1, 2003. Financial modules went live March 3, 2003. Numerous updates and service packs subsequently added to the software. J. D. Edwards sold to PeopleSoft. Oracle subsequently bought PeopleSoft. Upgrading from J.D. Edwards Oneworld XE to PeopleSoft EnterpriseOne 8.10 NIS will continue to be updated to keep up with changing environments and trends.

4. Nebraska Auditor of Public Accounts There were many benefits and functionality to greatly enhance the States ability to manage financial resources, while at the same time changing the way we conduct our audits of the financial records of the State. NIS is an internet based system and is accessible anywhere you can log onto the system. Warrants/checks are combined for the State as a whole before being issued, thus eliminating several warrants/checks to the same vendor on the same day.

5. Nebraska Auditor of Public Accounts Information is readily available in the system as long as you can find a way to get it out of the system. (There are issues of maintaining supporting documentation for the information entered, such as invoices, statements, etc.)

6. Nebraska Auditor of Public Accounts From the auditing standpoint, there was a huge learning curve and routine tasks became very difficult. Some of the Major issues were: Learning, training and understanding the basics and business processes of the new system. Identifying Key Risks and Control Issues.

7. Nebraska Auditor of Public Accounts Some of the Major issues were: (continued) Implementation was done during the middle of the fiscal year so we had to deal with conversion issues and verifying the conversion data was correct. Understanding interfaces and verifying data integrity. Understanding the General Computer Controls – the system security structure and batch management.

8. Nebraska Auditor of Public Accounts Some of the Major issues were: (continued) Identifying Point-In-Time and Time Sensitive reports and information. Determining how to get those reports. Lack of hard copy documents. Understanding workarounds for payroll labor distribution and lack of payroll segregation of duties. Reconciliation of State Accounting records to the State Treasurers bank accounts and records.

9. Nebraska Auditor of Public Accounts Understanding NIS Security Structure became an essential part of our auditing. Out of the initial 23,000 user ids established to access NIS, over 4,000 were given security access to functional areas. Nebraska started with a very complex security structure, it has changed as we have gone along. The remaining users of NIS are considered self- service employees. Users access the NIS system to view their pay stub and view and update their personal benefit information through Employee Self-Service.

10. Nebraska Auditor of Public Accounts Audit Processes. (continued) One of our first audit procedures was to conduct interviews and evaluate internal control procedures relating to every agencies accounting procedures and NIS. We documented the information for our financial audits and identified controls conducive to accurate financial reporting. Initially, we found that users were set up with more access than was needed due to the lack of understanding and knowledge of the system.

11. Nebraska Auditor of Public Accounts Audit Processes. (continued) We contracted with Deloitte and Touche to assist with the performance of the post implementation study of the J.D. Edwards OneWorld XE System. This study focused on data integrity, business processes, applications security and infrastructure. It was conducted jointly with members of our staff.

12. Nebraska Auditor of Public Accounts Audit Processes. (continued) For Fiscal Year 2003 and 2004, we had to have independent staff assemble together the agencies financial lead schedules manually due to mid-year conversion and not being able to get the detailed comparison information out of NIS. For Fiscal Year 2005, a report was developed and the information is now easily and readily available to us.

13. Nebraska Auditor of Public Accounts Results and Information. We had major issues in the beginning running statewide reports due to hardware server limitation, due to budget constraints. This has improved; however, we are still limited at times to when we can run reports so as not to tie up the system for posting and usage.

14. Nebraska Auditor of Public Accounts Results and Information. (continued) Reconciliation between the State Treasurers bank statements and the NIS accounting records. State Accounting completed reconciliation process for the months of May, June, and July of 2005. It showed a bank shortage of over $3,000,000 each month. State Accounting has started the reconciliation process for various months of the fiscal year ended June 30, 2006; however, the reconciliation process has not been a continuous monthly process and no monthly reconciliation has been completed since July 2005.

15. Nebraska Auditor of Public Accounts Results and Information. (continued) After three years, we are now to the point where we can do continuous auditing. We can do more data mining, comparison of information, and extraction of data than we have before. We continually audit for duplicate vendors, fake or duplicate employees, and duplicate payments. Since we do not have a report writer yet, we currently extract the information and put it into Access, Excel, or ACL.

16. Nebraska Auditor of Public Accounts Results and Information. (continued) We conduct statewide testing of payrolls and processes annually so that is can be relied upon for agency financials. Thus, allowing us more time to test in detail the specific areas identified.

17. Nebraska Auditor of Public Accounts The State of Nebraska has learned a lot from implementing this ERP system. Changes and improvements are continually being made. We have lost the majority of State staff who were on the implementation team. This is a great loss of skills with understanding of the system and its processes. We continue to hire experts in the IT area to assist us with procedures and understanding the system to address our risks.

18. Nebraska Auditor of Public Accounts Thank You Questions? Mary Avery Finance Manager Nebraska Auditor of Public Accounts Mary.Avery@apa.ne.gov 402-471-3686