A review of a critical audit issued five years ago that revealed a lack of oversight and accountability over the hiring and compensation of so-called casual hires at Hawaii public schools finds few improvements have been made.

The Department of Education’s internal audit branch revisited an audit it performed in 2012 that analyzed how schools recruit, hire and pay casual hire personnel — part-time, nonsalaried employees who are paid an hourly or daily rate.

The initial audit rated the controls around casual hires as unacceptable, the lowest of three possible ratings. The follow-up review — to determine whether the department has adequately addressed and resolved the initial report’s findings — again rated the department’s oversight as unacceptable.

The audit said the poor oversight exposes the department to several risks, including the possibility of employees with criminal histories working for the DOE; unauthorized hiring of casual hires; fictitious hours being paid to a casual-hire employee; and violation of federal employment laws.

The report was discussed last week by members of the Board of Education’s Audit Committee.

“It’s very troubling to see this come up again, and there’s really a lot of risk to us by not having this corrected,” said BOE member Kenneth Uemura, vice chairman of the Audit Committee.

In addition to its 22,000 salaried employees, the DOE employed more than 17,000 casual workers last school year, including part-time teachers and substitutes, paraprofessional tutors, classroom cleaners, meal count assistants and high school athletic coaches. Casual hire employees, who are recruited and hired at the school level, are terminated at the end of each fiscal year.

“Based upon our review, we noted that four out of the five prior audit findings from the review are still recurring or have not been adequately addressed,” the follow-up report states. “Therefore, we found the DOE’s controls related to the casual hire recruitment, hiring and payroll processes are still functioning at an unacceptable level.”

Overall, the auditors identified three key weaknesses:

>> Lack of oversight, monitoring and accountability over the casual hire and payroll processes at the school level.

>> Insufficient controls in the casual payroll system.

>> Casual hire employment forms and supporting documents not always submitted, retained and/or prepared completely.

“In evaluating the issues noted during our review, it appears that the root cause is the lack of an effective infrastructure, i.e. updated processes; clearly articulated roles, responsibilities and accountability; internal monitoring reports,” the audit said.

The review found, for example, some schools are allowing casual hires to start working before a required background check by the DOE’s central human resources office is completed. Of the 17,145 casual hires employed last school year, 1,873 workers, representing 11 percent of hires, had begun working at schools before receiving clearance, the auditors found.

The report also found instances in which hours recorded in the DOE’s casual payroll system did not match hours recorded on a respective casual hire’s time sheet.

The auditors selected for their follow-up review a sample size of 150 casual employees to retest payroll processes at schools. The analysis covered 299 pay periods and 2,476 workdays, and found 104 discrepancies between the hours recorded in the payroll system and employee time sheets. This resulted in an overpayment of 165 hours, the report said.

The audit found schools are able to enter into the payroll system work hours for days prior to an employee’s hire date and after their termination date; enter hours on prior pay periods as far back as the previous year; and enter hours that exceed the maximum hours allowed per week for part-time employees.

DOE officials, however, contend schools aren’t trying to game the system, but are likely overriding the system to expedite multiple hires to meet demand. The required criminal background check alone — which involves running an applicant’s fingerprints through a database — can take anywhere from two days to two months to complete.

“I do believe, truly, it’s a lack of awareness more than it is evil intention,” said Barbara Krieg, the department’s assistant superintendent for human resources. “Certainly we can and do and will raise awareness with the schools about what the requirements of best practices are.”

Krieg said the DOE did implement “limitations” on the payroll system after the first audit to tighten oversight and prevent hours from being “back entered” or workers from being added to the payroll system before they clear the background check. But, she acknowledged, some schools have found workarounds.

“I think we all share the concerns that were identified,” she said. “I have to acknowledge the reality that schools are doing what schools feel they need to do to get their staff in and started by when they need them.”

Several BOE members questioned whether there’s a way to expedite the background checks. Currently, applicants have to have their fingerprints scanned at the district office for the school to which they are applying. That requirement can be especially troublesome for rural schools.

“If I’m a principal out in Hana or Molokai or one of the rural schools that are very far from the district office … How do these people comply?” asked BOE member Grant Chun.

Krieg said in general such applicants would need to visit the district office. She said that in the past her office has sent employees out to rural schools at the beginning of the school year to help manually fingerprint applicants on-site. She said she was open to a suggestion that school-level employees be trained to handle the task. Krieg added that her office about a month ago issued guidance to schools that allows them to seek an exception to the requirement.

The audit offers nine recommendations, including targeted training for schools; having principals perform random spot checks of time sheets; and updating the department’s guidelines on casual hires. The DOE said in prepared responses in the report that it plans to implement changes over the next several months.