If the pandemic taught us one thing, it is how to use technology to accomplish typical school-related tasks especially within the human resources department. New hires, changes in employment, and separations require communication with many departments in a district from payroll to benefits to IT to security. Therefore, it is crucial to ensure that internal controls can function and the flow of information can continue even when someone is working remotely. This is where the use of technology comes in. Schools have traditionally required a physical paper form to document information, which often requires manually routing the form from department to department so that the appropriate supervisor can review and sign-off. However, we are here to tell you that there is a more convenient method to documenting, routing, and approving documents.
The federal E-SIGN Act, passed by Congress in 2000, states that e-signatures and eNotarization for transactions between two or more parties have the same legal validity and effect as pen-to-paper signatures. In New York State, the Electronics Signatures and Records Act (ESRA) gives electronic signatures (e-signatures) and electronic records (e-records) the same force and effect as signatures and record produced by non-electronic means.
How does this work? Similar to paper and pen, the signer must demonstrate the intent to sign. This can be done in ways such as clicking an “accept” button, typing a name, or using the mouse to create a signature. It is important to ensure that your current policies, procedures, and/or employee contracts permit the staff to consent to conduct transactions electronically.
With all the documentation districts are required to maintain in accordance with state retention laws and/or other state, federal, grant regulations, we can understand that filing space is limited which is why a lot of districts are moving towards digital storage where and when possible. One form that can be handled electronically is the Personnel Action Form (“PAF”). Many human resource departments use a paper PAF to document and share employee information (i.e., new hires, changes in title/position, separations, leaves of absence, etc.), which is then sent via inter-office mail to other appropriate departments for them to review, sign, and return. The issue with this manual process is the increased potential for bottlenecking and loss of data. For example, if a key signer is out, the process hits a dead end until that person returns to move along the process or the form can inadvertently be lost or misplaced. In both of these examples, a loss of critical information occurs which can lead to unauthorized employee access, unauthorized payroll transactions, unauthorized benefits, etc.
In addition, this manual process creates a maintenance issue – where will all the paper go? There are several applications for electronically signing documents. One popular software product is Adobe Sign though there are several others such as SignRequest, DocuSign, or PandaDoc. However, it is important to note that not all documents are allowed for e-signing. According to the New York State’s Office of Information Technology Services, documents excluded include wills, trusts, decisions consenting to orders not to resuscitate, and powers of attorney and health care proxies, with the exception of contractual beneficiary designations.
As technology continues to improve every day and with obstacles created by COVID-19 with respect to in-person signatures and notarized forms, it is expected that these limitations will be resolved to provide for a more robust e-signing process. E-signatures look to be key to future endeavors as businesses across the world navigate through today’s impediments. For more info about the Electronic Signature and Records Act, please click here.
Shari Diamond, CIA
Shari has been with Cerini & Associates, LLP since 2008 where she works primarily with the firm’s school district clients providing internal audit and claims audit services. She has over twenty years’ experience performing internal audits, risk assessments, and compliance reviews, as well as recommending processes to strengthen the internal controls environment while increasing efficiencies. Her prior experience at PWC and Northrop Grumman included performing Information Technology audits.
Thomas is a member of Cerini & Associates’ audit staff where he works with our education and school district clients. He conducts claims audits at various school districts on Long Island.