State audit finds flaws in upgrade of NC Core Banking system

A new state audit has found flaws in work to upgrade the state’s Core Banking system, a financial behemoth that handles money collected and disbursed by every state agency, institution, university and community college.

The Department of State Treasurer, which is scheduled to go live with the estimated $5 million upgrade on July 20, responded that it was making corrections based on the findings, though it noted the project has never been at risk of falling apart.

The findings and response are both found in the 27-page report that State Auditor Beth Wood’s office released Tuesday after 1,189 hours of work and a cost of $156,203. It notes there are more than 5,000 users of Core Banking, which in 2012-13 processed about $20 billion in payments as well as executed wire transactions amounting to nearly $154 billion.

The audit’s purpose was to make sure the system upgrade, by way of contractor Mythics Consulting, is set for a smooth launch. “Any major system interruption could cause a significant loss of financial services to state agencies, universities, and other government institutions,” the report said.

According to a work plan from the treasurer’s office, the upgrade would replace aging applications that track cash transactions and give access to more secure and optimal software. “This upgrade is critical to the long‐term stability of the Core Banking system,” said the treasurer’s office in its Information Technology Strategic Plan.

The auditor’s key findings during the audit period, January 2014 through February 2015, were:

▪ The project hasn’t received adequate third-party oversight, like from the state’s Enterprise Project Management Office or an independent vendor.

▪ The treasurer’s office “struggled” to execute tests and track the results effectively, making it difficult to assess the progress of system testing.

▪ The treasurer’s office and vendor didn’t follow a system to identify and resolve problems along the way.

▪ The treasurer’s office lacked complete, documented plans to ensure pre-launch criteria are met.

State Treasurer Janet Cowell said her office agrees with findings and recommendations in the report.

“We value your observations and have already taken steps to improve the documentation and processes referenced in your recommendations,” Cowell wrote to Wood. “We additionally feel that these recommendations from the review and our swift integration of them into our key processes and framework have reinforced a positive environment for a successful go-live status for the Core Banking system upgrade.”

This story was originally published May 13, 2015 at 4:01 PM with the headline "State audit finds flaws in upgrade of NC Core Banking system."