Core PR Concepts
Compliance/Research/Resources
Calculation of paycheck
PR Process/Supporting systems/Admin
PR Admin/Management
Audits
Accounting
100
the 2 common worker classifications
employees and independent contractors
100
definition of escheatment
turning unclaimed property over to state
100
definition of Regular Rate of Pay:
An hourly pay rate determined by dividing the total regular pay actually earned for the workweek
by the total number of hours worked.
100
ROP definition
Request for Proposal
100
in situational leadership - way managers handled their staffs often depended on the way they dealt with two factors
task behavior and relationship behavior
100
what are common payroll audits
401K
section 125
wage & hour
unemployment
100
several business areas that use data provided by
the payroll department
General accounting uses payroll data to record transactions in the company’s books of account and to prepare
financial statements both for internal and external purposes.
• Cost accounting uses payroll data to determine the cost of producing a product or providing a service and to
show ways of controlling these costs (e.g., wage data used to determine the cost of labor).
• Budgeting involves projecting the costs and revenues associated with various business activities and trying
to keep the costs—including
payroll costs—within
target limits.
200
the FLSA establishes
Minimum wage
Overtime pay
recordkeeping
child labor standards
200
requirements you may
be subject to include when working in payroll
• Family and Medical Leave Act (FMLA) eligibility and tracking
• Fair Labor Standards Act (FLSA) compliance for overtime, including average rate calculations
• Affordable Care Act (ACA) eligibility and reporting
• Sarbanes-Oxley
Act
• State overtime, meal and break, and FMLA rules
• Multiple workstate and local tax jurisdiction compliance
• For global installations, the regulations in other regions or countries
200
definition of a work week per FLSA
A workweek consists of seven consecutive 24-hour periods that equal 168 total hours
200
time & attendance automation benefits
Less time spent on processing
Fewer errors introduced during processing
Decreased costs
200
different management
styles per Hersey and Blanchard
• Low task/high relationship—little
control sought by the manager; good deal of mutual trust and support.
• High task/high relationship—manager
controls the job and procedures; also relies on personal communication
with employees to coach them in performing the job.
• Low task/low relationship—most
jobs delegated to staff; little personal contact desired by manager.
• High task/low relationship—manager
seeks to control staff and direct performance; but with little feedback
or dialogue with employees.
200
Check Payment Controls
Update signature authorizations
Hand checks to employees
Lock up undistributed paychecks
Match addresses
Payroll checking account
200
accounting time period concept
Each organization must determine its own accounting period based on the type of business it is
engaged in. For its yearly accounting period, an organization can choose either the calendar year or another 12-month
period (fiscal year, e.g., 6-1-
17
to 5-31-
18).
In most organizations, the end of the fiscal year coincides with the least
business activity for the year.
Printed for:
300
the federal minimum wage and when was it established
$7.25 per hour and 7.24.09
300
Internal Revenue Code requires all employers to withhold what taxes from employees pay
federal income, social security, and
Medicare taxes
300
IRS regulations include several fringe benefits examples
• Employer-provided
cars
• Flights on employer-provided
aircraft
• Free or discounted commercial flights
• Vacations
• Discounts on property or services
• Employer-paid
memberships in country clubs or other social clubs
• Tickets to entertainment or sporting events
• Qualified tuition reductions
• Dependent care assistance
• No-additional-
cost
services
• Working condition fringes
• Qualified transportation fringes
• De minimis fringes3
300
reports payroll manager may be required to produce
• New legislative and/or regulatory developments, such as new tax rates or wage bases, new rules governing
employee business expenses, or changes in the way states treat employee benefits
• Monthly labor costs—pay
rates, regular and overtime hours worked, compensation, paid time off, etc.
• Annual wages, taxes, and benefits
• Variance between compensation paid and budgeted
• Reports required from all department heads detailing ongoing projects, overtime pay, salary costs, future
plans, budgets, etc.
• Metrics measuring payroll processing costs overall and at different points in the process (e.g., gathering
time and attendance information)
300
payroll, we can assess our strength by asking a series of questions
• How well do we do our jobs?
• Do we provide accurate information?
• Is our final product accurate?
• Do we serve our customers well?
300
payroll calculation controls
Automated timekeeping systems
Calculation verification
Hours worked verification
Match payroll register to supporting documents
Match time cards to employee list
Overtime worked verification
Pay change approval
300
accounting equations
Assets -Liabilities= Equity
Revenue -Expenses= Net Income
Net Income -Income Distributed + Contributed Capital = Equity
400
the definition of exempt per FLSA
exempt from the OT provisions of the FLSA
400
meaning of acronyms: IRC and IRS
Internal revenue code
internal revenue service
400
involuntary deductions are and 2 examples
those over which an employer or employee has no control
tax levies
student loans
400
qualities that can help make a payroll manager a strong leader include
• Having a vision. A strong payroll manager must have a clear vision of where the manager and the department
should be headed, what their mission is, and how that vision and mission blend in with those of
the overall organization. With a vision of quality service, everyday work, which can seem mundane and
ordinary at times, becomes more purposeful and exciting. A leader must also communicate that vision, be
prepared for those who challenge it, and then acquire the resources to achieve the vision.
• Building team support. Without the support of the department’s employees, the manager’s goals and vision
will be unreachable. The payroll manager can build team support by creating an atmosphere where employees
are treated fairly, their ideas are given thoughtful consideration, and their needs are deemed important
and worth meeting.
• Seeking partners. Payroll managers cannot exist apart from the rest of the company. To be leaders, they must
network and seek the advice and support of managers from other departments.
• Accepting accountability. Leaders accept accountability for things that happen by owning the outcome. They
admit when a mistake was made or a problem is found in the payroll process and take ownership of it until
the problem is solved. Leaders also make good on their commitments and acknowledge the contributions
of other staff members rather than taking undue credit for themselves.
• Making decisions and taking action. Good leaders are decisive and then take action to put their decisions
into practice. Deciding what’s wrong with a practice or procedure in payroll will not solve anything unless
action is taken to put a solution in place.
• Leading by example. To be a leader, the payroll manager must take the initiative and be the first one to step
forward when a difficult problem needs solving or a crisis looms. Leading by example also means acting
with integrity by following your principles even when the consequences may not be pleasant.
400
planning and organizing consists of several key activities
Defining goals and objectives
Defining the time frame
Defining the subtasks
Analyzing available resources
Evaluating costs
400
general payroll controls
audit
change authorizations
change tracking log
error-checking reports
expense trend lines
issue payment report to supervisor
restrict access to records
separation of duties
400
typical company expenses include
• Wages paid to employees
• Employer-paid
benefit costs
• Maintenance for computers
• Office supply costs
• Employer share of payroll taxes
500
joint employer status under the FLSA
an employee’s hours worked for both employers for the workweek must be aggregated and considered as one
employment when determining whether any overtime pay is due
500
the 3 deposit schedules for federal withheld payroll taxes
monthly and semi-weekly and next day
500
federal taxes employer pays and 2019 limits including percentage
7.65% FICA 6.2% Social Security $132900 and 1.45% Medicare
FUTA 6.0% $7000 state credit 5.4%
500
critical resources needed to continue the payroll function in event of disaster include
• Staff
—— Travel/Lodging arrangements
—— Work location –disaster
recovery facility
—— Support from key business units including IT staff
• Equipment
—— Electronic and network connectivity
—— Systems or applications
—— Instructions or manuals (physical or electronic records) or other vital records
—— Ability to print checks, process direct deposits, and/or issue/update paycards
• Others
500
five steps to empowerment
• Step 1: Establish the desired results. The expected results are that the employees will have their pay corrected
with a manual check, their future paychecks will be adjusted properly, and they will receive quality customer
service.
• Step 2: Provide guidelines. The manual checks must comply with all applicable federal, state, and local
requirements, as well as company policies.
• Step 3: Identify resources available to accomplish the task. The following information is provided: tax tables,
company policies on manual checks, wage and hour guidelines, and contacts who can handle questions.
• Step 4: Hold people accountable. The employee will be evaluated based on the satisfaction level of employees
receiving the manual checks and the degree of compliance with the guidelines that have been provided.
• Step 5: Identify consequences. If the employee fails to complete the task timely and accurately, the company
will be exposed to possible financial penalties, the reputation of the payroll department in the organization
will suffer, and the failure will be noted on the employee’s performance record.
500
actions that can be taken for improving the payroll process performance:
• System review, evaluation, and updating
• System edits
• Account balancing and reconciliation
• Documentation of policies and procedures
• Internal controls, such as job segregation, job rotation, file security, physical payouts, etc. (see Section 11.8)
• External audits
500
Some transactions that represent liabilities include
• Income and employment taxes withheld but not yet deposited
• Contributions owed to a company benefit plan
• Accounts payable
• Wages payable
• Union dues deducted from pay but not yet paid to the union
600
SS8
Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding
600
The Walsh-Healey
Public Contracts Act376
governs the wages and hours of employees of manufacturers and dealers
furnishing the federal government with materials, supplies, and equipment under contracts exceeding $10,000.
600
gross up formula without 401K and example including calculation and proof
100 minus fit minus ss minus medi equal result
gross divided by result percentage
proof
600
Selecting a paycard vendor considerations
Type of card—Decide
whether the employer will use branded or nonbranded cards.
Employer costs—There
are several types of employer costs associated with paycards, including setup fees (e.g., creating
accounts, enrolling employees), payroll processing costs, and extra fees for one-time
payments (e.g., off-cycle
payments,
termination payments).
Employee costs—There
may be different costs for ATM and POS transactions depending on the vendor. Some of them
may waive the fee for the first transaction each pay period, and there may be added fees for extra services, such as
monthly statements or balance checks.
Legal issues—Make
sure that any vendor you are considering can comply with the wage payment regulations in the
states where the organization operates.
System compatibility—Make
sure that the vendor’s system is compatible with your employer’s payroll system.
Training—Determine
if the vendor offers training both for the payroll department on the software involved and for the
employees who will be using the paycards.
Paycard implementation issues.
600
easiest ways for a company to lose control over its entire payroll system
is to rely on verbal communication
of policies and procedures.
600
Controlling the process to improve performance actions
• System review, evaluation, and updating
• System edits
• Account balancing and reconciliation
• Documentation of policies and procedures
• Internal controls, such as job segregation, job rotation, file security, physical payouts, etc. (see Section 11.8)
• External audits
600
definition of debits and credits in accounting
A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is positioned to the left in anaccounting entry. A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account
700
SS5
Application for Social Security card
700
Davis-Bacon
and Related Acts
the Secretary of Labor sets prevailing minimum wage standards for laborers
and mechanics working on federally financed construction contracts of $2,000 or more. The “Related Acts” include
provisions that require Davis-Bacon
labor standards be applied to most federally aided construction. The prevailing
wages (including fringe benefits) are based on wages for similar workers in the locality where the project is to take place.
700
Shortened Formula gross up formula (when social security wage base has already been exceeded):
X = [Desired Net –.
009 ($200,000 –YTD
Medicare wages)]/.7565
X = [$30,000 –.
009 ($200,000 -$
175,000)]/.7565
X = [$30,000 –.
009 ($25,000) /.7565
X = [$30,000 –$
225]/.7565
X = $29,775/.7565
X = $39,358.89
700
What is a Business continuity plan
Because of the dangers of having a computer
system with the associated data all in one place should a disaster hit (e.g., fire, blackout, electrical storm),
sound business practice requires the employer to have a payroll business continuity plan that has been
tested and is ready to use (see Section 12.6). (It should be a part of any automated payroll system.)
• Wrong computer chosen. Despite all the investigation and research done before purchasing payroll system
software and/or hardware, it may prove to be inadequate or have too much capacity for the employer’s needs
700
Payroll managers in mid-size
and large organizations responsibilities
planning, staffing, training, evaluating,
counseling, delegating, recognizing, reporting, etc.
700
- Are the following duties assigned to different persons:
- Approval of each payroll,
- Processing and recording payroll,
- The reconciliation of related bank statements
- Possession of processed payroll checks
- Ability to enter or change employee bank account numbers
- Ability to add employees to the payroll system or to remove them
700
set of concepts
and principles that have come to be known as Generally Accepted Accounting Principles (GAAP)
Business entity concept. Every organization that operates separately is treated as a business under the business entity
concept. The purpose of accounting is to report each entity’s financial position on a balance sheet and its profitability on
an income statement. The employees, owners, and managers of a business entity must keep their personal transactions
separate from those of the business entity.
Continuing concern concept. This concept assumes a business entity will continue to operate indefinitely as a business.
If the business is for sale, it would not be a continuing concern and its assets would be valued at their fair market value.
Continuing concerns value their assets at their cost since they are not for sale.
Time period concept. Each organization must determine its own accounting period based on the type of business it is
engaged in. For its yearly accounting period, an organization can choose either the calendar year or another 12-month
period (fiscal year, e.g., June 1, 2018, to May 31, 2019). In most organizations, the end of the fiscal year coincides with
the least business activity for the year
Cost principle. Because organizations are assumed to continue as going concerns, all goods and services purchased
(assets) are recorded at the cost of acquiring them. The cost is measured by the cash spent or the cash equivalent of
goods or services provided in return for those purchased. Once valued, an asset remains at that value for its life minus
any depreciation in accordance with the continuing concern concept and the objectivity principle (see discussion
following).
Objectivity principle. Transactions must be recorded objectively to ensure personal opinions and emotions are not
part of the recorded transaction. This principle ensures accounting information will be useful for lenders and investors.
Generally, valuing an asset at cost meets this principle since it requires a deal between a buyer and a seller with different
goals in completing the transaction.
Matching principle. Expenses and revenue are recorded in the accounting period in which the expense is incurred or
the revenue is earned. Under the matching principle, transactions may have to be recorded before any money actually
changes hands, but after the essence of the transaction has been completed. The matching principle allows a comparison
between different organizations’ financial statements.
Realization principle. The realization principle governs the recording of revenue. Revenue is the income received for
goods and services provided by the organization. Revenue is recognized (or realized) and reported when earned, which
is during the accounting period when the goods have been transferred or the services provided. The amount recognized
is the cash received or the fair market value of goods and services received.
Consistency principle. Transactions must be recorded in a consistent manner based on the particular accounting
method, principle, or period. Users of accounting information require that transactions be recorded consistently so they
can make sound financial decisions regarding the organization, especially when comparing previous accounting periods
to the current period.
800
I9
Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding
800
McNamara-O’Hara
Service Contract Act379
applies to employers that contract with the federal government to
provide services to a federal agency. It applies to contracts over $2,500 and requires that employees be paid prevailing
minimum wages and fringe benefits based on the wages and benefits for similar employment in the locality or on a
collective bargaining agreement (the Secretary of Labor decides), but no less than the minimum wage under the FLSA.
800
Golden Parachute Payments
When companies change ownership, key executives are often provided with “golden parachutes” to soften their landing
should they be terminated by the new owner.
800
Enterprise Resource Planning (ERP) system features
Financial Operations
An ERP can automate, simplify and evaluate most accounting processes. What can take employees days to analyze and compute can be achieved within minutes using an ERP. An ERP can facilitate payroll, budgeting, billing and banking operations. The software can conduct cost analyses to better manage cash flow and forecast future growth. Using the ERP to perform these functions can reduce human error and help cut costs.
Human Resources
An ERP can not only help with hiring and training new employees, but also tracking their individual productivity. Each employee can log into the system and enter time worked and manage benefits and vacation time. The ERP can automate payroll processes, removing the need for an extensive payroll department. ERP software can send out employee surveys and news, provide an online community for employee collaboration and contain the policies and procedures for a company.
Production and Distribution
Some functionality included in an ERP that can benefit the manufacturing department by providing production control, process synchronization and quality evaluation. An ERP can also analyze the financials of a manufacturing company and automatically adjust processes based on cost analysis and forecasting. The software can automate distribution scheduling that often takes up precious employee time.
Orders and Inventory
What begins with the sales team needs to flow seamlessly to the inventory management team. Inventory and materials management helps companies keep track of stock, set appropriate price points and locate items within the warehouse. Supply chain management eliminates the human error that can result in costly mistakes in the distribution system.
800
most important decisions a payroll manager can make and consequences
whether to hire a
particular person. The stakes are high, since employees who perform well as enthusiastic team members can lead to an
efficient, cost-effective
payroll department, while hiring the wrong individuals can lead to dissension, inefficiency, and
costly turnover. As with any important task, hiring consists of more than one activity.
800
Primary Risks for Payroll
- Payroll is intentionally understated
- Inappropriate parties receive payments
- Employees receive duplicate payments
As you think about these risks, consider the control deficiencies that allow payroll misstatements.
800
list of some of a typical company’s assets
900
SS4
Application for Employer Identification Number
(For use by employers, corporations, partnerships, trusts, estates, churches,
government agencies, Indian tribal entities, certain individuals, and others.)
▶ Go to www.irs.gov/FormSS4 for instructions and the latest information.
▶ See separate instructions for each line. ▶ Keep a copy for your records
900
The Contract Work Hours and Safety Standards Act
requires contractors with the federal government (not those
already covered by Walsh-Healey)
to pay employees overtime of at least 1½ times their “basic rate” for hours worked
over 40 in a workweek. Overtime must be paid only for work covered by the contract (Walsh-Healey
applies to both
covered and uncovered work). The law applies to contracts over $100,000.
The basic rate is the same as the employee’s regular rate under the FLSA. Violators are subject to liquidated damages of
$26 per day for each employee working in violation of the Act. Such amounts can be withheld from amounts owed the
contractor under its contract with the federal government.
900
Jury Duty Pay tax treatment
1. If the employer pays an employee his or her regular wages in addition to jury duty pay received from the
government unit involved, the wages are subject to federal income tax withholding and social security,
Medicare, and FUTA taxes.
2. If the employer pays an employee the difference between the employee’s regular pay and the jury duty pay,
only that difference is subject to federal income tax withholding and social security, Medicare, and FUTA
taxes.
3. If the employer pays an employee wages for time spent on jury duty but requires the employee to turn over
the jury duty pay to the employer, only the difference between the amount paid and amount turned over
is subject to federal income tax withholding and social security, Medicare, and FUTA taxes. The employee
may deduct the amount turned over on his or her personal income tax return.
900
Payroll System basics
• Pay Processing –based
on calculation formulas, process payroll on a predetermined basis and calculate and
maintain records for pension or retirement contributions
• Payroll Reporting –access
to payroll reports including tax reporting and analytics with built-in
templates
and parameter-driven
reporting configuration
• Check Printing –print
checks and provide employees electronic access to earnings statements
• Direct Deposit and Paycards –set
up direct deposit and paycard accounts or distribute funds to a combination
of a check and direct deposit/paycard accounts
• Retirement Plan Reporting –calculate
and report retirement plans using file formats for major retirement
plan providers or pension plans
• Garnishment Processing –deductions
based on disposable earnings or take home pay and legal
requirements
• Time and Attendance –an
automated system for gathering time data and processing it from “punch to
payroll”
In addition, there are some advanced features, functions, and services that may be required within a given organization
that should be identified:
• Compensation Planning and Management
• Global Database and Reporting
• Talent Acquisition and Management
• Learning and Development
900
Training import
It is important for the payroll manager to keep in mind just
what training can and cannot do. While training can improve performance, it is not a cure-all
for every performance
problem. Proper training can improve an employee’s knowledge and skills, improvements which they can then use to
bring their job performance up to standard or to prepare them for a new job or promotion. What training will not do
is improve an employee’s poor attitude or work ethic, problems that can possibly be resolved by disciplinary action or
counseling.
900
payroll control deficiencies:
- One person performs two or more of the following:
- Approves payroll payments to employees,
- Enters time or salary rates in the payroll system,
- Issues payroll checks or makes direct deposit payments,
- Adds or removes employees from the payroll system
- Reconciles the payroll bank account
- No one reviews and approves recorded time
- No one reviews and approves payroll before processing
- No one performs surprise audits of payroll
- Appropriate procedures for adding and removing employees are not present
- No one reviews the removal of terminated employees from payroll
- No one compares payroll expenses to a budget
900
Expense account examples
Wages paid to employees
• Employer-paid
benefit costs
• Maintenance for computers
• Office supply costs
• Employer share of payroll taxes
1000
W7
Application for IRS Individual
Taxpayer Identification Number
▶ For use by individuals who are not U.S. citizens or permanent residents.
▶ See separate instructions.
OMB No. 1545-0074
An IRS individual taxpayer identification number (ITIN) is for federal tax purposes only
1000
Copeland ‘Anti-Kickback’
Act
imposes fines and jail time on anyone who induces any employee
working on a federally financed construction, building, or public works project to give up or “kick back” any part of the
employee’s compensation to which the employee is entitled under a federal contract.380
Another portion requires the Secretary of Labor to issue regulations for federal construction and public works contractors
and subcontractors that require them to furnish a pay statement to their employees each week.
1000
Loans to Employees taxability
The taxable amount is not subject to federal income tax withholding, but must be reported on the employee’s Form
W-2.
The taxable amount is subject to social security, Medicare, and FUTA taxes. If the employer forgives the debt, or
for any other reason the employee is not expected to repay the loan, the entire balance of the loan becomes income subject
to federal income tax withholding and social security, Medicare, and FUTA taxes in the year the debt is forgiven.
1000
Project Team members should be
• Payroll
• Human Resources
• Benefits
• Account Payable
• Accounting
• Tax
• Risk or Compliance
• Budget/Finance
• Data Processing/IT/MIS/HRIS
• Senior Management
1000
common barriers to listening
• Distractions from phone calls, emails, texts, people walking by the office, other interruptions
• Tuning out by thinking about something else or faking attention
• Reacting emotionally rather than rationally
• Failing to pay attention to the speaker’s body language
• Not meaning what you say or saying what you mean when speaking
• Anticipating what you will say next without really listening
1000
Substantive Procedures for Payroll for auditing payroll
- Reconcile 941s to payroll
- Recompute accrued payroll liability (amount recorded at period-end)
- Review payroll withholding accounts for appropriateness and vouch subsequent payments for any significant amounts
- Compare payroll expenses (including benefits) to budget and examine any unexplained variances
- When control weaknesses are present, design and perform procedures to address the related risks
- Compare accrued vacation to prior periods and current payroll activity
1000
Liability account examples
• Income and employment taxes withheld but not yet deposited
• Contributions owed to a company benefit plan
• Accounts payable
• Wages payable
• Union dues deducted from pay but not yet paid to the union