bptest intro cipps

8/8/2019 Bptest Intro CIPPS

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CIPPS Introductory Payroll TrainingCIPPS Introductory Payroll Training

Welcome to Introductory Payroll Training !




Introduction of Trainers

Housekeeping» Parking» Rest rooms» Emergency exits» Telephones»

Breaks» Refreshments» Restaurants (lunch)» Alternatives should the computer or equipment fails

Questions



Payroll Function Overview

CIPPS System Overview

Payroll Function Overview

CIPPS System Overview




Payroll Function OverviewPayroll Function Overview

Paying employees

Management Review/Audit of payroll entries

ReconciliationsAdjustments




Preparation of regulatoryinformation

Processing court orderedwithholdings Mo

ney!Taxes !Benefits

!

Money

!Taxes !Benefits

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Importance of payroll to the agency• Cost of Personal Services and Fringe Benefits as a

percent of total agency expenditures

• Employee morale is affected by payrolladministration

• Payroll controls and administration go beyond thesystem




Importance of Payroll Administration to Agency FiscalManagement

• High exposure area of responsibility

• Opportunity for fraud, unauthorized entry into CIPPS

• High risk function

• Potential for error

• Safeguard of assets




• Agency Fiscal Management must be the controllingparty to ensure the accuracy of payroll and payrollrelated expenditures.

• Management Review, Establishment of Policy, andAdherence to Procedures are integral controls outside of the system

• Payroll Administration goes beyond payroll processing.Paying employees is only one facet of the responsibilitiesof Payroll Administration




Agency Liability for Non-Compliance with Federal andState Regulations

• Penalties for late filings

• Federal Income Taxes owed for W-4’s improperlyprocessed

• Amounts for underwithholding of Garnishments




TYPES OF EMPLOYEES Salaried - Classified/FacultyAutomatic-no pay transaction is required to pay theemployee

Paid a predetermined amount

Virginia Personnel Act

Paid at the end of each current pay period if semi-monthly, and at the end of the month if monthly

...more




TYPES OF EMPLOYEES cont.Salaried - Classified/Faculty

Payment for faculty extends over the length of the contract 9, 10, 11, or 12 months and may bepaid on a monthly or semi-monthly basis

Entitled to receive state provided benefits (i.e.,healthcare, retirement, etc.)

...more




TYPES OF EMPLOYEES cont.Hourly - Wage-Non Automatic- pay transaction isrequired to pay the employee.

Paid a predetermined hourly rate for hours worked;Payment is for a prior pay period rather than current;

Not entitled to state funded benefits;

Limited to 1500 hours in an anniversary year, and

Automatically eligible for overtime.




TYPES OF PAYMENTS AND PAYROLLCALCULATIONS

Salary paymentsWage payments

Overtime payments (FLSA impact)

Shift Differential payments ...more




TYPES OF PAYMENTS AND PAYROLLCALCULATIONS cont.

Special Pays for Supplemental PaymentsAny additional money to be paid to an employee:• Moving/Relocation,• Workers Compensation,• Disability Benefits,• Leave Payouts, etc.




TYPES OF PAYMENTS AND PAYROLLCALCULATIONS cont.

Special Pays for Fringe Benefits

• Imputed Life - Considered a benefit by the Federal governmentif a “salaried” employee’s annual salary exceeds $25,000

• The calculation is based on the employee’s age and his annualsalary rounded up to the next thousand and doubled

...more




TYPES OF PAYMENTS AND PAYROLL CALCULATIONS cont.

• Imputed Life cont.

FICA taxes must be calculated and withheld

No income taxes are withheld but the amount is added to allfederal and state compensation for the employee at year end ontheir W-2

...more




WITHHOLDINGS FROM PAY • Types of Deduction Calculations

Fixed Dollar Amounts

Percentages

• Based on Net Pay• Based on Gross Pay• Based on a combination of pays (Regular

plus Special) ...more




WITHHOLDINGS FROM PAY cont.

Taxes

>State Income Tax (SIT) Virginia andother states• VA-4 Form for withholding

>Reciprocal Taxing ( i.e. Maryland)• Local Income Tax Withholding

...more




MANDATORY DEDUCTIONS

Types of Court Ordered Deductions

»Garnishments»Tax Levies

»Child/Spousal Support » Bankruptcy

»Garnishment Fee

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MANDATORY DEDUCTIONS cont.

Court Ordered Deductions• Priority of withholding when more than one is

presented for an employee

• Honoring the garnishment period, i.e., voiding the

check if distribution has not been made

...more

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• Guaranteed Minimum Net Rule

• Fixed amount or percentage of paycalculation options

• Administrative Fees

MANDATORY DEDUCTIONS

P ll F i O i




VOLUNTARY DEDUCTIONS Benefits/Voluntary Deductions

– Savings Bonds (Series EE & Series I) – Combined Virginia Campaign – Supplemental Insurances and Annuities

– Third-Party Administrator – VPEP-Prepaid Education – Parking

P ll F i O iP ll F ti O i




Flex Spending Accounts L imits for Dependent Care and Medical

Reimbursement

Reporting on W-2 at year end

Applicable Tax Deferrals

Administrative Fees associated with FSA’s

llP ll F i O i




Deferred Compensation and Annuities

§ Limit on withholdings for an annualperiod

§ Applicable Tax Exclusion

llP ll F i O i




HealthcareDifferent providers available to State employees

Applicable Tax Exclusion

Rates are determined by DHRM

Direct Deposit – Direct Deposit of a Fixed Amount or a

– Percentage of Net Pay





FRINGE BENEFITS CALCULATED AS AGENCY PAID DEDUCTIONS cont.

Retirement

LTD Premium

Retiree Health Care Credit

Pays on which retirement is calculated

Agency paid Healthcare Entitlement periods over and above normal employment

period, i.e., LWOP, COBRA, SDP

Group Life Insurance

Types of Pay on which Group Life is calculated



Payroll Function Overview Payroll Function Overview

ONE-TIME ADJUSTMENTS TO CURRENT PAY & WITHHOLDINGS (OVERRIDES)

May be used to make a one-time adjustment:

To increase/decrease/stop a deduction for the currentpay period

To increase/decrease/stop certain income taxes forthe current pay period

To correct an error in compensation that occurred ina previous pay period

To pre-pay certain deductions, due to LWOP, other

than 12-months paid, or to satisfy any “balance due”

llP ll F i O i





Situations that may require a DEDUCTIONOverride:• an incorrect amount was established in the

employee’s permanent record when thededuction was set up• the employee wishes to increase or decrease

the deduction for one pay period only

P ll F i O i





Situations that may require a TAX override:

An error occurred when establishing theemployee’s tax elections, resulting in excess taxbeing withheld

Excess tax was withheld on a special paymentPayments that should have been paid as non-

taxable were taxed when paid, or vice versa

ll i O i




ONE-TIME ADJUSTMENTS TO CURRENT PAY &WITHHOLDINGS (OVERRIDES)

The override feature should not be used to:

¨ Adjust FICA taxes¨ Change current period taxes - without written

authorization

¨ Change current period deductions - withoutwritten authorization

¨ Reduce taxes or deductions because the

employee is “short of funds” this pay period

P ll F i O i




CORRECTIONS FOR PRIOR-PERIOD ERRORS Two types: 1). Paid and 2). Non-Paid

Why they are needed:To correct errors that occurred in a prior pay

period that may requirea refund of a tax or deduction

updating the employee’s record to

reflect a payroll transaction that was

handled “outside” the payroll system

P ll F ti O iPayroll Function Overview




CORRECTIONS FOR PRIOR-PERIOD ERRORS

Paid Updates (P/M)

– Refund a deduction withheld in error – Refund excessive/erroneous taxes -

including employer portion, whereapplicable

llP ll F i O i





Non -Paid Updates ( + / -)

Record in employee’s earnings record any itemthat was handled outside the payroll system(such as using a petty cash account to handle apayroll item)






+ / - Non -Paid Updates» Record in employee’s earnings record any item

that was handled outside the payroll system (suchas using a petty cash account to handle a payrollitem)

+ / - Non -Paid Updates» Transfer dollars paid as one type of pay that

should have been another (i.e., paid as “regular” -should have been paid as workers compensation)





REVIEW OF EDIT REPORTS

– Certain employee record changes

– Wage and overtime payments – Batch Totals - ensure balanced batches – Deduction amounts and totals per deduction – Review gross-to-net calculations – Certify gross payroll total





Review of Pay Period Reports

Payments causing employees to appear on an “ excessivepayment ” report

Reconcile :

Payroll Expenditures to CARS

Deduction Reports and Report 10

Items identified by comparison of payroll data to DHRM’s records(personnel data )New Employee Report to VEC (for Social Services’ Division of ChildSupport Enforcement)





Other Period Responsibilities

-Payments to Third-Parties

-Void Check Processing

-“Special” interim payments

– Provide agency management with overview of allcurrent payroll/verification items

NOTE: Stop Payments for Lost or Stolen ChecksMUST BE PROCESSED BY THE TREASURER’S

OFFICE





MONTHLY RECONCILIATIONS/REVIEWS

Taxable Wages and Taxes Withheld

Fringe Benefits» VRS - Retirement/Group Life/

Long Term Disability

» Healthcare

Expenditures to CARS





QUARTERLY RECONCILIATIONS/REVIEWS – IRS - Required Reporting

Reconciliation of Tax Deposits

Quarterly Certification of

Wages and Taxes

– Unemployment Wage Reporting to VEC – Certification to DOA that records are accurate

and 941 reporting if correct

(Quarterly Reconciliation and Certification Form)





ANNUAL RECONCILIATIONS/REVIEWS All routine quarter reporting requirements applyto the 4th quarter

Annual Certification of taxable wages and taxeswithheld for W-2 preparation

Reporting to Department of Taxation

VEC ReportingRemittance of all Required Tax/Other Forms-Reciprocal State withholdings





RECORDS RETENTION -Mandates Issued By :

Department of Labor - Wage & Hour Div Fair Labor StandardsAct (FLSA)

Internal Revenue Service (IRS)

Internet address-IRS.GOV

Circular E

Other Applicable Publications





RECORDS RETENTION - cont. Mandates Issued By:

Auditor of Public AccountsDepartment of Accounts

Commonwealth Accounting Policies andProcedures Manual (CAPP), Section 21005

Recommended Retention ScheduleIndividual Agencies





RECORDS RETENTION

Source Documents Include: – Time Cards/Sheets

(FLSA requires 4 years retention) – Tax Forms – Personnel Authorizations (P-3’s) – All Documentation for Payroll Changes

NOTE: Most regulations require retention for 5 years,or until audited, whichever is later.





RECORDS RETENTION

– AUDIT REPORTS

Payroll and Deduction Registers

Reconciliations

Tax Deposit Information

CIPPS System OverviewCIPPS System Overview




CIPPS MASTERFILES» Employee

» Tax» Data Entry File» Pending





CIPPS MASTERFILES -

EMPLOYEE:

– Official Employee Payroll Record – Biographical Information

– Rate of Pay and Pay Entitlements – Standard Deductions – Federal Tax Elections





EMPLOYEE MASTERFILE Types of Pay (Report 10 information):

Regular

OvertimeShift Differential

Special Payments

Imputed LifeVSDP Benefit

GROSS PAY





EMPLOYEE MASTERFILE HOURS WORKED

» Regular Hours

» Overtime Hours» Shift Hours» Special Pay Hours

TYPES OF DEDUCTIONS:

» Health care» Savings Bonds» Parking





TAX MASTERFILE – State Tax Elections – Taxable Wage Accumulations

» Federal Taxable and Non-Taxable Wages» FICA Taxable Wages» State Taxable Wages» State Unemployment Wages

– Tax Accumulations» Federal Income Tax (FIT)» Social Security Tax (OASDI)/Medicare Tax (HI)

» State Income Tax (SIT)





PENDING FILE » Holding file for valid pay transactions awaiting execution into pay» Based on date of transaction and frequency in which employee is

paid

DATA ENTRY FILE » Current Pay Transactions

– Hours/Dollars - Overtime – Special Payments - Overrides





BATCH TRANSACTIONS » Represent actions to be taken for one pay period

only

» Receive limited editing when entered - – Edits for valid employee number only

- No online edits for :• Overtime eligibility• Employment Status

• Pay type valid for company use

BATCH TRANSACTIONS » Represent actions to be taken for one pay period

only

» Receive limited editing when entered - – Edits for valid employee number only

- No online edits for :• Overtime eligibility• Employment Status

• Pay type valid for company use





EDIT PROCESSING AND CERTIFICATION When all batch transactions have been entered,

request edit reports for the group(s) of

employees being paidEdit Reports

» Batch totals for hours and pay amounts

» Errors not detected during entry of transactions» Correction of errors, request another edit or

proceed to payroll processing





CERTIFICATION/REQUEST PAY

– Review Masterfile Changes – Ensure all batch totals agree with manually

calculated control totals – Review gross-to-net payroll calculation on last

edit report (Pre-Calc Report 10) – Online Certification Screen – Pay Processing

Pay Cycle Overview



Receives:ReportsChecks

Microfiche

ProducesEdit Reports

Processes Payroll

Computes FringesProduces:

ReportsWarrants

Creates:

Agency FilesHistory FilesPerforms:

Reconciliations

Keys Data

Corrects Errors

Certifies Payroll

Sends Warrants to TreasurySends Reports to Agency

Receive:ReportsInterface TapesFAD DepositsMicrofiche Tape

Dept of Treasury:Signs WarrantsReleases Checks toAgencies

Pay Cycle Overview

Agency DOA Third Parties

Requests Edit




CIPPS System Overviewy

DOA ResponsibilitiesSchedules the processing of all payrolls

Follows guidelines regarding State, Federal, and FICA taxing

Establishes and controls security to the system

Performs CIPPS/PMIS audit

Ensures all certified payrolls are processed by the due date

...more




CIPPS System Overviewy

Ensures timely response to agency questions and concerns

Provides technical training to agency personnel

Provides on-site assistance when justified

Maintains agency level data regarding deductions, specialpayments, shift differentials, and reports

Develops and coordinates changes to CIPPS

Maintains the CAPP Manual




C S Syste Ove v ewy

Agency ResponsibilitiesProvides accurate and timely payments of employees

Collects and submits payroll documents for regular,overtime, shift differential, etc.

Authorizes and certifies payroll data

Establishes proper telecommunication equipment, linesand internal security ...more




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Retains source documents, reports and other records

Verifies and updates employee masterfile changes

Ensures separation of payroll functions

Reviews and verifies the Gross Pay Limit ExceededReport (CIPPS Report 59)

Ensures timely submission of all mandated regulatoryreporting





THIRD PARTIES IMPACTED BY CIPPS OUTSIDE OF STATE – Courts, Federal and State Tax Authorities – Third-Party Administrators – Financial Institutions and Credit Union

– Virginia Employment Commission (VEC) – Virginia Retirement System (VRS) – Department of Social Services (DSS)