Quarter Processing:
Closing the Quarter
Handout Manual
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Published by ADP Enterprise Learning
May 2018
PREFACE
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Contents
Quarter Processing: Closing the Quarter
Course Introduction ....................................................................................................... 5
Course Purpose ....................................................................................................... 5
Course Objectives .................................................................................................. 5
Course Agenda ....................................................................................................... 5
Follow-Up Items .................................................................................................... 6
Adjustment Payrolls ...................................................................................................... 7
Overview ................................................................................................................ 7
What Is an Adjustment Payroll? ............................................................................. 7
How to Avoid an Adjustment Payroll .................................................................... 8
Common Reasons for Adjustment Payrolls ........................................................... 8
Setting Up the Payroll Schedule Job Aid ............................................................... 9
Submitting Previous Quarter Adjustment Payroll Entries.................................... 13
Topic Summary .................................................................................................... 14
Knowledge Checks ...................................................................................................... 15
Reconciliation .............................................................................................................. 16
Overview .............................................................................................................. 16
What Requires Reconciliation? ............................................................................ 16
Reconciling Your Reports .................................................................................... 16
Reconciliation Checklists ..................................................................................... 18
How to Calculate Taxable Wages ........................................................................ 19
Practice: Using the Master Control to Calculate Taxable Wages ........................ 20
Learning Activity: Calculating Taxable Wages ................................................... 21
What Other Resources Are Available? ........................................................................ 22
Course Closing ............................................................................................................ 23
Continuing Education Credits .............................................................................. 23
Training Evaluation .............................................................................................. 24
Quarter Processing: Closing the Quarter (34586_4) ............................................ 25
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Course Introduction
Course Purpose
This course introduces you to processing adjustment payrolls and reconciling payroll reports
with tax reports, providing you with the tools and knowledge necessary to successfully close
each quarter.
Course Objectives
Upon completing this course, you will be able to do the following:
Describe the types of adjustment payrolls.
Determine how to set up a previous quarter adjustment payroll in ADP Workforce
Now Current Version.
Identify considerations unique to submitting previous quarter adjustment payroll
entries.
Determine how to reconcile payroll reports with quarterly tax reports and quarterly tax
reports with annual tax reports.
Determine how to calculate taxable wages.
Course Agenda
This course includes the following topics:
Adjustment Payrolls
Reconciliation
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Follow-Up Items
List any follow-up items that you may need to discuss with your client support specialist or
implementation specialist:
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Adjustment Payrolls
Overview
In this topic, you will learn about the different types of adjustment payrolls that you can
process to ensure your payroll data is included in the proper quarter.
What Is an Adjustment Payroll?
An adjustment payroll is a payroll that is processed to update or to correct a previous quarter.
What Type of Adjustment Is Needed?
Previous quarter adjustment reclose payroll (with no amendment)
Previous quarter adjustment amendment payroll
Amendment (after the previous quarter payroll deadline has passed)
Types and Descriptions
Type Description
Previous quarter
adjustment reclose
payroll
An adjustment payroll that you process between the last payroll of the quarter
processing and the previous quarter adjustment reclose deadline to correct the
previous quarter.
Previous quarter
adjustment
amendment payroll
An adjustment payroll that you process between the day after the previous
quarter adjustment reclose deadline and the previous quarter adjustment
amendment deadline to correct the previous quarter.
Amendment An adjustment that you process after the previous quarter payroll deadline to
correct a quarter that has already closed.
Penalties for Late Deposits
Late deposits can result in the IRS imposing the following penalties*:
2% penalty for deposits 1–5 calendar days late
5% penalty for deposits 6–15 calendar days late
10% penalty for deposits 16 or more calendar days late
* You will be responsible for all penalty and interest charges incurred as a result of late
deposits.
Important Information
If you do not use ADP's Tax Filing Service, you can process adjustment payrolls. However,
you are responsible for amending and filing corrected returns to the various taxing
jurisdictions.
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How to Avoid an Adjustment Payroll
Before your last payroll of the quarter, make sure you have done the following:
Scheduled adequate time to verify your Master Control before ADP processes quarter-
end reports
Included the following:
Manual checks
Voided checks
Bonus pays
Address changes
Social Security number changes
Special compensation options
Common Reasons for Adjustment Payrolls
Common reasons for processing an adjustment payroll include the following:
An employee moved from one state to another state in a previous quarter, but the
employee's state coding was not changed until the current quarter. The employee's
wages for the previous quarter need to be updated to reflect the correct state coding.
Special compensation options—such as third-party sick pay and long-term disability—
were not entered for an employee before or with the last payroll of the year.
An employee has negative year-to-date taxable wages.
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Setting Up the Payroll Schedule Job Aid
Follow these instructions set up the previous quarter adjustment payroll schedule in ADP
Workforce Now Current Version.
Instructions
Step Action
1 Select Process > Payroll > Payroll Schedule.
Result: The Payroll Schedule page is displayed.
2 Click Add New Payroll.
Result: The Choose Payroll Type page is displayed.
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Instructions (cont.)
Step Action
3 On the Choose Payroll Type page, select the Previous Quarter Adjustment card.
Result: The Previous Quarter Adjustment page is displayed. Depending on today's date in
relation to the previous quarter adjustment reclose and amendment payroll processing
deadlines, the messaging on this page (and the availability of being able to successfully
schedule a Previous Quarter Adjustment) will differ.
4 After reading the information displayed, click Next.
Result: The Payroll Schedule page is displayed.
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Instructions (cont.)
Step Action
5 Enter the Payroll In and Payroll Out dates; they must be after the last day of the quarter. Enter
the Adjustment Reasons.
6 Scroll down on the Payroll Schedule page. The Deduction Groups and Special Effects fields are
read-only; only ADP associates can make changes to these fields.
In the Authorization field, click the Previous Quarter Adjustment Authorization link.
Result: The Previous Quarter Adjustment Authorization page is displayed.
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Instructions (cont.)
Step Action
7 After reviewing the information, including fees, click Accept.
Result: The Payroll Schedule page is displayed.
8 Click Done.
Result: This concludes the process of setting up the payroll schedule.
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Submitting Previous Quarter Adjustment Payroll Entries
When adding a previous quarter adjustment paydata batch, certain options are unavailable,
including:
Add New Template
Select the paydata template to use
Use this batch in the future
Copying standard hours and regular earnings
The page shown here represents the options displayed when adding a previous quarter
adjustment paydata batch.
The Paydata page for the batch is restricted to Memo columns, as shown here. Additional read-
only columns or memos may be inserted as needed.
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Submitting Previous Quarter Adjustment Payroll Entries (cont.)
Additional information about submitting previous quarter adjustment payroll entries includes
the following:
Live pays are not permitted on previous quarter payroll adjustments.
For manual checks and reversals, check payable to employee and check payable to
company are disabled.
Masterfile entries that are not permitted on previous quarter adjustments:
o Home Dept. number
o Data Control number
o Clock number
Topic Summary
Now that you’ve completed this topic, you should be able to:
Describe the different types of adjustment payrolls that you can process to ensure your
payroll data is included in the proper quarter
Set up the previous quarter adjustment payroll schedule in ADP Workforce Now
Identify considerations unique to submitting previous quarter adjustment payroll
entries.
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Knowledge Checks
Question
1 When setting up a previous quarter adjustment payroll schedule, what date do the Pay Date and
Period End Date default to?
a. Today’s date
b. The first day of the previous quarter
c. The last day of the previous quarter
d. The date the period started
2 If your previous quarter adjustment involves corrections for overstated Federal Social Security,
Medicare Tax/Surtax, and/or wages, which reason code(s) must you select from?
a. A1-A4
b. 1E-1G
c. 1A
d. 2G-2I
3 Where can you find a link to the fees associated with a previous quarter adjustment payroll?
a. In the Adjustment Reasons area of the Payroll Schedule page
b. On the ADP Workforce Now home page
c. In the Special Effects area of the Payroll Schedule page
d. On the Previous Quarter Adjustment Authorization page
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Reconciliation
Overview
In this topic, you will learn about the items that require reconciliation and how to compute
taxable wages. In addition, you will be provided with quarter-end checklists to help you
reconcile each quarter.
What Requires Reconciliation?
The information that you should reconcile throughout the year includes the following:
Current payroll
Tax deposits per payroll
Quarterly federal tax deposits
Unemployment tax deposits
Annual Forms W-2
Reconciling Your Reports
You should reconcile your payroll reports with your quarterly reports to ensure that the
amounts match at the end of each quarter. At the end of the fourth quarter, you should also
reconcile the amounts on your quarterly reports with the amounts on your annual reports.
Reconciling Payroll Reports with Quarterly Reports
Report What Amounts Should Match?
Master Control Quarter-to-date employee amounts for the last payroll of the quarter should
match the quarter-to-date amounts on the Wage & Tax Register.
Year-to-date employee amounts for the last payroll of the year should match
the year-to-date amounts on the fourth-quarter Wage & Tax Register.
Payroll Summary
(Statistical Summary)
The sum of all of the payrolls' federal tax deposit amounts for each quarter
should match the amounts on the quarterly Statements of Deposits & Filings
and on Form 941.
The sum of all of the payrolls' federal, state, and local tax and taxable
amounts for each quarter should match the amounts on the Company Totals
page of the Wage & Tax Register and on the quarterly Statement of
Deposits & Filings.
The sum of all of the payrolls' state unemployment amounts for each quarter
should match the amounts on the Company Totals page of the Wage & Tax
Register and on the Quarterly Wage Report.
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Reconciling Quarterly Reports with Annual Reports
Report What Amounts Should Match?
Wage & Tax Register Year-to-date employee amounts from the fourth quarter should match the
amounts on Form W-2.
The fourth-quarter, year-to-date amounts on the Company Totals page
should match the amounts on the annual Statement of Deposits & Filings,
Form 940, and Form W-3.
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Reconciliation Checklists
Payroll Checklist
Item Have I Verified That
1 The Master Control company totals for the quarter match the cycle totals?
2 The pay date and period-ending dates are correct?
3 All employees have a valid Social Security number?
4 No employee indicates Applied For in the Social Security Number field?
5 All manual and voided payroll checks were entered in a payroll?
6 A taxable block and tax withheld are not both present (only one or the other)?
7 Third-party sick pay information has been entered?
8 All employees have positive wages (except for other compensation) on the Master Control?
9 All employees' quarter-to-date wages are less than or equal to the year-to-date wages on the
Master Control?
10 Special compensation option accumulators are displayed on the Master Control and updated
information is contained within employee totals?
11 ADP has been notified of any tax notices/tracers (only if you use Tax Filing Service)?
Quarter-End Checklist
Item Have I
1 Reviewed the Error Notification System to verify the accuracy of the payroll records (if
applicable)?
2 Verified the Quarterly Tax Verification Letter?
3 Verified that the quarter-closing dates that ADP has on file are accurate?
4 Entered all adjustments before the processing of the last payroll of the quarter?
5 Notified ADP of any new tax jurisdiction information?
6 If you use iReports: Reviewed the Preview Page and Tax Register to ensure that no Credit
pages exist within the reports?
Credit Condition Checklist
Item Have I
1 Reviewed the quarterly tax reports upon receipt?
2 Determined whether credit pages exist?
3 Identified the type of credit?
4 Identified which employees are affected?
5 Determined the cause of the credit situation?
6 Identified which reports are affected?
7 Contacted my ADP service team to discuss available options?
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How to Calculate Taxable Wages
Federal Taxable Wages, Tips, and Other Compensation
Gross earnings (includes taxable fringe benefits and tips)
– Federal tax-exempt wages
– Deferred compensation
– Meals
– Cafeteria 125 benefits (may vary based on the benefit)
+ Group term life insurance (cost of coverage more than $50,000)
+ Third-party sick pay
+ Other compensation
= Wages, tips, and other compensation
Social Security Taxable Wages
Gross earnings (includes taxable fringe benefits and tips)
– Social Security exempt wages
– Meals
– Cafeteria 125 benefits (may vary based on the benefit)
+ Group term life insurance (cost of coverage more than $50,000)
+ Third-party sick pay
= Social Security wages
Medicare Taxable Wages
Gross earnings (includes taxable fringe benefits and tips)
– Medicare exempt wages
– Meals
– Cafeteria 125 benefits (may vary based on the benefit)
+ Group term life insurance (cost of coverage more than $50,000)
+ Third-party sick pay
= Medicare wages
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Practice: Using the Master Control to Calculate Taxable Wages
Instructions
Use the sample Master Control to answer the following questions about Frederick Parks’s
taxable wages.
Questions
1. Which types of special compensation options does Frederick have that impact his federal
taxable wages?
______________________________________________________________________
2. Is 401(k) subtracted from or added to his gross pay?
______________________________________________________________________
3. Is group term life subtracted from or added to his gross pay?
______________________________________________________________________
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Learning Activity: Calculating Taxable Wages
Instructions
Calculate the taxable wages for each scenario using the steps in the How to Calculate Taxable
Wages section of your handout manual.
Scenario 1
Calculate the federal, Social Security, and Medicare wages for John Smith using the following
year-to-date figures:
Gross earnings: $10,296.00
Other CAFE 125: $90.00
401(k): $617.76
Federal taxable wages = _____________________________________
Social Security taxable wages = _______________________________
Medicare taxable wages = ____________________________________
Scenario 2
Calculate the federal, Social Security, and Medicare wages for Mary White using the following
year-to-date figures:
Gross earnings: $29,782.00
Other CAFE 125: $320.00
401(k): $1,786.92
GTL premiums (more than $50,000): $32.00
Third-party sick pay: $500.00
Federal taxable wages = _____________________________________
Social Security taxable wages = _______________________________
Medicare taxable wages = ____________________________________
Topic Summary
Now that you’ve completed this topic, you should be able to:
Identify items that require reconciliation.
Use quarter-end checklists to help you reconcile each quarter.
Compute taxable wages.
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What Other Resources Are Available?
You’ve learned about many enhancements to ADP Workforce Now today. It’s unlikely that
you’ll remember all of the changes, so you need to know where to look when you need help
after class.
Access The Bridge
The Bridge is an online community for payroll and HR professionals where you can ask
questions, share knowledge, make connections, and learn how professionals like yourself are
getting more from their ADP solutions.
You can log on to The Bridge directly from ADP Workforce Now by clicking The Bridge icon
at the top of any page, or you can simply enter TheBridge.adp.com in your Internet browser.
All you need to log on is your ADP Workforce Now credentials.
Quarter-End Resources on The Bridge
To learn more about quarter-end tasks and deadlines, visit the Workforce Now Quarter- and
Year-End page on The Bridge.
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Course Closing
Continuing Education Credits
ADP is an approved provider of recertification credit hours (RCHs) by the American Payroll
Association (APA) and continuing professional education (CPE) credits by the National
Association of State Boards of Accountancy (NASBA). Most ADP courses are eligible for
RCHs and CPE credits.
RCHs and CPE credits provide recognition for updating or broadening professional
competencies and may be used to maintain certifications such as the Certified Payroll
Professional (CPP), Certified Public Accountant (CPA), or the Society for Human Resource
Management (SHRM). Professional organizations establish their own certification procedures,
which are subject to change.
Professional organizations often require documentation of class objectives, agenda, and
duration, along with a certificate of completion. This information is provided at the end of your
handout manual. At your request, your instructor will provide you with a certificate of
completion at the end of this class.
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Training Evaluation
Please take a moment to complete the evaluation.
ADP Course Description
Quarter Processing: Closing the Quarter (34586_4)
Program Content
This course prepares participants to successfully close each quarter. Topics include adjustment payrolls and reconciliation.
Objectives
Upon completing this session, participants will be prepared to do the following:
Describe the types of adjustment payrolls.
Determine how to set up a previous quarter adjustment payroll in ADP Workforce Now Current Version.
Identify considerations unique to submitting previous quarter adjustment payroll entries.
Determine how to reconcile payroll reports with quarterly tax reports and quarterly tax reports with annual tax reports.
Determine how to calculate taxable wages.
Audience
This course is intended for those participants who are responsible for reconciling payroll each quarter.
Prerequisites
None
Advance Preparation
None
Participant Materials
Participants will need to download or print the Quarter Processing: Closing the Quarter handout manual before attending class.
Method of Presentation
Virtual class (VC), Group Internet Based
Duration
1 hour
Continuing Education Credits
This course may be eligible for the following recertification credit hours (RCHs) and continuing professional education (CPE) credits:
RCH: 1.0
CPE: 1.0
Note: ADP is unable to grant formal RCH and CPE credits to a participant logged on to class through a mobile device. For more information, see the Training Policy.
In accordance with the standards of the National Registry of CPE Sponsors, CPE credits have been granted on a 50-minute hour.
ADP, LLC, Employer Services, is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.
In accordance with the American Payroll Association (APA), recertification credit hours (RCHs) apply to Certified Payroll Professional (CPP) and Fundamental Payroll Certification (FPC) credentials.
Recommended Field of Study (NASBA)
Specialized Knowledge and Applications
Cost and Training Policy
For information about course cost, registration, and cancellation policies, refer to the Training Policy.
Learning Records and Privacy Policy
Learner records are available on Learn@ADP within 24 hours after participants complete their training classes. To access learner records, refer to these instructions.
View ADP's Privacy Policy on Learn@ADP.
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