CIPPS Introductory Payroll Training Welcome to Introductory Payroll

CIPPS Introductory Payroll Training Welcome to Introductory Payroll Training !

CIPPS 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

CIPPS Introductory Payroll Training Payroll Function Overview CIPPS System Overview

Payroll Function Overview n Paying employees n Management Review/Audit of payroll entries n Reconciliations n Adjustments n Preparation of regulatory information n Processing court ordered withholdings

CIPPS Introductory Payroll Training 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 payroll administration • Payroll controls and administration go beyond the system

CIPPS Introductory Payroll Training Importance of Payroll Administration to Agency Fiscal Management • High exposure area of responsibility • Opportunity for fraud, unauthorized entry into CIPPS • High risk function • Potential for error • Safeguard of assets

CIPPS Introductory Payroll Training • Agency Fiscal Management must be the controlling party to ensure the accuracy of payroll and payroll related expenditures. • Management Review, Establishment of Policy, and Adherence to Procedures are integral controls outside of the system • Payroll Administration goes beyond payroll processing. Paying employees is only one facet of the responsibilities of Payroll Administration

CIPPS Introductory Payroll Training Payroll Administration is comprised of several facets of responsibilities • Compliance with Federal and State Tax laws and Regulatory reporting • Compliance with Federal Labor Law for FLSA and Wage and Hour Laws • Administration of Benefits for employees (Retirement, Healthcare, Group Life and Leave) • Accounting of Payroll and Benefit Expenditures in CARS

CIPPS Introductory Payroll Training Agency Liability for Non-Compliance with Federal and State Regulations • Penalties for late filings • Federal Income Taxes owed for W-4’s improperly processed • Amounts for under-withholding of Garnishments

Payroll Function Overview TYPES OF EMPLOYEES n Salaried - Classified/Faculty – Automatic-no pay transaction is required to pay the employee – Paid a predetermined amount – Virginia Personnel Act – Paid at the end of each current pay period if semimonthly, and at the end of the month if monthly. . . more

Payroll Function Overview TYPES OF EMPLOYEES cont. n Salaried - Classified/Faculty F Payment for faculty extends over the length of the contract 9, 10, 11, or 12 months and may be paid on a monthly or semi-monthly basis F Entitled to receive state provided benefits (i. e. , healthcare, retirement, etc. ) NOTE: State Employment Date may affect benefits the employee receives. . more

Payroll Function Overview TYPES OF EMPLOYEES cont. n Hourly - Wage-Non Automatic – Pay transaction is required 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.

Payroll Function Overview TYPES OF PAYMENTS AND PAYROLL CALCULATIONS FSalary payments FWage payments FOvertime payments (FLSA impact) FShift Differential payments. . . more

Payroll Function Overview TYPES OF PAYMENTS AND PAYROLL CALCULATIONS cont. FSpecial Pays for Supplemental Payments Any additional money to be paid to an employee: • Moving/Relocation, • Workers Compensation, • Disability Benefits, • Leave Payouts, etc.

Payroll Function Overview TYPES OF PAYMENTS AND PAYROLL CALCULATIONS cont. FSpecial • • • Pays for Fringe Benefits Imputed Life - Considered a benefit by the Federal government if a “salaried” employee’s annual salary exceeds $25, 000 Telecommunications – Cell Phones, Internet Company Car. . . more

Payroll Function Overview WITHHOLDINGS FROM PAY • Deductions FFixed Dollar Amounts FPercentages • Based on Net Pay • Based on Gross Pay • Based on a combination of pays (Regular plus Special). . . more

Payroll Function Overview WITHHOLDINGS FROM PAY cont. Taxes FFederal • • • Income Tax (FIT) W-4 Form for withholding W-4’s claiming exempt status Supplemental Tax. . . more

Payroll Function Overview WITHHOLDINGS FROM PAY cont. Taxes >State Income Tax (SIT) Virginia and other states • VA-4 Form for withholding >Reciprocal Taxing ( i. e. Maryland) • Local Income Tax Withholding. . . more

Payroll Function Overview WITHHOLDINGS FROM PAY cont. Taxes FSocial Security withholding terms: • FICA (OASDI and HI) • OASDI Rate/Limit - 4. 2% (6. 2% for prior years) up to the established limit stated on the Social Security Administration website (SSA. GOV) • Medicare only (HI) • HI Rate/ Limit - 1. 45% with no limit

Payroll Function Overview MANDATORY DEDUCTIONS Retirement – for salaried employees Court Ordered Deductions » Garnishments » Tax Levies » Child/Spousal Support » Bankruptcy » Garnishment Fee

Payroll Function Overview VOLUNTARY DEDUCTIONS Benefits/Voluntary Deductions – Combined Virginia Campaign – Supplemental Insurances and Annuities – Third-Party Administrator – VPEP-Prepaid Education – Parking – Agency Specific Deductions

Payroll Function Overview Flex Spending Accounts F Limits for Dependent Care and Medical Reimbursement F Reporting on W-2 at year end F Applicable Tax Deferrals F Administrative Fees associated with FSA’s

Payroll Function Overview Deferred Compensation and Annuities § § Limit on withholdings for an annual period Applicable Tax Exclusion from FIT and SIT

Payroll Function Overview Healthcare Ÿ Different providers available to State employees Ÿ Applicable Tax Exclusion Ÿ Rates are determined by DHRM Direct Deposit- Required – Direct Deposit of a Fixed Amount or a – Percentage of Net Pay

Payroll Function Overview FRINGE BENEFITS CALCULATED AS AGENCY PAID DEDUCTIONS » Agency paid Healthcare » Group Life Insurance » Retiree Credit » Long term Disability Insurance

Payroll Function Overview ONE-TIME ADJUSTMENTS TO CURRENT PAY & WITHHOLDINGS (OVERRIDES) May be used to make a one-time adjustment: ÜTo increase/decrease/stop a deduction for the current pay period ÜTo increase/decrease/stop certain income taxes for the current pay period ÜTo correct an error in compensation that occurred in a previous pay period ÜTo pre-pay certain deductions, due to LWOP, other than 12 -months paid, or to satisfy any “balance due”

Payroll Function Overview 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 - without written authorization ¨ Reduce taxes or deductions because the employee is “short of funds” this pay period

Payroll Function Overview Masterfile Corrections Two types: 1). Paid and 2). Non-Paid Why they are needed: » Correct transactions that occurred in a prior pay period. » Update employees masterfile record for transactions that occurred outside the payroll system.

Payroll Function Overview REVIEW OF EDIT REPORTS Accuracy of 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 –

Payroll Function Overview Review of Pay Period Reports Reconcile: Report 59 for “excessive payment” n Payroll Expenditures to CARS n Deduction Reports and Report 10 n Items identified by comparison of payroll data to DHRM’s records (personnel data) n New Employee Report to VEC (for Social Services’ Division of Child Support Enforcement) n

Payroll Function Overview Other Period Responsibilities -Payments to Third-Parties -Void Check Processing -“Special” interim payments – Provide agency management with overview of all current payroll/verification items NOTE: Stop Payments for Lost or Stolen Checks MUST BE PROCESSED BY THE TREASURER’S OFFICE

Payroll Function Overview MONTHLY RECONCILIATIONS/REVIEWS üTaxable Wages and Taxes Withheld üFringe Benefits VRS - Retirement/Group Life/ Long Term Disability » Healthcare » üExpenditures to CARS

Payroll Function Overview 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)

Payroll Function Overview ANNUAL RECONCILIATIONS/REVIEWS n All routine quarter reporting requirements apply to the 4 th quarter n Annual Certification of taxable wages and taxes withheld for W-2 preparation n Reporting to Department of Taxation n VEC Reporting n Remittance of all Required Tax/Other Forms. Reciprocal State withholdings

Payroll Function Overview RECORDS RETENTION Mandates Issued By: Department of Labor - Wage & Hour Div Fair Labor Standards Act (FLSA) Internal Revenue Service (IRS) Internet address-IRS. GOV Circular E Other Applicable Publications

Payroll Function Overview RECORDS RETENTION - cont. Mandates Issued By: Auditor of Public Accounts Department of Accounts Commonwealth Accounting Policies and Procedures Manual (CAPP), Section 21005 Recommended Retention Schedule Individual Agencies

Payroll Function Overview RECORDS RETENTION Source Documents Include: Time Cards/Sheets (FLSA requires 4 years retention) – Tax Forms – Personnel Authorizations – All Documentation for Payroll Changes NOTE: Most regulations require retention for 5 years, or until audited, whichever is later. –

Payroll Function Overview RECORDS RETENTION – AUDIT REPORTS ØPayroll and Deduction Registers ØReconciliations ØTax Deposit Information

CIPPS System Overview CIPPS MASTERFILES » Employee » Tax » Data Entry File » Pending

CIPPS System Overview CIPPS MASTERFILES EMPLOYEE: – Official Employee Payroll Record – Biographical Information – Rate of Pay and Pay Entitlements – Standard Deductions – Federal Tax Elections

CIPPS System Overview EMPLOYEE MASTERFILE Types of Pay (Report 10 information): Regular Overtime Shift Differential Special Payments Imputed Life VSDP Benefit GROSS PAY

CIPPS System Overview EMPLOYEE MASTERFILE HOURS WORKED » Regular Hours » Overtime Hours » Shift Hours » Special Pay Hours TYPES OF DEDUCTIONS: » Health care » Parking

CIPPS System Overview TAX MASTERFILE State Tax Elections – Taxable Wage Accumulations – » » – Federal Taxable and Non-Taxable Wages FICA Taxable Wages State Unemployment Wages Tax Accumulations » » » Federal Income Tax (FIT) Social Security Tax (OASDI)/Medicare Tax (HI) State Income Tax (SIT)

CIPPS System Overview PENDING FILE » » » Holding file for valid pay transactions awaiting execution into pay Based on date of transaction and frequency in which employee is paid Screens H 1 K 01, H 1 K 02, H 1 K 03 DATA ENTRY FILE » Current Pay Transactions – Hours/Dollars – Special Payments - Overtime - Overrides

CIPPS System Overview BATCH TRANSACTIONS » Similar transactions group together in a batch » Represent actions to be taken for one pay period only » Receive limited editing when entered » May be deleted through overnight editing

CIPPS System Overview EDIT PROCESSING AND CERTIFICATION When all batch transactions have been entered, request edit reports for the group(s) of employees being paid » Edit Reports received next business day » Reviewed for accuracy » Corrections/Data Entry » Ready for Certification

CIPPS System Overview 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 Agency Keys Data Requests Edit Corrects Errors Certifies Payroll Receives: Reports Checks DOA Third Parties Produces Edit Reports Processes Payroll Computes Fringes Produces: Reports Warrants Creates: Agency Files History Files Performs: Reconciliations Receive: Reports Interface Tapes FAD Deposits Dept of Treasury: Signs Warrants Releases Checks to Agencies Sends Warrants to Treasury Sends Reports to Agency

CIPPS System Overview DOA Responsibilities n Schedules the processing of all payrolls n Follows guidelines regarding State, Federal, and FICA taxing n Establishes and controls security to the system n Performs CIPPS/PMIS audit n Ensures all certified payrolls are processed by the due date. . . more

CIPPS System Overview n Ensures timely response to agency questions and concerns n Provides technical training to agency personnel n Provides on-site assistance when justified n Maintains agency level data regarding deductions, special payments, shift differentials, and reports n Develops and coordinates changes to CIPPS, issues Payroll Bulletins n Maintains the CAPP Manual

CIPPS System Overview Agency Responsibilities n Provides accurate and timely payments of employees n Timely entry into PMIS, BES, CIPPS n Collects and submits payroll documents for regular, overtime, shift differential, etc. n Authorizes and certifies payroll data n Establishes proper telecommunication equipment, lines and internal security. . . more

CIPPS System Overview n Retains source documents, reports and other records n Verifies and updates employee masterfile changes n Ensures separation of payroll functions n Reviews and verifies the Gross Pay Limit Exceeded Report (CIPPS Report 59) n Ensures timely submission of all mandated regulatory reporting

CIPPS System Overview 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)

CIPPS System Overview Now, let’s go take a look at CIPPS: CAPP TOPIC 50110, CIPPS NAVIGATION n Log in n Navigation n Log out