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Payroll Overview

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Payroll Overview Commonwealth Vernacular/Definitions: Agencies: DOA, VRS, DHRM Systems: BES, PMIS, VNAV, CARS, CIPPS, PAT

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

Payroll Overview 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 – human interaction is required

Payroll Overview Importance of Payroll Administration to Agency Fiscal Management • High exposure area of responsibility • Opportunity for fraud when internal controls are not applied • High risk function • Potential for error or fraud • Safeguard of Commonwealth assets

Payroll Overview • 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

Payroll Overview 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 to include disbursement to the receiving entity • Accounting of Payroll and Benefit Expenditures in CARS

Payroll Overview Agency Liability for Non-Compliance with Federal and State Regulations • Penalties for non-compliance • Amounts for under-withholding of Garnishments

Payroll Overview TYPES OF EMPLOYEES �Salaried – Classified/Faculty �Automatic-no pay transaction is required to pay the employee �Paid a predetermined amount �Virginia Personnel Act �The Comptroller of Virginia establishes the pay dates for classified employees . . . more

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

Payroll 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 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 Company Car. . . more

Payroll Overview WITHHOLDINGS FROM PAY • Deductions FFixed Dollar Amounts FPercentages • Based on Net Pay • Based on Gross Pay • Based on the value of a specific special pay or a combination of pays. . . more

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

Payroll Overview WITHHOLDINGS FROM PAY cont. Taxes v State Income Tax (SIT) Virginia and other states v Reciprocal Taxing ( i. e. Maryland) v Local Income Tax Withholding

Payroll Overview WITHHOLDINGS FROM PAY cont. Taxes • • FIT – Federal Income FICA (OASDI plus HI) • OASDI Rate/Limit - 6. 2%, up to the established limit stated on the Social Security Administration website (SSA. GOV) • HI – 1. 45% with no limit

Payroll Overview MANDATORY DEDUCTIONS Retirement – for salaried employees Hybrid Plan: Deferred Compensation of 1% Court Ordered Deductions �Garnishments �Tax Levies �Child/Spousal Support �Bankruptcy �Garnishment Fee

Payroll Overview VOLUNTARY DEDUCTIONS Benefits/Voluntary Deductions �Combined Virginia Campaign �Deferred Compensation/Annuities –Alternative Retirement Contribution Plans �VPEP/VEST-Virginia College Savings Plans �Parking �Flexible Spending Accounts

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

Payroll 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 Overview FRINGE BENEFITS CALCULATED AS AGENCY PAID DEDUCTIONS �Agency paid Health Care �Group Life Insurance �Retiree Credit �Long term Disability Insurance �Cash Match

Payroll Overview MONTHLY RECONCILIATIONS/REVIEWS �Tax Profile/Accumulator Reconciliation �Healthcare Reconciliation �VRS Reconciliation �VEC New Hire Reporting

Payroll Overview QUARTERLY RECONCILIATIONS/REVIEWS �Quarterly Certification to DOA – Control Totals Database � IRS – Form 941 - Required Reporting Reconciliation of Tax Deposits of Wages and Taxes �Unemployment Wage Reporting to VEC

Payroll Overview ANNUAL RECONCILIATIONS/REVIEWS �Annual Certification of taxable wages and taxes withheld for W-2 preparation �Reporting to Department of Taxation �Reporting to Other States

Payroll Overview DOA Responsibilities ü ü ü ü ü Schedules the processing of all payrolls Performs VA State and Federal regulatory reporting Establishes and controls security to CIPPS and Payline Ensures all certified payrolls are processed by the due date Ensures timely response to agency questions and concerns Provides training to agency personnel Provides on-site assistance when justified Develops and coordinates changes to CIPPS Issues Payroll Bulletins and maintains the CAPP Manual

Payroll Overview Agency Responsibilities Ø Provides accurate and timely payments of employees Ø Timely entry into PMIS, BES, VNAV, CIPPS Ø Collects and maintains payroll source documents Ø Authorizes and certifies payroll data Ø Establishes internal controls Ø Ensures separation of duties

Payroll Overview Education: Additional education opportunities are available through other organizations including: The American Payroll Association (APA) http: //www. americanpayroll. org/ Local APA chapters statewide Certifications for FPC and CPP