Pearsons Comprehensive Medical Assisting Administrative and Clinical Competencies

Pearson's Comprehensive Medical Assisting Administrative and Clinical Competencies THIRD EDITION CHAPTER 19 Banking and Practice Finances Lesson 2: Bank Statements and Payroll Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Lesson Objectives Upon completion of this lesson, students should be able to: 1. Define and spell the terms to learn for this chapter. 2. List and discuss the steps for reconciling a bank statement. Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Purpose of a statement from the bank is to confirm amount of funds in each account • Bank statement can identify errors that may have been made by office bookkeeping system or by bank • Monthly bank statement includes all transactions that have been processed Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Lists checks that have been processed and paid out to medical practice's creditors by bank, deposits, and fees charged by bank against the account Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Bank statements include: § Account number § Average daily balance and minimum balance § Tax ID number § Beginning balance § Deposit history Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Bank statements include: § § Interest/credits Checks and debits Service charges Ending balance Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

FIGURE 19 -9 A typical bank statement. Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Reconciliation § Comparing the data on bank statements with records maintained in medical office § Purpose is to match account activity and totals against medical office records to identify and correct errors Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Reconciliation § Bank statements reconciled as soon as they are received § Errors should be corrected immediately Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Critical Thinking Question 1. Does it really matter that much if a bank statement is reconciled or not? 2. Explain your answer! Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Reconciliation § Person who opens and reconciles bank statement should be someone other than the person who prepares the checks and makes the deposits § This is internal control that helps prevent embezzlement of funds § Savings account statements reconciled like checking accounts Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Reconciliation § For interest-bearing accounts, interest earned usually based on average daily balance § Interest credited or service fees charged to the account recorded in checking account register before beginning reconciliation Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Reconciliation § Bank statement lists processed checks numerical order § Checks listed in nonconsecutive order may be indicated with an asterisk (*) Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Computerized Reconciliation § Access menu option for bank statement reconciliation § Key in ending balance shown on bank statement § Computer screen displays list of deposits, cleared checks, and fees Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Bank Statements • Computerized Reconciliation § Check off each item on screen that matches an item on bank statement § Computer highlights any discrepancies on the screen that you need to fix § When done, computer displays message that account is balanced Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Generally largest category of AP expenses in medical office • Preparing payroll requires: § Calculating worked hours, wages, deductions for entire staff § Printing and distributing checks § Sending monies withheld to appropriate places Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Payroll may or may not include physician • Payroll checks generally issued weekly, bi-weekly, or monthly • Physician determines type of pay period to be used • All employees paid at the same time Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Fair Labor Standards Act (FLSA) § Federal law that regulates work conditions and pay § Most states also have labor regulations Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Fair Labor Standards Act (FLSA) § FLSA classifies employees as exempt or non-exempt from earning overtime pay for hours worked in excess of 40 hours per week § Classification determined by pay rate, pay method, and the type of job Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Fair Labor Standards Act (FLSA) § Most employees non-exempt and must be paid for overtime hours § Exempt employees must: • Earn at least $455 per week ($23, 660 per year) • Be paid by salary • Perform certain types of high-level administrative, executive, or professional job duties Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Fair Labor Standards Act (FLSA) § Definition of a workweek for purpose of calculating overtime determined by employer § Does not have to be Sunday - Saturday § Overtime pay rate 1. 5 times normal pay rate Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Fair Labor Standards Act (FLSA) § Hourly employees paid a specific amount for each hour worked, plus overtime pay § Do not earn wages for any time they are not at work, unless employer has made provision for paid time off (PTO) Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Fair Labor Standards Act (FLSA) § Salaried employees receive predetermined amount of money every pay period that is not dependent on number of hours worked within pay period § Unless salaried employee is classified as nonexempt, he or she is not entitled to overtime Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Outsourced Payroll § Many offices contract with outside payroll company to relieve the office of time-consuming and detailed record keeping § Basic services: calculating payroll and tax obligations, printing and distributing checks, and producing reports Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Outsourced Payroll § Additional services: direct deposit, payroll tax filing, issuing W-2 forms, 401(k) deductions, and tracking of employee benefits § Most payroll services guarantee accuracy of their work and defend the company and pay tax penalties if any discrepancies or errors are found Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

FIGURE 19 -11 Benefits of outsourced payroll. Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Payroll Software § Software packages available that are used to calculate payroll and tax withholdings and print payroll checks § Each employee has an account within the software in which wage information and tax exemptions are stored § Tax rate schedules updated each year Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Manual Payroll § Small offices may choose to keep payroll manually, performing all calculations with a calculator and handwriting checks § Accurate records needed for documentation of gross income, tax withholding, and each check issued for all employees Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Manual Payroll § Write-it-once pegboard system is efficient method of doing manual payroll Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Deductions § Employee's payroll check determined by first calculating gross wage § Then subtracting required and voluntary deductions, which produces net pay (take-home pay) § Deductions are money withheld from employee's paycheck for taxes, health and life insurance premiums, and other benefits Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

FIGURE 19 -13 Gross pay calculation. Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Required Deductions § Withholding is deduction of federal, state, and city taxes from gross wages § Employer pays tax amount withheld to the government on behalf of employee § When employees file their annual tax returns, amount withheld during year is deducted from amount owed at tax time Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Required Deductions § Amount of gross pay § Social Security number of employee § Number of exemptions of each employee § Deductions for federal, state, and city taxes and Social Security Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Required Deductions § State disability insurance and unemployment tax, where applicable § Any pretax deductions, such as 401(k) contributions Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Required Deductions § Federal government mandates employers to withhold and report: federal income tax, Social Security [Federal Insurance Contribution Act (FICA)], Medicare § Federal income taxes based on percentage of employee's total gross income Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Required Deductions § To determine amount of money to be withheld from each paycheck, employees must complete a W-4 form when hired Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Required Deductions § Federal Employer's Tax Guide provides tables to determine amount of withholding built into computerized payroll programs § Federal income tax rates vary from 10 percent to nearly 40 percent of gross wages, based on a person's total income Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Required Deductions § Percentages for Social Security and Medicare taxes are the same for everyone, up to a certain income level § Half deducted from employee's check and half paid by employer Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Required Deductions § Individual states may also have payroll withholding requirements for income tax, worker's compensation, unemployment tax, short-term disability insurance for employees Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

FIGURE 19 -16 Example FICA and Medicare deductions. Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Voluntary Deductions § Deductions not required by government but requested by employee for fringe benefits • Premiums for health, life, and disability insurances • Pension plan contributions • Union dues Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Voluntary Deductions § After processing payroll, employer forwards money withheld to appropriate vendors who provide various services Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Deposit Requirements § Employers must pay federal tax money withheld from employee paychecks at end of each period or month § Internal Revenue Service (IRS) imposes severe penalty for failure to deposit this money § Employers must also pay federal unemployment taxes and estimated income taxes on the business itself Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Deposit Requirements § If employer fails to remit tax payments as required, responsibility remains with employer § Government does not hold employees responsible for amounts deducted by employer but not submitted Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Deposit Requirements § Every employer must contribute to unemployment taxes as mandated under the Federal Unemployment Tax Act (FUTA) § FUTA is sole responsibility of employer Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Deposit Requirements § Based on employee's gross income but must not be deducted from the employee's wage § FUTA deposits calculated quarterly Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Deposit Requirements § All states have unemployment compensation laws, generally referred to as State Unemployment Tax Act (SUTA) § Most states require only employer to make payments toward this fund § A few states require both employer and employee to make a payment Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Year-End Reporting § W-2 form is federally required tax report • Employee's annual gross income • Federal (income, Medicare, Social Security), state, and local taxes withheld • Taxable fringe benefits, such as tips • Employee's net income for the year Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Payroll • Year-End Reporting § W-2 forms for the preceding calendar year must be delivered by January 31 § W-2 forms generally prepared by person or company that prepares payroll checks Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly

Questions? Pearson's Comprehensive Medical Assisting: Copyright © 2015, 2011 by Pearson Education, Inc. Administrative and Clinical Competencies, 3/e All Rights Reserved Beaman | Routh | Papazian-Boyce | Sesser | Mills | Maly