CIPPS Introductory Payroll Training

1. CIPPS Introductory Payroll Training Welcome to Introductory Payroll Training !

2. 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

3. CIPPS Introductory Payroll Training Payroll Function OverviewCIPPS System Overview

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

5. 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

6. 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

7. 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

8. 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

9. 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

10. Payroll Function Overview TYPES OF EMPLOYEES • 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 semi-monthly, and at the end of the month if monthly ...more

11. Payroll Function Overview 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 be paid on a monthly or semi-monthly basis • Entitled to receive state provided benefits (i.e., healthcare, retirement, etc.) NOTE: State Employment Date may affect benefits the employee receives. ...more

12. Payroll Function 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.

13. Payroll Function Overview TYPES OF PAYMENTS AND PAYROLL CALCULATIONS • Salary payments • Wage payments • Overtime payments (FLSA impact) • Shift Differential payments ...more

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

15. Payroll Function Overview TYPES OF PAYMENTS AND PAYROLL CALCULATIONS cont. • Special 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

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

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

18. 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

19. Payroll Function Overview WITHHOLDINGS FROM PAY cont. Taxes • Social 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 ...more

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

21. 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

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

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

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

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

26. 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 current pay period • To increase/decrease/stop certain income taxes for the current pay period • To correct an error in compensation that occurred in a previous pay period • To pre-pay certain deductions, due to LWOP, other than 12-months paid, or to satisfy any “balance due”

27. 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

28. 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.

29. 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

30. Payroll Function Overview Review of Pay Period Reports Reconcile: • Report 59 for “excessive payment” • 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 Child Support Enforcement)

31. 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

32. Payroll Function Overview MONTHLY RECONCILIATIONS/REVIEWS • Taxable Wages and Taxes Withheld • Fringe Benefits • VRS - Retirement/Group Life/ Long Term Disability • Healthcare • Expenditures to CARS

33. 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)

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

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

36. 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

37. 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.

38. Payroll Function Overview RECORDS RETENTION • AUDIT REPORTS • Payroll and Deduction Registers • Reconciliations • Tax Deposit Information

39. CIPPS System Overview CIPPS MASTERFILES • Employee • Tax • Data Entry File • Pending

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

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

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

43. CIPPS System Overview 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)

44. 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 H1K01, H1K02, H1K03 DATA ENTRY FILE • Current Pay Transactions • Hours/Dollars - Overtime • Special Payments - Overrides

45. 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

46. 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

47. 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

48. Pay Cycle OverviewAgencyDOAThird Parties Produces Edit Reports Receive: Reports Interface Tapes FAD Deposits Keys Data Requests Edit Processes Payroll Computes Fringes Produces: Reports Warrants Creates: Agency Files History Files Performs: Reconciliations Corrects Errors Dept of Treasury: Signs Warrants Releases Checks to Agencies Certifies Payroll Receives: Reports Checks Sends Warrants to Treasury Sends Reports to Agency

49. CIPPS System Overview • DOA Responsibilities • Schedules 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

50. CIPPS System Overview • 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, special payments, shift differentials, and reports • Develops and coordinates changes to CIPPS, issues Payroll Bulletins • Maintains the CAPP Manual