Whenever possible the following duties should be segregated. Anytime duties cannot be adequately segregated, you should contact State Accounting who will assist you with developing procedures that are acceptable for good internal controls.

Ø Agency time keeper - should only be entering time; should not have access to process payroll.

Ø Agency payroll clerk – when payroll clerks enter time sheets and process payroll an agency payroll supervisor must review the work. Accurately reporting employee’s time is the responsibility of the approving supervisor. Accurate recording of the time sheets in NIS is the responsibility of the agency payroll clerk.

Ø Agency payroll supervisor - responsible for reviewing payroll entries to ensure information is entered correctly. They should always review the time records for anyone who has access to enter, change, or update a payroll function.

Ø Agency payroll certifier - responsible for reviewing payroll entries to ensure the data entered is reasonable for their agency. This person should always review the records for anyone who has access to change, update or process payroll. The Payroll Certifier should have NIS Payroll access in order to review payroll data on-line, but they should not have access to change or update payroll records or to process payroll.

Ø Agency accounting person – responsible for reconciling the payroll to the general ledger (see instructions for reconciling). After the Payroll Certifier has certified the payroll to State Accounting, they will forward the Payroll Register Report which was used for certification, to the agency accounting person. The accounting person conducting this reconciliation should not have access to update or change payroll, or be the Payroll Certifier.

REVIEW PAYROLL MESSAGES

Payroll Certifiers should review the payroll message screen to ensure that all errors or potential problems have been resolved. This review should be conducted EVERY TIME the payroll is processed and the appropriate corrections or adjustments should be made before certifying your payroll. Usually the agency payroll clerk or agency payroll supervisor will have corrected these issues but it is the responsibility of the Certifier to verify the messages have been resolved. If the Payroll Certifier finds a message that needs resolution, he should contact the Payroll Supervisor.

Path: Payroll>Payroll Processing>Time Maintenance>Pay Cycle Workbench

Remove your ID from the User ID field

In QBE line for Payroll ID enter your agency number followed by an asterisk (*)

Click on Find

JE1

Highlight the Payroll ID

Go to Row>Pre-payroll>Review Messages

Payroll Messages

Below is a list of the most common errors that appear on the message screen:

· Autopay Timecard in Error: Check to make sure the employee’s standard hours worked and that they have the correct pay. Generally this error does not lead to any pay problems.

· Employee has Gross-to-Net Error: This error MUST be fixed before proceeding with payroll process. It occurs when the employee’s gross wages minus the taxes and deductions did not equal the net wages.

· EE Deduction Not Taken: Employee has insufficient gross pay to cover all of the deductions. Certain deductions MUST be paid (i.e. health, dental, etc.). Check to see whether deductions can be made up next payroll or whether employee must write a check to cover the deductions.

· EE Wage Attach Reduced by Rule: Do not need to worry about this. It indicates the gross pay wasn’t enough to cover garnishments, liens or child support. State Accounting is responsible for these items.

· Terminated Employee Paid: This indicates that there is an employee on the payroll with a pay status of 9. In most cases this is okay, but you should check the employee anyway to ensure they are not being paid for wages they are not eligible for.

· Job Does Not Qualify: Indicates that the pay start date is after the pay period ending date or the pay stop date is before the beginning of the pay period. This generally shows for new hires but also shows for a terminated employee that was reactivated for some reason. If the employee is supposed to receive wages on the payroll, you will have to correct the pay start/stop dates in order to pay them.

· Hours: When entered in excess or less than the number entered in the Pay On Standard Hours field, the message will appear warning of the problem. This is not a critical error but one that needs to be reviewed to ensure accuracy and correctness.

EMPLOYEES LISTED ARE EMPLOYEES OF THE AGENCY

This step requires the agency to have procedures in place ensuring that all employees being paid are current employees of the agency and be able to identify fictitious employees. The best way to accomplish this is to review the Payroll Register Report employee by employee. For large agencies this may be a task that the certifying person may receive help with from other employees. The key is to get two or three independent people involved. There must be a clear separation of duties – which means the people assisting with the review should not have access to make changes or process payroll. For large agencies, we understand the final certifying person may not be familiar with all employees. However a cursory review for reasonableness must be undertaken. During the certification process, the certifier should have a reasonable expectation of how many employees should be paid, the number of working hours for their agency, and the expected dollar amount of the payroll. (See also Hours/Gross Pay and Variance Spreadsheet)

The Agency should have a procedure documented and followed whereby upper Payroll Management does a face-to-face with randomly selected employees on a regular basis.

THE NUMBER OF HOURS AND GROSS PAY IS REASONABLE

The Payroll Certifier should review the hours worked and the gross pay for each employee to determine that they are reasonable. This can be done by reviewing the Payroll Register and looking at the total hours and gross pay for each employee. Please see Understanding the Payroll Register Report for instructions on how to find this information.

Large Agencies

For large agencies that have hundreds of employees, there are three tools which will assist in verifying the number of hours and gross pay: the Payroll Register Report (use the pages which lists total hours/gross pay by Home Business Unit), the Variance Spreadsheet and the Payroll Totals Report. In addition to reviewing staff that have access to change or update payroll, the Payroll Certifier should randomly select an appropriate number of employees and review the time entered for those employees. These randomly selected employees should be different employees each pay period.

Example of how to randomly select employees

An agency with 800 employees may determine to review 10 randomly selected employees each pay period. If the Payroll Register report is 400 pages long the Payroll Certifier should look at one employee on every 40^th page (that is one employee on page 40, one on page 80, one on page 120, etc.) to determine if the employee’s total hours are reasonable. This review should be documented with a tic mark and the initials of the Certifier. For the following pay period, to ensure a random selection of employees that are different from the last pay period, the Payroll Certifier can begin on page 3 and then select every 40^th page (page 43, page 83, page 123, etc.) For the next pay period the Payroll Certifier can begin the random selection on page 7.

Using the Payroll Totals Report: If the report is 50 pages long, the Payroll Certifier should look at one employee on every fifth page. Choose a random number, such as 13, and then review every 13^th employee on every fifth page (page 5, 10, 15, 20, etc.). For the following pay period, to ensure a random selection of employees that will be different from the last pay period, The Payroll Certifier should choose another random number, such as 9, and begin the review on page 4 (review the 9^th employee listed on page 4, 9, 14, 19, etc.). The Certifier should use a tic mark to identify the employee selected, and also initial and date the report.

If an Agency chooses to review the pdf report instead of printing out a hard copy, a spreadsheet should be created that the Payroll Certifier may initial to show this review was completed with an explanation of how the review was conducted.

The procedure used by each Agency to randomly select employees for review should be documented and is subject to review and approval by State Accounting.

PAYROLL JOURNAL ENTRY IS IN BALANCE

This procedure should be done by payroll clerks and payroll supervisors, but it is the responsibility of the Payroll Certifier to verify the Journal Entry is in balance before certifying the agency payroll. IF THE DEBITS AND CREDITS DO NOT BALANCE, THE PAYROLL CERTIFIER WILL BE CONTACTED BY STATE ACCOUNTING.

If the JE is not in balance (debits and credit columns must be the same number) or if the dates are not correct, contact the Agency payroll supervisor to have the payroll reset.

Path: Payroll>Payroll Processing>Time Maintenance>Pay Cycle Workbench

Remove your ID from the User ID field

In QBE line for Payroll ID enter your agency number followed by an asterisk (*)

Click on Find

JE1

Highlight the Payroll ID

Go to Row>Journal Entries>Journal Review>Journal Summary

JE2

Scroll to the bottom and verify the Debits and Credits are in balance

The GL date must be the same as the pay date (check date)

JE3

On the QBE line, in the field named Reference 2 enter AW* (must be caps) and click on Find

Debits and Credits must be in balance.

JE4

VERIFY GROSS PAY and NET PAY

The payroll certifier is required to verify the gross pay and the net pay on the payroll register agree to the amounts in the Journal Entry created in NIS. If either of these two amounts do not agree the cause must be determined and corrected before payroll is certified. Contact State Accounting if you need assistance in resolving the issue.

The two amounts that need to be reviewed are on the last page of the Agency’s payroll register and are shown in the screen shot below in the red boxes.

Review these two amounts on the payroll register to ensure they agree to the journal entry in NIS.

NOTE: If you are conducting your review in the order identified in the Payroll Certification Manual, you will be in the correct screen (Pay Cycle Workbench - Work With Compressed Payroll Journals) to conduct this next step. You will not need to Close your current window and follow the path shown below. You may skip down to the next section that begins “Enter T1 on the QBE line”.

Path: Payroll>Payroll Processing>Time Maintenance>Pay Cycle Workbench

Remove your ID from the User ID field

In QBE line for Payroll ID enter your agency number followed by an asterisk (*)

Click on Find

Highlight the Payroll ID

Go to Row>Journal Entries>Journal Review>Journal Summary

Enter T1 on the QBE line for Document Type

Click Find

Scroll to the bottom

To verify the Net Pay, review the credit amount for BU 99994.110501 (Payroll EFT)

and BU 99994.110500 (Payroll Warrants)

Verify the amount agrees to the amount on the payroll register

Enter T2 in the QBE field for Document type

Click Find

Scroll to the bottom

To verify the Gross Pay, review the credit amount for BU 76550.211390 (accrued wages)

Verify the amount agrees to the amount on the payroll register

NOTE: if the agency does not have many lines of coding, you may not need to put the T1 and T2 in the QBE line. You may be able to scroll to the bottom of the screen and find the amounts to verify. Be sure that you are verifying the amounts associated with the Business Units shown above.

USING THE PAYROLL REGISTER – R073012

The payroll register is the keystone of reports generated during payroll processing and must be used in validating payroll. The report is built in three sections –individual information, Home Business Unit (HBU) summaries and a grand totals page at the end.

The first section, by individual, provides a summary of the hours, pay rate, gross pay, deductions, taxes, total hours worked for period, as well as vacation and sick leave accrual information. There is also information regarding the warrant / auto deposit process and the check routing information. The section is used primarily by the payroll clerk during payroll setup and processing as a proof for information entered for the employee.

Payroll Regfirst.bmp

Section two, the summary by HBU, provides the same information as section one but on a summary basis for each home business unit. This section is used as a cursory summary for the payroll clerk but may be used more often by the accounting department or the Payroll Certifier. From this page, the Certifier can check the total number of employees being paid in the cycle and for reasonableness of the total number of hours and wages paid to the employees of this HBU.

Payroll Reg.bmp

The third section, found on the last page of the report, is the Grand Totals page. It provides the grand totals for every individual paid in the period, for every HBU addressed in the process, tax information and deductions. This page is used to balance the entire process and is a good reference point for the individual certifying the payroll. From this page, the certifier can check the total number of employees being paid in the cycle and for reasonableness of the total number of hours and wages paid to the employees of the agency.

Payroll Reg2.bmp

USING THE PAYROLL JOURNAL PROOF/EDIT REPORT - R05229

This report is designed to check for errors in the journal entries made while processing payroll.

To check for problems or issues in the report, open a PDF of the report. In the search box, type the word “error” and press enter. If errors exist, the search will stop at each location where the word “error” appears in the document. These errors are normally corrected by the agency payroll clerk, but it is the responsibility of the Payroll Certifier to ensure all errors have been resolved before certifying agency payroll. If a Payroll Certifier finds an error on the report, they should contact the agency payroll supervisor.

Errors usually occur when the Home Business Unit.Object code is set up incorrectly or not at all. Another cause for errors is the incorrect journal date entered or the Auto deposit date (start of deposits) listed in the future. This error would appear as an out of balance condition.

Payroll Journal Proof.bmp

USING THE PAYROLL EXCEPTION REPORT – R053191

The payroll exception report displays any exceptions to the normal payroll entry process. It encompasses problems with hours worked (greater or less than the established levels), overtime paid, wages paid (hours or wages greater than or less than the established levels), or any other areas where amounts exceed or are grossly less than established levels. These entries are informational in nature but should be reviewed for reasonableness before payroll is certified.

Payroll Exception.bmp

USING THE PAYROLL TOTALS REPORT – R581214

The Payroll Totals Report will assist Payroll Certifiers in conducting a review of employee hours and gross pay. This report runs automatically when pre-payroll is processed. To review the report, Payroll Certifiers should scan down the columns for Hours and Gross Pay. This will quickly allow the Certifier to determine if the hours and gross pay shown is reasonable for the employee.

This report can also be used by the Payroll Certifier to randomly select employees for verification of total hours and gross pay. (Please refer to section on NUMBER OF HOURS AND GROSS PAY IS REASONABLE).

HOW TO USE THE VARIANCE SPREADSHEET TOOL

This spreadsheet is usually completed by the agency payroll clerk or the agency payroll supervisor and forwarded to the agency payroll certifier for review. Entering the correct data in this spreadsheet can assist agencies in determining if their payroll is reasonable.



The information for this analysis is drawn from the payroll register for each pay cycle. This speadsheet should be saved for each pay cycle. When conducting the analysis information (highlighted below) for a new pay period, be sure to delete the old information and resave the spreadsheet with a new name.



Column B (Total # of Employees) and column C (Total Payroll Amount) come from the grand totals page of the Payroll Register Report.
Report.	(See example)

Columns D through I come from the summary by home business unit pages(s) of the Payroll Register Report.									(See Example)


Payroll Variance Analysis
Pay Cycle	Total # of Employees	Total Payroll Amount							Sum total of BU's Equals Total Payroll Amount
			Business Units
			99110001	99000003	99000006	99000004	99000005	99000000
B-1	81	$ 96,917.97	$ 3,649.88	$ 13,757.02	$ 3,239.29	$ 61,443.92	$ 12,932.90	$ 1,894.96	$ 96,917.97
B-2	80	$ 109,557.48	$ 3,649.88	$ 13,555.52	$ 2,259.92	$ 75,340.25	$ 12,856.94	$ 1,894.97	$ 109,557.48
B-3	81	$ 102,440.74	$ 3,649.88	$ 13,755.02	$ 2,749.59	$ 67,548.15	$ 12,843.13	$ 1,894.97	$ 102,440.74
B-4	90	$ 97,710.68	$ 3,649.88	$ 13,306.61	$ 2,769.13	$ 59,354.77	$ 12,931.26	$ 1,894.97	$ 93,906.62
B-5	81	$ 92,368.21	$ 3,821.82	$ 13,300.02	$ 2,814.85	$ 57,463.24	$ 13,073.32	$ 1,894.96	$ 92,368.21
B-6	83	$ 105,399.37	$ 3,942.17	$ 16,144.88		$ 71,345.42	$ 12,101.92	$ 1,894.98	$ 105,429.37
				A	A	B	C

A	Combined 2 employees from 99000006 with 99000003					$ 2,844.86
B	Overtime expense for storm clean up + 2 new employees					$ 13,882.18
C	Employee on LWOP					$ 971.40

	Number of employees = Total Check control number from payroll register						Yes / No