CIPPS Introductory Payroll Training

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CIPPS Introductory Payroll Training

• Welcome to Introductory Payroll Training !

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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

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Payroll Function OverviewCIPPS System
Overview
CIPPS Introductory Payroll Training
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Payroll Function Overview

• Paying employees
• Management Review/Audit of payroll entries
• Reconciliations
• Adjustments

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Payroll Function Overview

• Preparation of regulatory information
• Processing court ordered withholdings

Money ! Taxes ! Benefits !
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CIPPS Introductory Payroll Training

• Importance of payroll to the agency
• Cost of Personal Services and Fringe Benefits as
  a percent of total agency expenditures
• Gross Payroll/Benefit expenditures average 366
  million per month for the Commonwealth
• Employee morale is affected by payroll
  administration
• Payroll controls and administration go beyond the
  system

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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

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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

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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

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CIPPS Introductory Payroll Training

• Agency Liability for Non-Compliance with Federal
  and State Regulations
• Penalties for late filings
• Federal Income Taxes owed for W-4s improperly
  processed
• Amounts for underwithholding of Garnishments

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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

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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.)
• 
  ...more

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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.

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Payroll Function Overview

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

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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.

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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 employees
  annual salary exceeds 25,000
• The calculation is based on the employees age
  and his annual salary rounded up to the next
  thousand and doubled
• 
  ...more

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Payroll Function Overview

• TYPES OF PAYMENTS AND PAYROLL CALCULATIONS cont.
• Imputed Life cont.
• FICA taxes must be calculated and withheld
• No income taxes are withheld but the amount is
  added to all federal and state compensation for
  the employee at year end on their W-2
• 
  ...more
• 
  

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Payroll Function Overview

• WITHHOLDINGS FROM PAY
• Types of Deduction Calculations
• Fixed Dollar Amounts
• Percentages
• Based on Net Pay
• Based on Gross Pay
• Based on a combination of pays (Regular plus
  Special) ...more

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Payroll Function Overview

• WITHHOLDINGS FROM PAY cont.
• Taxes
• Federal Income Tax (FIT)
• W-4 Form for withholding
• W-4s claiming exempt status
• W-4s claiming more than 10 exemptions
• W-5 for EIC filing
• 
  ...more

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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

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Payroll Function Overview

• WITHHOLDINGS FROM PAY cont.
• Taxes
• Social Security withholding terms
• FICA (OASDI and HI)
• OASDI Rate/Limit - 6.2 up to 90,000
• Medicare only (HI)
• HI Rate/ Limit - 1.45 with no limit
• 
  ...more

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Payroll Function Overview

• MANDATORY DEDUCTIONS
• Types of Court Ordered Deductions
• Garnishments
• Tax Levies
• Child/Spousal Support
• Bankruptcy
• Garnishment Fee

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Payroll Function Overview

• MANDATORY DEDUCTIONS cont.
• Court Ordered Deductions
• Priority of withholding when more than one is
  presented for an employee
• Honoring the garnishment period, i.e., voiding
  the check if distribution has not been made
  
• 
  ...more

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Payroll Function Overview
MANDATORY DEDUCTIONS

• Guaranteed Minimum Net Rule
• Fixed amount or percentage of pay calculation
  options
• Administrative Fees

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Payroll Function Overview

• VOLUNTARY DEDUCTIONS
• Benefits/Voluntary Deductions
• Savings Bonds (Series EE Series I)
• Combined Virginia Campaign
• Supplemental Insurances and Annuities
• Third-Party Administrator
• VPEP-Prepaid Education
• Parking

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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 FSAs

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Payroll Function Overview

• Deferred Compensation and Annuities
• Limit on withholdings for an annual period
• Applicable Tax Exclusion

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Payroll Function Overview

• Healthcare
• Different providers available to State employees
• Applicable Tax Exclusion
• Rates are determined by DHRM
• Direct Deposit
• Direct Deposit of a Fixed Amount or a
• Percentage of Net Pay

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Payroll Function Overview

• FRINGE BENEFITS CALCULATED AS AGENCY PAID
  DEDUCTIONS cont.
• Retirement
• LTD Premium
• Retiree Health Care Credit
• Pays on which retirement is calculated
• Agency paid Healthcare
• Entitlement periods over and above normal
  employment period, i.e., LWOP, COBRA, SDP
• Group Life Insurance
• Types of Pay on which Group Life is calculated

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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

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Payroll Function Overview

• ONE-TIME ADJUSTMENTS TO CURRENT PAY
  WITHHOLDINGS (OVERRIDES)
• Situations that may require a DEDUCTION Override
• an incorrect amount was established in the
  employees permanent record when the deduction
  was set up
• the employee wishes to increase or decrease the
  deduction for one pay period only

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Payroll Function Overview

• ONE-TIME ADJUSTMENTS TO CURRENT PAY
  WITHHOLDINGS (OVERRIDES)
• Situations that may require a TAX override
• An error occurred when establishing the
  employees tax elections, resulting in excess tax
  being withheld
• Excess tax was withheld on a special payment
• Payments that should have been paid as
  non-taxable were taxed when paid, or vice versa

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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

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Payroll Function Overview

• CORRECTIONS FOR PRIOR-PERIOD ERRORS
• Two types 1). Paid and 2). Non-Paid
• Why they are needed
• To correct errors that occurred in a prior pay
  period that may require
• a refund of a tax or deduction
• updating the employees record to
• reflect a payroll transaction that was
• handled outside the payroll system

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Payroll Function Overview

• CORRECTIONS FOR PRIOR-PERIOD ERRORS
• Paid Updates (P/M)
• Refund a deduction withheld in error
• Refund excessive/erroneous taxes - including
  employer portion, where applicable

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Payroll Function Overview

• CORRECTIONS FOR PRIOR-PERIOD ERRORS
• Non-Paid Updates ( / -)
• Record in employees earnings record any item
  that was handled outside the payroll system (such
  as using a petty cash account to handle a payroll
  item)

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Payroll Function Overview

• CORRECTIONS FOR PRIOR-PERIOD ERRORS
• / - Non-Paid Updates
• Record in employees earnings record any item
  that was handled outside the payroll system (such
  as using a petty cash account to handle a payroll
  item)
• / - Non-Paid Updates
• Transfer dollars paid as one type of pay that
  should have been another (i.e., paid as regular
  - should have been paid as workers compensation)

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Payroll Function Overview

• REVIEW OF EDIT REPORTS
• Certain 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

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Payroll Function Overview

• Review of Pay Period Reports
• Payments causing employees to appear on an
  excessive payment report
• Reconcile
• Payroll Expenditures to CARS
• Deduction Reports and Report 10
• Items identified by comparison of payroll data to
  DHRMs records (personnel data)
• New Employee Report to VEC (for Social Services
  Division of Child Support Enforcement)

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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 TREASURERS OFFICE

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Payroll Function Overview

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

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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)

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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

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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

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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

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Payroll Function Overview

• RECORDS RETENTION
• Source Documents Include
• Time Cards/Sheets
• (FLSA requires 4 years retention)
• Tax Forms
• Personnel Authorizations (P-3s)
• All Documentation for Payroll Changes
• NOTE Most regulations require retention for 5
  years, or until audited, whichever is later.

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Payroll Function Overview

• RECORDS RETENTION
• AUDIT REPORTS
• Payroll and Deduction Registers
• Reconciliations
• Tax Deposit Information

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CIPPS System Overview

• CIPPS MASTERFILES
• Employee
• Tax
• Data Entry File
• Pending

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CIPPS System Overview

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

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CIPPS System Overview

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

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CIPPS System Overview

• EMPLOYEE MASTERFILE
• HOURS WORKED
• Regular Hours
• Overtime Hours
• Shift Hours
• Special Pay Hours
• TYPES OF DEDUCTIONS
• Health care
• Savings Bonds
• Parking

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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)

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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
• DATA ENTRY FILE
• Current Pay Transactions
• Hours/Dollars - Overtime
• Special Payments - Overrides

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CIPPS System Overview

• BATCH TRANSACTIONS
• Represent actions to be taken for one pay period
  only
• Receive limited editing when entered -
• Edits for valid employee number only
• - No online edits for
• Overtime eligibility
• Employment Status
• Pay type valid for company use

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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
• Batch totals for hours and pay amounts
• Errors not detected during entry of transactions
• Correction of errors, request another edit or
  proceed to payroll processing

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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

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Pay Cycle Overview Agency
DOA Third Parties

Produces Edit Reports
Receive Reports Interface Tapes FAD
Deposits Microfiche Tape
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 Microfiche
Sends Warrants to Treasury Sends Reports to Agency
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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

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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
• Maintains the CAPP Manual

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CIPPS System Overview

• Agency Responsibilities
• Provides accurate and timely payments of
  employees
• Collects and submits payroll documents for
  regular, overtime, shift differential, etc.
• Authorizes and certifies payroll data
• Establishes proper telecommunication equipment,
  lines
• and internal security
  ...more

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CIPPS System Overview

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

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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)
• Systems Tax Service (STS)
• Virginia Retirement System (VRS)
• Department of Social Services (DSS)