PPMS User Group May 29, 2009Lynn Melton

PPMS and FMS(one of these things just doesn’t belong)

Straight from the Department of the Obvious:

PPMS processes payrollFMS processes financial data

Both need to balance

Straight from the Department of Confusion:

The FOCUS: PPMS Employee account and W2 focused FMS General Ledger and Financial Statement focused

The PROCESSING: PPMS Only on Cut-Off (generally 4 times a month) FMS When Batches are released (every workday)

The ACCOUNTING: PPMS None (not even in the vocabulary) FMS All (even those pesky Transaction Codes)

The MECHANISM: PPMS Social Security Number’s FMS Transaction Codes

Straight from the Department of International

Vocabulary:

PPMS FMS

Test Payroll’s/Cut-Off’s BatchesDeduction, Reduction & Contribution Rev/Exp, Assets/Liab, FBBalances 5 Grosses Balances GL’sEarn Types Revenue CodesIRS John Ginther

Reach out….and Touch your

Neighbor

PPMS It’s a Small World after all

FMSHaven’t figured this one out yet

Those {PESKY} Payroll BatchesTransferring the $’s (..show me the

Money!)

Central Bank Account

Transaction Codes (3 different purposes)

Payroll Batches (2 bonus batches)

Payroll Clearing Account

Payroll Cut Off

Central Payroll Account (US Bank)

Central Payroll Account (US Bank)

1. Total Local Funds for the payroll are transferred from the college’s bank account to the central payroll bank account on the check date.

2. The total State Funds for the payroll are manually EFT’ed from the State Treasurer into the central payroll account (the person reconciling the payroll initiates this process). At this point in time, 100% of the dollars to cover the payroll are in the central payroll account.

3. Total Vendor Payments (Total Gross Payroll Amount + Employer Costs - Total Net Pay) are deposited back into the college’s bank account (effective on the check date + 1 banking date).

Vendor Checks & EFT Vendor Payments

Central Payroll Bank Account

030College’s

Bank Account

030College’s

Bank Account

010 thru 290State Funds

(from State Treasurer)

010 thru 290State Funds

(from State Treasurer)

020College’s

Bank Account

020College’s

Bank Account010College’s

Bank Account

010College’s

Bank Account

030College’s

Bank Account

030College’s

Bank Account020College’s

Bank Account

020College’s

Bank Account010College’s

Bank Account

010College’s

Bank Account

From PS1245

DEPOSIT INFORMATION:

1. TOTAL STATE FUNDS DEPOSITED TO PAYROLL ACCOUNT - ON CHECK DATE..... 616,410.64 #2 2. TOTAL LOCAL FUNDS DEPOSTIED TO PAYROLL ACCOUNT - ON CHECK DATE..... 399,467.98 #1 3. TOTAL ALL FUNDS DEPOSITED TO PAYROLL ACCOUNT.......................................... 1,015,878.62

TOTAL NET PAY............................................ 590,804.02 LESS HANDDRAWN CHECKS.................... 1,574.12 PLUS OVERPAYMENTS.............................. 0.00 ADJUSTED TOTAL NET PAY....................... 589,229.90

4. LESS ADJUSTED TOTAL NET PAY WRITTEN............................................................... 589,229.90

5. TOTAL FUNDS DEPOSITED TO DISTRICTS ACCOUNT - CHECK DATE + 1 BANK DAY 426,648.72 #3

6. DISTRICT CASH NET EFFECT (5 - 2)............................................................................. 27,180.74

From PS1425

VENDOR TOTAL 2,028.99

DATE TOTAL 153,936.55

PAYMENT TOTAL 182,953.04

DISTRICT TOTAL 426,648.72 #3

Payroll Banking: OverviewDollars are transferred into the Central (or System) Payroll Account

from the State Treasurer and each colleges local bank account.

The total gross payroll and related costs are calculated between “State” and “Local” funds based on PPMS.

The “State” portion is manually transferred from the State Treasurer and the “Local” portion is automatically withdrawn from each colleges account.

These transfers into the Central (or System) Payroll Account are effective on the payroll check date to cover 100% of the payroll costs.

The difference between the total gross payroll and related costs and the net pay written is calculated (by college). This portion is EFT’d back to each college to cover their vendor payment liability of employee deductions and employer cost liabilities.

This EFT back to the college occurs on the 1st banking day after payday.

Payroll Transaction Codes (TC) ....what exactly are they

accomplishing?The TC’s generated from payroll can be

categorized into 3 major areas:

1) Recording the transferring of monies between the System Payroll Account and each colleges local bank account for the disbursement of employee net pay and payroll related vendor payments.

2) The expensing of employee gross pay and employer benefit costs to the colleges budget accounts.

3) Recording each colleges vendor liability/expense of monies collected for each of the various types of liabilities associated with a payroll.

Payroll TC’s ….where do they come

from?FMS transaction codes are identified from either

the PPMS Institution Parameter Table or those contained on the Deduction Code Table.

The FMS transaction codes to record the transferring of monies between bank accounts (EFT’s) and expensing employee costs are contained on the PPMS Institution Parameter Table

The FMS transaction codes to record the payroll vendor liabilities/expenses are contained on the PPMS Deduction Code Table for each payroll deduction to be processed.

FMS Payroll Transaction Codes ….from the PPMS Institution Parameter Table

# TC Dr Cr Description

302 002 6510 1110 record EE gross pay/ER cost expense for non-accrued payroll

303 802 6505 5124 record EE gross pay/ER cost expense for

an accrued payroll304 804 5124 6505 reverse EE gross pay/ER cost accrual

6510 1110 and expense

305 040 1150 1110 bank deposit/withdrawal307 805 1319 1110 record central payroll account treasury funds308 801 1110 5111 record transfers to/from prepaid account309 800 1110 5199 record EFT deposits/withdrawals310 807 5124 1110 record liability at year end (13th/25th month)311 894 0120 0998 record staff months expense

Payroll Batches …and two bonus Batches to finish

the job.

Payroll Batches:06 – Payroll07 – Accrued Payroll08 – 13/25th Month (Year End) Accrued Payroll09 – Payroll EFT’s

Bonus Batches:01 – Pooled Cash51 – Vender Payments (checks only)

Payroll Clearing Account ….790-300-

1B99The transferring of monies between the central

payroll bank account and each colleges local bank account requires an account code to monitor these transfers.

The withdrawal of local funds to the central payroll account and deposit back of the total vendor liability is made from/to this account

The amount transferred back is 100% of the college vendor payment liability and is then immediately transferred to each individual vendor account by payroll deduction code.

Process Payroll on Cut-off(as determined by SBCTC-IT)

In any given month, there are 4 opportunities to run a payroll:A – paid on 25th

B – paid on 10th (accrued)H – paid on 15th

M – paid on last working day of month

In July, there are 2 “bonus” opportunities to run payroll:S – paid on 10th (accrued)1 – paid on 10th (not accrued)

Central Bank Account

Transaction Codes (3 different purposes)

Payroll Batches (2 bonus batches)

Payroll Clearing Account

Payroll Cut Off

(Simplified) Payroll Processing

Employee Name & Personal Info get input into PPMSW2 produced after calendar year end (January)

Budget Code input into PPMSTotal Gross & Employer Costs are charged in

FMS

Misc Deductions & Taxes calculated in PPMSVendor payments/taxes recorded and paid in FMS

The Aftermath:In just short 2 days….the magic

appears in FMS

The multiple payroll batches (to include Batch 01) post to FMS, recording the payroll expenditures and liabilities.

On payday, 2 days after the FMS posting date, the cash is transferred from the various sources (State Treasurer and all the colleges local accounts) to the System Payroll Account

Batch 51 is posted one banking day after payday.

Payroll: The GOOD

The A, H & M Payrolls and their associated Batches:

Batch 01 – Pooled Cash

Batch 06 – Payroll

Batch 09 – EFT Payroll

Batch 51 – Vender Payments by Check

The Good: A, H and M Payrolls (cont):

Batch 01 – Pooled CashBatch 51 – Vendor Check Payments

Batch 06 - Payroll: 002 (6510/1110*) – Record Employee Gross Pay/Employer Cost Expense

(not accrued) 800R (5199/1110) – Record EFT withdrawals to System Payroll Account 801 (1110/5111) – Record transfer of cash & vendor liability 812 (1110/5181) – Records transfer of cash & Health liability

Batch 09 – EFT Payroll: 040 (1150/1151) – Record bank deposit 040R (1151/1150) – Record bank withdrawal 800 (1110/5199) – Record EFT from System Payroll Account & vendor

payment 800R (5199/1110) – Record EFT to System Payroll Account & vendor

liability 800 (1110/5199) – Record EFT from System Payroll Account & vendor

payment

*4310 if State Fund is used

The Good: A, H and M Payrolls (cont):

Batch 01 – Pooled CashBatch 51 – Vendor Check Payments

Batch 06 - Payroll: 002 (6510/1110*) – Record Employee Gross Pay/Employer Cost

Expense (not accrued)

801 (1110/5111) – Record transfer of cash & vendor liability 812 (1110/5181) – Records transfer of cash & Health liability

Batch 09 – EFT Payroll:

*4310 if State Fund is used

800R (5199/1110) – Record EFT withdrawals to System Payroll Account

800 (1110/5199) – Record EFT from System Payroll Account & vendor payment

040 (1150/1151) – Record bank deposit040R (1151/1150) – Record bank withdrawal

800R (5199/1110) – Record EFT to System Payroll Account & vendor liability800 (1110/5199) – Record EFT from System Payroll Account & vendor payment

Payroll: The BAD

The B Payroll and the associated Batches:

Batch 01 – Pooled Cash

Batch 06 – Payroll

Batch 07 – Accrued Payroll

Batch 09 – EFT Payroll

Batch 51 – Vendor Payments by Check

The Bad: B Payroll (cont):

Batch 01 – Pooled CashBatch 51 – Vendor Check Payments

Batch 06 - Payroll: 804 (5124/1110; 6510/6505) – Record reversal of Employee Gross Pay/Employer

Cost Accrual & Expense (accrued)

800R (5199/1110) – Record EFT withdrawals to System Payroll Account 801 (1110/5111) – Record transfer of cash & vendor liability 812 (1110/5181) – Records transfer of cash & health liability

Batch 07 – Accrued Payroll: 802 (6505/5124) – Record Employee Gross Pay/Employer Cost Expense (accrued)

Batch 09 – EFT Payroll: 040 (1150/1151) – Record bank deposit 040R (1151/1150) – Record bank withdrawal 800 (1110/5199) – Record EFT from System Payroll Account & vendor payment 800R (5199/1110) – Record EFT to System Payroll Account & vendor liability 800 (1110/5199) – Record EFT from System Payroll Account & vendor payment

Payroll: The UGLY

The 06B & 06S Payrolls and the associated Batches:

Batch 01 – Pooled Cash

Batch 06 – Payroll

Batch 07 – Accrued Payroll

Batch 08 – 13th/25th Month (Year End) Accrued Payroll

Batch 09 – EFT Payroll

Batch 51 – Vendor Payments by Check

The Ugly: 06B and 06S Payrolls

(cont):Batch 01 – Pooled CashBatch 51 – Vendor Check Payments

Batch 06 - Payroll: 800R (5199/1110) – Record EFT withdrawals to System Payroll Account 801 (1110/5111) – Record transfer of cash & vendor liability 812 (1110/5181) – Records transfer of cash & health liability

Batch 07 – Accrued Payroll: 802 (6505/5124) – Record Employee Gross Pay/Employer Cost Expense (accrued)

Batch 08 – 13th/25th Month Accrued Payroll: 807 (5124/1110) – Record Employee Gross Pay/Employer Cost Expense (accrued) 804 (5124/1110; 6510/6505) – Reverse employee Gross Pay/Employer Cost Accrual

& Expense (accrued)

Batch 09 – EFT Payroll: 040 (1150/1151) – Record bank deposit 040R (1151/1150) – Record bank withdrawal 800 (1110/5199) – Record EFT from System Payroll Account & vendor payment 800R (5199/1110) – Record EFT to System Payroll Account & vendor liability 800 (1110/5199) – Record EFT from System Payroll Account & vendor payment

It’s all in the GL’s(…where creative accounting is not part of the

strategy.)

Balancing Fund 790 ….but

why?What is Fund 790?

A revolving account that identifies the funds held for future disbursement of taxes, vendor payments and other (payroll related) accounts within the college. An increase in the fund occurs when an EFT is received in the

colleges local bank account from the central bank account (day after payday).

A decrease in the fund occurs when the vendor payments are made.

Why does it need reconciling?There are depositsThere are withdrawalsThere are adjustments (hand draws & overpayments)

…need I say more?

Balancing Fund 790 ….what do we

need?FMS Reports

GA1335 – Program/Organizational Trial Balance (month end)

GA1409A – General Ledger Trial Balance (month end)

BM3105 – Pending Payment Report

PPMS ReportsPS1245 – Payroll Expense EFT SummaryPS1425 – Vendor Payment Liability ReportPS1410 – Payroll Reconciliation Report

Balancing the General Ledger in Fund 790

GL’s affected by Payroll that need monitoring:

1110 – Cash1312 – Current Accounts Receivable1399 – Payroll Handwrites5111 – Accounts Payable5124 – Accrued Salaries Payable5181 – Employee Insurance Deduction Payable5188 – Savings Bond Deduction5189 – Garnishment Deduction5191 – Customer Deposits5199 – Accrued Liabilities6505/6510 – Accrued/Cash Expenditures/Expenses

(should be zero)

Now that I have what they say I need, ….what do I

do?Compare FMS reporting:

Using the GA1335 and the GA1409A or GA1332… Add up all the amounts for a single GL and verify the total equals the GL on the

GA1409A or GA1332 Why? Because this verifies that you’ve identified all the amounts that equal

the month end balance in the GL. Identify the account codes that payment has not been made yet

Why? Because these are not “out of balance”, they are simply timing issues that will {hopefully} balance upon the next payment (quarter end, court notice, invoice, etc).

It is preferable that even though these are timing issues, to review the balances and to verify that the current amounts are correct using the Vendor Payment Reports.

Identify the account codes that payment has been made Why? Because these are your potential problem GL’s . If the account code balance is zero - Congratulations….and good luck next

month. If they’re not in balance - let the research begin! Start with your payroll

person and show them the amount the account is out of balance. The amount might be a familiar amount that would save you time in your balancing.

Now that I have what they say I need,….what do I do?

(cont)

Compare PPMS reporting: Using the PS1425 and PS1410, verify the following:

“Transfer to Vendor Payables” on 1410 agrees to “Vendor Payment Liability” on 1425

Using the PS1410, compare: “EFT Deposit to District Clearing Account” to “Transfer to Vendor

Payables” – the difference, if any, will be an adjustment (hand drawn or overpayment)

Compare the FMS reports to the PPMS reports Verify using the PS1425 & BM3105 that the vendors and amounts

agree. Notice the timing of payments to when the reports are printed….are

you really “out of balance” or are you simply waiting for a due date to pay (timing).

Life with Handdrawns & Overpayments

(…ridding your system of those Klingons)

What exactly is happening… …..and what should I be

looking for

Handdrawns & Overpayments are considered adjustments in both PPMS & FMS.

Things to keep in mind when balancing:The Central Bank Account holds all the net

amounts until EFT’d or cashed.The colleges local account holds all the vendor

payments until paid.

Handdrawn ChecksReasons an employee could be issued a handdrawn

check: (always follow college policy)

Was not paid on regular PPMS cut-off and should have been.

Sent to incorrect address.Check was lost/misplaced/stolen/used as a bookmark.Check was mutilated by:

Dog/Cat/Bird/Guinea Pig Shredder Washing machine Spilled perfume, bleach, coffee or that evenings dinner Child with stapler or Crayola markers Tires (drove over check through mud puddle causing it to

rip)

Handdrawn checks put simply…..A handdrawn check is drawn on the colleges local

bank account (that’s why handdrawn checks should not be “canceled” in PPMS – they should be “reversed”).

A handdrawn input into PPMS is basically recording the liability that the payroll bank account has incurred – it owes the college those funds (the net amount).

When PPMS processes a payroll on cut-off, the college becomes another vendor, using deduction code (200), and the net pay transferred to the central bank account is decreased by the net pay of the handdrawn – because the college (the vendor) is due those funds.

The adjustmentWhen the hand drawn check is written and issued

through FMS, the check should be recorded in FMS using the payroll account code assigned to the hand drawn check deduction code in PPMS (200).

The hand drawn check written on the colleges local bank account, when posted in FMS, will not charge the employee’s budget code. This will not occur until PPMS enters the hand drawn check and is posted to FMS (2 days after cut-off). The system will use the deduction code table to charge the appropriate account code in FMS.

The entry must be input into PPMS as this affects the 5 Grosses payroll tracks as well as the year end W2.

These two adjustments should net to zero and thus leave a zero balance in the account.

When there are Klingons

Go back to the originating documents and compare:Test payroll/manual calculations to arrive at Net

PayA19 given to FMS to produce hand drawn check

Verify that the amounts were input correctly:PPMS has correct Gross and Net Pay and includes

all deductions/reductions/contributions related to hand drawn.

PPMS has correctly input this transaction.FMS has produced a check for Net Pay.

OverpaymentsWhen a college should receive a personal

check from an employee:

Overpayment: Unable to recover employee’s auto deposit LWOP was not recorded prior to cut-off Contract was canceled and payroll was not notified

prior to cut-off An employee’s contract and/or hours got put on a

different employee’s pay screen.

Overpayments put simply…..Note: Only the net amount is collected for an

overpayment.

An overpayment is an amount that the college is collecting from the employee to pay back the central bank account.

An overpayment input into PPMS is basically recording the liability that the colleges local bank account has incurred – it owes the central bank account those funds (the net amount).

When PPMS processes a payroll on cut-off, the college, in a sense, becomes a “middle man” and the net pay transferred to the central bank account is increased by the net pay of the overpayment.

The adjustmentWhen the overpayment is received by the college, the

increase in cash should be recorded in FMS using the colleges payroll clearing account found in the institutional parameters (1015).

The overpayment that is deposited to the colleges local bank account, when posted in FMS, will not adjust the employee’s budget account. This will not occur until PPMS enters the overpayment and is posted to FMS (2 days after cut-off). The system will use the institutional parameter account code to charge the appropriate account code in FMS.

The entry must be input into PPMS as this affects the 5 Grosses payroll tracks as well as the year end W2.

These two adjustments should net to zero and thus leave a zero balance in the account.

When there are Klingons

Go back to the originating documents and compare:Test payroll/manual calculations to arrive at Net PayLetter given to employee requesting reimbursement

Verify that the amounts were input correctly:PPMS has correct Gross and Net Pay and includes all

deductions/reductions/contributions related to overpayment.

PPMS has correctly input this transaction.FMS has input the overpayment in the correct account

code (payroll clearing account).

…that’s all folks!