Year End

Another year is almost gone.  Yes, in the payroll world, we begin our year end planning in the summer, while we still have our sanity.

What does your year end check list look like?  At current, mine is 3 pages long of reminders, technology issues, check boxes and lessons learned from prior years.

If this will be your first year end with your department, or if you just want some free advice, here's a few tips:

Get in good with HR and IT.  They will be your best friends during the YE process.

Understand your payroll platform and your financial accounting system.  If you're fortunate, like me, to have an integrated system, various accruals and reversing entries could be made easier via the integration.  If the two systems are not integrated, make sure you have a strong understanding of what needs to happen from an accounting perspective for year end.

Delegate, delegate and delegate.  Don't tackle year end alone.  Even if you are the manager or supervisor, lean on your team. This gives them ownership and goals.  Put someone in charge of updating your company's intranet page, or have a team member liaise between payroll and HR on benefits.  It's a good way to help junior members gain more exposure, and it can alleviate items off of your plate.

Understand your external due dates, then give yourself and your department some wiggle room.

Taxes - are you in one of the Sixth Circuit jurisdictions where it was ruled that severance payments were FICA exempt?  If so, get on it and process refunds for any 2013 FICA that was withheld from severance.

Communicate and set realistic expectations - make sure everyone understands their role in the YE process.  Follow up, but don't micromanage the hell out of it.  Just make sure the tasks are getting done.

Be strong.  It only happens once a year.

Pay Stubs..ha ha "stubs"

When was the last time you looked at your pay stub?  I'll admit it, I don't typically look.  The most common response I receive when I ask someone "Did you look at your pay stub?" is "No, I'm salaried so I get the same every pay day."  But that's not the point.

Looking at your pay stub (payslip, pay advice) is a great way for employees to better budget their money.  Most employees have no idea if they are taking advantage of various tax savings opportunities.  I had one employee, a younger single gentleman, who opted to choose "married" thinking he would have a greater amount of Federal income tax deducted.

Did you set up a 2nd direct deposit account?  Check your pay stub for validation.  Enrolled in 401(k)?  Is the proper percentage being deducted?  Is it giving you the Federal tax relief you had hoped for?  Check your pay stub.

Looking at your pay stub also allows you the opportunity to see what types of work expenses are being deducted (uniforms and the like).  In some cases, these expenses could be itemized deductions on the employee's tax return.

Payroll is part of a larger process that relies on business partners and the employee to provide accurate information.  So please, if you notice an extra $10,000 in your bank account on pay day, check your pay stub.

401K Loan & LOA

How does your organization handle employee 401(k) loan payments while an employee is on non-military LOA?  I've recently learned how my org does it.  They have the employee mail us the check.  Our payroll team makes an entry within the payroll system, and then the loan payment data is recorded with all of the active employee deferral data on a weekly feed to Vanguard.

Does this seem strange to you?  A 401(k) loan repayment does not impact the W2.  Why is payroll doing this?

My proposal to our pension team includes these two options:

1.  Have the employee make the payment directly to Vanguard.
2.  Have the employee send the payment to them, and they can communicate to Vanguard that a payment was made.

Agree/disagree?

Certification Time!

How are you doing with maintaining your CPP credits?  Truth be told, I have not taken the CPP exam.  Ever.  I've taken plenty of mock exams but have just never taken the CPP.  I want this department to be certified (FPC or CPP) so I need to put my money where my mouth is and set an example.

I've started a review and study process for myself.  I'd like to sit for the CPP next month and I sure hope I can do it.  I've been involved in payroll as either a manager or senior analyst for over 15 years so I sure hope I can nail this.

What have you do to prepare for the exam?  What are some good study habits?

SMEs

Subject Matter Experts

Are you one?  Do you have identified SMEs in your department?  I've just hit the 6 week mark with my new team and it's pretty clear we lack in the SME arena.  There's a handful of people who understand the system very well, but outside of that, we don't have any real expertise.

I feel that this is the norm, however, in Payroll departments.  You will typically find SMEs in the HR field (recruiters, compensation, benefits, pension, etc.).  Why do you think that is?  I feel it all relates back to my first post:  payroll isn't sexy (yet!).

Relocation, state tax and reciprocity, deceased pay, severance, LOA....we have to have intimate knowledge about rules and regs and internal polices in order to execute appropriate payments.  Payroll departments have to have SMEs in order to ensure compliance.

Do you have SMEs in your department?

Processing Blues

Today is the first time with this employer that I "confirmed" or "transmitted" payroll.  It was a HUGE eye opener for me.  Here's what I learned:

1.  There's a LOT of room for interpretation - the documentation or checklist if you will is written for someone who has been performing these tasks for quite some time.  It makes a lot of assumptions.

2.  There's way too many tasks - there are 3 pages of "run this job" or "run this report" or "print and save a copy of this".  Honestly!  The platform we use allows for the automation of many jobs to be scheduled and ran at a specific time.

3.  Terminology - what I call something is not the same thing that a seasoned department member may call it.  We need to all be on the same page with vernacular.

4.  Audits - what audits?  I looked a report that provided data for employees receiving net pays for >$5,000.  What good does that do me?  Nothing.  I had to research each and every employee..and for what?  I could only look at hours and earnings codes and assume that what was passed into the payroll system is accurate.  Talk about risk....

This process has taken me over 2 hours to complete.  For under 6,000 employees and 1 pay group that is not acceptable.  I heard earlier there was a delay due to errors by the processing team.  It sounds like further upstream we have some opportunities as well.  Part of the issue is there are so many damn manual processes with the pilot and flight attendant pay data that it creates so much extra manual work for our group.

Yep...lots of room for improvement.

Internal Control Test

The time has come for me to prepare my team to work on obtaining their professional payroll certifications.  I've considered a pop quiz style FPC mock exam to get things rolling.  My intuition tells me that the majority of the group will not do well.  I have a team of very smart and dedicated employees.  With that stated, they, like many others, view payroll as just a job, not a profession.  I want to change that.

I want to focus this group on internal controls and compliance.  I feel that this will open their eyes to why this profession is so critical to the success of an organization.  So what's the best way to do that?  At a prior organization, a senior analyst asked permission to conduct an experiment.  She submitted a fake garnishment.  She and another employee, along with our director, doctored up a garnishment and mailed it to our office to see if our internal controls would recognize the garnishment as a fake.  Not only did our team not ID the garnishment as a fake, but they set it up for processing, which would have deducted about $1000 from this willing employee's pay check.

This experiment was conducted without my knowledge.  Initially I was embarrassed and even a little mad when I learned about it.  How could the team not spot some signs of this fake garnishment?  No mailing address, sloppy looking letterhead.  Even some of the words were misspelled!

I don't want my quiz or any tests of our controls to embarrass anyone.  But I want to illustrate the need for strong controls as well as a sharp eye for details.

How do you emphasize controls and compliance with your teams?  I'd love to know so please share!