DCAR Newsletter - October 2013

Office of Management and Enterprise Services DCAR Newsletter, Lynne Bajema, State Comptroller; Steve Funck, Deputy State Comptroller; Raymond C. Hanki

Newsletter Archive | Procedures Manual | Forms | State Comptroller

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Don't Forget

Deadline Reminder for Component Units 

Just a reminder that the deadline for submission of financial statements and audit reports is Oct. 31.  Please make sure your auditors are aware of your deadline and complete their work in plenty of time.   


Deadlines for November Payrolls

In planning your work for November, it is important to remember that Veterans Day is Monday, Nov. 11.  Thanksgiving is recognized on Thursday, Nov. 28, and Friday, Nov. 29, is also a state holiday.  November monthly payrolls will be paid on the last working day of the month, Wednesday, Nov. 27. Biweekly payroll for that week will also be paid on Wednesday, Nov. 27.  

With those dates in mind agency staff should plan their work accordingly for the deadlines: 

SUPPLEMENTAL:  PeopleSoft supplemental payrolls will be set to pay on Tues., Nov. 12.  Agencies should have these payrolls processed and paperwork forwarded to OMES by Tues., Nov. 5. 

BIWEEKLY:  State agency biweekly payrolls are scheduled to pay on Fri., Nov. 15.  Agencies should have these payrolls processed and paperwork forwarded to OMES by Fri., Nov. 8.  The next biweekly for state agencies will be Wed. Nov. 27.  Agencies should have these payrolls processed and paperwork forwarded to OMES by Thurs., Nov. 21. 

MONTHLY: Monthly payrolls will be set to pay on Wed. Nov. 27.  Agencies should have these payrolls processed and paperwork forwarded to OMES by Thurs., Nov. 21.

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Payroll Submission Deadlines

This is to serve as a reminder of the deadlines for submitting payroll.  If your agency processes payrolls late, please review your internal processes to correct for future payrolls.  Timing is critical and will be even more so after the implementation of the Bottomline Webseries application by the State Treasurer’s Office (OST). 

OMES has been running the payroll file at 3:30 p.m. daily in anticipation of changes OST will make to send payment files to the bank earlier in the day after migrating to the Bottomline Webseries application. 

OMES policy requires that all payroll transactions and paperwork are filed with OMES FIVE (5) DAYS prior to the actual pay date to ensure adequate time for audit and processing.   Once OMES receives the documents, the reports will be reviewed and the payroll will be released to be picked up by a process that sends the checks and direct deposits to OST for processing. 

Payroll documents must be received by 3 p.m. in order for payroll to be released to the OST file on that day.  If the paperwork is not received by 3 p.m., the payroll will be held until the paperwork is received.  Please adjust agency payroll processing as needed to ensure you meet the 3 p.m. deadline for all payrolls you want processed on a specific day. 

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Taxable Fringe Benefits

As we approach the end of the calendar year, be reminded that the payroll systems have been structured to accommodate the reporting of non-cash, taxable fringe benefits. Of specific concern to state employees, the following benefits should be reviewed to determine if W-2 wage adjustments are necessary:

  • Group Term Life Insurance
  • Employee Use of State Vehicles
  • Maintenance, Car and Housing Allowances
  • Additional non-cash benefits 

Reporting of these benefits is required by state and federal law, and it is the responsibility of the individual agency to ensure compliance. If the item is not run through the payroll system, the employer can deduct the taxes associated with the wage item on a following paycheck, as a miscellaneous deduction.  The State is responsible for timely depositing the taxes. Any taxes associated with items not run through the payroll system will need to be sent to OMES in a timely manner so the tax deposits can be made and the items posted to the employee’s earnings record. 

Under IRS rules, an employer can choose to pay the employee’s share of taxes on group term life, auto fringe, and other non-cash benefits. If the employer pays these taxes without deducting them from the individual, those taxes must be included as wages for federal, state, social security and Medicare wages (boxes 1, 3, 5, and 16). This increase in the employee’s wages is also subject to employee social security and Medicare taxes. This again increases the amount of additional taxes the employer must pay. 

Example: Tom received a non-cash benefit valued at $100.00. The agency decides to pay the employee’s taxes on all non-cash benefits. The employee’s taxes would be $7.65 [(100 * 6.2%) + (100 * 1.45%)]. This amount that the employer is paying for the employee is another benefit to the employee and must be taxed [(7.65 * 6.2%) + (7.65 * 1.45%)] = $0.58. This additional $0.58 is again taxable to the employee [(0.58 * 6.2%) + (0.58 * 1.45%)] = $0.05. Total taxes to the employee are $8.28, for total wages of $108.28. An easier way to calculate, is to “gross up” the benefit. The benefit amount is divided by 92.35% (100% - 6.2% - 1.45%) and the outcome is the gross wages to report. From this amount, the social security and Medicare taxes are calculated. 100.00/92.35% = $108.28 (the taxable wage amount). [(108.28 * 6.2%) + (105.28 * 1.45%)] = $8.28 (taxes). 

Under IRS rules, an employer can also choose to pay the retiree’s share of taxes on group term life insurance or collect them from the retiree. If the agency pays these taxes without deducting them from the individual, those taxes must be included as wages for federal, state, social security, and Medicare wages (boxes 1, 3, 5, and 16). The calculation is the same as the above example. If federal and state withholdings are required, this must also be taken into consideration for the calculations. Please refer to the W-2 instructions and Publication 15A, Employer’s Supplemental Tax Guide for additional information if needed. Also, please refer to OMES Human Capital Management Division rules to determine whether these payments are a valid pay plan for a particular agency.

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Employee Overpayments Collected After Year End

Employee overpayments that are collected in the next calendar year are to be repaid at the gross overpayment amount in accordance with Internal Revenue Service regulations. If an employee owes the agency, please be certain to let the employee know if the amount is not paid in full by Dec. 31, 2013, the amount they owe will increase to the gross amount.

Once the overpayment is identified, the agency must send a notice to the employee within 10 days of the finding.  The employee then has 30 days to respond to this notification. 

In accordance with O. S. Title 74 Section 840-2.19, the agency must send a notice to the employee within 10 days of identifying an overpayment.  The employee then has 30 days to respond to this notification.  Employees have several options for repaying overpaid payroll amounts:

  • reduction of annual leave (for the gross overpaid),
  • reduction of current gross salary (for the gross overpaid) in a lump sum or installments over a term not to exceed the term in which the overpayment(s) occurred,
  • lump-sum cash repayment,
  • miscellaneous payroll deduction (for the net overpaid) in a lump sum or installments over a term not to exceed the term in which the overpayment(s) occurred,
  • any combination of the above options. 

With the calendar year end so close, the collection of any outstanding overpayments is especially important and must be conveyed to employees who owe any monies back to the agency. When an overpayment is paid back in a subsequent year, IRS rules state that the employee must pay back at the gross amount because they had use of the funds in the prior year and as such, they are taxable to that year. Additionally, federal and state wages and taxes cannot be reduced for prior years when repayments are done after the end of that calendar year. 

For example, John Doe was overpaid in Sept. by $1,000.00 regular wages. This was discovered in Oct. and the agency calculated what the correct payroll should have been. The net check difference is $743.50, this is the amount the employee owes the agency if paying back by personal check or miscellaneous deduction in the current year. If the employee does not pay this net amount back by Dec. 31, 2013, the employee owes the agency the full $1,000.00 gross overpayment. 

The applicable W-2, Corrected W-2, or W-2C will only reflect a change in the Social Security and Medicare wages and taxes. Since the employee received and had use of the funds during the year of overpayment, the amount is still taxable for federal and state purposes. The W-2 form will not correct Federal or State taxable wages or income taxes. The employee may be entitled to either a deduction or credit on their current year Form 1040, please advise the employee to speak to their tax accountant.

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Reduction of Annual Leave Hours for Overpayments

When an employee chooses to pay back an overpayment using annual leave, the amount of annual leave reduced should equal the gross amount of overpayment. In the past there have been instances where agencies have incorrectly reduced the annual leave by the net amount of the overpayment.

If an employee pays back an overpayment using terminal leave, an OSF Form 94(P) must be submitted to correct the retirement amounts reported on the check which included the overpayment. Terminal leave is not included in retirement wage calculations; therefore, a payroll earnings adjustment is required.

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State HCM system Use of Addresses on W-2s

In the PeopleSoft HCM system, the W-2 process loads the employee’s mailing address for IRS Form W-2 reporting.  If there is no value in the mailing address field, then the employee’s home address will be used on the W-2.  If there is a value in the mailing address field that is not to be used on the Form W-2, it will need to be updated or inactivated. 

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Employee Direct Deposit Verification

Agencies are reminded that employee bank deposit slips should NOT be used to get the bank routing/transit number for setting up direct deposit information. A voided check from the employee is the most reliable method. If the employee does not have a voided check or wants to deposit into another type of account, have the employee call the bank directly to get the routing/transit number. A bank routing/transit number should never start with the digit “5”. This indicates a branch of the bank and will cause the direct deposit to be returned to the state. 

Errors in processing bank routing/transit numbers can cause significant delays in the employee’s receipt of his or her paycheck. Many banks do not reject bad routing/transit numbers until after the pay date. This means the deposit for the rejected check may not be returned to the state for several days after the pay date. A replacement warrant cannot be reissued until the money is returned to the state.

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Updating Employee Bank Routing Numbers

Several agencies are still receiving the bank routing number report with employees that have not been updated in the state’s HCM system. The report is being distributed to agencies to update employee banking information before the change to the new ACH application. If banking information is not updated before OST goes live with the new application, items with invalid routing numbers will be rejected and not processed to pay.

The new application will validate the submitted information against the latest Federal Reserve Bank routing numbers table and will reject the transaction if the bank routing number is determined to be invalid. If an item is rejected, it will be removed from the file that is processed to the banks and it will not leave OST to be paid and additional processing by the agency will be required to pay the employee(s).

Again, it is imperative that these updates be made now so transactions will continue to process without interruption after migration to the new application.

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Major Vendor Update

During the month of March 2013, World Media Enterprises purchased the Tulsa World newspaper and all related entities doing business as the "Tulsa World." As such, previous CORE state Vendor IDs of 0000072206 and 0000072256 have been inactivated as of Sept. 20, 2013.

Please note and begin to use the new Vendor ID of 0000348928 for any purchasing/PO activity for World Media Enterprises/Tulsa World moving forward.

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Signatures on Travel and Other Vouchers

We are changing our procedures to allow faxes, scans, and pdf files of documents with signatures supporting the expense as long as they are legible.  It has been the long-standing policy of this office to require claim vouchers with original signatures. This has had a big impact primarily on travel vouchers, for example, where employees of agencies with offices housed around the state must either mail or drive their travel vouchers normally to a central office for processing. This could increase both costs to the agency and processing time. This change will also apply to other signatures such as on invoices and even approving officer signatures on such vouchers.

With current technology and the general acceptance of electronic or digital signatures, we believe such a change is supported and the time is here to move forward.  Such a change was recently announced for accepting this new procedure on payroll claims as well.

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Volume 24, Number 4
Fiscal Year-2014
October 10, 2013

In This Issue ...


OFMA Meeting – Oct. 17, 2013

The Oklahoma Financial Managers Association is planning its next quarterly meeting.  Seminars are provided free of charge.  To ensure an adequate number of training materials and refreshments are available, please register at: www.okfma.com

DATE:   Oct. 17, 2013
TIME:    1:30 - 4 p.m.
PLACE:  Business Conference Center Auditorium MetroTech Springlake Campus
1900 Springlake Drive, Oklahoma City, OK 

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AGA CPE Luncheons

The Oklahoma City Chapter of the Association of Governmental Accountants offers one-hour CPE luncheons almost every month throughout the year.  Luncheons are held in the Burk Burnett Board Room at the National Cowboy and Western Heritage Museum, 1700 NE 63rd.  The cost is $15 for members and $20 for non-members.  Mark your calendars for the following CPE events:

Oct. 9th – Retirement Planning; Speaker Brenda Bolander with Retirement Investment Advisors

Nov. 5th – All day CPE event (see subsequent article)

Jan. 15th – The Economics of the Transformation of Oklahoma City; Speaker Mayor Mick Cornett

Feb. 12th – To be announced

Mar. 12th – To be announced

Apr. 16th – Citizen Centric and Performance Reporting; Speaker Mary Peterman, National AGA President

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Preparing for Year-End and 2014

Nov. 1, 2013

Presented by the American Payroll Association
Tulsa, OK

Preparing for Year-End and 2014 brings you up to date on the latest changes in legislation and regulations that affect the close of 2013 and the beginning of 2014. Year-end processing tips, fringe benefit taxation and reporting, implementing new tax laws and regulations. Good for payroll, human resources, systems, accounting and finance professionals responsible for payroll operations and involved in year-end processing.

For more information, please visit the American Payroll website.

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Nov. 5: Fiscal Anatomy of a State or Local Government Program (Class limited to first 50 to register)

State and local government financial managers know that their accounting and financial management systems are unique. But how can the differences be explained to new personnel? Do program managers understand how their activities fit into the big picture? Do auditors of government programs understand the nuances of encumbrances, appropriations and allotments?
This course is designed to highlight the differences in accounting and financial management at the state and local level versus the private sector. The course follows a program from its inception—adoption by appropriation—to budget execution, which includes establishing allotments and allocations, processing personnel and payroll, procuring goods, services and capital, and revenue processing.
The timeline for the program is approximately 24 months—from budget development through the GAAP reporting requirements—even though the actual activity takes place in one fiscal year.

CPE credits: 8

Field of Study: Finance

Format: Lecture, Group Discussion and Class Examples

Cost:  If registration is received by Sept. 30, $220 for AGA members and $270 for non-members

After Sept. 30, $250 for AGA members and $300 for non-members

Location:  National Cowboy and Western Heritage Museum
1700 NE 63rd

To Register:  Contact riley.shaull@trs.ok.gov

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Jennie Pratt, CPA
(405) 521-6160 jennie.pratt@omes.ok.gov

General Ledger:
Dan Thomason, CPA
(405) 522-4992 dan.thomason@omes.ok.gov

Lisa Raihl, CPA
(405) 521-3258 lisa.raihl@omes.ok.gov

Transaction Processing: Steve Wilson
(405) 521-4679 steve.wilson@omes.ok.gov

Payroll Processing:
Elsa Kunnel
(405) 521-6178

AP Manager:
Patricia Garcia, CPA
(405) 522-6855 patricia.garcia@omes.ok.gov

Vendor Maintenance:
Brian White
(405) 522-3093

OMES Service Desk (PeopleSoft questions)
(405) 521-2444 helpdesk@omes.ok.gov

Financial Reporting Unit: Matt Clarkson, CPA
(405) 521-2759 matt.clarkson@omes.ok.gov

Steve Funck, CPA, CGFM
(405) 521-3231 steve.funck@omes.ok.gov

Chris Forster, Director
(405) 521-4619 chris.forster@omes.ok.gov