CAR Newsletter - September 2016

Newsletter Archive | Statewide Accounting Manual | Forms | State Comptroller


October Columbus Day Federal Holiday

In planning your work for October, it is important to remember that Columbus Day is Monday, Oct. 10. Although not a state holiday, Columbus Day is a federal/bank holiday. As a reminder, all payrolls and documents must be received five business (5) days prior to the actual pay date to ensure adequate time for audit and processing. Adherence to this policy will ensure payrolls are processed to pay timely.

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Reduction-in-Force (RIF) and Voluntary Buyout (VOBO) Payments

The earnings codes listed below are setup in the HCM system to properly process payments made to employees under a RIF or VOBO. Please contact Enterprise Business Services (CORE) if your agency needs additional earnings codes.

VBO – VOBO/RIF RBA Amounts - 18-month cost of health insurance (for employee only amount)

SEV – Severance – lump sum payment up to $5,000

RLO - Longevity (RIF, Retire) – prorated longevity amount for those individuals who are retiring and are leaving under a RIF or VOBO. Because they are retiring, the prorated amount is subject to retirement contributions.

LNS - Longevity Severance – longevity amount for those individuals not retiring and leaving under a RIF or VOBO. Additionally, used for the remaining amount a retiring individual is receiving above the prorated amount subject to retirement.

NOTE: Only the prorated longevity (RLO) amounts for those employees retiring are subject to retirement wage reporting and contributions. Please be sure to use the correct earnings codes for employees to receive their retirement credit. If an incorrect earnings code is used and later discovered, the agency could be responsible for paying both the employee and employer shares along with any potentially lost earnings to the retirement system.

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SoonerSave Contributions and Eligible Compensation

As a reminder to agencies, certain types of earnings are eligible for deferral to SoonerSave while others are not considered eligible compensation.

Annual leave payout is generally eligible for SoonerSave deferral on termination of employment.  However, payments on severance from employment do not qualify as compensation for SoonerSave deferrals.  Therefore, payments under voluntary buyouts (VOBO) and reductions in force (RIF) would be excluded from deferral consideration.

Only compensation from an agency that is attributable to services performed for the agency may be considered as earnings from which SoonerSave deferrals can be taken.  This would include regular pay, overtime, shift differential and other similar payments based on employment.  If an amount would have been paid had the employment continued, such as annual leave, then deferrals can be taken.  

Please advise employees that changes in deferral amounts must be submitted to the SoonerSave Administrator and approved before processing through payroll.  For additional information, agency personnel should contact their SoonerSave Coordinator or the SoonerSave Administrative office at 1-800-733-9008 or 405-858-6781.

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Taxable Fringe Benefits

As we approach the end of the calendar year, be reminded that the payroll system has 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 in the current year, the employer can deduct the taxes associated with the wage item on a following paycheck in the next year, 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 x 6.2%) + (100 x 1.45%)]. This amount that the employer is paying for the employee is another benefit to the employee and must be taxed [(7.65 x 6.2%) + (7.65 x 1.45%)] = $0.58. This additional $0.58 is again taxable to the employee [(0.58 x 6.2%) + (0.58 x 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 x 6.2%) + (105.28 x 1.45%)] = $8.28 (taxes).

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, 2016, the amount they owe will increase to the gross amount.

In accordance with 74 O.S. § 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 made after the end of that calendar year.

For example, John Doe was overpaid in August by $1,000.00 regular wages. This was discovered in September and the agency calculated what the correct payroll should have been. The net check difference is $743.50; 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, 2016, the employee owes the agency the full $1,000.00 gross overpayment.

If the employee pays the gross amount back after year end, 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, and should be advised 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 OMES Form 94P must be submitted to correct the retirement amounts reported on the check that included the overpayment. Terminal leave is not included in retirement wage calculations; therefore, a payroll earnings adjustment is required.

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OMES Form 94P, Request for Overpayment Refund - Updated

The OMES Form 94P has been updated and is available on the OMES website. The updated form, revised 7/15/2016, contains new fields for reporting the Pathfinder retirement plan. The instructions have been updated as well.  Please be sure to use the new form on all overpayment refund requests.

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CFDA number – When does it need to be used?

There are reports in the State Accounting System that relate to federal program reporting.  These reports can be found within the navigation for General Ledger reports – General Ledger > General Reports.  These reports can be very useful when reporting federal expenditures for the Single Audit Report.  However, they are only useful if agencies are properly including the CFDA number on their transactions. 

                SEFA Expenditures
                SEFA Revenue Report
                SEFA Transactions Report

The CFDA numbers established by the US Office of Management and Budget are five-digit numbers in the format of two digits for the federal granting agency followed by a period then three digits assigned to the program (XX.XXX). For example, CFDA number 10.555 is assigned to a program administered by the US Department of Agriculture.  The specific program is the National School Lunch Program. 

In the State Accounting System, the CFDA number is a nine digit field using primarily numeric data.  The first five digits correlate to the federal CFDA number without the period ‘.’, and the last four are for state agency use (XXXXXXXXX).  Some agencies use the last four digits to designate whether the expenditure is part of the federal share or the state matching share.  If the last four digits are not specifically assigned, they are filled in with zeros.

If you receive a grant for which the CFDA number does not exist in the State Accounting System, you can submit a case through the OMES service desk to have it added to the system.  If you want to use the last four digits for further breakdown, be sure to include that in your request.  For example:

                105550001 – Nat’l School Lunch - Program Costs
                105550008 – Nat’l School Lunch – Admin Costs

The State Accounting System allows a voucher to process with a valid CFDA number. Although the CFDA field is not a required field in the State Accounting System, the federal CFDA number should be included for tracking and reporting purposes. The CFDA number can be set up in the purchase order or the voucher can be populated with the CFDA number if the purchase order does not contain it. This procedure allows the processing of the voucher without having to submit a change order to add or correct the CFDA number on the purchase order when ready to pay the voucher.

In addition to using the CFDA number on the disbursements, deposits of federal funds should also include the CFDA number.

So the simple answer to the initial question is that you should use the CFDA number anytime you are receipting or expending funds related to federal grants or programs.

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ASA and Clearing Account Reconciliation Forms

Effective immediately, agencies should submit their Forms 11 and 11a electronically.  The completed and signed forms, with the required backup, should be sent to the Central Accounting and Reporting group using the following email.  Hard copy submissions are no longer required and forms should not be submitted using a facsimile machine (FAX).

A single PDF file should be submitted for each account and the file should include the required supplementary reports or information.  Optional backup detail can be included as well.  Multiple files can be attached to a single email submission.  The file name should follow a specific naming convention to allow for electronic filing and sorting.  The appropriate naming convention contains the following elements:  five-digit agency number; class funding number; month and year (spaces are allowed in the file name).  Examples of naming conventions are shown below.

09000 79901 Aug 2017
09000 8090B Sep 2017

If you have any questions, contact Vivian Day at

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Properly Completing the OMES Form EWC

When submitting an OMES Form EWC - Electronic Warrant (Payment) Cancellation, to cancel EFT payments, be sure to complete all sections. This includes Section 3 - Reason for the Requested Action, with the appropriate information.  

Also, we have revised the EWC form to remove the Debit Reversal option since it is not utilized for AP and Payroll EFTs. (Pages 1 and 2 of the EWC Form are revised)

EWC Form Update

Please refer to the following for selecting the appropriate boxes for Section 3:

Select the type of correction:

1)  Stop Payment/Deletion
2)  Credit Reversal

Select the status of the Receiver (reason for cancellation)

a.   Reversal of a duplicate entry
b.   Unintended receiver of original entry
c.    Incorrect dollar amount of original entry

3)  Reclaim

NOTE: Under the DCAR Forms, see the revised EWC form and the EWC instructions for descriptions of the type of corrections, if needed.

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Beware of Fraudulent Payment Requests!

Fraud attempts are increasingly targeting individuals within businesses, government agencies and educational institutions to influence their behavior. State agencies must be vigilant as they perform procedures to verify requests for money movement (wire or ACH). Payment industry experts say there has been a 91% year over year increase in the number of targeted phishing attacks recorded globally. Many of these attacks are in the form of email spoofing. Never initiate a payment or money transfer based solely on email or telephone instructions, even from trusted sources. Validate by calling the individual or entity requesting the payment at their known telephone number. Never call a number provided via an email or popup message. Always validate the sender’s email address and hover over the email address and/or hit reply and carefully examine the characters in the email address to ensure they match the exact spelling of the company domain and the correct spelling of the individual’s name. Never give any banking or other confidential information to an unexpected or unknown caller.

The Office of the State Treasurer (OST) has processes in place to validate payment requests received from state agencies, but the success of these processes depend on agency personnel properly validating payments before they are submitted to OST for processing. If there are any questions related to electronic payments, payment requests or OST processes please contact Diedra O’Neil at

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Same-Day ACH Payments

On Sept. 23, 2016, an amendment to the NACHA Operating Rules will become effective enabling same-day ACH payments. This amendment will provide the option to financial institutions to originate certain same-day ACH payments and mandate all receiving financial institutions to receive same-day ACH payments. ACH credit transactions, except for international transactions (IATs), payments to the federal government, and transactions above $25,000, will be eligible for same-day processing.

Initially same-day ACH payments will be significantly more expensive to process than future dated entries to allow financial institutions to recover their costs for enabling and supporting this function. The Office the State Treasurer (OST) will only originate same-day ACH credits on an emergency basis. If your agency ever has such an emergency please contact the Director of Banking and Treasury at OST, Diedra O’Neil ( Agencies should NOT begin sending same-day effective dates in their payment files, the entries will continue to be processed on the next valid, future effective date.

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Volume 27, Number 3
Fiscal Year-2017
September 12, 2016

In This Issue ...


Monthly AGA CPE Luncheon

The Oklahoma City Chapter of the AGA holds CPE luncheons most months between September and April as well as two all-day CPE events.  The upcoming luncheon is on Sept. 21, and will be held at The Tasting Room, Will Rogers Theater, 4322 N. Western Ave., Oklahoma City.  Luncheons begin at 11:30 a.m. and end at 1 p.m.  Cost is $15 for AGA Oklahoma City Chapter members and $20 for non-members.  The luncheons are recommended for one hour of CPE.  Mark your calendar for the upcoming luncheon.

  • Sept. 21 - Speaker: Tim Gatz, Oklahoma Turnpike Authority

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OKFMA Quarterly Meeting

Mark your calendars for the next Oklahoma Financial Managers Association quarterly meeting on Thursday, Oct. 13.  This seminar is provided free of charge.  To ensure an adequate number of training materials and refreshments are available, please register at:

Date:   Oct. 13, 2016
Time:   1:30 to 4 p.m.
Place:   Business Conference Center Auditorium
MetroTech Springlake Campus
1900 Springlake Drive
Oklahoma City, OK

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APA Preparing for Year End and 2017

Preparing for Year-End and 2017 brings you up to date on the latest changes in legislation and regulations that affect the close of 2016 and the beginning of 2017. 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.

Friday, Nov. 4, 2016

Presented by American Payroll Association
Renaissance Tulsa Hotel & Convention Center
6808 South 107th Avenue
Tulsa, OK 74133

For more information, please visit:  APA website

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Payroll Law 2016

Nov. 16, 2016

Presented by Fred Pryor Seminars

Sheraton Downtown
1 N Broadway Ave
Oklahoma City, OK 73102

1-Day Seminar cost - $149

For groups of 5 or more - $139 each

For more information, please visit their website.

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The Complete Guide to Payroll Taxes and 1099 Issues

Presented by the Oklahoma Society of Certified Public Accountants (OSCPA)

Monday Nov.r 14, 2016 - Tulsa

Tuesday Dec. 13, 2016 – Shawnee

Thursday Dec. 15, 2016 - Lawton

For more information, please visit: OSCPA website

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State Comptroller:
Lynne Bajema, CPA

Deputy State Comptroller:
Steve Funck, CPA, CGFM

Jennie Pratt, CPA, CGFM

General Ledger:
Dan Thomason, CPA

Lisa Raihl, CPA

Transaction Processing:
Steve Wilson

Payroll Processing:
Elsa Kunnel

AP Manager:
Patricia Garcia, CPA, CGFM

ISD Finance:
Cathy Menefee, CPA, CGFM

Vendor Maintenance:
Victoria Baker

OMES Service Desk:
(PeopleSoft questions)

Financial Reporting Unit:
Matt Clarkson, CPA

Agency Business Services:
Steven Hawkins, CGFM

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