Entering, Approving, and Reconciling Payroll-

Time and LaborAPM 55.60.02

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Course Objectives

• Gain an understanding of the policy• Discuss recommended procedures• Discuss segregation of duties for payroll

activities

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Definitions

• EDR—Expense Distribution Report, a report listing employees and the ChartFields they were paid from

• Pay Comparison Report—Listing of employees whose rate of pay has changed from the previous period

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Payroll DutiesTime Keeper Approver Verification / Reconciliation Managerial Review

Obj

ectiv

e • Authorize time • Ensure accuracy• Ensure time is entered and approved

• Verify completeness• Verify changes were made• Verify accuracy in General Ledger

• Reasonability• Prior steps done• Reconciling items are appropriate

Objective

• Maintain delegates• May adjust time

• Review Gross Pay Inquiry screens• Review BIW time • Review MON absences

• Expired Appointments• Verify everyone is included• Additional Pay is accurate• EarnCodes are accurate• Appropriate ChartFields • Reconciliation of EDR to GL

• Test reasonability of payroll, trend analysis• Verify prior steps are completed• Reconciling items appear appropriate• Review USHR0087 and EDR for unusual or unanticipated payroll items

Requ

ired

Out

put • Approval in Time &

Labor• Completed checklist or prepared reconciliation AND• Signed EDR, and USHR0087

• Signed checklist or reconciliation AND• Signed EDR, and USHR0087

Required Output

• Review EDR to assure pay includes only appropriate persons• Review USHR0087

Activ

ities

Activities

Time Keeper

Overview• All employees enter their own time

• Exempt enter absences• Non-exempt enter time and absences

• Paper timesheets not required• May adjust time as necessary• May review exception reports

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Time Keeper

Suggested Tasks• Reasonability test data entered • Monitor for expired appointments• May review Payroll Comparison report

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Time Keeper

Required Functions• Enter and maintain delegates• Communicate with Payroll and HR offices

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Approver

Overview• Should be a supervisor

• Authorized by Department Management• Approval may be delegated• Not the same person who performs the

verification• The system documents approval• Approves time entered (not payroll amounts)

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Approver

Objectives• Authorize time entered• Ensure time entered is accurate• Ensure all time is submitted• Review for missed punches

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Approver

Activities• Review Payroll Comparison Report• Review EDR• Review payroll amounts—

View Gross Pay inquiry screen• Review bi-Weekly time and monthly absences

for accuracy and appropriateness

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Approver

Required Output• Time and absences are approved in Time and

Labor for monthly and bi-weekly

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Verification / Reconciliation

OverviewShould not be performed by Approver or

Timekeeper

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Verification / Reconciliation

Objectives• Verify changes are appropriate and accurate• Ensure payroll is complete• Validate General Ledger Entries• Validate on EDR

• Review for expired appointments

Nothing Unauthorized Additional Pay amountsRate of Pay HoursEarnings code Validate ChartFields

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Verification-Verify ChangesUSHR0087

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Verification-Verify Changes

Verify Accuracy & Appropriateness of Changes

Look for changes that are missing.

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Verification-Verify Changes

Print - Sign - Dateand Retain

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Verification-Verify Changes

Research any unauthorized changes in pay amount for exempt

employees

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Verification-Verify Changes

Look for changes that were not made.

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Verification-Verify Changes

Print – Sign – Date – and

Retain

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Verify– Validate Information

USHR Reports• Do not use USHR0112

• Not Based on Payroll System• USHR0173 Used for Employee Detail• Expense Distribution Reports (EDR)

• Summary (e.g., USHR0193S)• Detail (monthly and bi-weekly payruns

e.g. USHR0193M/B)

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Verify– Validate Information

Expense Distribution Reports• Three groupings within each EDR type

• USHR0193 summarizes by DeptID• USHR0208 summarizes by Program• USHR0209 summarizes by Project

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Verify – Validate InformationEDR USHR0193S

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The total payroll expense for the department in total should be compared

From the EDR

To the Income Statement

Verification – General Ledger

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Verification – General Ledger• Complete the Checklist for payroll transactions• Review non-PRL sourced entries

• Payroll Correcting Entries• Journal Entries• Vouchers

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Verify — Reconcile

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Verify — Reconcile

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Verify — Reconcile

There is a difference

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Verify — Reconcile

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Verify — Reconcile

Note the resolution of the reconciling items

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Verify — Reconcile

Sign, Date, and retain the reconciliation

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Verification / Reconciliation

Required Outputs• Signed EDR• Signed Pay Comparison Report (USHR0087) • Reconciliation or completed Checklist

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Managerial Review

Overview• At least Quarterly

• Frequency dependent upon control environment• By Department Head or Designated

Administrator

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Managerial Review

Objectives• Review detailed enough to determine:

• Authorized transactions accurately recorded• Timely transactions in General Ledger• Adequate controls exist• Payroll amount is reasonable

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Managerial Review

Activities• Review the EDR• Review USHR0087• Review the Income Statement• Review any reconciling items• Ensure verification/reconciliations were timely• Retain documentation in department

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Managerial Review

Required Output• Signed

• EDR • Pay Comparison Report (USHR00087) • Checklist or Reconciliation

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Why Segregate Duties?

• Segregation--One person only performs one task:• Record• Approval• Verify• Managerial Review

• Benefits of segregation• Deters fraud• Detects errors

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Segregation-Compensating Controls

• When less than optimal segregation exists, implement compensating controls

• Compensating controls include:• Managerial review for every pay cycle• Perform detailed managerial reviews• Share resources with other departments

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Segregation—Levels of ReviewTime

Keeper ApprovalVerifier/

ReconcilerManagerial

Review FrequencyDetail or

High Level1 2 3 Manager Quarterly High level1 2 1 Manager Quarterly High level1 1 2 Manager Quarterly High level1 Manager 1 Manager Quarterly High level1 Manager 2 Manager Quarterly High level

Manager Manager 1 Manager Quarterly Detail1 2 Manager Manager Pay Cycle Detail1 2 2 Manager Pay Cycle Detail

Manager 1 1 Manager Pay Cycle Detail1 Manager Manager Manager Unacceptable

Manager Manager Manager Manager Unacceptable

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• Keep roles segregated if possible• With optimal segregation-mangers must

document their review of at least one pay cycle per quarter for each DeptID, Program, or Project as appropriate

• Verifier must sign the EDR, USHR0087, and either complete Checklist or Reconciliation

Summary

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Additional Information

• University Accounting Policy Entering, Approving, and Reconciling Payroll – Time and Labor – APM 55.60.02

• Other related training available:• Financial Compliance Training Website• Contact your Campus Accounting Office for

departmental training sessions or further discussion

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