Question

Australian BAS agent: What payroll activities will be reported on and what reconciliation activities will be involved?

Answer 1

Payroll is a list of employees who get paid by the company Payroll also refers to the total amount of money employer pays to employees.

Reporting

Once you complete payroll run for a particular month, finance and high management team may ask for reports such as department wise employee cost, location wise employee cost, etc As a payroll officer it becomes your responsibility to dig into data and extract required information and share the reports. Salary paid is one of significant operating costs which has to be reported in books of accounts. Pay roll reports source their information from payroll transactions from the pay history in an employee card

Following has to be reported

Employees superannuation

Superannuation payement

Payement start date

Payement end date

Each employees providential fund contribution.

TDS deduction

Wages based on their positions

Payroll tax liabilities

Payroll activity by employees

Pay slips with leave terminations

Payroll deduction associated with garnishments, or premium with held to pay for all or a portion of health care insurance provided through employer

Taxes paid by employer

Break down of tax burden to a specific amount per employee.

Any statutory contributions that has to be made by employer and employee each.

We will go through some payroll reports

Time sheets:non exempt employees are paid according to hours reflected on their time sheets. Before payroll processing begins run a report to confirm that employees hours are correct and fix any errors before submitting hours for processing.

Payroll register:This summarizes each employees payroll information for selected pay period. Information may include employee name, Social Security number, hours worked gross salary or wages, deductions net pay and day today earnings

Leave of absence:paid or unpaid time off you must monitor employees accrued time off days or hours taken, and available balances. This is essential, regardless off wether time off is required by law or given at your discretion

Paycheck deductions:They come in many forms such as voluntary deductions for cafeteria and plans and involuntary deductions for employment taxes and wage garnishments. Proper administration of these deductions is vital to avoid issue with employees pay check and regulatory compliance

Outstanding pay check:if an employee takes too long to deposit or cash his or her paycheck, you need to be aware of it and sooner the better, as employers are bound by state escheatment laws. By running a report that shows uncleared checks, you can take proactive measures such as contacting employee or reporting unclaimed pay check

Labor Cost:payroll costs must be measured and managed. A report that breaks down payroll expenses -including salaries, wages, benefits taxes and insurances can help you measure and manage labor cost percentage.

Reconciling activities

Reconciliation in accounting involves verifying transactions are in balance and apply to correct account. For instance, when reconciling payroll a payroll transaction involves different accounts. If an employee earned 1500 during a payroll period but only receives 950,the rest of money would go to such things as taxes, social Security withholding, Medicare and insurance deductions. Reconciling that payroll check would involve verifying that all accounts affected by the payroll transaction agree and total to the gross amount used in calculating check.

Payroll Reconciliation

Accountants and clerks must verify that their calculations are correct, especially when formulating payroll. Prior to submitting payroll, the accountant audits their entries for errors and make adjustment Once payroll is submitted, the accounting system will generate the individual payroll checks requiring printing. After payroll, the accountant often reviews the entries made to guarantee they are correct and posted to right accounts.

Validating transaction

After completing payroll, the accountant or clerk reviews the entries for accurateness and validates such things as payroll tax entries, withholding and overtime to make certain that transaction occurred correctly. The reconciliation or balancing of payroll will include making entries to distribute payroll to appropriate cost accounts. For instance, salaries of those in manufacturing directly responsible for creating product accumulate in an account entitled cost of goods sold. The accountant verifies that correct payroll posted to this account as part of reconciliation

Earnings and payroll register

Other reconciled areas include verifying the accurateness of earnings. This involves double checking overtime, hourly and salary wages for correctness. The figures from individual checks are compared against earnings and payroll registers to guarantee these accounts are in agreement. When you add together tax accounts the various withholding accounts and all accounts associated with payroll together, the transactions for period must equal payroll

Reconciling Against Budget

Another form of reconciliation completed for payroll is reconciling payroll against budget for period. A report may be generated to provide to a department manager that shows areas where salaries are over or under budget. Footnotes will be included with this information for use by manager when meeting with upper management to explain budget overruns.

These are reconciliation activities that has to be taken by management while reporting payroll activities.