Question

What type of activities does payroll reconciliation include?

(simple and original answer please, no hand writing and answer should relate to Australian payroll system or Australian legislation thx)

Answer 1

Reconciliation in accounting involves verifying transactions are in balance and apply to the correct account. For instance, when reconciling payroll, a payroll transaction involves different accounts. If an employee earned $1,500 during a payroll period but only receives $950, the rest of the money would go to such things as taxes, Social Security withholdings, Medicare and insurance deductions. Reconciling that payroll check would involve verifying that all the accounts affected by the payroll transaction agree and total to the gross amount used in calculating the check.

Payroll Reconciliation include following Activities

Payroll Reconciliation

Accountants and clerks must verify that their calculations are correct, especially when formulating payroll. Prior to submitting payroll, the accountant or clerk audits their entries for errors and make any adjustments as necessary. 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 the right accounts. Another form of reconciliation is to check that taxes for the period post against the correct Social Security numbers.

Validating Transactions

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

Earnings and Payroll Registers

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 the tax accounts, the various withholding accounts and all accounts associated with payroll together, the transactions for the period must equal the payroll.

Reconciling Against Budget

Another form of reconciliation completed for payroll is reconciling payroll against the budget for the period. The accountant or clerk uses actual figures and compares them to the budgeted figures for the 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 the manager when meeting with upper management to explain budget overruns.

In most cases, the most important person involved with payroll will be a payroll coordinator. This individual has numerous roles and responsibilities for their respective accounting department, which can include being the liaison between employees, payments, and the Payroll Office and processing OPUS entries (hiring, budget number changes, leave of absence changes).

Payroll coordinators are also responsible for entering employee hours into the Time Reporting system for payroll processing. After payroll has been processed, there needs to a be review of each employee payroll. If the coordinator catches an errors, such as underpayments or overpayments occur, it is their responsibility to work with the Payroll office to correct these errors.

Depending on the size of your business, the payroll department could also include management (payroll supervisor, payroll director/manager), staff (payroll technician/assistant, payroll practitioner, payroll administrator), and technical manager, (data entry, system analyst, payroll system coordinator).

Always remember, no matter the role or position, the payroll department is in charge of:

• Pay Day. Selecting the schedule, every week or once month, to pay employees. The payroll department calculates employee wages, withholds the proper tax amount, and issues the paycheck.
• Paying Payroll Taxes. Paying the federal and state taxes that are withhold from employees, along with any business taxes.
• Filing Tax Forms. Most businesses must complete and fill tax forms every quarter, so that the government knows who has been paid and which taxes have been taken out.

The payroll department should also be aware of Federal and State deadlines and calculating and correcting hours, wages, tax holdings, and benefits.