**Payroll Checklist & Authorization form available for download at bottom of this web page.
Segregation of Duties - Roles & Responsibilities
Board President, Superintendent, Program Directors, Administrators: These individuals oversee staffing, program budgets, program and compliance requirements, and provide authorization for employee contracts. These individuals do not process payroll payments nor maintain accounting records.
Business Administrator: Is primarily responsible for internal controls, accounting procedures compliant with Generally Accepted Accounting Principles, oversight of the accounting system, payroll specialists and financial reporting. The Business Administrator assists other administrators in their duties. The Business Administrator may not process payroll payments in the accounting system.
Payroll Specialists: Payroll specialists process payroll payments based upon the authorizations received from administrators. They may not authorize payments in any respect. Authorizations must come through the appropriate administration process.
Authorization Requirements
Employee Contracts. A contract or compensation summary outlining each employee's compensation as agreed upon by the employee and district, signed by the employee and signed by at least two of the following:
o Board of Education President
o Superintendent
o Business Administrator
The contract is usually completed BEFORE the work begins, so that each party clearly understands the agreed up0n compensation and terms of employment. All payroll payments must be supported with an employee contract BEFORE payment can be made. Contracts and/or compensation should provide for all salaries, wages, and benefits to be paid.
Primary Assignment Contracts must be signed at a minimum by the employee, supervisor, Superintendent, and Business Administrator. Substitute and Additional Duty Contracts must be signed at a minimum by the employee and supervisor. The Board may elect a designee to also sign employee contracts. All employee contracts are subject to Board, Audit Committee, and audit review. In situations where an administrator is not available at time of payroll processing, the payroll specialist should attempt to obtain signatures on contracts from the employee, supervisor, and either the Superintendent or Business Administrator; when this is not possible, the Board President's authorization signature with at least one other administrator can temporarily provide the necessary authorization for payroll processing but all of the required authorization signatures should be obtained shortly thereafter.
Payroll Item Authorization. A payroll item authorization from the Business Administrator indicating the payroll items to which compensation should be processed with and costs charged to in the accounting system is required. This is normally completed and signed by the Business Administrator BEFORE payroll processing occurs. In situations where the Business Administrator is not available, the Superintendent may provide a temporary item authorization to ensure payment is made to the employee in a timely manner; however, the Business Administrator must provide a follow up payroll item authorization as soon as reasonably possible. The Business Administrator controls the budget account(s) within the accounting system to which each payroll item is connected to. Payroll specialists are not permitted to change or dictate the budget general ledger account(s) to which payroll items are linked with in the accounting system.
Additional Duty Payment Voucher. For additional duty assignments, the employee and supervisor must complete an additional duty payment voucher indicating the assignment has been completed and/or payment is due to the employee per the agreed upon contract.
Form of Authorizations. The contract, compensation summary, and payroll item authorization may be combined into one document or be processed as separate documents. However, the form in which authorizations are obtained must contain the key elements of authorization for payroll processing--compensation amounts for salaries, wages, and benefits; payroll item authorizations, etc.
**Payroll specialists are not permitted to process payroll without a proper contract/compensation summary and payroll item authorization on file with the appropriate authorization signatures. In the case of additional duty assignments, payroll processing cannot occur without a properly completed additional duty payment voucher which verifies the assignment has been complete or payment is required in conjunction with the agreed upon contract.
17th of the Month
Time sheets, leave forms, and PARs (personnel activity reports) are normally due to the payroll office no later than 17th of each month, unless the district office instructs otherwise given a unique calendar situation.
Payroll specialist reviews time sheets, leave forms, and PARs for accuracy. If corrections are needed, payroll specialist sends time sheets, leave forms, and PARs back to supervisor for corrections to be made.
Payroll specialist inputs data into Quickbooks for payroll set up, based upon payroll item authorization and contract authorizations.
Payroll specialist conducts a 30 person sample to ensure the following is on file as applicable:
o Amount/rate being paid matches contract
o Contracts
o Payroll authorization
o Background check
o Employee ID tag has been issued
o PAR and Time Sheet are on file
3 Days Before Payroll Payment Date
Edit Check/Review by Two Specialists: Two payroll specialists print final reports for administrative review and signature BEFORE direct deposit is made
o “Summarize Payroll Data in Excel”
o Final comparison report of prior payroll period with current payroll period for all employees and payroll items
o Check payroll items and payment splits against payroll item authorizations
o Check hourly paid employees – hours and rates in system reports against actual time sheets
o Check one-time payments against vouchers & ensure one-time payments made in last payroll period have not been duplicated in the current payroll
o Verify insurance, retirement, and benefits are accurate in conjunction with the employee's contract
o Verify employee voluntary deductions and W-4 changes are validated with proper paperwork for each employee
o Compares prior month to current month payroll for each person for anomolies, differences, and account for changes between the two months for each person
o Both specialists print, sign, and all payroll reports for the archive verifying the review and accuracy of payroll
Due 48 Hours Before Payroll Payment Date
Independent Review Before Direct Deposit Transfer: The following must be verified by the payroll specialist and one other person before the direct deposit transfer occurs:
o Net pay from system reports matches net pay in direct deposit file for bank
o 10 person sample of net pay, line by line, is verified between system reports and direct deposit file
o Print reports and both individuals sign and date
§ Payroll summary report from system
§ Copy of bank report verifying amounts by employee that were transferred
The business administrator is notified first of the amount and summary of payroll before the direct deposit transfer occurs. Approval from the business administrator must be obtained first before the transfer. Payroll specialist or business administrator uploads direct deposit file with bank and prints report from bank website. The report is retained with all other payroll reports in the archive for future review and audit
Payroll specialist completes IRS EFTPS form and calls amounts in for ACH withdrawal.
Payroll specialist runs deduction checks and forwards to administration for review and authorization signature to pay. The Superintendent and Business Administrator review and sign authorization before deduction checks are mailed to vendors. As part of this review, each check must be supported by documentation/report from the accounting system that shows the transaction detail supporting each check and which matches the amount of each deduction check.
Payroll specialist prints check stubs and leave reports and distributes to employees
Due Within 5 Working Days of Payroll Issuance Date:
Payroll specialist distributes reports to administrators for review:
o Employee leave summary report by location
o Hourly Employee Comparison – Hours Worked vs. Authorized Contract Hours for Year
Payroll specialist files all reports, time sheets, PARs and related paperwork in personnel files and archives for future review.
Payroll specialist works with the business administrator prints “payroll item detail” report and identifies employees who should be submitting PARs and ensures PARs are on file for all employees working in federal and multiple programs.
The Business Administrator completes all necessary calculations for journal entries needed distribute employee benefits to appropriate program account codes.
Final Approval of Payroll: The Business Administrator and Superintendent shall sign and date a summary report of all payroll payments to each employee. After they have reviewed and signed the payroll summary report(s), all documentation related to each payroll payment run should be filed for future review and audit.
Bank Reconciliations: Payroll specialists may not to perform monthly bank reconciliations. Bank reconciliations are performed by the Business Administrator. The Business Administrator may not perform payroll processing duties as a segregation of duties and key internal control. When completing bank reconciliation, the Business Administrator cross checks amounts that have cleared the bank in relation to payroll with amounts processed in the accounting system--i.e. payroll ACH payments to employees, IRS EFT payments, etc.
Business Administrator Checklist
Reports have been printed for the permanent file:
o Payroll item detail report
o Payroll item summary report – Totals Only
o Summarize Payroll in Excel Reports
§ YTD Summary 1
§ YTD Summary 2
§ Rates & Hours by Job
§ Quarterly
o Bank direct deposit report, verifying payments for each individual employee
o Deduction checks report
o Copy of journal entry benefits distributions
o Copy of IRS EFTPS information
Review all PARs for possible JE distributions and compliance
o Cross check PARs in system for inventory of employees who are required to submit PARs
Complete calculations for benefits distribution JEs
Verify IRS ACH has been made correctly
Payroll checksums and cross reference checks:
o Net pay in reports matches net pay in direct deposits to bank
o Federal taxes in reports matches IRS ACH at bank
o Benefits revolving accounts in system matches payroll item summary report amounts