As with the other modules, the month-end process is one of the most important functions in Payroll. The Payroll System has its own month-end processing routine, aided by a specific checklist to guide the Operator through the process. This process is less complex in Payroll because some of the processing has already occured during each payroll run.
The Payroll month-end process updates all accounting transactions to the General Ledger System to be incorporated into financial statements. It also updates employee balances and totals, copies current wage and check data to yearly files, and does a media backup during the year-end update.
One key point to understand and to train your Operators to be observant about is the processing month which shows at the top of data entry screens. Once you are in month-end processing, Operators should not process any more payroll until the system indicates it has been rolled into the next processing month. In order to minimize this problem, we recommend the user for each system also be responsible for processing the end-of-month if possible, restricting the number of persons accessing the system during critical periods. This will also provide important feedback to the Operator as to the effects of decisions made during the processing month.
A copy of the checklist is located in the 'CHECKLIST' file. We will review here only the steps for end-of-month balancing - the payroll portion of the checklist is reviewed in the Example Procedures.
Print Earnings Reports - ALL
These are monthly reports act as a paper record of all payroll transactions, including gross earnings, hours worked and withholdings processed during a period. They cumulate monthly, quarterly and yearly totals. These reports should be filed in the Payroll monthly file.
Print Yrly Tax & Check Reports - Yrend
These reports are only needed at year-end; and then only if you really want the output.
Prepare & Mail QTRLY STATE SUI Report
Information for this report, currently required by the State, can be found on the report generated from menu item, Payroll (4.3.3).
Prepare & Mail QTRLY FEDERAL 941A Report
This federal tax report showing FEDERAL income tax, FICA, and MEDICARE withholdings is printed on the report generated from menu item, Payroll (5.2.1). Use the report to complete the IRS forms.
Prepare & Mail YEARLY FEDERAL W2 Forms
The system calculates the information required for W-2s and will send the completed reports to a hold file in the spooler. Laser printer forms are also available. Also, review the current year forms for any changes in format from the prior year. If the format has changed, you will need to contact your Customer Service Representative to program the necessary changes. The W-2 data is saved to tape during the month-end update and is available for reprinting if necessary.
Prepare & Mail YEARLY FEDERAL 940 Report
Information for this federal unemployment report showing FUTA withholdings is printed on the report generated from menu item, Payroll (5.3.2). Use the report to complete the IRS forms.
Mail above 2 Reports before Jan 31st
A reminder the federal tax reports must be received by the IRS within 30 days of the reporting period they cover. Penalties may be assessed if these reports are not received.
Process End-of-Month Update
The monthly update is the most important function and must be performed once all data has been processed and reports printed. Employee monthly data, or quarterly data if appropriate, is cleared, wage totals are copied to yearly files, posting records are updated to the General Ledger System, and, finally, the current processing month is set forward one month. The year-end update will automatically occur when updating December of any year. This year-end update will require a media back-up before purging employee earnings totals.
You will not be allowed to maintain the Payroll System more than one month in advance of the General Ledger System. Also, you will not be allowed to do a General Ledger update when an Payroll update has not been performed.
Because tax invoices are created in the Accounts Payable System from the Payroll System update, you should process the Payroll System update prior to the final A/P System check run. This will ensure tax payments will be reflected in Payroll, A/P and G/L in the same accounting month.