1.35.9 Integrated Financial System Payroll

Manual Transmittal

March 31, 2016

Purpose

(1) This transmits new IRM 1.35.9, Financial Accounting, Integrated Financial System Payroll.

Material Changes

(1) This IRM provides guidance for the processing of payroll expenses received from the National Finance Center to the IRS Integrated Financial System.

Effect on Other Documents

None.

Audience

Offices within CFO.

Effective Date

(03-31-2016)

William H. Maglin II, Associate Chief Financial Officer (ACFO) for Financial Management.

Overview

  1. This Internal Revenue Manual (IRM) provides guidance and process flow for payroll expenses received from the National Finance Center (NFC) to the IRS Integrated Financial System (IFS).

  2. The Chief Financial Officer (CFO), Financial Management (FM) Unit, Financial Management Systems Office, develops and maintains this IRM.

Background

  1. The IFS is the administrative accounting system of record for the IRS. The IRS Automated Interface to the National Finance Center (AINFC) is the interface between NFC payroll system and IFS.

  2. The interface provides extracts used for financial reporting of payroll data. The interface allows IRS to meet audit requests and ensure that payroll processing errors are found and corrected. Additionally, reconciliations are performed to ensure that all labor expenses have been posted correctly and timely to IFS in support of Agency financial statements and the GAO audit.

Related Resources

  1. Related resources for this IRM include:

    1. IRM 10.8.60, IT Service Continuity Management (ITSCM) Policy and Guidance.

    2. IRS Financial Management Codes Handbook.

    3. Treasury Financial Manual, Part 2, Chapter 5100, Reconciling Fund Balance with Treasury Accounts.

    4. Beckley Finance Center Desk Procedure, Chapter 60, Payroll Reconciliation Procedures.

    5. Financial Reports Desk Procedure, Chapter 111, Accrued Funded Payroll (FPAY) Reconciliation.

Definitions

  1. In this IRM, the terms below have the following meanings:

    1. ABCO - Administrative Billings and Collections accounting transaction type, representing receivables and collections owed to the IRS from its employees.

    2. Accounting Period - A length of time, usually a month, in which transactions are posted in IFS. The IRS defines its accounting periods to correspond to a fiscal month and a fiscal year. For example, accounting period 01 corresponds to October of the fiscal year and accounting period 12 corresponds to September of the fiscal year.

    3. CAPS - Adjustment transactions other than ABCO or MISC; for example, corrections to Thrift Savings Plan contributions.

    4. ECC- Acronym for the administrative accounting component of the IFS.

    5. Fiscal Year - The Federal Government's accounting period. It begins on October 1, ends on September 30, and is designated by the calendar year in which it ends.

    6. Integrated Financial System (IFS) - The IRS official administrative financial management system.

    7. Interface - A one way or two way automated process run on a pre-determined schedule. Data is received from a host source and reformatted for use by a host recipient.

    8. MISC - Miscellaneous accounting transaction type, representing recertified payments to IRS employees.

    9. PACS - Payroll accounting expense transactions.

    10. Pay Period - The two-week period beginning on Sunday and ending on Saturday, representing an 80-hour work week.

    11. Payroll Accrual - An expense incurred for work performed but not yet paid.

    12. Payroll Component - The payroll information from the NFC converted to IFS-readable format.

    13. Personnel Component - The personnel information related to employment details, compensation, and benefits.

    14. PROJ - Project or Internal Order Code.

    15. SF-50 - Reference for Standard Form initiated for a Personnel Action.

    16. Tivoli - IBM product used for scheduling and management of Jobs.

    17. UNIX - Type of computer operating system.

    18. VLDA - Valid accounting string made up of Cost Center, Functional Area, and Appropriation by Fiscal Year.

    19. WEEK1 File - This file contains 99% of the payroll accounting transactions for a pay period.

    20. WEEK2 File - This file contains late payroll accounting transactions and most of the Administrative Billing and Collection accounting transactions for a pay period.

Acronyms

  1. The following chart contains acronyms that are used throughout this IRM:

    ACRONYM DESCRIPTION
    ABCO Administrative Billings and Collections
    AINFC Automated Interface to the National Finance Center
    BEAR Biweekly Examination and Analysis Record
    BFC Beckley Finance Center
    BW Business Warehouse
    BU Business Unit
    CAPS Consolidated Adjustment to the Payroll System
    CARS Central Accounting Reporting System (formerly GWA)
    CB Corporate Budget
    COTS Commercial-Off-The-Shelf
    DR Disaster Recovery
    ECC ERP (Enterprise Resource Planning) Central Component
    ECC-DCC Enterprise Computing Center - Detroit
    ECC-MTB Enterprise Computing Center - Martinsburg
    EFTU Enterprise File Transfer Utility
    EMDB Employee Database
    EMFL Employee File
    EOM End of Month
    ESS Employee Support Services
    FBWT Fund Balance With Treasury
    FISMA Federal Information Security Management Act
    FTE Full Time Equivalent
    FTP File Transfer Protocol
    FY Fiscal Year
    FPAY (Accrued) Funded Payroll Reconciliation
    GAO Government Accountability Office
    GL General Ledger
    HR Human Resources
    IFS Integrated Financial System
    MISC Miscellaneous Transactions
    NDM Network Data Mover
    NFC National Finance Center
    ORGA Organizational Segment to Accounting Distribution Table
    PACS Automated Payroll Accounting Transactions
    PPDF Pay Period Detail File
    PROJ Project
    SGL Standard General Ledger
    SOC Sub-Object Class
    SSN Social Security Number
    TAPS Totally Automated Personnel System
    TIMIS Treasury Integrated Management Information System
    USDA United States Department of Agriculture
    WEEK1 NFC Time and Attendance File
    WEEK2 NFC Time and Attendance Previous Pay Period File
    YTD Year-to-Date

Responsibilities

  1. This section provides responsibilities for:

    1. Chief Financial Officer.

    2. Associate Chief Financial Officer for Corporate Budget.

    3. Associate Chief Financial Officer for Financial Management.

    4. Director, Beckley Finance Center.

    5. Director, Financial Management Policy Office.

    6. Director, Financial Management Systems Office.

    7. Director, Financial Reports Office.

Chief Financial Officer

  1. The Chief Financial Officer (CFO) is responsible for overseeing policies, procedures, standards, and control for the processing of payroll expenses.

Associate Chief Financial Officer for Corporate Budget

  1. The Associate CFO for Corporate Budget (CB) is responsible for:

    1. Issuing budget guidance to the business units, such as guidance relevant to the year-end process and new fiscal year appropriations, related to payroll.

    2. Providing the Organizational Segment to Accounting Distribution (ORGA) file to the Financial Management Systems Office Security and Payroll Section bi-weekly for use in payroll transaction validation.

    3. Maintaining the IRS Financial Management Codes Handbook.

Associate Chief Financial Officer for Financial Management

  1. The Associate CFO for Financial Management (FM) is responsible for:

    1. Establishing, maintaining, and ensuring compliance with accounting policy and procedures for payroll-related financial reporting.

    2. Establishing accounting and financial management processes and procedures for processing payroll-related transactions.

Director, Beckley Finance Center

  1. The Director, Beckley Finance Center (BFC), is responsible for:

    1. Reconciling payroll transactions recorded in the Standard General Ledger (SGL) in accounts 1010.0200 and 1010.0290. Federal agencies are required to reconcile their SGL 1010 account and all related sub accounts. This reconciliation is done on a monthly basis.

    2. Tying to the FBWT Management Summary report and completion of the CARS vs. Access Spreadsheet. The results obtained from these sources are transferred to the Payroll Reconciliation Worksheet, which identify any differences.

    3. Preparing appropriation changes, by pay period, for payroll transactions that were remapped from the original (NFC) appropriation to a derived appropriation based on posting logic established in the AINFC automated interface process.

    4. Preparation of the Accrued Funded Payroll (FPAY) Reconciliation work paper document, by accounting period, for review and signature by the Financial Reports Office.

Director, Financial Management Policy Office

  1. The Director, Financial Management Policy Office (FMP), is responsible for:

    1. Providing clarifying guidance and assistance on payroll-related accounting policy matters.

    2. Assisting managers and other employees in interpreting and applying payroll-related policies.

Director, Financial Management Systems Office

  1. The Director, Financial Management Systems Office (FMS), is responsible for:

    1. Supporting IFS operations and maintenance activities, including the posting of payroll expenses.

    2. Processing and monitoring bi-weekly AINFC payroll transactions and providing payroll extract files for interface and posting to IFS subsystems (ECC and BW).

    3. Providing confirmation of accurate and complete processing of payroll transactions at the interface level.

    4. Providing confirmation of accurate and complete posting of payroll transactions to IFS.

    5. Providing payroll-related error correction support.

    6. Administering and advising on payroll accruals and adjusting entries.

    7. Providing payroll-related functional user support to business units, as well as, other CFO organizations.

    8. Providing payroll-related audit deliverables.

    9. Providing payroll-related Disaster Recovery (DR) support for Federal Information Security Management Act (FISMA) required functional testing.

Director, Financial Reports Office

  1. The Director, Financial Reports Office (FR), is responsible for:

    1. Providing financial information and support to other organizations and offices related to payroll.

    2. Administering and advising on payroll accruals and adjusting entries.

    3. Preparing, reviewing, and approving payroll-related work papers in support of the financial statements.

    4. Providing review and sign off on the Accrued Funded Payroll (FPAY) Reconciliation.

    5. Providing payroll-related audit deliverables.

Automated Interface to the National Finance Center Payroll Accounting Interface Overview

  1. The automated interface between NFC and IRS allows the IRS to utilize personnel/payroll data to account for payroll obligations and track the movement and cost of personnel.

  2. The payroll interface processing uses personnel/payroll information for IRS employees received from NFC.

  3. Payroll information is validated and formatted by the automated interface process for use in IFS.

  4. The NFC calculates IRS' payroll data and processes payroll checks or electronic funds transfer (EFT), based on the type of data transmitted (personnel benefits and timekeeping data).

  5. Payroll interface processing is broken into two major components:

    1. Personnel.

    2. Payroll.

  6. Personnel information includes information on employment, compensation, benefits, and the processing of official personnel actions that include hiring, promotions, demotions, transfers, retirements and other separations.

  7. Payroll information uses the NFC payroll data and converts it to an IFS-readable format. However, before the IFS data is created, there are a series of events that occur outside of AINFC:

    1. An individual payroll record is created after an employee has been hired and established on the agency's employee roster.

    2. The IRS forwards personnel and payroll data to NFC to process the Agency's payroll.

  8. The automated payroll accounting interface process generates extract files, which represent subsets of personnel/payroll data by type of transaction for processing in the following IFS subsystems:

    1. ERP Central Component (ECC).

    2. Business Warehouse (BW).

Payroll Accounting Transaction Files

  1. The Enterprise Computing Center-Martinsburg (ECC-MTB) retrieves two automated Payroll Accounting Transactions (PACS) files each pay period.

  2. The NFC generates the first PACS WEEK1 file on the second Sunday following the end of a pay period, eight days after the end of the pay period. This file contains about 99% of the transactions for the pay period.

  3. The NFC generates the PACS WEEK2 file the following week. This file contains any late PACS transactions and most of the Administrative Billings and Collections (ABCO) transactions. These two files make up the payroll accounting transactions file.

  4. The PACS file contains four types of transactions:

    1. Payroll accounting transactions (PACS).

    2. Administrative Billings and Collections (ABCO).

    3. Consolidated Adjustment to the Payroll System (CAPS).

    4. Miscellaneous (MISC).

  5. The majority of the transactions processed are PACS. The PACS transaction records consist of only the expenses incurred by IRS. The IFS only receives the transactions that affect the IRS financial accounting system from NFC. For example, IFS receives the record of the IRS payments to a health insurance carrier, but the file excludes the IRS employee's contributions to the health insurance carrier. Similarly, IFS receives the record of the IRS Federal Insurance Contribution Act (FICA) expense for an employer in a PACS transaction, but the file excludes the IRS employee's obligation.

    Note:

    This is an important distinction that defines the interface. IFS only receives IRS-paid expenses from NFC. Employee-paid expenses, such as insurance, savings plans, garnishments, taxes, and liens, are not included.

  6. The automated interface generates files for PACS, ABCO, CAPS, and MISC transactions for posting in IFS.

  7. In addition to the PACS expense records, these three transaction record types (ABCO, CAPS, and MISC) are used for reconciliation purposes.

Personnel Transaction File

  1. The file of IRS employee personnel transactions (SF-50s) is the Biweekly Examination and Analysis Record (BEAR) file.

  2. The NFC generates this file at the same time as the PACS WEEK1 file.

  3. The BEAR file consists of SF-50 transactions for each IRS employee for the pay period. It also contains a "snapshot" , or ending pay period status record, for each IRS employee in the NFC personnel system, regardless of the employee's pay status.

  4. This file is automatically processed through the interface to provide the data used for personnel reports and queries in IFS.

  5. Work instructions and Job Aids for SF-50 and related personnel reports are available through the IFS BW system. Additional information on IFS reports and queries can be found on the IFS web page.

Payroll Accounting File Handling Overview

  1. On a weekly basis and before the start of the automated interface processing, valid accounting data elements are automatically interfaced from IFS and loaded into AINFC, in two primary tables:

    1. Validation (VLDA).

    2. Project (PROJ).

  2. A similar interface process is used to automatically load the Organizational Segment (ORGSEG) to Accounting Distribution Table (ORGA) bi-weekly data into AINFC. This table is maintained by CB and provided to the FMS Security and Payroll Section on a bi-weekly basis.

  3. At the beginning of the fiscal year, a separate automated interface process is performed to establish the various reference tables in AINFC.

  4. The ORGA as well as the reference tables used for validation, are utilized in accordance with the data contained in the IRS Financial Management Codes Handbook. The data loaded into the automated interface is reviewed and approved by business unit representatives, CB staff, and FMS personnel prior to the start of the new fiscal year.

  5. The automated interface processes the PACS files retrieved from NFC, the previous pay period WEEK2 file, and the current pay period WEEK1 files. The automated interface combines the WEEK2 file with the WEEK1 file.

  6. The automated interface process next validates the values of the data within the accounting transactions. The automated interface process replaces invalid data with derived values from the validation and reference tables. It places any unresolved transactions in a suspense file for review by an analyst in the FMS Security and Payroll Section.

  7. Once the accounting data is validated, the personnel/SF-50 process begins. As part of the automated interface process, the accounting data is used to update the personnel data. When it has generated the personnel data, it combines the personnel data into the accounting data. Since the accounting data will contain both current pay period payroll accounting transactions and prior pay period payroll accounting adjustments, the automated interface process must again verify the consistency of the data within the payroll accounting transactions.

  8. When the automated interface process is complete, a file that contains validated payroll accounting transactions is created, referred to as the Pay Period Detail File (PPDF). This file provides the data for all extract files created and reports used in IFS.

  9. Transactions that do not pass validation are written to the recycled error file for further review and correction by an analyst in the FMS Security and Payroll Section. Refer to IRM 1.35.9.13, Error Correction Overview.

Personnel/Standard Form-50 Process

  1. The automated interface receives and validates personnel transaction data from NFC and creates a personnel/SF-50 file, which is sent to IFS.

  2. The personnel/SF-50 file provides the basis for the SF-50 and attrition reports, which show movement of IRS employees, and the cost of those employees.

Biweekly Examination and Analysis Record File Validation

  1. The BEAR file retrieved from NFC consists of:

    1. Personnel transactions.

    2. "Snapshot" records.

  2. A BEAR transaction record received from NFC, indicates that a valid personnel transaction (action) has been initiated for an employee. This action may be for the current pay period or an adjustment to a prior pay period. The action may be as simple as a name change or as complicated as a transfer with a promotion.

  3. A BEAR snapshot record contains the most recent status of each IRS employee in the NFC system.

    Note:

    Only active IRS employees have a BEAR snapshot record. Therefore, not every IRS employee who has ever been in the NFC system has a snapshot record. The BEAR file is not an employee database.

  4. The automated interface process uses the data in the BEAR file to load the Employee File (EMFL). This file is used to create the Human Resources (HR) extract files used in IFS for employee payments other than payroll (e.g., travel). The EMFL file also serves as an intermediate file that is subsequently used to create the Employee Database (EMDB) file.

Personnel Data Verification

  1. Once the automated interface process updates the personnel data with the proper accounting distribution, it then checks each personnel record for internal consistency. The interface may change personnel data to reflect a proper relationship between an employee's accounting distribution and his or her duty location.

  2. The automated interface process always assumes that the accounting data is correct, either as validated or as derived. The accounting validation (ORGA) table process and derivation process are very important to the automated interface process and are the most sensitive to recognizing errors, should they occur.

Employee Database (EMDB) and Standard Form-50 File

  1. The automated interface process generates the EMDB and the SF-50 file.

  2. The EMDB file contains the most current employee status as reflected in the BEAR file. As such, that same consistent database is used by the automated interface process to generate the accounting transactions, ending status of the employee's SF-50, attrition reports, input for employee listings, and employee locator reports.

  3. The SF-50 file contains each personnel transaction in an interface-ready format. For the fiscal year-to-date SF-50 and attrition reports, the SF-50 file contains each active IRS employee's status at the beginning of the fiscal year. Many of the SF-50, and all of the attrition reports, show the movement of IRS employees throughout the fiscal year. If an employee, for example, transfers during the fiscal year, the reports show the employee at the beginning of the fiscal year in his or her original location, the transfer, and the employee's ending location. The reports cover all relevant personnel actions such as hiring, termination, promotion, salary change, and demotion.

  4. The personnel/SF-50 automated interface process relies on the personnel/SF-50 process as the main source of validation and derivation for personnel transactions. The NFC personnel system maintains the Organizational Segment, and the Organizational Segment is the basis of the accounting distribution.

  5. For detailed and user-funded payroll accounting transactions, where the personnel/SF-50 automated interface process does not determine the accounting distribution, the AINFC interface validates and derives the other significant fields (Fund Code and EC Code) to be consistent with the accounting distribution.

Accounting Distribution Overview

  1. The accounting distribution is used to post employee labor data (dollars and hours) for the accounting transaction. It is also used to determine the organization an employee belongs to within IRS. The accounting for an employee may be derived by either directly entering the information by the employee (or designee) or systemically generating the accounting codes from the employees' personnel code (ORGA Table) in the automated interface process.

  2. The automated interface process uses the automated ORGA Table process to lookup valid accounting codes or Organizational Segment Code (ORGSEG).

    Note:

    ORGSEG is made up of Appropriation Code, Cost Center, Functional Area, and Valid From and To Date.

  3. If the payroll transaction has invalid or missing accounting codes when received from NFC, the automated interface process uses the automated ORGA Table process to determine and assign a valid ORGSEG.

  4. Only the PACS transactions have an ORGSEG when received from NFC. The other payroll transactions (ABCO, MISC, and CAPS) do not have an ORGSEG when received from NFC.

Accounting Distribution

  1. The automated interface process derives normal accounting distributions from an employee's location.

  2. The automated interface process derives detailed distributions for an accounting transaction from timekeeper-entered information.

  3. The timekeeper usually enters detailed accounting for employees who are on a temporary assignment.

  4. The automated interface process validates user-funded distributions, which occur when a timekeeper enters a change to the permanent accounting distribution of an IRS employee without a personnel transaction. The business units process user-funded distributions for certain types of temporary assignments, filled with a permanent employee.

Payroll Accounting File Processing Overview

  1. The AINFC automated interface process creates payroll accounting extract files for posting in IFS. These files are used to record payroll expenses accurately and to ensure the data is reconciled with the U.S. Department of the Treasury (Treasury) and NFC.

  2. The interface process generates the following files from the PACS (WEEK1/WEEK2) NFC payroll transactions and the EMDB table for posting in the ECC subsystem:

    1. PPDF.

    2. ABCO.

    3. MISC.

    4. CAPS.

  3. The extract files are sent to IFS for posting in the ECC and BW subsystems for use in reporting and related queries.

    1. The PPDF file contains the complete set of payroll accounting transactions processed by the interface in a given pay period.

    2. The ABCO file contains the payroll-related receivables and collections in a given pay period.

    3. The MISC file contains recertified payments.

    4. The CAPS file contains Consolidated Adjustment to the Payroll System transactions.

  4. The automated interface process generates a series of extract files representing data for payroll transactions, previously discussed in this section, for posting in IFS.

  5. The extract files referenced above are sent to IFS through a job that places them (and the necessary trigger files) on the mainframe UNIX partition. An analyst in the FMS Security and Payroll Section sends an email notification that the files are available for pickup and requests that the IFS automated processing jobs be initiated. A Tivoli job is executed that polls the UNIX mainframe server and retrieves the files for processing in IFS to the ECC and BW subsystems.

  6. Prior to creation of the extract files, the automated interface process ensures all transactions received from NFC are processed successfully and accounted for through an automated internal balancing process. In the event of an error, or receipt of incomplete or mis-identified transactions, NFC is contacted to conduct research and provide a new file.

Reconciliation Overview

  1. A crucial part of the overall AINFC interface process is the reconciliation process. Reconciliation of payroll transactions provides a basis for verifying that cash disbursed by Treasury matches cash disbursements posted in IFS. Performing this verification monthly enables the IRS to meet external audit requests and ensure processing errors are identified and corrected. Additional reconciliation is done at the general ledger account level and at the Treasury account level.

  2. The major components of the reconciliation process are:

    1. Automated internal balancing.

    2. IFS General Ledger reconciliation.

    3. Treasury account reconciliation.

  3. The reconciliation processes provide a foundation for ensuring both system integrity and proper accounting of payroll-related cash disbursements both at the Agency level and at the Treasury account level. Reconciliation is vital to the assurance that all labor dollars have been posted correctly and timely to IFS in support of Agency financial statements.

    Note:

    The reconciliation process does not address personnel issues, placement of employees, or cost distribution.

Automated Internal Balancing
  1. During the AINFC automated interface process, automated internal balancing occurs using biweekly payroll dollars, record counts, and control hash totals. This automated process ensures all incoming NFC transactions are accounted for and all transactions submitted by NFC have been processed successfully in the interface.

  2. If there is a discrepancy, the automated internal balance process halts until the source of the discrepancy is determined and corrected.

  3. The automated interface process produces an internal balancing form that is distributed via Outlook e-mail to the FMS Security and Payroll Section.

  4. An analyst in the FMS Security and Payroll Section visually verifies and confirms that:

    1. The correct fiscal year and pay period are reflected on the automated form.

    2. All variances identified as "should be equal to zero" equal 0.00 or are "within tolerance" (less than or equal to 0.05).

    3. The PACS (WEEK1 and WEEK2 files) processed amounts match the trailer records for the files used in processing.

    4. The carry forward recycled error amount matches the previous pay period ending recycled error amount.

  5. Error corrections between pay periods may result in a difference to the beginning balance of the next pay period recycle error amount. This activity requires that the Internal Balancing sheet is annotated to reflect and verify that the activity has taken place. Additionally, the Payroll Team Lead should be notified via an e-mail containing the annotated Internal Balancing sheet digitally signed by the FMS Security and Payroll Section analyst.

Enterprise Resource Planning Central Component Reconciliation of Integrated Financial System General Ledger
  1. After posting payroll transactions in IFS, an automated reconciliation of the payroll operating expenses received from NFC is reconciled to the IRS trial balance by pay period.

  2. The review of this reconciliation is performed by an analyst in the FMS Security and Payroll Section.

  3. The automated reconciliation consists of comparisons of the detailed employee level data received from NFC, to the posting in IFS and the corresponding general ledger cash postings. The detail information includes PPDF, ABCO, CAPS, and MISC postings, as well as any manual payroll corrections.

  4. The reconciliation ensures the data received from NFC has been fully accounted for in IFS after the posting jobs for ECC have completed.

  5. The IFS Transaction Code FS10N is used to produce the General Ledger Trial Balance report.

  6. Peer review is performed by an analyst in the FMS Security and Payroll Section.

Enterprise Resource Planning Central Component Payroll Reconciliation to Treasury
  1. On a biweekly basis, after successful posting of IRS payroll, NFC provides Treasury with the payroll distribution files necessary for paying employee salaries and employee benefits. The NFC prepares an FMS-224, Statement of Transactions, on IRS' behalf for payroll disbursements. The Payroll Reconciliation Accountant in the BFC Reports and Reconciliation Section uses Treasury’s Central Accounting Reporting System (CARS) Account Statement to identify the payroll disbursements reported by NFC. The BFC analyst performs an external reconciliation of payroll transactions processed by AINFC to ensure cash (payroll) disbursed by NFC and reported to Treasury via the FMS-224, Statement of Transactions, agrees with cash (payroll) posted to the General Ledger.

  2. The payroll reconciliation differences between IRS and Treasury are found primarily in the following areas:

    1. Cumulative prior year differences.

    2. Errors.

    3. Timing differences.

  3. Instructions for this process can be found in Desk Procedure, Chapter 60, Payroll Reconciliation Procedures.

Automated Interface to the National Finance Center Payroll System Accrual Process Overview

  1. The AINFC automated interface process utilizes a reference table, referred to as the Payroll Processing Schedule, to automatically record a payroll accrual in IFS to account for unpaid days in a given month/year.

  2. The table is maintained by the FMS Security and Payroll Section on a fiscal year basis.

  3. The IFS calculates a payroll accrual monthly. The accrual is based on prorating/projecting the last paid payroll for the month over the remaining unpaid workdays through the end of the accounting period/month.

    Note:

    Because the system accrual computes the unpaid expenses for payroll, thereby consuming budget, it facilitates monitoring and management of the remaining available funds. It also records the unpaid payroll liability incurred by IRS, since most pay period end dates do not fall on the last day of the month.

  4. Additionally, FR and BFC further validate the system accrual by recalculating the unpaid IRS obligation owed to its employees. See IRM 1.35.9.11.2.2, Accrued Funded Payroll Reconciliation (FPAY). See also Financial Reports Desk Procedure, Chapter 111, Accrued Funded Payroll (FPAY) Reconciliation.

Payroll Processing Table
  1. The processing of payroll data files from NFC is performed in a bi-weekly automated interface and uses the Payroll Processing Schedule (by Fiscal Year) as a guide for timing and accrual posting. The Payroll Processing Schedule is maintained by the FMS Security and Payroll Section.

  2. The contents of the Payroll Processing Schedule loaded into AINFC, maintained in a table.

  3. The Payroll Processing Schedule contains the following elements:

    1. Payroll processing cycle.

    2. IFS Accounting Month.

    3. Accrual Days (Hours).

    4. Ready for IFS date.

    5. Pay Period Begin date.

    6. Pay Period End date.

    7. Pay date.

    8. Posted to IFS date.

Accrued Funded Payroll Reconciliation
  1. The Accrued Funded Payroll (FPAY) work paper represents IRS’ obligation owed to its employees for wages (includes related benefits and payroll tax expense) earned during the month, but not paid before month end. A work paper is created for each accounting period, peer reviewed, and signed.

  2. The purpose of this work paper is to validate the system generated payroll accrual, ensure the accrual impacts the appropriate liability accounts, and confirm the system accrual for the prior period was properly reversed in the current period.

  3. The work paper is a joint collaboration between the BFC (preparation) and FR (review and signature).

Actual Paid Payroll Charges
  1. Actual paid payroll charges posted in IFS include an employee's basic salary for time worked (or leave taken), supplemental pay for overtime, Sunday overtime, night rate differential, and other incentive payments, such as retention and recruiting bonuses and gainsharing.

  2. Employer contributions to employee retirement, Social Security, Medicare, life insurance, health insurance, and the Thrift Savings Plan are also included among the payroll charges.

  3. Actual payroll charges are automatically recorded in IFS using Document Type LP.

Projecting and Automated Posting of Accrual Dollars
  1. The actual charges for a given pay period are used as the basis for projecting accrual dollars - days worked but not yet paid until the last workday of the month.

  2. The system accrual process includes the following assumptions:

    1. The time period begins with the Sunday following the last paid payroll end date within the Accounting Period.

    2. Work days are counted through the last day of the month.

    3. Since the accrual process projects straight accrual dollars based on paid payroll amounts, the process does not anticipate special circumstances, such as individuals not working on the unpaid days of the month.

  3. The automated interface process extends the current hourly rate of pay, including benefit factors, times the number of work/holiday hours remaining through the last day of the month.

  4. Once the automated payroll interface files are received in IFS, accrual charges are automatically recorded using Document Type LC.

    Note:

    The dollar amount of the Document Type LC (accrual) line may be different than that of the Document Type LP (actual), due to the difference in counting workdays vs. last day of the month.

Enterprise Resource Planning Central Component Reversal of the Automated Accrual
  1. After the completion of the month-end closing automated process in IFS, an analyst in the FMS Security and Payroll Section manually initiates the reversal process in IFS for the previously posted payroll accrual, using Transaction Code F.80 (accrual reversal).

  2. The reversal process is initiated on the first business day of the next accounting period.

  3. Instructions for the accrual reversal process task are maintained electronically.

Fiscal Year End Accrual Processing
  1. In order to provide a more accurate projection of funds availability at year end, an automated accrual process takes place in the automated interface process that accounts for all remaining days between the time of automated payroll (pay period) processing and the last work day of September.

    1. A normal payroll accrual is automatically posted with the last pay period processed in August, using the criteria in IRM 1.35.9, Section 11.2.3.1, Projecting and Automated Posting of Accrual Dollars.

    2. On the first business day of September, the accrual is reversed by an analyst in the FMS Security and Payroll Section. Immediately following this activity, a new accrual is automatically posted to reflect the work days remaining until the end of the month (and including the work days remaining after the last August pay period end date).

    3. For each subsequent pay period processed in September, the previous accrual is reversed and a new accrual is automatically posted by the automated payroll interface to reflect the remaining days until the end of September, as referenced in IRM 1.35.9, Section 11.2.3, Enterprise Resource Planning Control Component Reversal of the Automated Accrual.

      Note:

      The automated accrual process is different at year end because it records an accrual for all work days remaining in the fiscal year from the time of each automated payroll posting until the last work day of September. The automated accrual method used during the other months uses the ending date of the last full pay period to post that month, counting the work days from the pay period end date to the last work day of the month, as referenced in IRM 1.35.9, Section 11.2.2.1, Projecting and Automated Posting of Accrual Dollars.

Reports Overview

  1. The AINFC interface process includes creation of various reports, logs, and statistics produced each pay period for use in internal reconciliation and error resolution.

  2. A mainframe-housed repository, referred to as Control-D, can be accessed through the Knowledge, Incident/Problem, Service Asset Management, Online 5081 System, with access granted to only CFO employees with a duties-related need.

  3. The Control-D repository stores reports, logs, and statistics in text format, which can be printed and/or saved electronically to a restricted access folder for further use by FMS.

Error Correction Overview

  1. The accumulated AINFC error file contains pay period transactions that failed the AINFC validation process and therefore could not be posted in IFS. The file is referred to as the "Recycle Error" file.

  2. Each pay period, the AINFC process reads the Recycle Error file and attempts to match all records containing an invalid TIMIS Code to the AINFC LEDGERS files to acquire a valid TIMIS Code. Matched records are processed through the ORGA process (TIMIS Code and ORGA file) to obtain a valid accounting string. See IRM 1.35.9.9, Payroll Accounting File Handling Overview. In any records where valid accounting string data cannot be determined, the characters "ZZ" are placed in the REGION field.

  3. Correction steps are necessary to resolve any errors that do not pass the previously described file handling and validation processes.

Error Correction Process

  1. A payroll analyst in the FMS Security and Payroll Section reviews for each pay period, the mainframe-housed repository (Control D) listing of current fiscal year error transactions.

  2. Further research is performed to determine appropriate accounting string information necessary for processing corrections in a subsequent pay period.

  3. Research may involve contacting the appropriate business unit to determine the valid accounting information to use.

  4. An automated error correction process is used to correct errors. This process uses a spreadsheet, containing key data fields, which determine a match to the transaction being corrected. Missing or corrected data fields are entered into the spreadsheet.

  5. The spreadsheet is uploaded to the mainframe, and automatically scheduled jobs are run to validate and process the corrected information.

  6. Verification reports are available through the mainframe-housed repository (Control-D). These show the results of the correction processing.