31 Correct Errors in Pre-Payroll Processing
This chapter contains the topic:
31.1 Correcting Errors in Pre-Payroll Processing
After you review pre-payroll reports, you might discover errors in the gross-to-net calculations. Some errors you might encounter include:
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An employee is not included in a payroll cycle.
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DBAs do not calculate properly.
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The gross wages less the deductions that printed on an employee's payment do not equal the net wages on the Payroll Register.
The following examples describe common errors and the steps you would take to correct them.
31.1.1 Example 1: An Employee is Not Included in a Payroll Cycle
Occasionally an employee who should be paid this pay period is omitted from pre-payroll processing. Typically, an employee is omitted from pre-payroll processing for one of the following reasons:
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The selection criteria for the pre-payroll version did not include the employee.
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The date entered as the employee's pay start date or pay stop date is incorrect.
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No timecard has been entered for the employee.
To determine why the employee was not included in pre-payroll, locate the employee on the Employee Entry form. The form should indicate that the employee is locked in pre-payroll.
When the Employee Entry form does not indicate that the employee is locked in pre-payroll, the employee was not included in the data selection for the pre-payroll program version.
Do one of the following:
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Reset the payroll ID and then change the selection criteria for the pre-payroll version so that it includes the employee. You should then process pre-payroll again.
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Issue an interim check for the employee.
If you issue an interim check, you should change the pre-payroll selection criteria after you complete payroll cycle processing.
Reviewing Pay Start and Stop Dates
If the employee is locked in pre-payroll, review the employee's pay stop and pay start dates on the Employee Entry form.
When the pay starts date is after the pay period ending date, or the pay stops date is before the pay period beginning date, the system does not include the employee in the payroll cycle. For example, if the pay period dates are 4/26 - 5/09 and the pay starts date is 5/10, the system does not include the employee in that payroll cycle.
Reviewing Timecard Information for Hourly Employees Only
If the employee who was not included in pre-payroll is paid hourly, verify that you completed either of the following:
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Entered a timecard for the employee.
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Entered standard hours for the employee on the Pay and Tax Information form. (Entering standard hours causes the system to automatically generate timecards for the employee.)
If the employee does not have a timecard for this pay period, enter one and then rerun pre-payroll.
31.1.2 Example 2: DBAs Do Not Calculate
In some cases, the system does not calculate one or more DBAs that should be calculated during pre-payroll. This scenario could happen even if the system properly calculated the DBA during the last payroll cycle. This condition might affect:
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All employees
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Some employees
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One employee
Use the Transaction Audit report or the DBA Register, which you can print during the print payroll cycle reports step, to determine how many employees are affected. Use the DBA One-Time Override window on Time Entry by Employee to review current DBAs for individual employees.
DBAs Did Not Calculate for Any Employees
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On the DBA Setup form, locate the DBA.
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Verify the information in the following fields:
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Calculate in Pre-Payroll
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Beginning Effective Date
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Ending Effective Date
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Pay Period to Calculate
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Access the Basis of Calculation table.
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Verify that:
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The based-on PDBAs were calculated.
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The based-on PDBAs are not zero.
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The DBA is not based on another DBA that is assigned at a different level (employee, group, or DBA).
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Make any necessary corrections to the DBA Setup form.
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Access the second Pre-Payroll Processing form.
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Verify the information in the following fields:
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Year
The year must match the year entered for the master pay cycle.
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Period Number
The period number is not specified.
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Access the Master Pay Cycles form.
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Verify the information in the following field:
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Withholding Period
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Make any necessary corrections to the payroll cycle information.
DBAs Did Not Calculate for Any Employees in a Group Plan
If you are using group plans to assign DBAs to employees, and the system did not calculate DBAs for any of the employees in that plan, verify the plan setup.
If you are using the Human Resources system to enroll employees in benefit plans, verify that the employees are enrolled in the proper plans.
If you are using Payroll to assign employees to DBAs, complete the following steps:
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On Group Plan DBA Setup, locate the group plan in which the employees are included.
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Verify the information in the following fields:
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Beginning Effective Date
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Ending Effective Date
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Withholding Period
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Make any necessary corrections.
DBAs Calculated for Only Some Employees
If you are not using group DBA plans, or if the employees whose DBAs did not calculate are in different DBA plans, complete the following steps:
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Review the Deductions Not Taken and Deduction Arrearage reports to verify that the employees earned enough to cover their deductions.
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Locate the employee on the DBA Instructions form.
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Verify the information in the following fields:
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Start Date
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Stop Date
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Pay Periods to Calculate
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Group Code
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Union Code
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Make any necessary corrections.
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On the DBA Setup form, locate one of the DBAs that the system did not calculate.
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Access the DBA Limits window.
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Using the information in this window, determine whether the employee has reached the limit for this DBA.
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Access the Basis of Calculation Table.
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Review the information and make any necessary corrections.
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If the DBA uses a calculation table, access the Calculation Tables form.
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Review the information and make any necessary corrections.
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Using the DBA One-Time Overrides window that you access from the Time Entry by Employee form, determine if a one-time override exists for the DBA.
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Using the Interim Check Entry form, determine whether an interim check was issued for the employee this period.
If the DBA is set up to calculate once per period, and it is included on an interim check, the system does not calculate it during pre-payroll.
31.1.3 Example 3: Gross To-Net Error
When the gross wages less the taxes and deductions that printed on an employee's payment do not equal the net wages on the payroll register, you probably need to set up an additional tax area. For example, your organization might have recently started doing business in another state, but you did not enter a tax area for that state into your Payroll system.
Although Vertex calculates the tax, and it is subtracted from the gross wages, the system does not print the tax on the Payroll Register. Therefore, the gross wages less the deductions and printed taxes do not equal the net wages on the payroll register.
To ensure that the system creates the correct journal entries, you must correct the gross-to-net error. Depending on the way in which your company constants are set up, you might be required to correct this error before you can continue with payroll cycle processing.
The Summary Payroll Register, which you can print during pre-payroll processing or from the Reports Only menu selection, displays ERR next to each employee who has a gross-to-net error.
To correct the error, complete the following steps:
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Set up a tax area for the new state.
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Reset the payroll ID.
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Rerun a full pre-payroll.
31.1.4 Example 4: An Employee's Taxes Must Be Recalculated
In some cases, the system identifies and corrects errors for you. Depending on how you set up your deductions, an employee who is a low wage earner might have one or more pre-tax (tax-deferred or tax-exempt) deductions reduced or placed in arrears. Reducing or arrearing pre-tax deductions changes the employee's taxable gross wages. When this condition occurs, the system automatically reduces the pre-tax deduction to zero and recalculates the employee's taxes using the new taxable gross wage amount.
To perform these recalculations, the system automatically submits a changes only pre-payroll and prints the following reports:
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Changes Only Payroll Register
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Deductions Not Taken report (if applicable)
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Deduction Arrearage (if applicable)
During this processing, the system:
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Places a pre-tax deduction entirely in arrears or fully reduces it (depending on the arrearage rule), if it cannot be fully deducted. The system does not partially arrear or reduce a pre-tax deduction to avoid negative pay. Two examples are:
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A pre-tax deduction has an arrearage rule of Q (place the full or partial amount in arrears as needed and do not apply the limits when collecting). If the program cannot take the full amount of the pre-tax deduction, it uses rule G instead, placing the entire amount in arrears and listing the amount on a Deduction Arrearage report.
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A pre-tax deduction has an arrearage rule of P (partially or fully reduce the deduction as needed, but do not collect the amount in the future). If the program cannot take the full amount of the pre-tax deduction, it uses rule F instead, taking none of the deduction. In this case, the amount is not placed in arrears. The system prints the amount on a Deductions Not Taken report. It does not hold the amount over to be collected in the future.
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Marks the deduction as a One-Time Override with a zero amount. This excludes the deduction from the calculations in the automatic Changes Only cycle.
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Sets pre-payroll to automatically cycle through a changes only pre-payroll at the end of the current processing, to recalculate taxable wages and net pay.
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Prints a detailed Deductions Not Taken report, a Deduction Arrearage report, or both totaled by employee.
The system runs changes only processing up to three times to resolve these situations.
Subsequent Reductions to Mandatory Deductions
When the system automatically processes changes only pre-payroll, recalculation typically results in higher taxes. To avoid a negative check, the system might have to place one or more mandatory deductions in arrears according to its normal processing priorities.
Wages Lower than Total Pre-Tax Deductions
An employee has standard pre-tax deductions of $100.00 and $50.00, but earnings for this pay period are only $95.00. During the full pre-payroll, the Payroll Register appears as follows:
The system takes the $50.00 pre-tax deduction but omits the $100.00 pre-tax deduction, because wages do not cover it in its entirety. Because of the deduction's arrearage rule, the system does not place the amount in arrears. That is, the system will not try to deduct this amount in future pay periods. An omitted deduction with this type of arrearage rule is printed on a Deductions Not Taken report.
When the system subtracted pre-tax deductions from the gross wages, no taxable gross remained and no taxes were calculated. However, the $100.00 deduction was not taken. Therefore, taxes must be recalculated on $45.00 (gross wages minus only the pre-tax deduction that is being taken).
The employee listing on the Changes Only Payroll Register is as follows:
Figure 31-2 Changes Only Payroll Register
Description of ''Figure 31-2 Changes Only Payroll Register''
An employee earns $88.92 in hourly wages and $500.00 in tips. This employee also has a pre-tax deduction of $143.00. The system initially calculates taxes based on a taxable wage of $445.92 (earnings of $588.92 less a total pre-tax deduction of $143.00).
During the full pre-payroll, the Payroll Register shows the following for the employee:
The system also prints a Deduction Arrearage report, showing this employee's pre-tax deduction of $143.00 that the system could not deduct because the net was zero after the taxes and tips were deducted from the gross wages. This report also lists part of the taxes not fully covered before the net reached zero. The Deduction Arrearage report indicates that the system placed these deductions in arrears (because of their arrearage rules). The system will take the deductions in the next pay period if the employee's net pay covers them.
However, the system based the federal and state calculations shown above on $445.92, the gross wages minus pre-tax deductions. Because the system could not take the pre-tax deduction, it must recalculate taxes based on the full gross wages.
This employee's listing in the Changes Only Pre-Payroll Payroll Register appears as follows:
Figure 31-4 Changes Only Pre-Payroll Payroll Register
Description of ''Figure 31-4 Changes Only Pre-Payroll Payroll Register''
The system recalculated the taxes based on $588.92, the total gross without the pre-tax deduction. The taxes are therefore higher, except for the federal income tax. Again, the system places the federal income tax deduction in arrears because insufficient pay remains for the entire deduction. The changes only pre-payroll prints the amount in arrears on a Deduction Arrearage report.