In my role at KALTech, I have noticed that the Payroll team often find this time of the year very stressful. They have to perform their regular tasks of processing the payroll, balancing posting and additionally now have to produce payment summaries, overwrite YTD figures, add FBT payment and review employee’s records in preparation for the new financial year, just to name a few additional responsibilities at this time of the year. It’s easy to see why the payroll teams stress so much at this time of the year.
To help alleviate this, I’ve listed some practical steps for a smooth and stress free end of financial year(EOFY). These suggestions are based on my experience in the SAP Payroll Consulting area.
1. Pay by Pay Reconciliation Process
These processes are performed on the same day as the payroll bank transfer occurs and any discrepancies need to be investigated.
- 1.1 Individual payroll results verses Payment Summary listing figures
- 1.2 Tax on Payment Summary Listing verses Group Tax Remittance
- 1.3 Payroll Tax Gross to Payment Summary Listing Gross
- 2.1 Check that business addresses and contacts details are correct on payment summaries. This is a configuration task performed by the Payroll consultant.
- 2.2 Apply any SAP OSS Notes or Patches affecting payment summaries.
- 2.3 Check outstanding overpayments to ensure the accuracy of gross and tax figures and process any necessary adjustments to the payment summaries.
- 2.4 Communicate with the Business owner the deadline for any late/adjustment or off-cycles payments.
- 2.5 Process any overrides due to late/adjustment or off-cycles paid after the last payroll runs but before June 30.
- 2.6 Load FBT figures as overrides on Payment Summaries. These figures are provided and signed off by Taxation (Person in-charge).
- 2.7 Preparation of final Payroll Tax, Group Tax and Payment Summary Reconciliations.
- 2.8 Run Payment Summary program to create Infotype 849 and 850 records. These amounts must equal the reconciliation figures. This Infotype is used to generate both the ATO Magnetic Media and the Printing File.
- 2.9 Determine best approach for distributing terminated and current payment summaries.
- 2.10 Send the file to the printers and approve proofs.
- 2.11 Confirm delivery date post printing.
- 2.12 Prepare any ATO letters i.e. adjustment to previous year payment summaries and Lump Sum E.
- 2.13 Prepare Workplace Giving Letters.
- 2.14 Prepare manual payment summaries, if necessary.
- 2.15 General announcement to all employees.
- 2.16 Check that the number of payment summaries printed is same as requested.
- 2.17 Co-ordinate the distribution to all employees which may include communication to reception and all mailrooms. Terminated employee’s payment summaries can be sent to home address/postal address on record.
- 2.18 Preparation of ATO Magnetic Media including completion of covering Payment Summary Report (download from ATO website).
- 2.19 Forward Magnetic Media, letters and any ATO copies of manual payment summaries to ATO.
- 4.1 Increase Payroll Team awareness of impact to payment summaries when processing data.
- 4.2 Adjustment/ Advanced and Off-cycles payments to be kept at a minimal after the last payroll run for the financial year.
- 4.3 A report to be created which reads each individual payroll result to produce a total. This will reduce the time taken to merge this data into Excel.
- 4.4 Currently, each program variant is manually updated with any new wage types created. There is a risk that the maintenance of this variant is not done causing reconciliation to be incorrect.
- 4.5 To lower the risk and increase efficiency, a wage type catalogue should be created. With this catalogue as a basis, a new processing class should be created grouping the wage types together. Reporting could then be performed based on the processing class rather than individual wage types. When new wage types are created or copied, the processing class would be added therefore updating the variant automatically.
- 4.6 The Payroll Tax Reconciliation should be undertaken by the Finance Team using the pay results.
This process is the final pay-by-pay reconciliation. It reconciles the payroll taxable earnings to the gross amounts recorded on the payment summaries. The spread sheet is sent to the Finance team once the Payroll Officer has completed their data input. The Finance contact should then include the payroll taxable earnings and the differences are investigated.
The calculation used for this reconciliation is:
Payroll Tax Earnings
Less Payroll Tax Earnings not on Payments Summaries
Less On Payment Summaries Not Payroll Taxable
Equals Gross Amounts on Payment Summaries
2. End of Financial Year Checklist
This is a list of tasks which must be performed either just prior to or at the end of the financial year:
3. Payment Summary Overrides
These overrides adjust figures appearing on the payment summary when the change cannot be done via the payroll results. An example of this is off-cycle payments made between the last pay run and June 30.
Using this process means that the actual payroll results do not match payment summary figures.
As these adjustments are reconcilable items, it is important to keep them at a minimum. All adjustments should be made via the payroll were possible.
Below are some recommendations which could prepare the Payroll team in advance for the year end:
To conclude, the key is to “Plan ahead and not to wait until the last minute”. If you are not completely confident with your SAP payment summary process, then the best way forward is to invest in training with a SAP solution provider, like KALTech who will provide you with all the required support.
KALTech has excellent support experience, especially around the Payment Summary process. We have proven methodologies that guarantee the best results for our customers.
Talk to us and Experience the KALTech Difference!
KALTech SAP/SuccessFactors Consultant