Systems Flashcards
Benefits of TIN Matching
- Match W-9 name and TIN with IRS records.
- Decrease backup withholding and penalty notices.
- Reduce the error rate in TIN validation
Define batch processing
Data is entered in batches. The batches are then processed in the system and after the batches are processed the updated records can be viewed in the system.
Define parallel testing.
Using actual payroll inputs to run a full payroll end-to-end on a new system and comparing the results to the live payroll
Define RDFI
Receiving Depository Financial Institution - The employee’s bank
Define SaaS
“Software-as-a-service” Software and associated data is hosted centrally by vendor and accessed by customers over the internet.
Define Unit testing
Testing individual components of a new payroll system.
Defining the objects of your project is part of what phase of system selection?
Performing a needs analysis.
Definition of “authorized payor” for TIN matching.
- Has filed information returns in at least one of the past two years.
- Is listed in the Payer Account File (PAF) database
Developing training materials is part of what phase of system implementation?
Configuration
Documenting your current system is part of what phase of system selection?
Performing a needs analysis.
During what timeframe can you request a direct deposit “recall”?
After the bank sends your file to the ACH network but before deposits post to employee accounts.
During what timeframe would you request a “reversal” of a direct deposit?
- Within 5 business days
- After the deposit posts to the employee’s account.
- RDFI normally posts deposits to employee accounts on payday.
Employment tax records must be retained for how long?
4 years after the tax becomes due or is paid, whichever is later.
Higher hardware costs is a disadvantage of what type(s) of payroll systems?
In-House
How can management discover that internal control procedures are being circumvented?
Rotate payroll staff job responsibilities.
How can you tell the difference between an ITIN and an SSN?
An ITIN begins with a 9 and has either 7 or an 8 as the fourth digit.
How long must an employer retain an ACH authorization?
Latter of 2 years after revoked or 2 years after termination.
How long must you keep I-9 forms?
3 years after date of hire or 1 year after date of termination, whichever is longer.
How long must you retain FLSA records?
Some records must be maintained 3 years after last date of entry while others must be kept 3 years from the last day in effect.
How long must you retain OSHA records?
5 years
How many years must you retain FMLA records?
3 years from end of leave.
In-House system Disadvantages
- Initial Investment
- Level of fixed costs
- System Maintenance
- Hardware costs
- special facility requirements for hardware
- staffing requirements
- involvement required to complete Software updates.
In the direct deposit process, what is your company’s bank called?
ODFI, Originating Depository Financial Institution
Is prenotification of new direct deposit setups required?
No
Length of time a BSO password is good for.
90 days
List 3 reasons why a company must have internal controls.
- Prevent material errors and fraud from occurring
- Ensure compliance with statutory laws and regulations
- Preserve the integrity of the company’s financial statements
List disruptions that a BCP should address
- Premises
- People
- Systems
- Documentation
- Data
- Equipment
- Telecommunications
Live processing on the new system begins during what phase of a system implementation?
Rollout
Lower initial investment is an advantage of what type(s) of payroll systems?
Time-shared
Service bureau
Maximum number of user ids an individual may have for BSO.
One
Name five different types of payroll systems.
- In-house
- Time-shared
- Service bureau
- Outsourced
- SaaS (cloud-based)
Name 2 types of Agile Methodology.
Scrum and Kanban
Ordering hardware is part of what phase of system implementation?
Requirements gathering and analysis.
Other names for SaaS
- Cloud Computing
- Hosted software
- Web-based software
- On-demand software
Outsourcing Advantages
- Level of fixed costs
- System Maintenance
- Hardware costs
- Special facility requirements for hardware
- Staffing requirements
- Expandability
- Involvement required to complete Software updates
Outsourcing Disadvantages
- Initial Investment
- No access to real-time data
- Lack of control over system software and hardware
- Software not designed for companies specific needs
Party to whom employer sends EFT transactions
ODFI
Party to whom ODFI sends EFT transactions.
ACH Operator
Party who posts EFT transactions to customer accounts
RDFI
Planning and organizing is part of what phase of system implementation?
Project initiation
Populating the database is part of what phase of system implementation?
Configuration
Programming customizations is part of what phase of system implementation?
Configuration
Qualifications for Certified Professional Employer Organization certification application.
- Online application for each responsible individual
- $1k user fee per applicant
- Surety letter
- Copy of audited financials with CPA opinion
- Positive working capital
- Uses accrual accounting
Requirements of CPEO to maintain certification
- Quarterly attestation has withheld and deposited all federal employment taxes
- Maintain bond
- Notifies IRS of any material changes to qualifications since applied
SaaS Advantages
- Security
- Scalability
- Lower cost of ownership
- Control & Flexibility
- Enhancements & fixes updated automatically
- No IT burden
- Better data reliability & disaster recover
- Real-Time access
- Opportunity to identify and correct errors before checks are produced
SaaS Disadvantages
- Lack of control over system software and hardware
- Software not designed for companies specific needs
Service Bureau Advantages
- Initial Investment
- Level of fixed costs
- System maintenance
- Hardware costs
- Special facility requirements for hardware
- Expandability
- System Security
- Involvement required to complete Software updates
Service Bureau Disadvantages
- Lack of control over system software and hardware
- Software not designed for companies specific needs
Services available in BSO
- Electronic wage reporting (EWR)
- View File/Wage Report status, errors and error notices
- View name and SSN errors and error notices for wage files and wage reports submissions of your company
- SSN verification Service (SSNVS)
- Form SSA-1694 Request for Business Entity Taxpayer Information
- Internet Representative Payee Accounting Service
System for checking the format of EFW2 file
Accuwage
Timeshared system Advantages
- Initial Investment
- Level of fixed costs
- System maintenance
- Hardware costs
- No special facility requirements for hardware
- Expandability
- No involvement required to complete Software updates
Timeshared system Disadvantages
- System response time
- no control over system software and hardware
- software not designed for companies specific needs
- lack of control over timing of input and late processing when needed
- system security
To whom do you send an RFP?
To each vendor you want to present a solution to your project team.
Three roles in Scrum
Product Owner, Scrum Master and Team Member
True or False: An External audit can be relied upon to detect fraud
False. The purpose of an external audit is not to detect fraud. However, if fraud is uncovered during an external audit, the auditor has a duty to notify management.
Types of meetings in Scrum
- Backlog grooming
- Sprint planning
- Daily Scrum
- Sprint Review
- Sprint Retrospective
Vendor presentations are part of what phase of system selection?
Select a system
What are the phases of implementing a new payroll system
- project initiation
- requirements gathering and analysis
- configuration
- testing
- training
- rollout
What are the phases of selecting a new payroll system
- Select a project team
- perform a needs analysis
- prepare a request for proposal
- select a system
What does SOX section 404 require
That management must assess the effectiveness of internal controls and procedures for financial reporting annually. The company is required to publish a statement in its annual 10-k report regarding the scope and adequacy of the internal controls.
What does the acronym BCP mean?
Business continuity planning
What does the acronym BSO mean?
Business Services Online. A service of the SSA
What does the acronym SOX mean?
Sarbanes-Oxley ACt of 2002
What internal control can be used to protect against ghost employees?
Conduct surprise physical distribution of paychecks requiring employees to show a photo ID to receive their check.
What is a method to prevent collusion between a payroll employee and an employee outside of payroll?
Rotate payroll staff job responsibilities.
What is an ACH pre-note?
A zero dollar deposit sent to test the direct deposit setup for an employee. It is sent before any live deposit.
What is considered a quick turnaround time in disaster recovery?
4 hours
What is the difference between real-time processing and batch processing?
In real-time processing updates entered into the system can be viewed immediately. In batch processing updates cannot be viewed until after the batch is processed.
What is the federal record retention requirement for employment records?
4 years
What is the focus of an external audit?
For the auditor to express an opinion as to whether the company’s financial statements are free of material misstatements and omissions.
What is the maximum number of SSNs you can verify online via SSNVS?
10
What method can be used in batch processing to catch keying errors or import errors?
Batch totals
What two categories of testing should be performed during a system implementation?
Parallel testing
Unit testing
When can you request a “delete” from your ACH file?
Before your bank sends your file to the ACH network.
Which type(s) of payroll systems gives you the greatest control over timing of input and processing?
In-house
Who developed Agile Kanban?
David J Anderson
With what external companies are payroll likely to interface data?
Benefit plan administrators
Banks
With which other department(s) is payroll likely to interface data?
- Accounts payable
- Accounting
- Human Resources
- Compensation
- Benefits
