NCAS Payroll Interfaces

It is the policy of the State of North Carolina that reconciliations of payroll reports and accounts be performed at appropriate intervals.

G.S. 143B-426.39 Powers and Duties of the State Controller

There are two statewide payroll interfaces, the Health Benefits Interface and the Payroll Interface.  These interfaces allow for programmatic postings of employer payroll costs.  Gross salary, FICA, retirement, and medical insurance costs are interfaced from the Central Payroll System and posted to the North Carolina Accounting System with offsets to specific clearing accounts.  Clearing account balances represent funds the agencies are responsible for disbursing and provide further assurance of the accountability of payroll costs.

The Health Benefits Interface converts data from the Central Payroll System into NCAS posting transactions for all agencies that elect to participate in the automated health benefits posting process.  The Office of the State Controller (OSC) receives a monthly file from Central Payroll which includes all health benefits expenditures.  The Health Benefits Interface is processed on the first working day of the month.

The NCAS posting transactions are created for employer medical insurance contribution costs with an offset to a Health Benefits Payable clearing account/center.  These transactions are posted to the General Ledger with an appli­cation source code of BI.

The Health Benefits Interface generates the appropriate account for recording employer medical insurance contribution costs.  These accounts are derived from the salary/wage account used to post the employee's gross wages as follows:

The offset to all health benefits expenditure transactions is recorded against one of the following health benefits payable accounts:

The center associated with the health benefits payable account is determined as follows:

Deposit of Employee Portion

At the end of each month, the Central Payroll Division remits amounts deducted from employee earnings for insurance premium costs to the employing agency.  The agency receives a check from the Central Payroll Division for the total amount withheld from employees for each insurance carrier. The cash deposit is recorded against the Health Benefits Payable clearing account (see previous list) that is appropriate for each carrier.  This would also be the case for employees who are pay­ing their own portion out-of-pocket (e.g., an employee on a leave of absence). The following chart illustrates the appropriate procedure to record cash deposits:

Posting Health Benefits Expenditures

For agencies using the NCAS Health Benefits Interface, all employer medical insurance contribu­tion costs are posted to the General Ledger during the night of the first working day of the month after which the employee's portion is deducted.  The effective date of the posted transactions is the month's first working day.  Under this procedure, medical premium costs are posted in the same month for which the coverage is in effect.  The typical transactions generated from the Health Benefits Interface are illustrated below:

Payroll splits are incorporated into this process, so that the correct percentage of the expenses are posted for each accounting distribution and debit/credit code.

Remitting the Insurance Premiums

Once the insurance carrier billings are reconciled against the Central Payroll reports, an Accounts Payable check is issued to the insurance carrier.  The invoice lines should reference the appropriate Health Benefits Payable account and center.  The following chart illustrates the appropriate procedure to record this payment through Accounts Payable:

Health Benefits Interface Reporting

Each time the Health Benefits Interface is processed, a report, HTHRPT01, is written to Systemware as OSCOP* FC712-1 (where * represents the agency's region: F for NC23 and C for P). 

Reconciling the Health Benefits Payable Account (2119304XX)

After the premium checks have been issued to the insurance carriers, agencies should review the ending balance of each Health Benefits Payable clearing account (2119304XX).  Any balances remaining in the payable accounts should be attributable to one of the following:

• Personal check prepayments of an employee's premium portion are recorded (e.g., prepayment from an employee on a leave of absence). These balances should decrease as each month's premium payment is made and should clear after the final premium amount is paid.
• Health Benefits Payable clearing account transactions are posted to suspense. Determine whether the appropriate payable account/center is valid and active on the NCAS.
• Transactions are not properly processed through a Health Benefits Payable account. Evaluate whether all medical insurance premium transactions other than those generated by the Health Benefits Interface are properly recorded in a Health Benefits Payable account instead of an expenditure account.
• Employer medical insurance contributions are not processed through the Central Payroll Sys­tem (e.g., new employee salary/wage payments are processed through a payroll other than the monthly payroll).  Prepare a journal voucher to record the expenditure and clear the Health Benefits Payable account.
  

Health Benefits Suspense

Salary/wage accounting distributions entered into the Central Payroll System are not validated against the accounting distributions existing in the NCAS.  Accounting distributions that are invalid or inactive on the NCAS and processed through the Health Benefits Interface will post to the Health Benefits Interface Suspense account/center, 531998-9999.

Health Benefits suspense balances are cleared by entering a journal voucher into the NCAS with a BI accounting rule which generates the offset to suspense.

The Payroll Interface converts data from the Central Payroll System into NCAS posting transactions for all agencies that elect to participate in the automated payroll posting process.  The OSC receives a file for each payroll processed by the Central Payroll Division which includes all payroll expenditures. The monthly payroll interface includes adjustments related to imputed income.  The schedule for processing interfaced payroll transactions follows:

The NCAS posting transactions are created for all payroll expenditures, including total salaries/ wages, employer social security costs, and employer regular retirement and LEO retirement contributions.  The offsetting entry posts to a payroll clearing account/center. These transactions are summarized by accounting distribution (company/account/center) and debit/credit code.  All Payroll Interface transactions are posted to the General Ledger with an application source code of PI.

The Payroll Interface generates the appropriate accounts for recording employer social security and retirement costs.  These accounts are derived from the salary/wage account used to post the employee's gross wages and are as follows:

The offset to all payroll expenditure transactions is account 211240 Central Payroll Clearing.  The center associated with the payroll clearing account is determined as follows:

Posting Payroll Expenditures

For agencies using the NCAS Payroll Interface, all salary/wage and employer social security/ retirement costs are posted to the General Ledger prior to the actual payment of the payroll.  Except for refunds and cancellations, the typical transactions generated from the Payroll Inter­face are illustrated below:

Payroll splits are incorporated into this process, so that the correct percentage of the costs are posted for each accounting distribution.

Transferring Funds for Payroll Costs

On the payroll payment date, each agency is responsible for electronically transferring the total cost of the payroll to the Central Payroll Division via the Cash Management System.  The entry to record the cash transfer is as follows:

The state of North Carolina provides employees the opportunity to participate in a pre-tax term life insurance plan through the ING Group Term Life Plan.  Employee premiums are coded to deduction code 452.  The Internal Revenue Service requires that he imputed cost of life insurance coverage in excess of $50,000 be included in income, using the IRS Premium Table, and is subject to income, social security and Medicare taxes.  Because the state is affecting the premium cost through its subsidizing and/or redistributing role, there is a benefit to employees. This benefit is taxable even though the employees are paying the full cost they are charged.  ING provides an electronic file that the Central Payroll System uses to assess imputed income, which is recorded using deduction code 055. 

Imputed income inflates the eligible employee's taxable income but is not a true cost to the employing agency.  To correct the agency's salary costs, an interface from the Central Payroll System for all agencies using the NCAS is posted with the monthly payroll to reduce the applicable salary costs accumulated for all payrolls processed during the month.  The Imputed Income Interface generates the following transactions:

The offset to all payroll expenditure transactions is account 211240 Central Payroll Clearing.  The center associated with the payroll clearing account is determined as follows:

The Imputed Income Interface will post invalid accounting distributions to the payroll suspense account and are cleared by entering a journal voucher into the NCAS with a PI accounting rule to generate the offset to suspense.

Cash Carryforward Procedures

If cash is properly reconciled by year end (June 30), balances in both the Central Payroll Clearing account (211240) and the Health Benefits Payable account (2119304XX) should represent funds held for employees and eligible for disbursement in the first period of the next fiscal year.  A cash carryforward check is written to the agency to carry the clearing account balances for appropriated funds forward to the next year, which should clear during subsequent payroll and health benefits interface processing.  Any appropriated balances not relieved prior to year end close revert to the state and the obligations which need to be paid in the next year will have to come from the next year's budget.

Year End Accruals

Health Benefits Accrual

Health benefits costs are not accrued at the year end.  All employer medical insurance contribu­tions should be paid prior to the end of the fiscal year.

Payroll Accruals

The Payroll Interface automatically creates accrual and accrual reversal transactions for appro­priate payroll costs incurred during the month of July.  These transactions are generated for all payroll costs paid in July with a pay ending date prior to July 1.

Accrual entries are posted to the General Ledger in the thirteenth period of the previous year as follows:

Accrual reversal entries are posted to the Suspended Batch Master (SBM) as future dated batches and are released from the SBM and posted to the General Ledger at the end of the new fiscal year.  The accrual reversal entries are recorded as follows:

Any material payroll liabilities incurred prior to July 1 and paid after July 31 will need to be accrued manually by the agency.

This policy applies to all State entities.

There are no exceptions to this policy.

There are no special terms for this policy.