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pdfET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
INTRODUCTION
The Cashiering function consists of processing employer contribution payments, including
the following major tasks:
Receive employer contribution payments
Prepare contribution payments for deposit
Deposit contribution payments into clearing account(s)
Record all contribution payment deposit information
Post contribution payments to employer accounts
Transfer monies to the Unemployment Trust Fund (UTF)
PRIMARY OBJECTIVE
The primary objective of Cashiering is the prompt and accurate processing of employer
contribution payments. To achieve this, the Cashiering function must:
Accuracy
and
Completeness
Timeliness
1.
Process all contribution payments accurately and record deposit activities
accurately (Accuracy and Completeness)
2.
Deposit all contribution payments promptly and transfer monies to the
UTF timely (Timeliness)
To determine the accuracy and completeness of processing employer
contribution payments and recording deposit activities, a Program Review
will be conducted to determine the existence of necessary internal controls
and to determine whether or not such controls are functioning properly.
To assess the promptness with which the State deposits contribution payments
into the clearing account, an Estimation Sample will be conducted.
(Timeliness of the transfer of monies from the clearing account into the UTF
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TAX PERFORMANCE SYSTEM
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CHAPTER FOUR
INTRODUCTION
will be gauged through another vehicle and will not be assessed through TPS)
REVIEW METHODOLOGIES
Because accuracy of posting of contribution payments will be evident through the Account
Maintenance Acceptance Samples for Contribution Report Processing, Debits/Billings and
Credits/Refunds, no Acceptance Sampling is required for the Cashiering function.
Program Review
The Program Review for Cashiering has two components: a Systems Review and an Estimation
Sample.
The Systems Review covers the following:
Recorded Information and Instructions
Training
Recording of Transactions and Events
Execution by Authorized Individuals
Systems to Assure Execution of Events
Review of Completed Work
Review UI Cashiering activities conducted by Non-State Entities (other
State Agency or Lockbox)
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CHAPTER FOUR
INTRODUCTION
REVIEW METHODOLOGIES
The Systems Review will identify the internal controls and quality assurance systems necessary
for an effective Cashiering operation, and indicate if such controls are in place. Most questions
in the Systems Review require a Verification Source (VS). However, because of the significance
of the Cashiering function, some review questions require small, stringent tests to confirm the
presence and effectiveness of the internal controls.
Verification Test (VT) instructions are provided when a verification test is needed. If a VT fails,
the reviewer must draw the conclusion that a risk exists in that area. (VTs that fail must be
repeated the following year.)
In addition to the review of the State Cashiering operation, a section has been designed for the
States that employ non-State, State Agencies (e.g. State Departments of Revenue) or banks
(lockboxes) to perform Cashiering activities. For States that employ either a non-State agency or
a bank lockbox for Cashiering activities, BOTH SYSTEMS REVIEWS ARE NECESSARY
because:
Rarely can all contribution payments and documents received at a non-State
cashiering site be processed exclusively at the site, and
The State Cashiering Systems Review includes questions dealing with recording
deposit information for which States have responsibility.
All references to Non-State State Agencies and Bank Lockbox Operations will be generically
referred to as Non-State Entities on all subsequent pages.
NOTE: If NO contribution payments are received by the State, some questions in the State
Cashiering Systems Review may not be applicable to your State's operations. The reviewer
should carefully examine each question in the State Cashiering Systems Review, document the
reason specific questions are not applicable and request Regional Office approval to record N/A
answers for those questions.
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CHAPTER FOUR
INTRODUCTION
REVIEW METHODOLOGIES
The Estimation Sample for Cashiering examines :
Employer Contribution Payments
In addition to the Systems Review, a sample of employer contribution payments will be
examined to measure the timeliness in which contribution payments are deposited into the State's
clearing account. The Estimation Sample will be selected from daily mail receipts during the
review period.
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PROGRAM REVIEW
COMPONENTS
SYSTEMS REVIEWS
State
Non-State Entities
ESTIMATION SAMPLES
State
Non-State Entities
SYSTEMS REVIEWS
ET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CHAPTER FOUR
CASHIERING
PROGRAM REVIEW
SYSTEMS REVIEW INTERVIEW SHEET
Function
Reviewer
Persons Interviewed
Date
Name:
Documents Reviewed
Title:
Title:
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TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW
Recorded Information and Instructions
In the State Cashiering operations, procedures should be set forth for receiving employer
contribution payments, preparing contribution payments for deposit, depositing
contributions into the clearing account, recording deposit activity, posting contribution
payments to the employers' accounts and transferring monies to the UTF.
The reviewer should examine recorded information, instructions and
procedures available to the staff and compare them to the laws and written
policies of the State to determine if they are current, accurate, and
complete. The reviewer should also observe the Cashiering process and
talk with employees to learn if the recorded information, instructions and
procedures are available to staff..
The operations of a non-State entity to process contribution payments for
the State, will not be included in this section of the review (See the NonState Entities Systems Review for a review of non-State State Agencies
and bank lockbox operations). However, residual work done by the State
will be included, e.g., procedures for sending and receiving work to and
from the non-State entity.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If there are no
recorded instructions, describe in the narrative how the staff becomes
aware of the proper procedures to perform the tasks of the Cashiering
function.
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
Does the State have recorded information and instructions to assist employees to perform
Cashiering functions in accordance with State laws and policies?
Yes
2.
No __
If yes, are all recorded information and instructions:
Yes
a.
b.
c.
d.
No
Current? .....................................................................................................................
Accurate? ...................................................................................................................
Complete? ..................................................................................................................
Readily available to staff?..........................................................................................
VS:(Questions 1 and 2
3.
)
If any of the preceding evaluative questions are answered "no", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions.
VS:(Question 3
)
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A" and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW
Training
The State needs to have systems and procedures to identify training needs and deliver
training to employees who perform duties within the Cashiering function. New employees
need to learn the procedures for processing and posting employer contribution payments.
Experienced employees benefit from periodic refresher courses and additional training
when procedures change and/or defects in quality occur at an unacceptably high rate.
The reviewer should become familiar with the methods and procedures the
State uses to identify and meet the training needs of employees involved
in cashiering activities.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If there is no
formal training program, then describe how the staff learns of the laws and
written policies and the proper procedures to perform the Cashiering
duties.
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
Does the State have methods or procedures to provide training for newly hired
employees?
Yes
No __
*If yes, identify the type of training:
Yes No
a.
b.
c.
d.
e.
*Formal Classroom Training? ...................................................................................
*On the Job Training?................................................................................................
*One-on-One Training? .............................................................................................
*Individual Self-guided Training?.............................................................................
*Other?.......................................................................................................................
Describe the type and frequency of training in the narrative.
2.
Does the State have methods or procedures to provide refresher training for experienced
employees?
Yes
No __
*If yes, identify the type of training:
Yes
a.
b.
c.
d.
e.
No
*Formal Classroom (e.g., refresher courses)? ...........................................................
*On the Job Training?................................................................................................
*One-on-One Training? .............................................................................................
*Individual Self-guided Training? . ..........................................................................
*Other?........................................................................ . .
...
Describe the type and frequency of training in the narrative.
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SYSTEMS REVIEW QUESTIONS
3.
Does the State provide training when there are:
Yes No N/A
a.
b.
c.
d.
e.
f.
4.
State law changes? .....................................................................................................
Policy/procedure changes? ........................................................................................
Needs identified from review of finished work
(e.g., supervision, quality assurance review)? ...........................................................
Hardware/software changes? .....................................................................................
Peak processing periods? ...........................................................................................
*Other?.......................................................................................................................
Does the State have processes (e.g., back-up training or organizational flexibility) to
assure that staff absences will not disrupt operations?
Yes
No __
If yes, describe in the narrative following these questions.
VS: (Questions 1-4
)
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
5.
*In the opinion of the supervisor or manager, does the training meet the needs of the
Cashiering function? (e.g., Are sufficient resources available--training packages,
facilities, staff, etc.?)
Yes
6.
No __
If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions
VS:(Question 6
)
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CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A", and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW
Recording of Transactions and Events
The Cashiering function should have procedures and controls to assure that employer
contribution payments are accurately accounted for and that bank deposits are accurate
and reconciled. Whether the State system is automated or manual, an audit trail should
lead from source documents to State accounting records of receipts and to the transfer of
monies into the UI Trust Fund.
The reviewer must determine whether there are systems to assure that
records of receipt and processing of employer contribution payments are
kept accurately, completely, and up-to-date. An audit trail should be in
place leading to support documentation.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If there is no
recording or reconciliation of the General Ledger Account, then explain
how the State is assured that the accounts are accurate.
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
Does the State maintain an audit trail for the following types of transactions:
Yes No N/A
a.
b.
c.
d.
e.
f.
g.
h.
i.
2.
Receipt of employer contribution payments? . . . . . . .
Preparation of contribution payments for deposit? . . .
Deposits to the clearing account? . . . . . . . . . . . . . . ...
Deposit discrepancies? . . . . . . . . . . . . . . . . . . . . . ....
Posting to employer accounts? . . . . . . . . . . . . . . . . .
Transfer monies to the UI Trust Fund? . . . . . . . . . .
Balancing of contribution payments? . . . . . . . . . . . .
Information received via electronic media . . . . . . .
Dishonored contribution payments (NSFs)? . . . . . .
Does the State have a means to identify the source of discrepancies?
Yes
No __
*If yes, which are used:
Yes No
a.
b.
c.
d.
e.
f.
g.
*Deposit list/calculator tapes? ...................................................................................
*Batch lists/batch reconciliation? ..............................................................................
*Bank statements? .....................................................................................................
*Debit or credit notices from bank? (Dishonored checks
or discrepancies) .......................................................................................................
*Bank Statement Trial Balance?................................................................................
*State Treasurer's Report? .........................................................................................
*Other?.......................................................................................................................
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
3.
Are the information sources retained and accessible for State use?
Yes
VS:(Questions 1 – 3
4.
No __
)
If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions.
VS:(Question 4
)
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TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A", and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW
Execution by Authorized Individuals
The Cashiering unit handles negotiable items and cash. Access to these contribution
payments should be limited to authorized, assigned staff. This requirement provides
security for the contribution payments and assures that the cashiering functions are
performed by authorized, assigned individuals only.
The reviewer must examine the flow of contribution payments through the
State and identify the internal controls limiting access to and providing
accountability for the contribution payments. The reviewer must also
examine the authorizations and procedures governing the flow of
contribution payments from field offices and other sources to the Central
Cashiering unit.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section.
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CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
Does the State have the following controls to assure that the processing of contribution
payments is limited to assigned staff in the Central Office:
a.
Specific individual(s) assigned to assure that all mail is picked up or delivered
daily?
No __
Yes
b.
Specific individual(s) assigned to open and handle checks?
Yes
c.
No __
Area for opening and handling checks restricted to assigned individuals?
Yes
No __
d.
Specific individual(s) assigned to receive and prepare contribution payments for
deposit?
Yes
No __
e.
Area for preparing contribution payments for deposit restricted to assigned
individuals?
Yes
f.
No __
Specific individual(s) assigned to account for and forward contribution payments
to bank for deposit?
Yes
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No __
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PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
g.
Area for accounting of contribution payments to forward to the bank for deposit
restricted to assigned individual(s)?
Yes
h.
No __
Specific individual(s) assigned to deliver contribution payments to bank?
No __
Yes
i.
* Controls for receiving and depositing contribution payments other than those
listed above? (If yes, describe in the narrative).
Yes
VS:(Question 1
2.
No __
)
Does the State have the following internal controls to provide accountability for all
employer contribution payments received in other units in the Central Office and/or the
field:
a.
Specific individual(s) assigned and responsible for receiving and accounting for
contribution payments?
Yes
No __
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SYSTEMS REVIEW QUESTIONS
b.
Procedures for controlling and forwarding contribution payments from collections
units, field units or other similar units to the Central Cashiering Unit?
Yes
No __
c.
Procedures to verify that contribution payments forwarded from collections units,
field units or other similar units were received by Central Cashiering Unit?
No __
Yes
VS: (Question 2
3.
)
Does the State have the following internal controls providing accountability for handling
currency (actual cash) received:
a.
Pre-numbered receipt books?
Yes
No __
(1)
If yes, is an internal audit (e.g., verifies who assigns the books, who
possesses them, that the proper number sequence is used, etc.) performed?
No __
Yes
(2)
*If yes to (1) above, indicate frequency of audit by checking all that apply:
(a) *Monthly ..................................................................................................
(b) *Quarterly ................................................................................................
(c) *Annually .................................................................................................
(d) *Other.......................................................................................................
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
VT: (Verification Test) Conduct the following test and annotate your findings in the space
below. Pull either the completed receipt books from the last four quarters or the records of
completed receipts for the last four quarters. Verify and track the use of pre-numbered receipt
books, correct numbering of the receipt books and that the receipts are used in sequence from the
books.
Verify that the currency received was deposited and accurately posted to the employer
account for 12 receipts. If the total number of receipts written is less than 12, verify the
deposit activity and accuracy of posting to the employer's account for all of them.
NOTE: If no receipt books were issued and/or no receipts were written during the review
period, contact your Regional Office for instructions.
4.
Are specific individual(s) assigned to transfer monies from the clearing account to the
UTF?
No __
Yes
VS:(Question 4
)
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CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
5.
If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions.
VS:(Question 5
)
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TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A", and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW
Systems to Assure Execution of Events
For Cashiering, controls are needed to reconcile balances of transactions and to identify
areas where exceptions are encountered.
The reviewer will determine if such controls have been built into the
Cashiering operations. It is beyond the scope of TPS to actually validate
balances in the general accounting system. The reviewers will only verify
that the State maintains a general accounting system and performs
reconciliations of all accounts (i.e., Accounts Receivables, Clearing,
Solvency Fund, Penalty and Interest).
A section has been designed for States that employ the services of NonState Entities to perform cashiering activities. Both sections must be
completed by States that use the services of Non-State Entities because
not all cashiering activities can be processed through the Non-State
Entities' operation.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section.
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TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
Does the State verify that the amount shown on the daily deposit records agrees with the
amount credited by the bank?
Yes
2.
No __
Does the State verify that the amount credited by the bank agrees with the amount
recorded in the State's accounting system (i.e., general ledger account)?
Yes
3.
No __
Does the State have internal controls in place to assure that discrepancies between its
deposit records and bank deposit records are routinely reconciled?
Yes
4.
Does the State have internal controls that assure that adjustments are made to the
accounting system to reflect discrepancies reported by the bank?
Yes
5.
No __
No __
Does the State have internal controls that assure that adjustments are made to employer
accounts to reflect the discrepancies reported by the bank?
Yes
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No __
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
6.
Does the State have internal controls to assure that the State accounting system is
adjusted to reflect dishonored-check contribution payments?
Yes
7.
No __
Does the State have internal controls to assure that the employer's account is adjusted to
reflect dishonored-check contribution payments?
Yes
No __
VT: (Verification Test) Conduct the following test and annotate your findings in the space
below. For each bank used by the State, select a bank reconciliation statement(s) (or statement
from comptroller's office citing State banking activities) for one month from the past 12 months.
Track all entries (e.g., deposits, debit for dishonored checks, credit memorandums resulting
from coding errors, or other adjustments to deposits) back to the deposit record to assure that all
appropriate action was taken. Exclude from this test transfer of funds, employer refund activity
or any benefit payment activity.
NOTE: If the State does not receive a traditional bank statement, determine the means by which
the State acquires a record of banking transactions. Consult with your Regional Office to
develop an approach to conducting the VT using the documents available to you.
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
8.
Does the State have procedures to assure timely deposit of all contribution payments?
Yes
VS:(Question 8
9.
No __
)
*Does the State sort contribution payments and source documents as follows?
Yes No
a.
b.
c.
d.
e.
f.
g.
10.
*Timely reports..........................................................................................................
*Untimely reports ......................................................................................................
*Reports with liability reported, payment enclosed ..................................................
*Reports with liability reported, no payment enclosed .............................................
*Reports with no wages, no liability due...................................................................
*Reports with excess wage only, no liability due......................................................
*Other items that can not be processed immediately
(e.g., Correspondence, etc.) .......................................................................................
*Does the State have procedures to give priority to depositing high dollar contribution
payments?
No __
Yes
If yes, describe in the narrative at the end of this section.
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CHAPTER FOUR
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SYSTEMS REVIEW QUESTIONS
11.
Does the State have a procedure for problem items that require special handling (e.g.,
reports received with no employer account number, irregular contribution payments,
etc.), that assures prompt follow-up and deposit of payments? (Example: process to
place items in a suspense account/exception file for follow-up).
Yes
No __
a.
If yes, does the State have procedures to assure that items placed in the above
accounts/files are ultimately handled and posted as appropriate?
Yes
No __
VT: (Verification Test) Conduct the following test and note your findings in the space below.
At the beginning of the quarter, identify 12-15 employer contribution payments in the "suspense
account/exception file". At the end of the quarter, review the records to determine the
disposition of the items.
If an item has not yet been cleared, determine whether or not procedures have been
followed thus far.
For items that have been cleared, determine if procedures were followed correctly and
timely (e.g., payments were posted to the proper employers' accounts within the time
frame required by the State, or money was correctly refunded or transferred to the proper
State agency).
NOTE: Reviewers who cannot conduct this test because the State does not use exception
files/suspense accounts must contact their Regional Office for further instructions.
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
12.
Does the State have a procedure to assure prompt transfer of monies from the Clearing
Account into the UTF?
Yes
VS: (Question 12
13.
)
*Does the State accept Electronic Fund Transfers (EFT) for contribution payments?
Yes
14.
No __
Does the State have system procedures or internal controls to assure that employer
accounts are properly posted to reflect:
Yes
No N/A
a.
b.
Payments received in paper form (checks/cash)? ......................................................
Payments received via EFT?......................................................................................
(N/A is only appropriate if Question #13 is answered "No").
VS: (Question 14
15.
No __
)
*What is the estimated average time to credit (apply) monies to the appropriate employer
account?
Number of days ______
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
16. If procedures are automated, is a systems check performed every time a program is changed?
Yes __ No __
17.
If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions.
VS: (Question 16
)
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TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A", and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW
Review of Completed Work
For Cashiering function, the State should be conducting systematic reviews of completed
work to assure accuracy and timeliness. The review should include contribution payments
posted to employer accounts as well as deposit activity.
The reviewer will consider the kind of supervisory program and/or quality
assurance review the State uses to assess the Cashiering function. The
review procedure may differ for new employees.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If there is no
supervisory and/or quality assurance review, describe how quality is
assured in the Cashiering unit.
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For staff members involved in the Cashiering function, are the following components subject to some form of systematic review?
For Yes answers, enter a "Y" in the appropriate column(s). For Yes answers, also enter "Y" in column 6. If there are no reviews,
answer "N" for No in column 6. Column 6 is the only evaluative question.
Type of review
Component
a.
Timeliness of deposit of contribution payments.
b.
Reconciliation of bank statements and resolution of
discrepancies.
c.
Proper handling of NSF checks, including adjustments to State
deposit records and individual employer accounts.
d.
Timely and accurate clearance of items from
suspense/exception files.
e.
Accounting of TAX cash receipt books.
VS:
(Question 6
*Informational
*1
Supv
*2
Peer
*3
QR
(Qual.
Rev)
*4
Support
Clerical
*5
Other
6
Review
ConductedY/N
)
ET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
7.
If any of the preceding evaluative questions are answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions.
VS: (Question 7
)
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TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A", and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
Additional Controls
1.
*Does the State have internal controls or quality assurance systems in the Cashiering
function which this review failed to identify?
Yes
No __
Yes
No __
If yes, describe below.
2.
* Are there any exemplary practices for the Cashiering function?
If yes, describe below.
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ET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
Review of Non-State Cashiering Activities
(Bank Lockbox or non-State Agency)
*THE STATE USES A BANK LOCKBOX OR NON-STATE AGENCY TO PERFORM
CASHIERING ACTIVITIES:
YES
NO ___
If yes, continue to the next page. If no, this concludes the Systems Review.
SYSTEMS REVIEW
Recorded Information and Instructions
The State should have a contract with the bank or non-State agency that performs its
Cashiering activities. The contract should specify all the procedures and controls that are
needed to assure that contribution payments are processed timely and accurately, that
information and unprocessed contribution payments and documents are forwarded to the
State, that deposits are made to the Clearing Account in a timely manner, and that
transfers are made to the UTF timely. The State should also have methods to verify that
the contractual requirements are being met.
The reviewer should review the contract and visit the location(s) where the Cashiering activity
takes place (bank or other agency) to determine that the operation is fulfilling the contract
requirements. The reviewer should also review the process to assure that contribution payments
are being processed timely and accurately and that information, unprocessed contribution
payments and documents are forwarded to the State.
In the Narrative Section following the questions, explain "Other" responses and "Compensating
Controls". Identify the question being explained by referencing the number and section.
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Non-State Entities
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CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
*Cashiering activities are performed by:
a.
b.
2.
* Bank .......................................................................................................................
* Non-State AGENCY (e.g., Dept. of Revenue) .......................................................
Does the Contract and/or related document(s) that detail services to be provided, contain
provisions for the following:
Yes No
a.
Frequency of deposit? ................................................................................................
b.
c.
d.
e.
f.
g.
h.
Security? ....................................................................................................................
Accuracy of data provided to State? ..........................................................................
Promptness of data provided to State?.......................................................................
Accessibility of records?............................................................................................
On-site review by State? ............................................................................................
Frequency of mail pick-up? .......................................................................................
*Disaster Recovery? ..................................................................................................
VS: (Question 2
3.
)
If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions
VS:(Question 3
)
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ET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A" and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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TAX PERFORMANCE SYSTEM
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Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW
Recording of Transactions and Events
The contract should specify procedures and controls to assure that employer contribution
payments are accurately accounted for and that bank deposits are accurate and reconciled.
Whether the Non-State Entity system is automated or manual, it should provide an audit
trail that leads from source documents to records of receipts and to the deposit of monies
into the UTF.
The reviewer must determine whether there are systems to assure that
records of receipt and processing of employer contribution payments are
accurately and promptly recorded. An audit trail should be in place
leading to support documentation.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If the Non-State
Entity does not provide a record of monies received by employers and a
record of deposit activities, explain how the State is assured that the
accounts are accurately maintained and how the State is assured that the
Non-State Entity is adhering to the contract requirements.
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
Does the Non-State Entity have a method to prove untimely employer reporting, such as
retaining untimely envelopes or filming/imaging of the envelopes to document untimely
reports and payments?
Yes
VS: (Question 1
2.
No __
)
Does the State have procedures to verify that items forwarded to the State from the NonState Entity are received?
Yes
No __
VS: (Question 2
3.
)
Does the endorsement or other documentation on the checks contain information that
assists State staff with an audit trail for payments?
Yes
VS: (Question 3
No __
)
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
4.
Are copies of the contribution payments available to the State staff?
Yes
No __
VS: (Question 4
5.
)
Are controls in place to assure the accuracy of report and payment data?
Yes
No __
*If yes, which controls are used?
Yes No
*a.
*b.
*c.
*d.
*e
*f.
Calculator Tapes ........................................................................................................
Control Totals ...........................................................................................................
Key Verification ........................................................................................................
On-line Edits ..............................................................................................................
Batch Machine Printouts............................................................................................
Other ..........................................................................................................................
If other describe
VS: (Question 5
)
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
6.
*Does State receive magnetic media output of information from the Non-State Entity?
Yes
a.
No __
If yes, does the State have a method to verify the accuracy of the information?
Yes
VS: (Question 6a
7.
No __
.)
*If the State permits contribution payments via EFT, is the associated contribution report
required to be submitted to the Non-State Entity?
Yes
a.
No __
If yes, is there a written procedure to properly credit the employer's account with
the payment?
Yes
No __
If yes, describe the procedure in the narrative.
VS: (Question 7a.
)
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ET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
8.
*Does the Non-State Entity process contribution report data submitted:
Yes No
a.
b.
c.
9.
*On diskette? .............................................................................................................
*On magnetic tape ....................................................................................................
*Via Electronic Data Interchange (EDI)?..................................................................
If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions
VS:(Question 9
)
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ET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A", and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW
Execution by Authorized Individuals
Since the Cashiering function requires the handling of negotiable items and cash, access to
these items should be limited to authorized, assigned staff. This requirement provides
security for the contribution payments and assures that the cashiering functions are
performed only by authorized individuals.
The reviewer should examine the contract and the handling of
contribution payments by the Non-State Entity to identify the internal
controls limiting access to and providing accountability for the
contribution payments.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section.
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
2.
3.
Is the mail opened in an area that is restricted to authorized individuals?
Yes
No __
Yes
No __
Is the mail sorted in an area that is restricted to authorized individuals?
Are deposits prepared in an area that is restricted to authorized individuals?
Yes
VS: (Questions 1, 2 & 3
4.
No __
)
Are specific individuals assigned and authorized to credit a deposit to the State's clearing
account?
No __
Yes
VS: (Question 4
)
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
5.
Are specific individuals assigned and authorized to make adjustments to the State's
account (e.g., debit and credit memoranda, encoding errors and dishonored contribution
payments)?
Yes
No __
VS: (Question 5
6.
)
*Does the contract authorize bank or non-State personnel to transfer funds to the
UTF?
Yes
No __
If yes, are specific individuals authorized to make the transfer of money to the
UTF?
Yes
VS: (Question 6a.
No __
)
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
7.
If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions
VS:(Question 7
)
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ET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A", and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW
Systems to Assure Execution of Events
For Cashiering, controls are needed to assure that the Non-State Entity provides the
services detailed in the contract and that specific instructions are followed.
The reviewer will determine if such controls have been built into the
contract and if the Non-State Entity is adhering to the conditions of the
contract.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section.
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
Does the Non-State Entity record the amount of mail received (e.g., 20 trays) and the
time the mail is received so that workload may be monitored?
Yes
VS: (Question 1
2.
*Is the mail:
Yes
a.
*delivered by the postal service? . . . . . . . . . . . . . . . . . . . .
b.
*picked up from the post office ? . . . . . . . . . . . . . . . . . . . .
3.
*Once opened, is the mail sorted in the following manner:
No__
)
No
Yes No
a.
*Timely reports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b.
c.
d.
e.
f.
g.
h.
i.
*Untimely reports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*Reports with liability reported, payments enclosed? . . .
*Reports with liability reported, no payment enclosed? . ..
*Reports with no wages, no liability due? . . . . . . . . . . . . .
*Reports with excess wage only, no liability due? . . . . . .
*Contribution payments that can't be processed? . . . . . . .
*Reports that can't be processed? . . . . . . . . . . . . . . . . . . .
*Other items that can't be processed?
(e.g., Correspondence, etc.) . . . . . . . . . . . . . . . . . . . . . . . . .
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
4.
*Does the Non-State Entity perform any other sorts in the operation?
Yes
a.
5.
No __
If yes, describe
*Are large dollar contribution payments identified and given priority handling for
deposit?
Yes
a.
6.
No __
If yes, describe how (e.g., color coded envelopes, separate lockbox).
Are envelopes examined to assure that the entire contents of the envelope are
removed?
Yes
VS: (Question 6
No __
)
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
7.
Is there a procedure for assuring that items that cannot be processed by the Non-State
Entity are forwarded to the State in a timely manner?
Yes
VS: (Question 7
No __
)
8.
*Are reports reviewed for completeness (e.g., employer identification, a comparison of
amount shown to the amount remitted, etc.)?
Yes
No __
9.
*Do the reports remain with the contribution payments until the batches are balanced?
10.
No __
Yes
No __
Is the clearing account credited on the day of deposit?
VS: (Question 10
11.
Yes
)
Is the State able to determine the available balance (checks deposited that have cleared)
and the book balance (available balance plus uncleared checks) at any given time during
the course of a business day?
No __
Yes
VS: (Question 11
)
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
12.
If procedures are automated, is a systems check performed every time a program is changed?
Yes __ No __
13.
If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions
VS:(Question 12
)
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ET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A", and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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CASHIERING
Non-State Entities
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
Review of Completed Work
For States that use the services of Non-State Entities to perform Cashiering functions, a
review of completed work would include monitoring contract provisions. The State should
conduct systematic reviews of completed work by the Non-State Entity to assure accuracy
and timeliness of the information. The contract should specify the quality of work
expected by the State.
The reviewer will consider the kind of quality assurance review the State
uses to assess the quality of work completed for it by the Non-State Entity.
In the Narrative Section following the questions, explain "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If there is no
quality assurance review, describe how quality is assured by the State in
the Cashiering function.
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
1.
Does the State monitor the performance of the contract?
Yes
a.
No __
*If yes, identify which provisions are monitored in the narrative following these
questions.
VS: (Question 1
2.
)
*Does State management consider the provisions of the contract adequate for the State's
payment processing needs?
Yes
a.
3.
No __
*If No, how is the contract deficient?
*Is the contract procured through a competitive bid process?
Yes
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CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
4.
If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __
If yes, describe in the narrative following these questions.
VS:(Question 4
)
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW NARRATIVE
Question
Number
Explanation of "N/A", and "Compensating Controls"
(when deemed necessary)
Question
Number
Answers to "If yes, describe" and "Other":
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TAX PERFORMANCE SYSTEM
CASHIERING
Non-State Entities
CHAPTER FOUR
PROGRAM REVIEW
SYSTEMS REVIEW QUESTIONS
Additional Controls
1.
*Are there additional internal controls or quality assurance systems exercised by the
Non-State Entity that this review failed to identify?
Yes
No __
If yes, describe below.
2.
* Are there any exemplary practices by the Non-State Entity or by the State in the dealing
with the Non-State Entity?
Yes
No __
If yes, describe below.
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ESTIMATION SAMPLE
ET HANDBOOK NO. 407
TAX PERFORMANCE SYSTEM
CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
DEPOSIT PROMPTNESS OF CONTRIBUTION PAYMENTS
ESTIMATION SAMPLE INSTRUCTIONS
Purpose/Intent
To measure the timeliness in which States deposit
contribution payments into the Clearing Account.
Scope
The scope of the review will be the contribution payments
received during the second quarter review period.
Universe
The universe for the Estimation Sample should include all
paper payments (e.g., cash, checks) received during the
review period. A sample will be drawn from the universe
of paper payments to determine deposit promptness. A
sample size GOAL of 500 payments (see the Sampling
Table on page 113) will be selected from the paper
payment universe and listed on the TPS Cashiering Sample
Coding Sheet.
NOTE: In States that accept ELECTRONIC FUND TRANSFERS (EFTs), the reviewer must
determine the percent of contributions received via EFT. Sampling the EFT universe is not
necessary since all EFTs are deposited timely. A formula has been developed that combines the
measurements from the Estimation Sample (paper payment sample) and the entire EFT universe
to reflect overall deposit promptness (see Step 11).
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CHAPTER FOUR
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ESTIMATION SAMPLE INSTRUCTIONS
Timing/Frequency
The sample will be selected once per calendar year.
The sample selection period will cover the time during
which the state receives the "peak" or "bulk" mail for the
second quarter reports. (Typically, reports and payments
will be due on or around July 31).
Sampling Procedures
The following are steps for selecting sample items.
STEP 1. * The reviewer will estimate the time period
during which 90% of the receipts for the quarter are
anticipated. This could be as long as five weeks in some
states. From that time period, the reviewer should
determine the five days during which the greatest amount
of mail receipt is anticipated. The five days selected
should be based on historical mail receipt data and the
reporting due date. Reviewers must be able to support their
decision. Sample items are to be selected from each of
these five days. The samples may be chosen from five
consecutive days or from five days chosen at random over
the course of the mail receipt period. If the cashiering
function is performed at a lock box, or other agency site, or
located one or more hours from the state agency, the
number of sampling days may be reduced to three days
(with RO approval). The sample size will remain at 500
items, increasing the number of sample items to be selected
each day to 167 items. (Although this modification will be
accepted, it is not preferable because it reduces the
representativeness of the sample items.) Note: If 90% or
more of the receipts for the quarter are expected to arrive
within five days or less, samples must be taken each day.
* Please refer to last page of Estimation Sample Instructions if lockbox is used.
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CHAPTER FOUR
PROGRAM REVIEW
ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd. STEP 2. Notify Regional Office of Sample Period.
Reviewers must apprise the Regional Office of the days selected for
sampling and provide information to support the selection,
including an estimate of the percentage of total dollar amount that
will be received during the selected period.
STEP 3. Determine if mail is presorted.
Determine if checks are sorted for special handling prior to opening
the envelopes based on predeterimined indicators such as color
coded envelopes or a separate mailing address for large employers.
a. If yes, see instructions and explanation in Appendix A
for adjustment required before going to step 4.
b. If no, go to step 4.
STEP 4. Determine which sample selection method will be used.
The state may use either one of the following sampling
methodologies: a. Check Interval, b. Mail Tray.
For either method, the goal is to select 100 sample items in each of
the 5 days. This requires the reviewer to estimate the number of
mail trays or amount of mail to be received per day and to establish
a sample interval or the number of sample items to be selected per
tray for that day. Either method can be used for selecting samples;
however, the Mail Tray Method may be easiest to estimate. Once a
method is selected, it should be used for all of the 5 days. Do not
switch back and forth between methods. At the end of the first day,
100 sample items should have been selected, at the end of the
second day, a total of 200 items should have been selected, etc.
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CHAPTER FOUR
PROGRAM REVIEW
ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd.
When less than 100 items are selected on any given day, the
difference between the number of sample items actually selected
and 100 must be added to the goal for the following day. For
example, if 90 sample items are selected on Day 1, 110 items
should be selected on Day 2, for a total of 200 items within 2 days.
Sample selection should be discontinued at the end of the 5th day,
even if less than 500 total items have been selected.
When more than 100 items are pulled on a day and there is still
more mail from which samples could be selected, the reviewer
should continue to pull samples using the same sampling interval,
and then reduce the number of samples selected the following day.
For example, if 120 items are selected on Day 1, only 80 items
should be selected on Day 2, for a total of 200 sample items within
2 days. If the 500 items target is reached during the 5th day and
more mail remains, the reviewer should continue to select sample
items at the same interval, until all mail received for the day has
been sampled.
In some state agencies, mail is received round the clock or is
received before or after the reviewer is on site. Under these
circumstances, the reviewer must make a “best guess” of how much
mail will be received while he or she is available and select 100
sample items from mail incoming during that time period. For
example, the reviewer is on site 7:00 AM to 4:00 PM. The reviewer
would select items from each mail delivery between 7:00 AM to
4:00 PM, for a total of 100 items for the day. If the number of items
selected during the time the reviewer is on site is not 100, the
following day’s sample selection would be adjusted to make up the
difference.
To use the Check Interval Method:
(1) Project the total number of contribution payments (less EFT
payments) to be received during the designated time frame by one
of
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CASHIERING
CHAPTER FOUR
PROGRAM REVIEW
ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd
the following methods and enter the number in the appropriate place
on the Summary Sheet.
(a) Use last year’s total number of receipts (items) for the
second quarter, OR
(b) Use the number of employers expected to report during
the sample period. (Total number of active
employers minus anticipated number of late filers).
(2) Divide the projected number of contribution payments (items) y
500 to determine the Check Interval Number (Nth number).
(3) Determine the Random Starting Number for the sample. (See
instructions in Appendix A, TPS Handbook). This will be
the first sample item selected.
(4) From the Random Starting Number, count the envelopes until
the Nth item is selected. Each successive item to be selected is
determined by adding the Nth number to the number of the most
recently selected item. (NOTE: It is permissible to measure the
distance between the random start number item and the Nth item
within a mail tray to select each subsequent sample item.)
To use the Mail Tray Method:
(1) Estimate the number of mail trays to be received during the peak
period using historical data from the Cashiering Unit and/or the
Mail Room.
(2) Determine the number of sample items to be selected from each
tray by dividing 500 by the number of trays that you expect to
receive.
EXAMPLE: If forty (40) trays of mail are expected during
the sampling time frame, divide 500 by 40. The result is
12.5 contribution payments per tray. Alternately, make a
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CHAPTER FOUR
PROGRAM REVIEW
ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd
random selection of 12 items from the first tray and 13 from the
next tray during the course of the sample selection time frame.
STEP 5. Select sample contribution payments.
On each of the days of the sampling time frame, the TPS reviewer
(or alternate) will go to the area where the mail is received, opened
(by machine) and transferred to mail trays. The samples for the
day will be selected from these trays by the method selected.
NOTE: It is more important to maintain a consistent sampling
technique than it is to pull exactly 500 items. Once the sampling
technique is established, do not alter it. Example: if you are
pulling every 10th item and the 20th item contains no payment, do
not record that account as part of the sample, but continue to count
to the 30th item which will be the next item recorded as part of the
sample. The sampling table on page 113 will adjust the percentage
needed to determine the value-to-pass.
STEP 6. Record identifying information for each sampled
payment.
For each sample contribution payment, complete Columns B, C,
and D on Coding Sheet as follows.
a.
Column B:
Enter the date that the mail was received by the State
or Non-State Entity.
b.
Column C:
Enter the employer account number assigned by the
State. If an account number is not available, enter
the employer's name or business name as shown on
the report or payment.
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CHAPTER FOUR
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ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd.
NOTE: Even when the account number is available, it may
be useful to record the employer's name to assure accurate
identification. This column may also be used at the
discretion of the reviewer to record any other information
that would be helpful in identifying the account or tracking
the payment.
c.
Column D:
Enter the amount of the payment.
STEP 7. Replace sample item.
Return each payment to approximately the same spot from
which it was removed. There should be nothing that would
indicate which payments are part of the sample except the
information recorded on the Coding sheet.
STEP 8. Determine the review date.
Determine the date it is reasonable to assume that all
contribution payments received during the selection period
are deposited and the information is posted to the employers
file. Enter the date in the appropriate blank on the Summary
Sheet. Hold the list of sample contribution payments until
the sample review date.
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CHAPTER FOUR
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ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd.
STEP 9. Review sample payments for timeliness.
Each sample payment listed on the Coding Sheet will be
reviewed for timeliness of deposit.
Review appropriate records to determine the date that all
payments listed were deposited (e.g., deposit slips, batch
listings, cash transmittal log, employer's record, etc.).
STEP 10. Complete Coding Sheet.
For each sample contribution payment, complete the
Coding Sheet as follows:
a.
Column E:
Enter the date that each payment listed was
deposited.
b.
Columns F, G, H and I:
For each payment listed, complete the appropriate
column (Columns F through I), using the following
process.
(1) Determine the number of banking days
between date the payment was received and the
date the payment was deposited (do not include
weekends and holidays). NOTE: Payments
received one day and deposited the next day
are considered to be deposited within one day,
regardless of the TIME of day received or the
TIME of day deposited.
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CHAPTER FOUR
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ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd.
(2) Based on the number of days between receipt and
the date of deposit, enter the dollar amount of the
sample payment either column F, G, H, or I, as
follows:
Column F represents within 1 day for deposit.
Column G represents within 2 days for deposit.
Column H represents within 3 days for deposit.
Column I represents within 4 or more days for
deposit.
c.
For each page of the coding sheet, total amounts of
each column and enter the total amount of the column on,
Total Dollar This Page (line 21). The total amount of
Columns F, G, H, and I should equal the total of column D.
d.
For each page of coding sheet, count the number of
items in each column and enter total on, Total Items This
Page (line 22). The Total items of each column should
equal the total number of completed lines of the Coding
Sheet (cannot exceed 20 per sheet).
Complete the coding sheet for all sample items.
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CHAPTER FOUR
PROGRAM REVIEW
ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd.
e.
Complete Part II of the Summary page of the Coding
Sheet as follows:
(1) Total amounts of Columns D, F, G, H and I from
coding sheets used in sample selection.
(2) Enter column total amount on corresponding
columns of Summary Coding Sheet on line 1,
columns D, F, G, H and I.
(Total amounts of columns F, G, H, and I should
equal total of line 1, column D).
(3) Total items for columns D, F, G, H and I for all
coding sheets used in the sample selection.
(4) Enter column total items on corresponding
columns of Summary Coding Sheet on line 2,
columns D, F, G, H and I.
(Total number of items for column F, G, H and I should
equal total of line 2, column D).
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CHAPTER FOUR
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ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd.
f.
Complete Part III of the Summary Page. This will
give the percentage for timeliness and amounts deposited.
(1) To compute the percent of amounts deposited:
Divide the total dollar amounts of each column (F
through I) from Part II, line 1 by the total dollars
column D, line 1, then Multiply the result by 100 and
round to the nearest, one decimal place.
(2) Enter the percentages in Part III, line 3, in
corresponding column (F, G, H or I).
(3) To compute the percentage of items deposited:
Divide the total item count of each column (F
through I) from Part II, line 2 by the total item count
from column D, line 2, then Multiply the result by
100 and round to the nearest, one decimal place.
(4) Enter the percentages in Part III, line 4, in
corresponding column (F, G, H and I).
NOTE: The percentages of items deposited (f (3) & f (4)
above) are only to aid the reviewer and State management in
analyzing the level of effort in the deposit activity (items vs.
dollars). No Federal requirements pertain to the number of
items deposited. Federal requirements relate to dollar
amounts only.
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CHAPTER FOUR
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ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd.
g.
Complete Part IV, Summary Recap of the Summary
Page. This will demonstrate the percentage of dollars
deposited by day.
(1) From Part III, line 3 enter the percentages from
the corresponding columns into the percentage line.
(2) From Part II, line 1, columns F, G, H, and I,
enter amounts into corresponding column in Part IV.
(3) Add the percentages and amounts deposited
within 3 days (lines 5, 6, and 7 of Summary Recap)
and enter on line 8.
(4) Total percent column and amount column.
Percentage total should be 100%. Total of amount
should balance with Part II line 1, Column D total.
h.
Enter the actual number of contribution payments
received during the designated time frame in the appropriate
blank of Part I on the Summary.
i.
Subtract the projected number of payments (or trays)
from the actual number of payments (or trays) and enter the
difference on the designated line in Part I of the Summary
Sheet.
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CHAPTER FOUR
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ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd.
j.
Divide the difference by the projected number of
payments, and multiply the result by 100. Round to the
nearest, one decimal place and enter on the space in Part I of
the Summary Sheet for % of Deviation. This information
should be taken into account for estimating contribution
payments for the next Deposit Timeliness sample.
EXAMPLE:
Projected number of payments = 15,000
Actual number of payments = 18,000
Difference = 18,000 - 15,000 = 3,000
Percent Deviation = 3,000/15,000 = 1/5 or .20
.20 * 100 = 20%
STEP 11. Calculating Electronic Fund Transfers (EFTs).
(If no EFTS are received, go to Drawing Conclusions).
All EFTs from employers for contributions (do NOT include
penalty and interest payments) received during the quarter,
will be counted as being deposited timely. The following
formula should be used by States that receive both paper
payments and EFTs to determine overall timeliness of
deposit.
P= (w * 100) + [(1-w)*p]
where w is the proportion of funds deposited electronically
and p is the percentage of the paper payments received by
the agency or sent to the lockbox that were deposited within
3 banking days (line 8 from Summary Recap).
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CHAPTER FOUR
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ESTIMATION SAMPLE INSTRUCTIONS
Sampling Procedures contd.
EXAMPLE: If 10 percent of dollars are deposited
electronically and 92 percent of dollars received as paper
payments are deposited within 3 banking days, the weighted
combined estimate is:
P= (.1 * 100) + (.9 * 92)
P= 10 + 82.8 = 92.8 percent
If the percent of EFT dollars is expected to be 50% or
greater, the sample size and value to pass will change.
Reference the Sampling Table under Drawing Conclusions.
NOTE: While the percent of paper payments deposited in a
timely manner is based on the Estimation Sample, the
percent of contributions received via EFT should be based
on actual EFT payments for the quarter.
Drawing Conclusions
To draw conclusions about timeliness, do the following.
Identify the size of the sample from Part II, line 2, column D
of the Summary Coding sheet (Total Items).
Refer to the following Sampling Table to determine the
value to pass.
TIMELINESS STANDARD: 90% or more dollars
deposited within 3 days or less.
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ESTIMATION SAMPLE INSTRUCTIONS
Drawing Conclusions contd.
If the percentage of the total dollar amount deposited within
3 banking days (line 8 of Summary Sheet), is equal to or
greater than the value to pass percentage, then the reviewer
will conclude that 90% of the dollar amount of employer
contribution payments have been deposited timely.
If the percentage of the total dollar amount deposited within
3 banking days is less than the "value-to-pass" percentage,
then the reviewer must conclude that timely deposit of
employer contribution payments cannot be confirmed.
The value to pass figure is lower than the 90% timeliness
standard in order to lessen the probability of “Type I Error”.
Type I Error is the appearance of failure when in fact, the
sample passes.
SAMPLING TABLE
# of Sample Items
375 - 405
406 - 441
442 - 481
482 - 527
528 - 579
580 - 640
IV - 111
Value to Pass
87.5%
87.6%
87.7%
87.8%
87.9%
88.0%
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CHAPTER FOUR
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ESTIMATION SAMPLE INSTRUCTIONS
Drawing Conclusions, contd.
EFT SAMPLING TABLE
% EFT
Sample Size
50 – 54.9
55 – 59.9
60 – 64.9
65 – 69.9
70 – 74.9
75 – 79.9
80 – 84.9
85 – 89.9
90 - 100
400
400
400
300
300
200
200
200
0
Value to Pass
77.4
75.1
72.2
68.1
63.2
55.6
45.5
29.1
N/A
If the State receives no EFTs, then this conclusion will be
based solely on the outcome of the Estimation Sample. If
EFTs are accepted by the agency, the conclusion will be
based on a combination of the Estimation Sample results
and the EFTs received by the agency. (See Step 11).
For all untimely deposits, the reviewer must provide an
explanation on the Acceptance Sample Explanation Sheet.
Documentation
All documentation gathered to review samples (which does
not include checks) must be kept until review completion
and Regional Office approval of the Annual Report. Hard
copy documentation should be maintained, unless the State
is able to recreate the identical information used in the
review.
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ESTIMATION SAMPLE INSTRUCTIONS
Lockboxes
All States should make all reasonable attempts to follow the
above instructions. If, however, lockboxes are not in the
same geographical location as the reviewer AND it is not
possible for the reviewer (or alternate) to pull the sample for
the entire "peak" period, OR there are other circumstances
that make it impossible to follow the instructions (i.e.,
around the clock processing), a modified sampling
methodology may be used with the advance approval
through the Regional Office.
The State must request approval through the Regional
Office and give the reason for the request. Based on the
information provided, the Regional Office and National
Office will develop a modified sampling methodology for the
State.
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TAX PERFORMANCE SYSTEM
Cashiering Estimation Sample Explanation Sheet
State: _____________________ Period Covered: _______________ Date: _______________ Reviewer: _______________
Identification Number
Explanation
Page _____ of _____
TPS CASHIERING SAMPLE CODING SHEET
STATE_______________________________
YEAR AND QUARTER OF REVIEW_____________________
EMPLOYER ACCOUNT
A.
REVIEWER__________________________
AMOUNT OF PAYMENT
DEPOSIT
RECEIVED
AMOUNT ($)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
OLLAR AMOUNT THIS PAGE
AMOUNT ($)
DAY 4+
AMOUNT ($)
TOTAL ITEMS THIS PAGE
*Payments received one day and deposited the same day or any time the next day, are considered to be deposited within one day.
TPS CASHIERING SUMMARY SHEET
STATE______________
PART I
___
YEAR AND QUARTER OF REVIEW________________
PREPARATION
CHECK SAMPLE INTERVAL
RANDOM STARTING NUMBER____________
___
REVIEWER__________________
SAMPLE SELECTION START DATE
SAMPLE SELECTION END DATE____________________
EFT(%)
PART II SUMMARY FOR DOLLARS & ITEM COUNT (Sample Data)
MOUNT OF PAYMENT
AMOUNT OF PAYMENTS
DAY 1
AMOUNT
1
AL DOLLAR AMOUNT
2
TOTAL ITEMS
PART III SUMMARY FOR PERCENTAGES
3
PERCENTAGE BY CATEGORY ($)
4
OVERALL PERCENTAGE (ITEMS)
PART IV SUMMARY RECAP
Line 1, Column F) ___________% (Line 3, Column F)
Line 1, Column G) ___________% (Line 3, Column G)
Line 1, Column H) ___________% (Line 3, Column H)
% DEPOSITED WITHIN 3 DAYS
Line 1, Column I)
___________% (Line 3, Column I)
100%
% VALUE NEEDED TO PASS (from chart)
DAY 2
AMOUNT
DAY 3
AMOUNT
DAY 4+
AMOUNT
====
| File Type | application/pdf |
| File Title | The Cashiering function consists of processing employer contribution payments, including the following major tasks: |
| Author | MacDonald |
| File Modified | 2008-01-08 |
| File Created | 2008-01-08 |