Personnel-Payroll System Requirements

Published by the Government Accountability Office on 1990-05-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

            Federal Financial Management
                System Requirements
May 1990*

             System Requirements
         Joint Financial           Management           Improvement          Prop-am

T undertaking
   he Joint Pinancial Management Improvement Program (JFMIP) is a joint cooperative
                 of the Office of Management and Budget, the General Accounting Office, the
Department of the Treasury, and the Office of Personnel Management, working with each other
and with operating agentits toimprove Enaxial management practices throughout government.
The Program was initiated in 1948 by the Secretary of the Treasury, the Director of the Bureau
of the Budget, and the Comptroller General, and was given statutory authorization in the
Budget and Accounting Procedures Act of 1950. The Civil Service Commission, now the Office
of Personnel Management, joined JPM.IP in 1966.

The overall objective of the JPMIP is to make improvements     that contribute significantly to the
effective and efficient operations of governmental programs.   Activities aimed at achieving this
objective include:

            Developing general objectives in those areas of common interest to the central
            agencies for guiding the improvement of linandal management across government
            and promoting strategies for achieving those objectives.

            Reviewing and coordinating central agencies’ activities and policy promulgations
            affecting financial management to avoid possible conflict, inconsistency, duplication,
            and cor&sion.

            Undertaking    projects and special reviews of significant problems and new
            technologies   in &uncial management and publishing the 6ndings and conclusions.

            Acting as a catalyst and clearinghouse for sharing and disseminating Cmncial
            management information about good iinancial management techniques and
            tcchnologiw .

            &viewing the financial management efforts of the operating agencies and serving as
            a catalyst for further improvements.

The JPMIP plays a key role in mobilizing resources and coordinating cooperative etlbrts in the
improvement of financial management practices, and relies on the active participation of federal
agencies to be successful. The Joint Program is guided by a Steering Committee consisting of
key policy o5ciab &om each of the sponsoring agencies. A key official f+om a program agency
also serves on the Steering Committee. A small staff beaded by an Executive Director provides
support to the Committee.

           his personnel/payroll functional requirements document for U.S. civilian person-
    T      nel is the first step to expand the Core Financial Systems Requirements. Its
    preparation addresses the goal of the President’s Council on Management Improve-
    ment (PCMI) and JFMIP to improve the efficiency and quality of payroll and person-
    nel management in the federal government.
          Agencies are to use these functional requirements in planning their financial
    system improvement projects. As with the Core Financial Systems Requirement,
    agencies will have to include their unique requirements, both technical and
    fkctional,     with the requirements in this document. Further, each agency must
    develop its own integration strategy detailing how it will either interface or
    integrate with existing program and subsidiary systems and with the Core finan-
    cial system.
        We want to take rhis opportunity to thank the agency officials and others in
    the financial and personnel management community who contributed to the
    document. We value their assistance and support. With continuing support
    such as this we can confidently face the financial management challenges of the

    Virginia B. Robinson
    Executive Director


            n July 26, 1989, the President announced a Management by Objectives Program
     0      for the federal government. This program includes a cross-cutting objective for
     financial management.
          “To guarantee the effectiveness and integrity of programs and services for
     the public and the proper stewardship of public resources.”
         Achieving this objective will require a number of improvements in federal fi-
     nancial management information and systems.
          This Joint Financial Management Improvement Program (JFMIP) docu-
     ment “Personnel/Payroll    Systems Requirements” has been prepared as a con-
     tinuation of the Federal Financial Management Systems series which began with
     the Core Financial Svstems Reauirements in January, 1988. It has been prepared
     in consultation with Office of Management and Budget (OMB), the General
     Accounting Office (GAO), the Financial Management Service (FMS) of the
     Treasury Department, and federal program agencies.
          When implemented, by incorporation in GAO’s accounting principles and
     standards, in Treasury’s reporting requirements, and in OMB circulars, these
     standards will become mandatory. FMS will assist agencies in making their
     systems conform to these standards and in making reviews against the standards.
     The GAO and agency Inspectors General (IG) will independently review agency

Table of Contents

Preface                                               i
Introduction                                         ii
Financial Management Framework                       1
Standards Implementation                             3
Overview                                             4
Human Resource Data                                  9
Human Resource Data Collection                      10
Human Resource Data Maintenance                     11
Personnel                                           13
Position Management                                 13
Staffing                                            13
Personnel Activities                                14
 Employee Relations                                 14
 Labor Relations                                    14
‘Training                                           15
 EEO Support                                        15
 Retirement                                         15
 Time and Attendance Proceesing                     16
 Leave Processing                                   1s
 Usages and Accruals                                18
 Conversions                                        19
 Prior-period Retroactive Adjustments               19
 Pay Processing                                     20
 Gross and Net Pay Computation                      20
 Deduction and Employer Contribution Calculations   21
 Outputs of Pay Processing                          23
 Report Processing/Reconciliation                   25
 External Reporting                                 25
 Management Reporting                               25
 User Reporting                                     25
 Records Retention                                  27
 ADP Systems Requirements                           28
 Software Documentation                             29
 Reporting Requirements                             30
 Internal Control                                   31
 Interfacing Systems/Information      Maintained    33
                                Financial Management                                          Framework

                                       his document is a part of a broad program to improve federal financial man-
                                T      agement. This program involves the establishment of standards for financial
                                information, financial systems, reporting, and financial organization. The inter-
                                relationship between systems and data standards is shown in illustration 1.
                                      In 1982, the Federal Managers’ Financial Integrity Act provided the corner-
                                stone for improved financial management. Section 4 of this legislation requires
                                annual reports on the compliance of agency systems with GAO standards under
                                OlMK policy direction on behalf of the President.
                                     In 1984, the GAO issued new accounting standards as Title 2 of its Policy
                                and Procedures Manual for Guidance of Federal Agencies. In 1984, OMB
                                established through Circular A- 127, “Financial Management Systems,” polic!
                                guidance for a broad program of improvement for all federal financial informa-
                                tion and systems. In 1986, the Treasury issued new standards for improved
                                businewtype financial reporting and OMB issued the Standard General Ledger

Figure   1: Framework         for the Integration   of Federal   Financial   Systems



                         Standard    Data                                          Standard   Processing


         To be defined

    (SGL). The SGL provides for a unified chart of accounts for accounting and
    budgetary information.   It governs the recording of transactions within every
    agency financial system.
          In 1487, the Director of OMB administratively appointed Gerald Kiso as the
    first Chief Financial Officer (CFO) fcx the United States Government and
    required that each major agency designate a CFO. Each agency CFO is a mem-
    ber of the CFO Council. In 1988, President Bush appointed Frank Hodsoll as
    his CFO.
         In 1988, JFMIP developed new standards for agency central financial sys-
    terns: the Core Financial Systems Kequirements, which is a continuation of the
    series entitled Federal Financial Manawment Systems. These requirements were
    signed by the Comptroller General, the Secretary of the Treasury, and the
    Director of OMB.
         At the present time additional standards are under development. JFMII? is
    working on data element standards, which will provide for common data element
    definitions for all the budget and accounting information routinely reported to
    OMB and Treasury. The requirements document for payroll/personnel will be
    supplemented by systems requirements for such activities as property, procure-
    ment, and grants.

                                            Standards Implementation

                                                   s shown in figure 2, establishing standards is only part of the process of im-
                                         A         proving financial management systems and information. Agencies must im-
                                            plement the standards.
                                                   Good governmentwide standards assist agencies in developing strong sys-
                                            tems and information, by eliminating duplicative work among agencies and
                                            providing a common framework so that outside vendors can more economically
                                            provide systems sofware. However, agencies must augment these standards
                                            with their own requirements, which must be carefully designed to assure consis-
                                            tency with the government-wide standards. Each agency must also integrate
                                            standard systems with existing systems and with major program systems that are
                                            u~~iqw    to the agency.

Figure        2: Financial          System      Improvement       Projects
         Standards                                                              Agency   Implementation

          l    Standard
               Reporting                                  l   Additional
               Requirements                                   Agency
                                                              Requirements                                    l       Adaptation
          l    U.S. Government
               Standard General
                                                              Additional                                      l       Procedures
               Ledger                                     l

                                                -_h           Agency
               Core Financial                                 Technical

               System                                         Requirements           . Software
               Requirements                                                            Selection              l       Documentation
                                                          l   Integration
          l    Personnel                                      Strategy                                        l       Conversion
               Requirements                               . Software/                                             l   Maintenance
                                -    -      I               Hardware
         1. Travel
         , Management                       I

          l    Other Standards

   I--         1   Subject of this report


          he complexity, diversity, ,md size of the employee population in federal gov-
    T     crnment agencies place unique demands on managers of personnel/payroll
    operations. The constantly changing requirements of human rcsourcc manage-
    ment has led management to look not only at the functional capabilities of
    personnel/payroll   systems, but also at the hardware/so~hvare as well as manage
    rial environments in \vhich these systems are supported and/or operated.
         All pcrsonnel/pa):roll systems that are being designed and implemented or
    are in use must result in the fi)llo\ving.
      l   Operation in accordance ivith laws, regulations, and judicial decisions. It is
          the responsibilip of each agency to be familiar \vith the legal requirements
          governing its pcrsonnel/pa~r~~lI operations.
      l   Complete, accurate, and prompt payment of pay and deductions.
      l   Complete, accurate, and prompt generation and maintenance of personnel/
          payroll records and transactions.
      l   ‘I’imelqr access to complete, correct, and accurate infbrmation, without
          extraneous material, to those \\ithin and without the agency who require the
      . Timely and proper interaction of- the personnel/payroll     system with the Core
        financial s\rstems.
      l   Adequate internal controls to ensure that the personnel/payroll   system is
          operating as intended.
         This document idcntifics the fimctional requirements for a personnel/
    pa!rroll system. Though it may be used \vhen dewloping a new personnel/
    payroll system or improving or evaluating a current system, it does not provide a
    specific model fix such a system. Functional requirements not mandated by law,
    regulation, directive, or judicial decisions must result in cost~eff&tive s\rstems
    that are in the interest of the government. Al possible alternatives for meeting
    the requirements should he considered.
         The human resourc‘c or personnel management fimctional requirements
    presented are those required to initiate and maintain the compensation of em-
    ployees. The fill1 spectrum of personnel management fimctions would include
    planning, policy, programming, budgeting, operations, and control. The per-
    sonnel management activities range fiwm position requirements/classification
    and rccruitmcnt/cn~ploymciit   to compensation/benefits   and separation/retire-
    ment. The pa\‘roll function is part of the compensation acti\-ity of the personnel
    management flmction and links it to financial management systems.

    The way in which payroll activity and personnel activity relate in the case of an
    individual employee illustrates the relationship of payroll activity to personnel ac-
    tivity. An individual’s payroll record is created after Personnel has hired the
    individual, brought the person onto the organization’s rolls and established his/
    her salary, grade, entitlements, erc. Any changes to the basic authorizations and
    entitlements must be made bg Personnel activity before being reflected in the
    payroll system.
         The operational functions of the federal government’s personnel/payroll
    systems can be segregated into txvo general categories. The first catego? in-
    cludes those mandatory functions based on federal laws and regulations; the
    second category includes those optional functions based on the special manage-
    ment requirements of the individual agencies. Mandatory functions based on
    law or regulations are standard across agencies and are documented in federal
    manuals such as the Federal Personnel Manual (FPM) Supplement 296-33, “The
    Guide to Processing Personnel Actions”; FPM Supplement 29X-1, “The Central
    Personnel Data File”; Title 6, “Pay, Leave, and Allowances,” of GAO’s Policy
    and Procedures Manual for Guidance of Federal Agencies; and the Treasuw
    Fiscal Requirements Manual. Optional functions are established by agency
    management based on such fktors as the mission of the agency, its size, and the
    geographic distribution of personnel. These functions are documented in agency
    regulations and directives.
         A large variety of these optional fimctions have been and will be developed
    to support the special requirements of an agency. These functions vary \videl>
    throughout the federal community and arc required to support each agency’s
    special personnel/payroll   processing needs. The information provided in this
    document includes a cross section of those optional functions most often identi-
    fied as being used within the federal community.
          The burden of demonstrating that these optional fimctions are cost effective
    and clearly in the interest of the government rests with the agency heads. Fur-
    ther, each agency must develop an etkient, efkctivc, and economical strategy for
    interfacing or logically integrating its personnel/payroll system (or subsystem)
    with other systems {or subsystems) that provide information to or utilize infor-
    mation from the standard personnel/payroll      system.
          The data in these optional processes must be consistent with the standard
    personnel/payroll   system that contains the ofkial records for the agency. Dis-
    tributed processing and small end-user computers greatly increase the need for
    agency-wide strategic planning for information resources. Incompatible data in

    separate files or systems can prevent, or make difficult, the integration   of data to
    generate the information required by management.
         Illustration 3 provides an overview of the functional model. This graphic
    definition is a logical flow of data through those functions that make up the
    standard personnel/payroll    system. Each of the standard functions is described

    Human Resource Data
    Data collection activity
        Collects and edits all employee-related and/or position-related data needed
    to process pay and to support personnel activities of the standard personnel/
    payroll system.

    Maintenance Activitv
         Maintains current and historical personnel, pay, leave, time and attendance,
    and retirement data for each employee. Supports both payroll-related data and
    personnel-related data in a logically integrated database and/or interfaced sys-

    Personnel Processing
        Processes personnel actions in accordance with Federal Personnel Manual
    (FPM) Supplement 296-33, “The Guide to Processing Personnel Actions.”
    Provides a variety of reporting data for use in advice and consultation to line
    managers and employees, as well as in required external reports such as EEO
    compliance and training reports. Provides daily certified SF-50, Notification of
    Personnel Action, data for posting to the payroll master record.

    Time and Attendance Processing
        Coliects time and attendance and labor-related data and edits these against
    the Master Employee Record (MER) and reference tables on a daily, weekly,
    and/or biweekly basis as required.

Figure   3: Personnel     /Payroll     System       Functional        Overview

                                            Time & Attendance

                                                                                                   Agency Personnel


                                                                      I j-

                                                ,             n

                                            ) Standard    1       )
                              I            + Personnel/
                                               Payroll                                                 v    t
                                                                                                   Report Processing/


                                  Leave Processing                               Pay Processing

             Agency Level Processing

    Leave Processing
        Processes and controls leave advances, accruals, conversions, transfers,
    usages, and forfeitures for each employee.

    Pay Processing
        Calculates gross pay and allowances, deductions, employer contributions,
    and net pay for each employee. Because of the sensitivity of payroll disburse-
    ments and the need for payroll certification, pay processing must be considered a
    standard function to be controlled in a more central manner.

    Report Processing/Reconciliation
        Accesses, manipulates and formats data as required to satisfy accounting,
    regulatory, and managerial information requirements, including required report-
    ing to the Offrice of Personnel Management (OPM)--to the Central Personnel
    Data File (CPDF) and through the SF 113A, Monthly Employee Report, and SF
     113G, Monthly Full Time Equivalent (FTE) Report. Provides payroll system
    data for comparison and reconciliation with disbursing and accounting systems
    to ensure accuracy and completeness.

    Human Resource Data

          mployee and position data collection requirements provide for the collection
    E     and editing of certain employee data necessary to determine entitlement to
    and compute the amount of pay, leave, and allowances and determine whether
    agencies are operating within established personnel ceilings and dollar iimita-
    tions. Data collected is passed to certain other functions, for use in processing
    and reporting in those functions.

         The Human Resource Data function consists of two activities, data collec-
    tion and maintenance.
        The data collection activity is responsible for the valid entry of position or
    employee- and payroll-related data as required by the personnel/payroll system
    to satisfi an agency’s requirements. The required edits (e,g,, in accordance with
    FPM Supplement 296-33, “The Guide to Processing Personnel Actions”; the
    CPDF; FPM 530, “Pay Rates and Systems (General)“; and Title 5 of the U.S.
    Code) are to ensure the accuracy and validity of all transactions+
         Once the transactions are validated, the data collection activity makes the
    data available, based on system design, to the Human Resource Data mainte-
    nance activity which will identifjr the position-related data and employee-related
    and payroll-related data. Update processing enables all other functions in the
    personnel/payroll   system to perform specialized processing by providing access
    to the detail and summary information it maintains.
         Information in the Human Resource Data function may be accessed by
    other functions for use in their processing. For example,
      l   the Personnel Processing function may access information on salary rates and
          the amount and nature of entitlements when updating and changing that
      l   the Leave Processing f-unction may access information   on leave balances, by
          type of leave, when updating that information;
      l   the Pay Processing function may access much of the same information as the
          Personnel function and, in addition, information on deductions, when
          processing the payroll for payment of net pay, deductions, and empioyer
          contributions; and
      l   the Reporting function may access such data elements as are reported when
          reports for internal control, other internal, and external purposes are
        In addition to its custodial role, the Maintenance activity performs mass
    updates of employee and position records in response to reference changes,
    ensures proper treatment of manually calculated pay, ensures proper payment of

     lump sum leave, and generates Civil Service Retirement and Federal Employee
     Retirement System data.
          Further, certain additional historical data must be maintained to facilitate re-
     porting and prior-period adjustment of data, for example:
       l       a pay history showing gross pay by type, deductions by type, and net pay for
               each pay period;
       l       a time and attendance history showing hours or days worked by type of pay
               fi)r each pay period; and
       l       a leave histoT showing beginning balances, leave accruals, leave usages, and
               ending balance, by type for each pay period.
               Optional   data covering:
       l       awards and training information,    by date;
           l   nature-of-action   changes for each employee, by date; and
       l       salary charges by assignment or activity, organization, geographic location,
               or other cost accounting centers may also be maintained.
               The data collection    activities must:
           l   Accept and edit position-related data, if required by agency management, for
               use in controlling the overall agency ceilings as established by dollar, FTE,   i
               and position limitations.
       l       Provide for erroneous input to be corrected immediately a at a later date
               from a suspense file that has preserved the input as initially entered and      L
               cdi ted.
       + Accept and edit employee-related data, based on effective date and nature-
         of-action codes (NOAC), in accordance with FPM Supplement 296-33,
         FPM Supplement 298-l (including OPM provided CPDF edit package),
         and H’M 530 guidelines. The cff&ive date establishes when transactions
         are to be effective, including the service computation date for purposes of
         retirement, leave accruals, promotions, and within-grade increases, and
         specitic dates for ivhich changes in deductions are to be effective.
       l       Accept and edit payrollLrclated data, as required, in accordance with Title 5
               and other related regulatory guidelines.
       l       Accommodate the entry of multiple personnel actions for an employee in
               one pay period, and/or on the same day.

          l Accept and edit award data, EEO data, and employee training data, if
         l Establish new, deactivate existing, and modify existing personnel actions
     whenever appropriate and implement FPM Supplement 29633 and
         FPM Supplement 298-l changes in a timely fashion.
       l   Automatically adjust date fields (e.g., service computation   date, not-to-
           exceed dates) based on processing of personnel acrions.
           The maintenance    activities must:
       l   Accept edited position-related dara, as required, for use in managing the
           organization within established dollar, FTE, and position limitations. Post
           this data to the PMR.
       . Accept edited employee-related data, based on NOAC and effective date, in
         accordance with FPM Supplement 29633, FPM Supplement 298-1, and
         FPM 530 guidelines. Post this data to the MER.
       l   Accept edited payroll-related data in accordance with Title 5 and other
           related regulatory guidelines fbr posting to the MER.
       l   Update all related employee records (including salary rate, leave accrual, and
           expense records} based on each personnel action transaction.
       l   Recognize, through the use of effective dates, whether a transaction requires
           current, future, or retroactive processing and generate the appropriate action
           and payment.
       l   Update all affected employee records to reflect across the board entitlement
           and/or deduction changes.
       l   Generate a checklist report for each separating or transferring employee to
           ensure proper procedural treatment.
       . Calculate projected annual leave balances.
       . Store lump sum leave hours to be paid to separating employees. Reduce
         annual leave balances to zero after lump sum payments are made.
       l   Update the CPDF with both activity and status reporting.
       l   Update a Time History data base each pay period to include current-period
           and prior-period adjusted time information for each employee.
       l   Update a Pay History data base each pay period to include detail, pay-period,
           quarter-to-date, and year-to-date pay data for each employee.

l   Update retirement data including name, service history, and fiscal history for
    each employee. Maintain separate records for military (post-1956) and
    civilian (re-employed annuitant) deposits. Provide cumulative agency
    employment totals.
l   Update leave data to reflect leave wages and balances for each employee.
l   Allow the payroll office to add a new payline manually or to change or delete
    an erroneous paylinc, prior to calculation and disbursement of payroll.
    (Each payline is identified by the pay period in which it was calculated and by
    the pay period to which it applies (the “effective” pay period)).
l   Update appointment    limitation   balances, health benefit rates, and FEGLI
l   Maintain historical data by pay period and transactions by effective date to
    facilitate prior-period adjustment processing.
. Maintain “calendar year-to-date” and “fiscal year-to-date” balances for
  targeted deductions and payments in order to stop action when the target is

                his function is comprised of features within the following             personnel activ-
     T          ties that are supported across agencies:
       . Position management
       l       Stafhg

       l       Personnel activities
       l       F,mployce relations
       l       I .abor relations
       l       Training
       l       EEO support
       l       Retirement
          Some features that arc recognized as “I’ct-sonnel” activities are included in
     other components of the standard personnel/payroll systems. The Human
     Resource Data collection activity is responsible for the entry of all employee- and
     positiowrelatcd data. Data maintenance and reporting activities are performed
     within the Human Rcsourcc Data and Report Processing/Reconciliation           func-
     tions, respecti\~ely.
         This section identifies those features that arc included within the standard
     pcrsonliel/pa!rroll system.
               Concerning     position     management,        this function    must:
           l   Provide information        nccdcd to establish, maintain, and abolish positions.
           l   Provide management information              data (e.g., open positions, positions filled
               b\: part-time employees, etc.).
           l   Support position revienrs to determine if restructuring positions could
               improve efficiency of operations, enhance Equal Employment Opportunities
               (EEO), and/or support management goals.
               Concerning     staffing,    this function      must:
           l   Maintain records on applicants (from both within and outside the
           l   Track internal recruitment and compctiti\:e (merit) and noncompetitive
               promotions and transfers.
           l   Track external recruitment and expert/consultant               recruitment.

    l   Maintain current organizational       component identifiers for reporting to
        OPM’s CPDF.
        Concerning    personnel activities,     this function     must:
    l   Provide the capabilities to process employee-related data, based on assigned
        positioq NOACs,     and efkctive date, in accordance with FPM Suppiemcnts
        296-33, FPM Supplement 29X-1, and FPM 530 guidelines.
l       l+osess appointments and position changes (e.g., promotions,
        reassignments, changes to to$ver grade).
    l   Process incentive awards as a result of personnel actions, for both current
        and prior-period effective dates, ensuring that duplicate awards arc not
    m Process all suspense actions of “not-to-exceed” (NTE) appointments.
      Provide the capability to support (1) termination of grade retention and
      details and (2) conversion to lower grade after temporary promotions.
      Provide the data for pending NTE terminations, tenure changes, ends of
      probationary periods, and ends of bvithin-grade waiting periods.
    l   Process completed adverse actions.
    l   Process resignations and retirements; generate data for SF 50, Notification
        of Personnel Action; SF 2806, Individual Retirement Record; SF 2807,
        Kegistcr of Separations and Transfers; and SF 1 150, Kecord of Leave Data.
. Generate reemployment priority data and retained-grade program data.
        Concerning   employee relations,       this function      must:
l       Provide the capability to support pending performance evaluations.
l       Provide the capability to support employee benefit entitlements (life, health,
        and retirement) in response to cmptoyec inquiry or policy changes.
l       Support retirement estimates for requesting employees.
        Concerning   labor relations,      this function      must:
l       Produce union dues withholding         information.
l       Provide union data     on   retention register, merit promotion   lists, and
l       Produce data on union cmployec  activity, to include union steward rime and
        union employee time involved in adverse action, grievance, and appeals
         Concerning   training,     this function      must:
     l   Provide the capability to compile SF 182, Request, Authorization,
         Agreement and Certification of Training, data for annual reporting to
     l   Generate training data from SF 182s for management information        support.
     . Generate training data related to EEO training
         Concerning   EEO support,        this function        must:
     l   Provide information to support quarterly, annual, and ad hoc reporting to
         OPM, Equal Employment Opportunities Commission, and other reporting
     l   Provide information to support a wide variety of comparative studies using
         human resource data to identify discriminatory trends; generate data from
         such sources as the applicant supply file and best-qualified lists.
     9 Provide information to support recruitment procedures reviews to
       determine whether cl’omen, minorities, and handicapped individuals are
       included in applicant pools.
     l    Provide information     to support position reviews.
         Concerning   retirement,      this function     must:
     l    Provide the capabilities to compute retirement benefits, as well as to
          anticipate retirements and track personnel through the process.

     Time and Attendance                                Processing

          he Time and Attendance Processing function provides information on the
     T    units of pay necessary to determine gross pay from hours worked and leave
     taken. The principal input for this function is the time and attendance document
     accounting for time in pay status. Outputs of leave taken are submitted to the
     Leave Processing function, 2nd outputs of hours worked or pieces completed go
     to the Pay Processing function.
          In the course of operating personnel/payroll systems, numerous pieces of in-
     formation will be entered. Edits of this data are required, as a broad objective, at
     the earliest time to ensure that the data are complete, correct, accurate, and in
     accordance with legal requirements.
          Edited and certified time and attendance reports are passed on a pay period
     basis to the pal’ processing function components for further payroll processing.
     The Time and Attendance function must:
       l   Support the collection of time and attendance data based upon an
           established tour of duty, including alternative work schedule/flexitime
           information.   This requires, as a minimum, only positive acknowledgement
           from the timekeeper that the employee worked the established tour and that
           time and attendance data is available for supervisory review and approval.
       l   Support the collection of-work hours, leave hours, and all other pay-related
           hours, as well as labor-related hours if required by agency management,
           from one source document ti)r each employee.
       l   Support the collection of labor distribution hours by the classification code
           structure defined in the Core Requirements document.
       l   Provide for the collection of time and attendance data on a daily, weekly,
           biweekly, semimonthly, and/or monthly basis.
       l   Calculate and adjust ~vcckly hours based on Fair Labor Standards Act (FLSA)
       l   Accept time and attendance data through various processing modes.
       l   Support the correction of current- and prior-pay period time and attendance
       l   Input time spent by employees cvho work temporarily in a higher
           classification (1) lvithin the department but in different organizations or
           [Vork centers or (2) in other departments.
       l   Provide for the capture of time and attendance data in fractions of hours.
       l   Generate a hardcopy time and attendance report,

     l   Provide the capability to receive electronic approvals from authorized
         supervisory personnel and release data for fkther system processing.

     Leave Processing

          he Leave Processing fimction performs all activities associated with determi-
     T    nation of proper leave balances for all qpes of leave, leave advances, accruals,
     usages, forfeitures, and transfers. This involves the application of current-period
     leave accruals and leave charges to each employee’s available leave balances, leave
     transfers, donations to leave banks or individuals, and adjustments to leave
     balances for restored leave, LEO settlements, and similar after-the-fact situations.
     In addition, this function processes end-of-year leave forfeitures and carryovers
     for each employee, based on agency-established guidelines.
          ‘I’he processing of leave transactions is performed for each reported leave
     type at the end of each effective pay period, based on entitlements established by
     the personnel o&x.      Advances, accruals, and restored leave are processed before
     usages arc applied to the appropriate available balance.
                Concerning   usages and accruals, this function    must:
        l       Ensure that leave taken is supported by a sufficient balance. Insufficient
                leave balances are automatically converted based upon an established leave
                priority scheme and, when appropriate, specific management review (e.g., to
                determine ad\,ance Icavc, leave without pay, or absence without leave).
            l   Each pay period, accrue each type of leave which can be accrued and to
                which an employer is entitled, based on entitlement established in the
                Human Resources fimction, including partial accruals and carryovers.
        l       Process variable leave accruals for part-time employees. Leave accruals for
                part-time employees are based on actual hours in a pay status.
        l       Determine compensatoy time to be forfeited or compensatory hours to be
                paid based on predetermined elapsed time limits f& compensatov time
                earned and maximum earning ceiling for combined leave and earnings.
        l       Generate detail audit trail and control data to ensure that all reported leave
                hours have been processed accurately and that the hours used in pay
                calculation are correct.
        l       Track and report job-related injury time (continuation     of pay).
        l       Interfkce with the Core financial system or another designated system and
                alert that system to establish receivables or follow up on types of leave that
                may cary to the government employee indebtedness, including health and
                life insurance premiums for employees on approved leave without pay and
                certain jury duty fees \vhile on court leave.
        l       Provide for fiscal-year-end and calendar-year-end processing in accordance
                with established guidelines.

     l   Provide for year-end leave forfeitures processing using maximum carryover
         amounts  maintained in the Human Resource function.
         Concerning   conversions,   this function     must:
     l   Modify leave accruals for employees who change either leave systems,
         biweekly tours-of-duty, or from full-time to part-time.
     l   Determine all work and leave hours to be paid for use by the Pay
         Processing, Report Processing/Reconciliation,  and Human Resource Data
         maintenance functions.
         Concerning   prior-period   retroactive     adjustments,   this function   must:      ,
     l   Process both current- and prior-period       leave transactions on an effective pay
         period basis.
     l   Provide for recomputing leave balances due to prior-period hour
         adjustments or retroactive entitlement changes for each period subsequent             i
         to the effective period of the change in the following order: (1) retroactive
         entitlement changes and then (2) prior-period hour adjustments,

     Pay Processing

          hc Pay Processing function calculates earnings, gross pay, deductions, net
     T    pay, and employer contributions for each employee on an effective pay
     period basis. Each pay line is identified by the pay period in which it was calcu-
     lated and by the pay period to which it applies (the “effective” pay period).
          This function provides for the computation and disbursement of net pa!:, de-
     ductions, and employx contributions by:
            l   computing gross pay as the sum of each rate of pay times the number of
                units related to it plus all appropriate allowances and/or other gross pay
        l       classi@ing and totalling deductions,
            . subtracting the sum of deductions from gross pay, and
        l        applying formulas or utilizing tables to determine employer contributions
                 rquired for certain payroll taxes and benefits.
         Pay calculations shall be performed at the end of each pay period after
     properly authorized inputs ha\~ been received from the Time and Attendance
     Processing function.
         Statutory limit and reasonableness tests are performed on gross pay, and net
     pay is tested to ensure that deductions do not exceed gross pay. At the end of
     each processing cycle detailed audit and control data are generated,
          Prior-period hour adjustments, changes to an employee’s entitlement (for
     earnings or deductions) or mass table changes will provide for retroactive calcula-
     tions. The retroactive calculation of prior-period earnings is similar to current-
     period processing, except that time and attendance data ti,r prior periods are
     obtained from adjusted hours of retroactive pay transactions rather than from the
     weekly time transaction.
         If circumstances require it, supplemental pay actions (e.g., pay actions not
     processed in the normal pay q~lc) are input into the system. These pay actions
     then scn~ as the basis for the computation of gross pay, deductions, net pay, and
     employer contributions.
                Concerning   gross and net pay computation,      the pay processing function
        l       Process both current-period   and prior-period   adjustments as an integral
                part of the payroll cycle.
        l       Compute pay according to the time worked and/or        leave taken, based     on
                data approved by the relevant supervisor.

     0 Compute pay of various types (e.g., entitlements for employees eligible for
       foreign service allowances, special pay and retention pay for commissioned
       officers, awards for SES, merit pay, cash awards, etc.)
     l   Compute earnings amounts for partial pay periods when entitlement dates
         do not coincide with pay period beginning and ending dates. Processes
         earnings adjustments on a begin-date/end-date  basis.
     l   Support adjustments and regular calculations that cross fiscal and/or
         calendar years, providing proper information to the Core financial system
     l   Initiate the pay calculation cycle only after time and attendance data have
         been certified and leave has been processed.
     l   Calculate overtime based on FLSA and Title 5 requirements.
     l   Calculate premiums and difyerentials as a percentage of’base pay, and set
         dollar amounts.
     l   Calculate shifi differential amounts based on hours actually lvorked and
         certified by a supervisor.
     l   Accommodate processing of supplemental pay actions.
     l   Provide for percentage computation        of deductions (e.g., 20 percent federal
         taxes on awards).
     l   Support Unemployment Compensation for Federal Employees processing
         and responding to 931 requests.
     l   Record gross pay, deductions, and net pay, generating information to
         update other functions and other systems, as appropriate, including the
         Standard General Ledger maintained in the Core financial system.                    1

     l   Accept allowance and premium pay entitlement as set dollar amounts or
         compute them as percentages of pay without some or all of the entitlement,
         as defined by law and regulation.
         Concerning deduction        and employer contribution      calculations,   this
         function must:
     9 Calculate the following       deduction types for each employee:
             l   mandatory deductions (e.g., federal, state, local, and FICA taxes),
             l    voluntary deductions (e.g., life insurance, health insurance, thrift
                 savings deductions, allotments, and bonds), and
             l    involuntary deductions (e.g., IRS levies and administrative debt

     l   Provide the capability to handle deductions that apply in various pay
     l   Adjust taxable gross pay by deducting untaxed items (e.g., thrift saving
         deductions) and civil service retirement annuity offsets.
     l   Support mass rate changes and individual entitlement changes for current
         and retroactive processing. Offset advanced sick leave balances against
         annual leave balances. Accommodate waivers of collections for leave
     l   Compute the maximum variable levy deduction based on available net pay
         and the outstanding amount owed IRS.
     l   Prorate insurance deductions for part-time, seasonal, and newly hired
         employees using the “four-day rule.”
     l   Accelerate deductions for employees paid an annual salary in less than one
         year (e.g., teachers).
     . Compute deductions, employer contributions, and net pay based on
       manually calculated earnings amounts (e.g., supplemental pay for
       commission or tip earnings).
     l   Calculate deductions specified in chapter 5, Title 6, of GAO’s Policv and
         Procedures Manual for Guidance of Federal Agencies, using tables and
         making such computations as necessary and providing for such things as:
             l    limitations on the maximum amount of salary subject to certain
             + limitations   on the maximum amount allowed for certain other deduc-
             l    adjustments of taxable gross pay for certain purposes by deducting
                 untaxed items, including penalties, before computing taxes; and
             l   proration of certain deductions for part-time or seasonal employees.
     l   Subtract the deductions calculated in the order of precedence provided for
         in GAO’s Title 6, while ensuring that net pay is not negative.
     l   Determine when a bond may be issued given its denomination per pay
         deduction. The process for setting bond issuance dates and issuing bonds
         may be accomplished by systems outside the paq’ system.
     l   Deduct some items in every pay period and others in selected pay periods

       l   Offset the dollar amount ofad~:anced leave balances (computed at the rate
           of pay in effect when the leave was taken) against the dollar amount of final
           net pay and any unused annual leave (based on the current pay rate) on
           termination of an employee from federal employment.
       * Offset the dollar amount of other receivables owed the agency against final
         net pay or, if applicable, lump sum annual leave payments on separation
         from the agency.
       l   Generate payment for severance pay.
       l   Accommodate various methods of payment (e.g., electronic funds transfer/
           direct deposit, home leave, etc.).
       l   Generate supplemental payments and recertified checks.
       l   Generate payment to beneficiary of unpaid compensation.
       l   Provide for electronic fund transfers of amounts withheld to appropriate
   The following are some of the outputs             the Pay Processing function
       l   Information on gross pay by type, deductions by type, and net pay by pay
           period, made available for retention.
       . Magnetic tapes or other media to be sent, with any accompanying reports,
         to Treasury or other aurhorized disbursing officers for disbursement, with
         any accompanying reports, of deductions, net pay, and employer contribu-
         tions to intended pays.
       . Magnetic tapes or other media to be sent to Treasury for issuance of U.S.
         savings bonds.
       l   Magnetic tapes, or other media transmitting information on federal
           retirement thrift plan contributions and loan repayments, to be sent to the
           Thrift Investment Board.
       l   Employee earnings statements detailing the composition of gross pay,
           deductions, and net pay for the pay period and year to date.
       l   Information   on the transfer of dues withheld for labor organizations.
       l   Information to pass to the Core financial system and cost accounting
           modules to update fhd     balances with Treasury and other assets, expense
           and liability accounts, appropriations and other cost centers for the payroll,
           including employer contributions.

23 -
     l   Information made available to other fLnct.ions to generate internal and
         external payroll reports not created directly in the Pay Processing function.

     Report Processing/Reconciliation

          he Report Processing/Reconciliation    function performs two related
     T    purposes. The report processing aspect accesses,manipulates, and formats
     data as required to satisfSrregulatory, managerial, and accounting information re-
     quirements. User outputs produced include all vouchers and reports necessar)
     to recognize payroll expense and authorize related disbursements. External
     reports include those required by Treasury, the Department of Labor, the
     Federal Retirement Thrift Investment Board, and others. Managerial reports
     include control reports used bq’ personnel/payroll   offke staff members, as well as
     reports used by others such as work location supervisors.
          The purpose of the reconciliation aspect is to provide payroll system data for
     comparison and reconciliation with that of disbursing, accounting, and personnel
     systems (or modules) to ensure accuracy and completeness.
          Disbursing data are reconciled to provide assurance that all disbursements
     authorized for payment by the payroll certiQing officer were disbursed com-
     pletely and accurately. Personnel data are reconciled to provide assurance that all
     employees on the payroll are bona fide and that all earnings, entitlements, and
     benefits arc being computed as authorized and recognized in the personnel
     system. Health insurance enrollment data are made available to carriers so that
     payroll and carrier records can be verified.
           Concerning external reporting,        the Report Processing/        Reconciliation
           function must:
       l   Produce reports required by Treasury, IRS, the Social Security
           Administration, the Department of Labor, OPM, and OMB. Produce
           reports for state and local taxing authorities at required intervals.
           Concerning   management        reporting,   this function   must:
       l   Produce all reports and vouchers necessary to recognize payroll expenses,
           establish related receivables (e.g., administrative debts) and disburse all
           related payments. Produce supporting detail registers or subsidiary ledgers.
       l   Produce managerial reports to facilitate monitoring of personnel costs, leave
           authorization, and personnel actions by personnel/payroll  staff members and
           by operational supervisors or managers.
       l   Generate, as an option, tickler reports for management (e.g., pending NTE
           terminations, pending performance evaluations, etc.).
           Concerning   user reporting,     this function   must:
       l   Generate required reports--SF 1150, Record of Leave Data; SF 2806,
           Individual Retirement Record; and SF 2807, Register of Separations and

         Transfers-for   separating or transferring employees with the next regular
     l   Generate Monthly Employee Keport (SF 113A) and the Monthly               Full-Time
         Equivalent (FTE) Report (SF 113G) to OPM.
     l   Provide for tax deduction reporting, reconciling,    and correction processing
         for each taxing authority.
     l   Provide the information to analyze detail pay transactions and establish each
         as either a disbursement or as a debt due the government.
     l   Derive summary totals of earnings, deductions, contributions,      and paid
         hours for control purposes and to facilitate reporting.
     l   Provide disbursement voucher data for verification and certification of the
         payroll process.
     l   Generate reports of pay and benefit transactions required by the agency Core
         financial system.
     l   Generate reports on the use ofvarious methods of payments (e.g., check,
         direct deposit/electronic funds transfer, etc.).
     l   Generate accounting transactions fi)r accruals of pay and benefits. This
         process is to provide for reversals and accruing pay and benefits on other
         than a monthly basis.
     l   Provide a means for correcting accounting transactions for an employee for
         one or more past pay periods generating adjusting accounting transactions
         to reverse the improper charges and record the correct ones.
     l   Notif+ agency payroll and personnel office staff of incorrect or missing data.
     l   Compile employee data related to health insurance enrollment for validation
     l   Store audit trail data in the standard personnel/payroll   data files.
     l   Generate detail registers or subsidiary ledgers which support all vouchers,
         accounting entries, and disbursements authorized by the payroll ofice.
     l   Provide a report for health benefits deductions not taken (e.g., for an
         employee on leave without pay).
     l   Provide a report of employee debt, caused by prior-period adjustments or
         current-period computation, to be used in administrative collection.
     l   Provide an output matrix of reports that dcscribcs report by title, purpose,
         frequency, distribution IcveI, and the media used to distribute.

       l   Generate retention records for Reduction in Force (RIF) based on
           competitive position, tenure, and retention requirements.
          Concerning records retention,     no record created within the federal govern-
     ment may be destroyed without the approval of the National Archives and
     Records Administration (NARY), per 36 C.F.K. 1228. Basic payroll records are
     currently authorized for disposal by General Records Schedule 2, Payrolling and
     Pay Administration Records, and General Records Schedule 20, Electronic
     Records. (Copies may be obtained from your agency’s records officer or from
     NAM.)     For payroll records not covered by this authority, or for any questions
     regarding the disposition of federal records, please contact:

                Offke of Records Administration (NI)
                National Archives and Records Administration
                Washington, DC 20408

           The phone number is (202) 501-6025

     ADP Systems Requirements

          hese requirements have been itemized in part IV, ADP Systems Require-
     T    merits, of the Core Financial Svstems Requirements (January 1988).

     Throughout the editing and processing activity of the personnel/payroll system,
     information must be maintained to support editing and computations. In
     achieving this objective, edits must be applied to assure that data and/or transac-
     tions are:
        l appropriately alphabetical, numeric, or both;
       . within established ranges or consistent with predefined values;
       9 properly authorized;
       l   not executed before the minimum time for execution, in accordance with
           legal criteria, has passed;
       l   not executed after the maximum time for execution, in accordance with legal
           criteria and agency policy, has passed;
       l   not otherwise executed contray     to legal criteria; and
       l   executed for all employees, locations, or other parameters intended.
           In addition, editing components musr further provide:
       l   for some errors to be defined as “fatal,” in which case processing stops until
           the problem is resolved;
       l   for other errors to be defined as “nonfatal,”   in which case processing may
       l   easily understood messages to identie    the nature of errors; and
       l   the capability to correct errors immediately on line or have them placed in
           suspense files for later correction.

     Sofhlrare Documentation

          he rcyuircments for SOfh~wc documentation arc listed in appendix C of the
     T    Core Financial Systems Requirements (Januav 1988). As stated in this ref-
     erence, the items in the appendix are meant to identil$ the scope and intent of
     the documentation requirements rather than to state them definitively.

     Reporting                    Requirements

          he reporting function must (1) support management by generating reports
     T    that provide the necessary information to ensure the system’s integrity, (2)
     support the various legal and regulatory requirements by generating reports at
     regular intervals or on an as-needed basis, and (3) produce reports to meet
     special needs or requirements. Reporting requirements are also contained in the
     General Functional Requirements sections I-5 and I-6 of the Core Financial
     System Requirements (January 1988). Additionally, the system shall:
       l   Report events and transactions according to the personnel/payroll        code
       l   Generate reports at specific time intervals or upon request, including reports
           that span fiscal and calendar years.
       . Produce transaction listings and error listings (or before and after images of
         the database) to \:alidate each process.
       l   Provide the capability to query current, historical, and/or     archived data.
       l   Provide the capability to produce schedules, listings, and reports to support
           each of the functional areas.
       l   Support the production of external reports in the prescribed format at the
           required interval. Reports for external reporting purposes include, but are
           not limited to:
                l    reports on federal, state, and local taxes withheld and forwarded for
                l    reports on retirement, health insurance, and life insurance forwarded
                    to OPM;
                l    reports of pending payroll and personnel transactions for which the
                    effective date has not yet been reached;
                l    reports of transactions or actions for which “not-to-exceed”   dates are
                    about to be reached; and
               l     reports to accompany magnetic media used for certifying and
                    disbursing net pay and deductions.

     Internal Controls

           he head of each executive agency is required by 31 U.S.C. 3512 to estab-
     T     lish, e\.aluate, and maintain ‘Idequate systems of. accounting and control.
     Appendixes I I and III to Title 2 of GAO’s Policv and Procedures Manual for
     Guidance of Federal Agencies cst,~blish the standards and requirements for
     systems of accounting and internal controls. These requirements include the
     responsibility to ensure that any contractor (government or private) operating a
     payroll system on behalf of an agency m,ktains adequate systems of accounting
     and internal control. Some of thcsc requirements are contained in the General
     Functional Kequiremcnt I-6 of the Core Financial Svstem Reauirements (January
          Internal controls xc to ensure that dat‘l Are processed in accordance with
     prescribed standards and procedures and that information used to process and
     report personnel ,md payroll activities accurately reflects the results of operations.
     The internal control function must:
       l   Provide for well-defined organizational rcsponsibilitics to the data element
           level for the collection of, maintenance of, and access to these data-assigned

       l   Provide audit trail reports and error listings to support data transferred from
           estcrnal systems to the standxd personnel/payroll system.
       l   Ensure that transactions processed within the system accurately reflect the
           agencies’ activities.
       l   l’ro\idc controls to ensure that data entered for processing is accurate and
           enter-cd only once.
       l   Provide controls to cnsurc that rejected transactions are promptly analyzed
           and corrected.
       l   Provide controls to ensure that all transactions entered are completely and
           accurately processed in the appropriate processing period.
           In addition, the personncl/~~a~rtll system must meet all federal standards for
     internal control. These standards arc contained in Titles 2 and 6 of GAO’s
     l’olicv and Procedures Manual     for Guidance of Federal Agencies and in OMR
     Circulars ii- 123, “InternCll Control Systems”; A- 127, “Financial Management
     Systems”; and A- 130, “Manqyncnt         of Federal Infknation  Resources.”
           If an agency’s standard perso~~~lcl/payroll system is operated on contract
     \,vith a cross-servicing agency or by a contractor, measures must be taken to
     ensure all rcquiroments arc C~dcc~uatel~  met, These operations may require:

  l   an audit of the contractor operations by the agency demonstrating that the
      operations are in accordance with Title 6 and other legal requirements,
  l   contractor certification of compliance with legal requirements based on a
      documented internal review of operations by the contractor,
  l   an audit of contractor operations by an independent party who certifies
      compliance with legal requirements, or
  . other actions which demonstrate that contractor operations are in
    accordance with legal requirements.
     A provision must be made for a single audit of the contractor to eliminate
audits by each agency being supported under a cross-servicing agreement.
     Interfacing                Systems/Information

           he personnel/payroll    system, at the standard and/or agency-level, must be
           able to process transactions from other external systems and record and
     track such transactions and related information in order to provide the basis for
     central control. (This may require a custom interface to properly identify and
     format the transactions.) The system must:
        l Provide system flexibility in accepting data input from multiple media that
          recognizes user agencies’ unique data input requirements.
       l   Subject all transactions from interfacing systems to the standard personnel/
           payroll system edits, validations, and error-correction procedures.
       . Provide system capability to (1) customize data input, processing rules, and
         edit criteria and (2) provide agencies flexibility in defining internal
         operational procedures and in supporting agency requirements.
       + Provide the capability to identify and process transactions from other systems
         that enter and update the standard personnel/payroll system.
       . Use software that allows the uploading and downloading       of data.
       l   Provide system flexibility in providing multiple-media output reports and
           recognize user agencies’ unique data output requirements.
       l   Provide system capability to allow users to customize output for reporting
           and providing interfaces to other systems necessary to meet agency
           requirements for external processing (e.g., general ledger posting, budget
           reconciliation and execution).

Requestsfor copies of JFMIP reports should be sentto:

    Joint Financial ManagementImprovement Program
              666 1lth Street NW, Suite 320
               Washington, DC 20001-4542

                 Telephone(202) 3765439
                    Fax (202) 376-5396
    U.S. General Accounting Office
JOINT FINANCIAL MANAGEMENT             First-ClassMail
   IMPROVEMENTPROGRAM                Postage& FeesPaid
        666 11th Street NW                   GAO
             Suite 320                Permit No. G-100
    Washington, DC 20001-4542