MEMORANDUM NO. 98-32

August 10, 1998

TO THE HEADS OF ALL STATE AGENCIES

1. PURPOSE
   The purpose of this memorandum is to support agencies with the payment conversion of non-reportable reimbursements to employees. This memorandum is issued to clarify and improve upon the directives promulgated in Memorandum No. 97-57, dated October 21, 1997.
   
2. GENERAL INFORMATION
   With the first paycheck in 1998 all reimbursements to employees paid from an agency budget were processed on the payroll. Our Office received suggestions and questions from agencies and will address these issues within this memorandum.
   
3. EMPLOYEE REIMBURSEMENT FORM
   Requests were received from various agencies using the Employee Reimbursement form (CO-17XP-PR). The form has been revised, a copy is attached to this memorandum.

   The revised Employee Reimbursement form (CO-17XP-PR) has two additional signature blocks:

   • an employee (payee) signature block
   • a supervisor's signature block

   The Petty Cash Recovery Section was revised to include two transactions:

   • one hard coded to recover the advance
   • one to cancel the recovery process

   The revised form is hard coded with a zero in the object section to assist payroll personnel, who only enter a three-digit object code (extension).

4. FUNCTION/ACTIVITY
   Many agencies requested additional space for entry in the function/activity fields. At this time, those fields cannot be expanded. If the function or activity the agency uses to charge the expenditure has more digits than the payroll screens can accommodate, it is advisable for the agency to restructure the coding they use presently and design a new table. The function field can be any digit from 0-9999 and the activity field can be from 0-999.

   If the agency does not want to restructure the internal Function/Activity table, an Agency Correction or Adjustment Report form (CO-604) must be completed and processed to charge the expenditure to the required agency function or activity code.

5. FRINGE BENEFITS
   The charging of fringe benefits on employee reimbursements is determined by the object code.

   An object code (extension) such as 02610 (261) - Non-reportable reimbursement for in-state travel, 02620 (262) - Non-reportable reimbursement for out-of-State travel, or 02630 (263) - Non-reportable mileage must be entered. If there is no object code (extension) entered, the system will calculate fringe benefits on the reimbursement. To correct a non-reportable reimbursement to an employee that has calculated fringe benefits, your agency must complete and submit a Reimbursable Cost Recovery Report form (CO-826) to correct the entry.

6. PETTY CASH
   You must have two transactions for a petty cash advance recovery. The first transaction recovers the advance from the employee's paycheck.

   The second transaction requires that the limit amount be entered into the system and will automatically stop the petty cash recovery deduction once the limit amount has been reached. The limit amount should be equal to the amount of the petty cash received by the employee. If the second transaction is not entered, the next pay cycle will also have a deduction from the employee's paycheck.

7. INTERNAL CONTROLS
   Each agency must establish its own Internal Controls. The agency must determine which department, accounts payable or payroll, will code the form and which one will enter the information on-line.
8. ADDITIONAL INFORMATION
   
   1. If an employee is not receiving a paycheck on the cycle a non-reportable reimbursement is made, it will be necessary to code the reimbursement transactions with a transaction code of R3. This will prevent any deductions from being taken from the reimbursement.
   2. Using the SID 001 with an object code beginning with 02 is not proper.
   3. All reimbursements are included in the year to date earnings total shown on the employee's statement of earnings. The amount is included in the total wages for the period but the non-reportable portion of the reimbursement is not reported to the Federal Government as taxable wages. The amount is also not included in the individual's W-2 form at the end of the year.
9. TUITION & TRAINING FUNDS (9916)
   Payments from the tuition and training funds will continue to be processed with a CO-17XP in the usual manner at this time.
10. GENERAL
    Questions may be directed to the Office of the State Comptroller as follows:

    Payroll Procedures
    On-line: Payroll Services Division, 702-3463

    Remote Job Entry: Payroll Services Division, 702-3462

    Character and Major Object Coding
    Accounting Services Division, 702-3380

    Memorandum Interpretation
    Policy Services Division, 702-3436

     

NANCY WYMAN
STATE COMPTROLLER

NW:BG

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