1124 - University of North Carolina at Chapel Hill Policy on Payroll Suspense

Introduction

Purpose

The policy has been developed to ensure the following:

• the appropriate sources are charged for employee earnings and the associated employer paid benefits and taxes,
• under-charging of the appropriate fund source does not occur,
• a standard business practice is being followed by all campus departments with respect to the proactive management of payroll funding and payroll suspense,
• that the university does not forego indirect cost revenue for expenses that could have charged to a sponsored project,
• any adverse impacts on effort reporting associated with the use of payroll suspense are mitigated,
• labor reports using account as a criteria are accurate,
• timely and accurate grant reporting and effort certification, and
• the University does not pay expenses from discretionary funds that were allowable and allocable to a sponsored project.

Policy

Policy Statement

Payroll Suspense chartfield strings have been created for each department to capture personnel expense transactions during the payroll distribution process when a valid chartfield string does not exist for some or all of an employee's earnings and related employer paid fringe benefits and taxes. These charges may remain temporarily, i.e., no more than 90 days from being charged to suspense, until the appropriate funding source has been identified.

Departments/schools should review suspense transactions monthly and move charges to an appropriate funding source as soon as possible. Many suspense transactions are created when a sponsored project funding end date occurs. This policy follows directives outlined in the Office of Sponsored Research - 500.20 - Cost Transfers. Salary cost transfers must be prepared and submitted within 90 days from being charged to suspense, except in cases where the sponsor's (federal or non-federal) terms and conditions are stricter than UNC-CH's Policy. Regardless of the timing, salary cost transfers initiated after an effort statement has been certified are subject to additional scrutiny.

Personnel transactions/ePARS should not include a suspense account as a funding source as the payroll suspense chartfield string is not designed to be an intentional funding account.

In all cases, to mitigate risk, ensure accurate financial accounting/reporting and comply with various Contract and Grant stipulations, including accurate effort certification, it is incumbent upon campus units to ensure that charges are moved off payroll suspense to the appropriate fund source(s) within 90 days of being charged. Action must be taken on uncorrected expenses -- see Finance Procedure 1124.1, Managing Payroll Suspense.

Exceptions

None.

Additional Information

Special Situations

Any requests to move employee payroll charges that were not moved off of the departmental payroll suspense within 90 days will be subject to further scrutiny and will be routed to OSR or the Budget office as appropriate for approval. The request should include a justification from the MOU Financial Lead for why the request is being made.

Frequently Asked Questions

Q: What are common causes of payroll suspense?

A: Causes of payroll suspense include:

• The end date on the current salary allocation has expired for any or all of the accounts.
• No charging instructions in the department budget table (DBT)
• Project is not active in ConnectCarolina.
• HR record assignment start date is after the current system date.
• Invalid chartfield string as funding source for an employee

Q: How do I correct suspense charges?

A: Please see Finance Procedure 1124.1 and Related Data section (coming soon).

Q: After the system moves an employee to payroll suspense, should payroll suspense remain as a funding source for more than 90 days?

A: No, payroll suspense should only remain a funding source for less than 90 days. Payroll suspense should not be used as a holding account. Instead an appropriate expense account should be determined. F&A is often the fund used for payroll suspense. If a department intends to use F&A as a holding account, then the account and source should be updated to the regular F&A source (14101) and the appropriate account for the employee class.

Q: Some employees display 0 for earnings expense but have an active suspense charge. Why is this?

A: Some suspense charges are deduction or tax only charges. Please work with a PAAT advanced user in your unit as that user can initiate a deductions or taxes only adjustment.

Q: In June, an employee's charges hit suspense due to a project ending in May. Should I move the employee off of suspense by state fiscal year end, June 30?

A: The 90-day cost transfer policy is followed at this point so a suspense balance at state fiscal year end is expected.

Q: Should I use the payroll suspense chartfield string to fund a new hire or give a salary increase?

A: No. Payroll suspense is not designed to be an intentional funding source. Payroll suspense is designed to capture transactions created by a system funding error such as an expired funding source, etc.

Q: Should I modify my department's payroll suspense chartfield string by adding a cost code or project?

A: As payroll suspense is designed as a temporary source for system funding errors, the chartfield string should remain as the default.

Q: Can I use suspense sources 14102 or 14103 as an intentional personnel funding source?

A: The payroll suspense policy focuses primarily on account 511190; however, the same restrictions apply to source 14102 and 14103 as by chartfield definition 14102 and 14103 should only be used with account 511190.

Related Requirements

External Regulations and Consequences

• Guide for Using the Payroll Accounting Adjustment Tool (PAAT)
• PAAT Webinar

University Policies, Standards, and Procedures

• Finance Procedure 1124.1 – University of North Carolina at Chapel Hill Procedure on Managing Payroll Suspense
• Office of Sponsored Research - 500.20 - Cost Transfers

Contact Information

History

• 7/29/2016: Added an FAQ
• 7/22/2016: Add link to 1124.1