MISSOURI INTERGOVERNMENTAL RISK MANAGEMENT ASSOCIATION PAYROLL VERIFICATION PROGRAM

Transcription

1 MISSOURI INTERGOVERNMENTAL RISK MANAGEMENT ASSOCIATION PAYROLL VERIFICATION PROGRAM Verification of reported member city payrolls is vital to the financial integrity of the association. As set forth under Article VI a), of MIRMA s Articles of Association, each member of the association shall be required to include as part of any regular audit by an independent CPA firm, a verification of the calendar year payroll most recently reported to MIRMA for assessment purposes. The Board of Directors has established several requirements to insure that accurate payroll verifications are received in a timely manner, and are stipulated below. I. MEMBER RESPONSIBILITIES Each member city is required to include as a part of their annual audit conducted by an independent CPA firm, a verification as to the completeness and accuracy of the calendar year payroll most recently reported to MIRMA, for assessment purposes. The member city must assure that the payroll verification is sent directly to the MIRMA administrative office by the CPA firm within the specified time frame. II. AUDITOR RESPONSIBILITIES The independent CPA firm must follow the format of the example reports and schedules on pages 3-5 of this section. All three of these statements must be included in the verification. The verified payroll shall include all regular wages and salaries paid to elected or appointed officials and all full and part time employees. In addition, all remuneration paid to contract employees such as recreation supervisors, instructors and umpires should also be included. It shall not include fringe benefits, the premium portion of overtime pay, the employer s contribution to deferred compensation plans, or expenditures for the services of independent contractors. Also excluded are payments to an attorney that is an independent contractor. However, the payroll shall include pay for holidays, vacation, and periods of sickness, all reported as straight time. Please refer to the Payroll Reporting Guidelines on page 9. The auditor is responsible for sending the necessary documentation directly to the association s administrative office. III. DEADLINE AND PENALTIES Each member is required to assure that its auditors have submitted the required payroll verification within one year of the end of the calendar year to be verified. For example, payroll verifications for the calendar year ended December 31, 2012 must be received in the association s administrative office by December 31, Each member who has not submitted their verification within sixty days of the deadline will be notified. Revised June,

2 The penalties for non-compliance, as set forth in Resolution of the Board of Directors Number 90-3, are detailed below. If the verification is not received by the end of the twelve month period, the member will be assessed $1, The member will then be required and so notified to provide the verification within 60 days. If the verification has not been received by the end of the additional 60 day period the member will be assessed a penalty of five percent of the gross assessment calculated upon the payroll for which verification has not been received. The member will then be notified to provide the verification ninety days prior to the membership renewal date. If the verification is not received ninety days prior to the membership renewal date, the members membership will be terminated effective on the membership renewal date and the member will be so notified. IV. OVER AND UNDER REPORTING OF PAYROLL In the event that a member under reports their payroll, the city will be held liable for the additional assessment due based on the amount of payroll that was not reported. For instance, if the payroll was reported at $450,000, but was verified to have been $470,000, the city would be liable for the additional assessment based on the $20,000 difference. An invoice detailing the amount owed due to the error will be sent out immediately, and must be paid within 45 days of the date of the invoice. If the payroll was over reported, the member city will receive a credit based on the amount of payroll over reported on the following year s assessment. Revised June,

3 INDEPENDENT AUDITOR S REPORT To the City of XYZ, Missouri (Member of MIRMA): We have audited the accompanying Schedule of Payroll Reportable to the Missouri Intergovernmental Risk Management Association (MIRMA) of the City of XYZ, Missouri (the City) for the year ended December 31, 20XX and the related note. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of this schedule in accordance with the terms of payroll reportable to MIRMA; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the schedule that is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on the schedule based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the schedule is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the schedule. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the schedule, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City s preparation and fair presentation of the schedule in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the schedule. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the Schedule of Payroll Reportable to MIRMA presents fairly, in all material respects, the payroll information contained therein for the year ended December 31, 20XX, in accordance with the terms referred to above. Restriction on Use This report is intended solely for the information of the City and MIRMA and is not intended to be and should not be used by anyone other than these specified parties. [Firm Signature] [Report Date] Revised June,

4 CITY OF XYZ SCHEDULE OF PAYROLL REPORTABLE TO MIRMA for the year ended December 31, 20xx FEDERAL TAXABLE WAGES, IRS FORM 941 $1,750,000 Plus employee payroll deductions for deferred compensation 75,000 Plus employee payroll deductions for IRS section 125 benefits 50,000 Plus all remuneration paid individually to recreation officials 30,000 (such as umpires), elected or appointed officials, etc. TOTAL ADDITIONS 155,000 Less reimbursed expenses, clothing and automobile allowances 35,000 Less premium portion of overtime pay 25,000 TOTAL DEDUCTIONS 60,000 NET PAYROLL REPORTABLE TO MIRMA $1,845,000 Revised June,

5 CITY OF XYZ NOTE TO SCHEDULE OF PAYROLL REPORTABLE TO MIRMA 1. Purpose of Presentation The City of XYZ is a member of the Missouri Intergovernmental Risk Management Association (MIRMA). MIRMA provides the City with property, casualty and workers' compensation insurance protection. MIRMA assesses its members for insurance based on the gross wages of covered employees. Gross wages are calculated by taking Federal Taxable Wages from IRS Form 941, and adding non taxable amounts such as employee payroll deductions for deferred compensation and IRS section 125 benefits, as well as, all remuneration paid to individually contracted recreation officials and umpires, elected or appointed officials, etc. Such amounts are then reduced by that portion of Form 941 wages which represent reimbursed employee expenses, clothing and automobile allowances and the premium portion of overtime pay (the portion of overtime pay in excess of the normal wage rate). Revised June,

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9 PAYROLL REPORTING GUIDELINES This list is to serve as a guideline for reporting member s payroll to MIRMA. Payroll should include: 1. Wages or salaries (includes all regular wages and salaries paid to all elected or appointed officials, full and part-time employees, and individually contracted employees such as recreation officials, umpires, or instructors) 2. Commissions 3. Bonuses 4. Pay for overtime work (less the premium portion) 5. Pay for holidays, vacations, or periods of sickness 6. Payment withheld from employees to meet statutory obligations for insurance or pension plans such as FICA or Medicare 7. Payment for any basis other than time worked, such as piecework, profit sharing, or incentive plans 8. Payments for salary reduction, employee savings plans, retirement, or cafeteria plans (IRC 125) that are made through employee-authorized salary reduction from the employee s gross pay 9. Davis-Bacon wages or wages from a similar prevailing wage law 10. Expense reimbursements to employees to the extent that the employer s records do not confirm as a valid business expense Payroll should exclude: 1. Premium portion of overtime 2. Tips or gratuities 3. Payments by employer to group insurance or group pension plans for employees, other than those covered by #6 and #8 above 4. Payments by an employer into third-party trusts for the Davis-Bacon Act or a similar prevailing wage law provided the pension trust is qualified under IRC Sections 401(a) and 501(a) 5. Dismissal or severance payments except for time worked or vacation accrued 6. Payments for active military duty 7. Expense reimbursements to employees to the extent that the employer s records confirm as a valid business expense 8. Supper money for late work 9. Work uniform allowances 10. Sick pay paid to an employee by a third party 11. Employer contributions to employee benefit plans such as: employee savings plans, retirement plans, cafeteria plans (IRC 125) 12. Payments to an attorney (i.e. city attorney or prosecuting attorney) if it is an individual contractor Revised 6/2/2017