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Reconciliation of General Ledger Liability Account for FICA

Policy: 

A reconciliation of FICA workers and employer tax is performed monthly. A reconciliation of Form 941, including FICA taxes, is performed quarterly.

These reconciliations are performed to ensure payments made for employment tasks are appropriately accounted and tracked and to ensure that the reporting agent withholds and remits payments to tax agencies accurately and timely.

After performing the reconciliation, a reconciliation statement is prepared by the <<Staff Title>> (or assigned staff) verified, reviewed by <<Staff Title>> (or assigned staff) who signs the bank statement, and stored at <<file path>>. Signed reconciliation sheets are stored for a minimum of 7 years per File Retention Policy.

Procedure: 

 

Reconciliation of FICA Payments to General Ledger
Performed Monthly
Account <<GL Account Number>>
 
  1. F/EA Accountant reviews bank account transactions for FICA payments processed from program operating account
  2. Sum all payments made for FICA from program operating account found here: <<file path>> bank download
  3. Subtotals with description “IRS USATAXPYMT” are weekly Federal Income Tax, and Employer and Employee FICA payments
  4. Obtain report from www.eftps.gov called EFTPS Batch Provider Payment Inquiry Report
  5. Compare payments made within the month from the bank account to payments made weekly as shown on EFTPS Batch Provider Payment Inquiry Report
  6. Identify, research and resolve any discrepancies
  7. Open the reconciliation worksheet found at <<file path>>
  8. Enter sum of FICA payments from bank account on bank account transactions sheet
  9. Ending balance and sum of payments should match
  10. Research and correct any discrepancies
  11. Make necessary adjustments to general ledger if required
  12. All adjustments must be reviewed by <<Staff Title>>
  13. <<Staff Title>> signs and dates control document notating any adjustments
  14. <<Staff Title>> signs and dates reconciliation sheet
  15. <<Staff Title>> passes reconciliation sheet and supporting documents to <<Staff Title>><<Staff Title>> verifies completeness and mathematical accuracy
    1. <<Staff Title>> signs and dates reconciliation sheet
Reconciliation of FICA and Federal Withholding Returns and Payments
Performed Quarterly (See Policy and Procedure 8.1)
        1. F/EA makes deposits per deposit frequency after each payroll.
  • 941 deposit includes FICA (Social Security and Medicare tax) withheld from workers pay, FICA (Social Security and Medicare tax) paid by the employer on workers pay and Federal Income Tax withheld from workers pay
  •  Payroll Department sends a weekly payment breakdown for 941 payments to Accounting <<Staff Title>>
2.      Each quarter, Payroll Department sends a quarterly payroll summary of 941 payment
3.      Each quarter Payroll Department sends a copy of form 941, Schedule B, and Schedule R, to Accounting Department after submitting it to the IRS
4.     <<Insert reconciliation process here>>

 

Internal Controls: 

The internal controls used by F/EA to monitor this process establish responsibility, segregate duties, document procedures and ensure independent internal verification.

 

The methods of internal control utilized by F/EA in the Reconciliation of General Ledger Liability Account for FICA are:

  • Each of the supporting documents are reviewed for mathematical accuracy by each verifier
  • Each reconciliation document is prenumbered

  • Each party initials and dates each reconciliation document displaying confirmation of their review

  • All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.

  • All adjustments require supervisory review and approval