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Reconciliation of General Ledger Liability Account for Federal Withholding Tax

Policy: 

A reconciliation of workers Federal Withholding Tax is performed monthly.

A reconciliation of Forms 941, including Federal Withholding Tax taxes, is performed quarterly.
 
These reconciliations are performed to ensure payments made on behalf of employers represented by the F/EA are appropriately accounted and tracked.
 
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 Federal Withholding Tax Payments to General Ledger

Performed Monthly
<<GL Account Number>>
  1. <<Staff Title>> reviews bank account transactions for Federal Withholding Tax payments process from program operating bank account
  2. Sum all payments made for Federal Withholding Tax from program operating bank account
  3. Subtotals with description “IRS USATAXPYMT” are weekly Federal Income Tax, Social Security and Medicare Tax payments
  4. Obtain report from payroll department 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. Communicate with payroll department as necessary
  8.  Direct payroll department to make adjustments to their records as necessary
  9. Print reconciliation sheet for <<GL Account Number>> found at <<File Path>>
    • Enter ending balance for account

 10. Enter sum of Federal Withholding Tax payments from bank account on bank account transactions sheet

  • Ending balance and sum of payments should match
  • Research and correct any discrepancies
  • Make necessary adjustments to general ledger if required

 11.  F/EA Accountant signs and dates reconciliation sheet

 12.  F/EA Accountant passes reconciliation sheet and supporting documents to <<Staff Title>>

 13.  <<Staff Title>> verifies completeness and mathematical accuracy

 14.  <<Staff Title>> signs and dates reconciliation sheet

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 Federal Withholding Tax are:
  1. Each of the supporting documents are reviewed for mathematical accuracy by each verifier
  2. Each reconciliation document is prenumbered
  3. Each party initials and dates each reconciliation document displaying confirmation of their review
  4. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.