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Reconciliation of General Ledger Liability Account for State Withholding Tax

Policy: 

A reconciliation of State Withholding Tax (SWT) liability is performed monthly.

A reconciliation of SWT returns and payments 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 State Withholding Tax Payments to General Ledger

Performed Monthly
<<GL Account Number>>
  1. F/EA Accountant (or assigned staff member) reviews bank account transactions for State Withholding Tax (SWT) payments processed from the program operating bank account.
  2. Sum all payments made for SWT from workers F/EA Payroll Account found here: <<File Path>> Payroll download
  3. Subtotals with description “<<STATE DOR>> EFT WITH TAX” are SWT payments
  4. Obtain reports from payroll department showing state tax withholding payments on a weekly basis
    • These reports are separated by employers who remit payments weekly, monthly and quarterly (depending on the employer's individual tax deposit frequency)

  5.  Compare payments made within the month from the bank account to payments made as reported on weekly SWT tax payment reports

  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 necessar

  9.   Print reconciliation sheet for account <<GL Account Number>> found at <<File Path>>

 10.   Enter ending balance for <<GL Account Number>>

 11.   Enter sum of State Withholding Tax quarterly payments from bank account on reconciliation sheet

 12.   Ending balance and sum of payments should match

 13.   Research and correct any discrepancies

 14.   Make necessary adjustments to general ledger if required

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

 16.  <<Staff Title>> passes reconciliation sheet and supporting documents to <<Staff Title>> (or assigned staff member)

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

 18.  <<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 FICA 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.