Schools Using EPM as their Payroll Provider We strongly recommend that schools using EPM as their payroll provider manage their payroll costs using the Payroll Control Ledger Code. This is because EPM deducts the various pay elements from the School s Bank Account at the time they need to pass on these costs: - total due to employees (salaries) on pay day, at the end of the month - pensions possibly the same day, but more likely early in the following month - Inland Revenue payment later in the following month, and - 3 rd Party payments also later in the following month or later The use of Payroll Control makes it easier to deal with these timing differences, as we charge the costs to the relevant ledger code in the month in which they are due, and then place each element to the Bank on FMS6, as the bank account is debited. Payroll Control sits on the Balance Sheet (within the BCR) as a liability, showing that the school owes some money but has not yet disbursed it. Process: 1. On receipt of the final EPM reports, process a Normal Journal to debit each ledger code (e.g. Teachers Pay) with the total (final column figure) for that ledger code. Extract from EPM report: A Black 2456.50 B Brown 1288.36 C Grey 3602.90 D Umber 2397.10 R White 1599.20 01001100 11344.06 Ledger code for teachers pay Total debit for journal After working down the EPM list (debit APTC ledger code, with total admin pay costs, debit TA ledger code with total teaching assistants pay costs, etc), balance the journal with a credit to Payroll Control Account.
2. When the Bank Statement is received, showing a BACS payment, compare this figure with the totals at the bottom of the Costings Report. You should refer to the EPM Summary Report, to identify whether the payment relates to employees pay, pensions, IR or any third party payments. You will also need the EPM 3rd Parties report, as this will confirm whether all 3rd party payments are being made via BACS (so will automatically be taken from the School's Bank Account), or whether any are to be 'paid by cheque' (so will need a manual journal to remove the amount from Payroll Control). See below: Possible reasons for differences. Extract: Gross Taxable Tax NI NI Pension Pension 3 rd party Net Pay Pay Pay Paid Deductions 20953.47 19533.56 2926.73 1223.67 1185.67 2718.91 1172.74 239.32 15384.01 Total Cost of Payroll 24357.02 (20953.47-0.00+1223.67+2718.91-539.03-0.00-0.00) Total Due to Inland Revenue 4842.04 (2926.73+1185.67+1223.67+45.00-0.00-539.03-0.00) Total Due to Employees 15384.01 (15384.01) Total Due to Pensions 3891.65 (1172.74-2718.91) Total Due to Third Parties 239.32 (24357.02-4842.04-15384.01-3891.65) When a figure appears on the Bank Statement, process a Cash Book journal to debit Payroll Control.
Summary of Process: Normal Journal using figures on EPM Payroll Summary Report: Debit various employee ledger codes + Credit Payroll Control When figures appear on Bank Statement, check to EPM Summary Sheets: 4 separate Cash Book Journals to Debit Payroll Control: 1 for total due to employees 1 for total due to Inland Revenue 1 for total due to pensions 1 for third party payments At the end of each month, after completing the Month End reports, the balance on the BCR for the Payroll Control ledger code should be reconciled to the EPM Summary Sheets; the balance will be the total of the elements which have not yet appeared on the Bank Statements, e.g. usually the Pension, National Insurance & 3 rd Party payments elements for the month being reported.
In this example, the balance on Payroll Control after completing the Period End Return should be 8973.01 (i.e. total due to IR 4842.04 + total due to Pensions 3891.65 + Total due to 3 rd Parties 239.32). It is good practice to make a note of the outstanding pay elements, including the amounts, on the monthly BCR Balance Sheet page, as confirmation of that Payroll Control has been reconciled. Any differences should be investigated and adjustments made as appropriate. Possible reasons for differences: 1. 3 RD Party Payments are not always made via BACS. Sometimes part of this is paid by cheque. The supporting EPM sheets will detail the method of payment. Extract from EPM 3rd Parties Report: Code Description Amount Employer Amount Total Amount by BACS Amount by Cheque ACE Ace Insurance 3.80 0.00 3.80 3.80 0.00 CHILD Child Care Vouchers 227.17 0.00 227.17 0.00 227.17 GMB SUB GMB Sub 5.55 0.00 5.55 5.55 0.00 GTC1 GTC Fee Deduction 3.00 0.00 3.00 3.00 0.00 Total 239.52 0.00 239.52 12.35 227.17 2. Some adjustments made by EPM (e.g. for emergency payments) will be included in the 3 rd Party Payments figure on the Summary Sheets (to enable EPM to balance their reports). However, these are unlikely to feature in the BACS debit.
3. Childcare Voucher Services (CVS). The amount of any CVS payment will need to be cleared each month from Payroll Control, using a normal journal to debit PC and credit the amount to Workplace Nursery Fees (63086041-01). In any case where the amount debited directly to the Bank is not the same as the 3 rd party figure on the EPM report, a normal journal will be needed to adjust (debit) Payroll Control. The other line of the journal will depend on each situation. If Payroll Control cannot be agreed to the outstanding EPM figures, it will be necessary to investigate the difference and make a relevant adjustment. Please contact your Schools Financial Advisor if you need any advice on this.